Pakistan's military minds its own
business By Sudha Ramachandran
BANGALORE - Pakistan's military, long notorious
for its stranglehold over politics, has as pervasive a
presence in the country's business and commercial
enterprises. While the military's political and
administrative influence is well known, public knowledge
of its vast corporate interests is still limited,
especially outside the country.
The military is the
single largest player in the Pakistani economy
today, active in a wide variety of commercial
enterprises engaged in production of items ranging from
breakfast cereal, sugar and cakes to cement,
pharmaceuticals and fertilizers. The military's
commercial empire, worth billions of dollars, includes a
number of transport, construction, real estate,
insurance and communication enterprises, steel and power
plants, banks, an airline, an FM radio station, a pay-TV
channel and hundreds of educational institutions.
The core of the military's business empire is a
group of four foundations - the Fauji Foundation, Army
Welfare Trust, the Shaheen Foundation and the Bahria
Foundation. Dr Ayesha Siddiqa-Agha, a Pakistani defense
analyst, points out that though the four foundations
were set up ostensibly for the welfare of retired
military personnel, this "role has since long taken a
back seat. The growth and mode of operations of these
foundations now indicate an urge at empire building and
providing perks and privileges for senior officers."
While the Fauji Foundation comes directly under
the Ministry of Defense, the Army Welfare Trust is under
the General Headquarters, the Shaheen Foundation under
the Air Force Headquarters and the Bahria Foundation
under Naval Headquarters. The activities of the
foundations are designated as "corporate ventures". They
control some of the largest listed companies on the
Karachi Stock Exchange. Companies run by the foundations
enjoy special privileges, like access to prime real
estate, easy bank credit, tax breaks and subsidized
electricity. Not surprisingly, they routinely beat
civilian companies in contract bids.
Of the
four, the Fauji Foundation is the oldest and the
country's largest business conglomerate. Indian defense
analyst Rahul Bedi describes it as the "jewel" in the
Pakistani military's crown. Headed by a three-star
general, it provides "womb to tomb" benefits for nearly 9
million retired military personnel and their dependants.
These benefits include preferential hiring of
ex-servicemen for jobs at the Fauji Foundation's wholly
owned companies and subsidiaries.
The
Pakistani military operates both in the public and
private sectors. In the public sector, it has the
National Logistic Cell (NLC), the country's largest
trucking and transportation service, and the Frontier
Works Organization (FWO), a construction giant. The NLC
is believed to be the army's most profitable operation.
Like the FWO, it is fully controlled by the Army General
Headquarters. Established by former dictator General
Zia-ul Haq in 1978, the NLC's fleet of trucks played a
vital role in transporting the Central Intelligence
Agency's weapons into Afghanistan in the 1980s and later
in supplying the Taliban with food, fuel and weapons.
Prime real estate is made available to defense
housing authorities at throwaway prices. How these prime
properties fall into the hands of the military is worth
recounting in some detail, if only to illustrate how the
military occupies civilian property and grows rich at
the cost of the people. In an opinion piece in the
English-language daily Dawn, Farhatullah Babar outlines how the
military took control of a private housing society, the
Lahore Cantonment Cooperative Housing Society. Babar
points out that "when the society began flourishing,
army authorities took forcible possession of it. On a
complaint, the registrar of Cooperative Societies
ordered that elections be held but the occupiers of the
society did not allow elections for 10 years. In 1999,
the military authorities 'persuaded' the provincial
government to issue an ordinance, the Defense Housing
Authority Lahore Ordinance 1999, to formalize the
takeover. The ordinance was promptly challenged in the
Lahore High Court on the ground that the provincial
legislature cannot legislate on matters relating to
defense."
While the matter was still pending in
courts, the provincial government introduced the
ordinance in the form of a bill. It was pending in the
assembly when the military took over in a coup in
October 1999 and the assemblies were dissolved. Under
Article 117(2) of the constitution, a bill pending in a
provincial assembly lapses on the dissolution of the
assembly. Thus the bill lapsed and the Lahore Cantonment
Housing Society was revived. But the army authorities
did not allow the society's members to perform their
statutory functions and kept allotting plots to military
officers. Barely three weeks before the general
elections of 2002, a presidential order was issued on
September 19, 2002, under which the Defense Housing
Authority, Lahore, was set up. This order was
subsequently indemnified through the 17th amendment in
the constitution, thus giving a pseudo-legal basis to
the military's takeover of the society.
Such
pieces of prime real estate are then distributed among
military personnel at throwaway prices. It is among the
many perks and privileges of being a part of the
Pakistani military. The Army Welfare Trust, which is
spearheading the attempt to appropriate and occupy
A-grade agricultural land being tilled by around a
million peasants in Okara, is facing fierce resistance.
But the military is using severe repression and
intimidation to quell the protest.
The military
justifies its vast business empire as a contribution
toward national development. Facts indicate otherwise -
public funds are being channeled into the generals' bank
accounts. Siddiqa-Agha argues that most of these
business ventures are actually running at a loss, with
the generals siphoning off funds from the country's
annual defense budget to make up the difference.
Losses are said to be higher in ventures that
are fully managed by retired and serving military
personnel. Far from contributing to the country's
socio-economic development, the military's commercial
enterprises are a heavy drain on public funds.
Some of these military-run enterprises have won
praise from international banks and organizations for
their efforts to eliminate corruption. However, as Tariq
Ali points out in the New Left Review, "Many of these
enterprises have been engaged in corruption, although
scandals usually erupt only when civilian businessmen
get too greedy in exploiting the opportunities they
offer, or when the fall of a government exposes their
shady deals. [Former prime minister] Benazir Bhutto's
spouse Asif Zardari was implicated in shortchanging the
air force's Shaheen Foundation in a dubious media
venture. In another case, it emerged that a private
businessman had bribed senior naval personnel in
defrauding the Bahria Foundation over a land development
deal."
But recently, President General Pervez
Musharraf came out in fierce defense of his military's
vast business empire. He dismissed critics of the
military's role in business as "pseudo-intellectuals".
Like everything else the military does, its business
dealings are evidently above public scrutiny and
reproof, and enjoy immunity from public accountability.
Sudha Ramachandran is an independent
researcher/writer based in Bangalore, India. She has a
doctoral degree from the School of International
Studies, Jawaharlal Nehru University in New Delhi. Her
areas of interest include terrorism, conflict zones and
gender and conflict. Formerly an assistant editor at
Deccan Herald (Bangalore), she now teaches at the Asian
College of Journalism, Chennai.
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