December issue 2006

“The government has no involvement in the Fauji Foundation”

– Brigadier (retd) Syed Mujtaba, Secretary to CBOD, Fauji Foundation

Q: Is the Fauji Foundation a public or a private company?

A: It is a private trust. You can understand it in this way — the Fauji Foundation has a group of private companies that operate like any other private company, but with the difference that we are not interested in making money for the sake of money. The money is made to support our welfare wing, which operates a number of projects, but broadly speaking, most of them are in the areas of education and health, two areas that pose the greatest challenge to the poor citizens of this country. Our welfare is directed mostly towards the families of army personnel. The army soldier or officer is looked after by the army even after retirement through various schemes so that their families do not suffer. Our welfare is focused more on the families of army personnel, including adult children. We look after their sons until they are 18, and their daughters, until they are married. Once a girl is married, our responsibility ceases. However, if unfortunately she gets divorced or widowed, then we start looking after her again for life, if necessary, or until she marries again. If a girl remains a spinster, we will look after her throughout her life. So you can see how we look after the daughters of our men.

This year alone, we‘ve spent roughly three billion rupees on welfare and thus, have reached about seven to eight per cent of the population.

Q: So, is there no difference between the Fauji Foundation and any other private group, like the Dewans for instance?

A: None whatsoever. We compete openly and fairly in the market. Out of a staff of approximately 10,000 people, a majority of them are civilians and we pay them market salaries because otherwise no one will work for us. We also pay taxes, and we are the third or fourth highest tax payers in this country. Just in this financial year, we have paid approximately 23 million rupees.

Q: What is the relationship between Fauji Foundation and the government?

A: The government has no involvement in the Fauji Foundation. We neither give any donations to anyone, nor do we accept any public money. The government has not done us any favours. No special statutory regulatory orders have been issued, etc. In fact, because of the profile of the people involved in our administration committee, we are very careful. For instance, we had a number of sugar mills, but when the sugar business became politicised we gradually pulled out.

Q: Who owns Fauji Foundation?

A: The committee of administration are the owners. The chairman of the committee of administration is the secretary of defence.

Q: So, the secretary of defence is the chairman and owner of Fauji Foundation?

A: The committee of administration that he heads is the owner. The secretary of defence is an ex-officio member of the committee.

Q: You have emphatically stated there is no government involvement in Fauji Foundation. The committee of administration has seven members. The secretary of defence is the chairman. The other members include the chief of the general staff, Pakistan army, the adjutant general, Pakistan army, the quarter master general, Pakistan army, the master general of ordinance, Pakistan army, the deputy chief of the naval staff (personnel) naval headquarters, and the deputy chief of the air staff (administration) air headquarters. All of them are government servants, are they not?

A: You do not understand. They are only responsible for the strategic vision of the foundation. They have nothing to do with us in the day-to-day administration. For instance, we do not receive any instructions from the ministry of defence, so we are independent . These are all misconceptions and frankly, they run so deep, we do not want to even start justifying (ourselves). People are entitled to their misconceptions.

Q: What exactly is the “strategic vision” of this private group called the Fauji Foundation that these government servants are responsible for?

A: They ensure that we follow the constitution of the Fauji Foundation that was approved on February 3, 1972. Their involvement is necessary as they tell us about our target beneficiary groups like the families of the soldiers, etc.

Q: What are the misconceptions you think people have?

A: Well, people think that we are the business or corporate face of the Pakistan army. We are not. We have nothing to do with the army. People think that we are being given special breaks or favours by the government. We are not getting any special favours. We have not received any money from the government. People think that we do not pay taxes, whereas, as I’ve just told you, we pay taxes.

Q: Why do you think people have these misconceptions?

A: Because we have managed the business very well and are a successful group. The Indians tried to do it, but failed. We succeeded and today are worth more than two hundred billion rupees.

Q: You say that you have not received any government money, but what about the money given to bail out Fauji Fertilizer?

A: Again this is a misconception. No one is interested in the whole story; people are just seeking to politically exploit it. We were asked by the government to establish a DAP (a kind of fertilizer) plant, so we did. It was called Fauji Fertilizer Jordan because at that time we got the raw material from Jordan. Now we get it from Morocco. Anyway, in 1999, the government brought down the prices of DAP causing a great loss. So, like any other large business house in the world, we had taken loans from banks, including Habib Bank, which at that time was state-owned. It was the government’s fault that it brought down the prices causing the company a loss of 10 billion rupees. Who was going to pick up that loss? Not us. Why should we have? But if we had defaulted on the payments, the government bank would have suffered. So what the government did was negotiate with us and promise to pay us five billion rupees over a period of nine years. We were asked to pay the banks the remaining five billion up front, which we did. It was the government’s bad policy, which they were trying to cover up, and so they paid us five billion rupees .

Q: As a private business house , aren’t you prepared for profit and loss ?

A: We are. But we keep to very safe businesses as our profit is for welfare. That is why we do not venture into any speculative risky business.