- Inquiry reveals how private firms ‘running’ affairs of government regulatory body
ISLAMABAD: In surprising revelations, an inquiry committee of Ministry of Food Security and Research (MoFS&R), constituted to investigate ‘hegemony’ of private firms in one of the ministry’s important department, Department of Plant Protection (DPP), has shown the ugliest picture of how a government regulatory body is being influenced and run by a group of private companies and mafia.
The 15-page report, prepared by a committee on the directives of Prime Minister secretariat and submitted to the Secretary MoFS&R, reveals how a powerful mafia is practically runs the DDP affairs, especially the major role of the department, the fumigation process of all imported and exported agriculture items.
The committee headed by Rashid Mahmood, former Additional Secretary-II of MoFS&R (currently serving as secretary power) was assigned to investigate the controversy over the import of Methyl Bromide (MB), used for fumigation and the monopoly in this sphere.
After hearing the complaints about the monopoly of a company in DPP, the PM office in December 2021 had directed the food ministry to address the issues and fix responsibility for any wrongdoing that may have occurred in the past.
The committee, which also included Syed Ahsan Mumtaz (Joint Secretary) and Mr. Shahid Abdullah (Director DPP) as its members, had later submitted the report to secretary MoFS&R early this year but the ministry kept the same secretly without any further action apparently after the change of government in the center.
As per the report, “Inquiry Report on Methyl – Bromide Registration and Import for Phytosanitary Fumigation,” a copy of which is exclusively available with this scribe, the committee has made it clear that for all practical purposes, it appears that DPP is no more a federal entity as far as the issuance of biosecurity and phytosanitary certificates is concerned.
Instead, it is influenced and practically run by the fumigators who virtually control the entire value chain of the business. Such regulatory capture is generally associated with a high level of corruption. The majority of the department officers are compromised and/or afraid of doing anything against the mafia for fear of repercussions, says the report.
In its findings, the committee has revealed that current leadership positions at DPP are not manned by scientists/entomologists who have any knack for enforcement nor have the ability to sustain extraneous pressure while executing their regulatory powers. Therefore, the current organogram and recruitment criteria cannot serve the purpose of regulatory enforcement with high stakes.
According to the document, there is a subculture of corruption, backbiting, infighting, and responsibility-shirking that has seeped into the very roots of the organization. The Director General (DG), all directors, and deputy directors are part of the problem rather than the solution, even if some of them may not be financially corrupt.
The committee has informed that interestingly, the importer of Methyl Bromide and fumigating companies were all one party due to which not only there is a monopoly but also higher cost being charged to importers/exporters by the fumigators. The decision about the right price of fumigation cannot be left to private actors if the volume of private actors’ business is a result of regulatory action.
Government can neither let non-compliant shipments unchecked nor allow inspectors to declare compliant shipments as non-compliant. The first will serve the interest of agro-traders, and the second will serve the fumigators’ interest. In case agro-traders collude with the department, it would compromise Pakistan’s bio-security reputation and safety of its own agro-ecology at home.
If fumigators collude with the department, it will increase the cost of imports and exports and lead to unreasonable profits. The fumigators have successfully maneuvered and practically taken over DPP’s regulatory functions.
“It is a classic case of regulatory capture by the private sector. An organization with regulatory power to either stop a ship from sailing or stop one from unloading can play havoc if it does not maintain a high level of organizational integrity,” the report says. It says DPP’s current lot of employees have, as a class, lost the fundamental ethos of integrity which is so crucial for performing its functions properly,” says the report.
“Its own employees at the senior level have admitted that they have been getting monetary gains from the fumigators at the institutional level (office space, operational expenses, etc.). Their behavior illustrates a clear propensity to benefit fumigation business, which cannot happen without incentive for personal financial gain. The fact that even some of class-IV employees own personal cars, which they regularly use as stated by senior officers in their statements, goes to explain DPP’s institutional decadence. This state of affairs indicates management’s total surrender to the fumigation mafia and acceptance of corrupt practices as a mode of operation,” says the report.
The committee has further revealed that M/s Adeel Pesticides and Manufacturing is the sole distributor of MB on behalf of M/s National Chemicals. Notably, this distributor of MB is also a fumigator. Although 50 fumigators are registered with DPP, MB was distributed to only three fumigators, namely M/s Pentagon Fumigation, M/s Pest Management Services, and M/s Tahir Fumigation Services. Although 50 fumigators are registered with DPP, only six consumed 98% of MB during 2021.
Furthermore, M/s Pest Management Services and M/s Pak Pansy Fumigation operate from the same physical address. Similarly, M/s Progressive Fumigation and M/s Pentagon Fumigation Services are also registered at one address. Therefore, the committee concluded that primarily four fumigators control 98% of the fumigation business in Karachi.
In addition, the fact that the sole distributor is also a fumigator and supplies MB to only three major fumigators, thus crowding the rest from the market indicates the existence of strong market power in the hands of a cartel. It adds that M/s Ahmad and Kamran traders, which tried to import MB, were punished by the group to serve the interest of the monopoly.
While suggesting to immediately end the cartel and create a fair and competitive environment in DPP, the committee has recommended the concerned authority to review all the laws and rules with a view to enable itself to register as many importers of MB as are required to break the monopoly.
It suggests all directors and deputy directors should be removed forthwith and should not be posted in any organization that has regulatory powers with financial stakes. They might be used in pure technical roles in organizations without significant regulatory functions.
The Organogram of DPP should be modified to include at least two directors who will head the enforcement teams and shall not necessarily be entomologists/scientists.
Ideally, such officers can be hired from amongst the retired officers of the Pakistan army at the rank of lieutenant colonel with a clean reputation and having served for at least two years in any law enforcement agency in Karachi. The committee has recommended a formal disciplinary proceeding to be initiated against the chain of officers who canceled various IPCs for the import of MB. Given the increasing trend in fumigation vis-a-via total fumigation of oilseed vessels during 2021, a show-cause notice was issued to DG who was posted during that period.
As per the committee no DG should be posted from amongst DPP officers. Each DG will closely observe the presence or otherwise of monopolistic prices and shall furnish a certificate to the Secretary that monopoly does not exist. In case of his failure to do so, he should be relieved of his duties forthwith.
To enable DG to ensure non-monopolistic pricing, laws and rules shall be suitably amended to empower the DG to get any data/information from fumigators and to fix price of fumigation per cubic meter periodically. An assets-beyond-means inquiry must be initiated against all Directors and Deputy Directors of the Department.
It may be added here that the mandate of DPP is to enhance phytosanitary capabilities of the country and check pest and disease spread on crops. Anything grows from earth and any subsequent derivatives need phytosanitary and biosecurity clearance before being traded internationally. In other words, no agricultural products can be imported in or exported from Pakistan without being certified as safe from pests and diseases. Fumigation is a tool to ensure the biosecurity of suspected consignments. The fumigation market in Pakistan is a multi-billion rupee industry, and MB is the primary fumigant.
