ISLAMABAD: A bill aimed at bailing out companies or industrial units under financial distress through courts faced on Thursday a deeply divided Senate Standing Committee on Finance, with its proponents and opponents taking extreme positions.
The Corporate Rehabilitation Bill 2015, introduced in the Upper House in February last year, has been a centre of controversies between the stakeholders — bankers and businessmen.
“The main objective of this bill is to provide relief to entities from total bankruptcy, which leads to the loss of jobs and national productivity. Most private entities can recover if given only a slight relief,” said Senator Saleem Mandviwalla, who moved the bill. “We all saw what the banks did to the Dewan Group. It’s all gone now and nobody is the gainer.”
In an earlier meeting the bill was totally rejected by the Pakistan Banking Association (PBA). Banks believe the court-driven corporate rehabilitation law would make the recovery of their money from a defaulter even more difficult.
In contrast, members who support the bill say it would provide some relief to the business entities from the courts. “There should be a mechanism to protect those who have taken loans from the banks,” Senator Islamuddin Shaikh said. “These banks will restructure the same loans and even add more to your credit if you have personal contacts with them.”
The committee was briefed by a special guest corporate lawyer Salman Akram Raja, who described the bill as a black law in the lending business. “Pakistan has a culture of wilful default and lodging incorrect claims. A large number of businesses would deliberately drop their financial standing and approach the court for relief from bankruptcy (if the bill is passed),” he said.
He even presented his own version of the corporate rehabilitation bill and claimed that it had balanced approach towards dispute resolution between borrowers and lenders.
His briefing led to a division among the committee members and it was decided that amendments would be sought again from the Ministry of Finance as well as other stakeholders before taking up the bill.
Talking to Dawn later on, an official said that both the bills presented extremists views as the one presented by Mr Mandviwalla granted all-out protection to businesses, even to those who make planned and wilful financial default, whereas Mr Raja’s draft was heavily skewed in favour of the banking sector.
The committee also discussed a National Accountability Board’s inquiry on the privatisation of MCB Bank and a briefing by the Federal Board of Revenue (FBR) regarding St James’ Hotel, London.
TDAP UNDER AUDIT: Meanwhile, the Senate Standing Committee on Commerce has constituted a sub-committee to investigate financial spending of the Trade Development Authority of Pakistan (TDAP) on holding exhibitions in foreign countries.
The three-member committee will comprise Mr Mandviwalla (as its head) and Rubina Khalid and Usman Khan Kakar.
The TDAP, an export-promotion authority of the Ministry of Commerce, is responsible for holding exhibitions in the country and abroad. However, senators reported irregularities in its foreign exhibitions.
Senator Shibli Faraz, who chaired Thursday’s meeting, bemoaned that the authority ignored small provinces of Khyber Pakhtunkhwa and Balochistan. “If TDAP is not working effectively, it needs to be closed down,” he said.
The sub-committee is mandated to audit TDAP’s records. However, no deadline has been mentioned to complete the task.