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By Ansar Abbasi
ISLAMABAD: Honest and patriotic officials of the finance and economic ministries in Islamabad are stunned at the feverish activity in Islamabad to bail out a few big fish of the country’s stock market, which are operating under the garb of both foreign and local investors.

These officials claim that the Rs 30 billion being offered to foreign investors in what is being called as the “PUT” option is actually going to the same big fish, six or seven main brokerage houses, who have set up foreign offshore companies and who bring their own black money into the market as ‘foreign investors’.

Acting Secretary Finance Ayub Tareen, when approached, insisted that the bailout package was meant to give confidence to the country’s stock market. Admitting that there were fears that the taxpayers’ money may go into the pocket of some big fish of the stock market, Tareen said the SEC was presently working out a regulatory safeguard mechanism to address such fears and to ensure that the public money did not go down the drain.

When asked if it was fair to put the taxpayers’ money at risk to save the collapsing stock exchange, he said the government was genuinely trying to put a stop to the stock exchange downslide for the sake of small investors, who were required to be protected from losing their savings and investments.

An insider who has worked in one of these big houses, however, said the so-called foreign investment was basically coming from offshore accounts of these brokerages and a thorough probe would reveal it was a big scam. This foreign portfolio investment (FPI) should actually be turned into foreign direct investment (FDI) in the same companies so that this scam could be controlled, he said.

“The two-billion dollar figure is an eyewash, as already the value of this two-billion dollar investment has gone down with the market and if the stock exchange floor is removed, it will be worth only a few million dollars. So why the PPP government is so keen to give Rs 30 billion package to these so-called foreigners unless it becomes clear who is behind it and who will make the real buck,” a senior finance official told this correspondent.

The latest scam being sold by the vested interests to the panicky PPP government leaders is that the government should step in the falling market and buy the shares of these big fish at 12.5 per cent lesser price compared to the current price being artificially sustained because of the market floor mechanism.

These patriotic experts say while the big fish are asking the government to bail them out at just a 12.5 per cent loss, they themselves in the kerb market are desperately selling their shares at 20 to 25 per cent loss, which means they are ready to sustain such losses but want the government to share these losses.

So if the government is at all thinking of intervening, these officials say, it should offer to buy the shares of these dirty fish at 30 to 40 per cent less price and should invest the people’s money kept in NIT, EOBI, State Life and other big companies wisely and in the interest of the people and not a few manipulators who always make a big killing, whether the market goes up or down.

These officials point out that in 2000 and 2005 stock market crashes, these very big fish made billions while small investors were deprived of their life savings and money.“The Shaukat Aziz government was fully behind these market manipulators and they were fully protected. Some were even found guilty in 2005 but were let off the hook after a token fine of just Rs 100,000 or so and never debarred from further business activity,” a senior official who watched the 2005 scandal unfold said.

The current crisis, he said, was created by the big brokerage houses, which were operating not only as middlemen but also as secret investors, secret foreign buyers and secret political operators using their connections with politicians and decision-makers in their own interest.

“The finance ministry has gone out of its way to bend the rules to oblige this small coterie of brokers who have made mega millions in the Musharraf era and own vast lands in Karachi, Lahore, Islamabad and foreign shores like Dubai, Ajmaan and Kuala Lumpur. Just have a look at the passenger manifests of three airlines and the number of trips these people make will prove how big stakes they have in foreign lands,” a finance official said.

The surprising thing for these patriotic officers is that the PPP government is bending backwards to accommodate these black sheep of the Musharraf-Shaukat Aziz regime. “They have not yet issued the petty Rs 1,000 Benazir cards for the poor but they have already set aside Rs 50 billion to save these few sharks,” one official noted.

The answer to these mega scandals is that parliament and the Public Accounts Committee now headed by Opposition Leader Chaudhry Nisar Ali Khan should reopen the 2005 and 2000 stock scandals and fully carry out a probe into the current crisis to expose the real culprits.

“When this is done, it will be proven that 90 per cent of the problem revolves around the big seven sharks and if they are neutralised, the stock market will regain confidence and stability, and come to a level in which real foreign investors will be able to come in,” one official noted.

Parliament must assert its authority on some issues, he said. “If they can do nothing about foreign drones, they should at least shoot down the local drones that are bombing the people’s pockets every day.”

http://www.thenews.com.pk/top_story_detail.asp?Id=18059
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