When was the last time you saw a conglomerate advertising not its consumer-facing or even industrial products but itself – its own reputation as a responsible corporate citizen? Probably last night, if you live in Pakistan and watched the news on just about any major channel, with Engro Corporation’s ads about its various business lines and their positive impact on Pakistan’s economy and society.

Of course, Engro being among the most sophisticated locally owned conglomerates in the country, at least part of the reason is likely just corporate brand-building: Engro wants prospective suppliers, customers, employees, financiers, and business partners to view the company favourably. But it probably is not entirely a coincidence that the company’s activities – and, more recently, its chairman and largest shareholder Hussain Dawood, along with his son and Engro board member Samad Dawood – have been named in inquiries currently being conducted by the National Accountability Bureau (NAB).

At least part of the reason for the ads, then, might simply be Engro turning to the court of public opinion to help counter the near-hysterical theatrics of reporters who appear to have convinced themselves – without any substantive evidence to date – that Engro and its officials must be guilty. They are just not sure yet of what crime.

While most viewers probably did not pay much attention to the ads, they represent an interesting – and important – shift in power dynamics in Pakistan. It is highly unusual in the country’s history for a large, well-capitalised, highly influential, and generally well-regarded company like Engro to be turning to public opinion directly rather than engaging in a more quiet lobbying campaign with the government to ensure that its side of the story gets a fair hearing.

The reason why Engro is doing this is extraordinary. For the first time since at least the late 1950s, there is no longer a straightforward answer, at least as far as the business community is concerned, to the following question: who is in charge of the government of Pakistan?

Political scientists – both inside Pakistan and abroad – refer to governments like those currently in office in Pakistan as a “hybrid regime”, meaning it has elements of both democratic civilian and autocratic military rule. And the presence of that duality is causing confusion among leading businesses in Pakistan as they have undergone an extremely aggressive – and heavy-handed – prosecution campaign by NAB, which has rendered it virtually impossible to figure out what the government considers acceptable.

And while the government announced on December 27 an amendment to the law that curbs some of NAB’s worst powers, in effect promising relief from that aggressive campaign, the question that will continue to puzzle the business community is this: who should they turn to when they have a problem? Who is in charge in Pakistan today? And what does it mean for their future and that of the Pakistani economy?

For this story, Profit spoke to several current and former senior officials inside large companies that have been targeted by NAB for prosecution, as well as other officials who have familiarity with NAB prosecutions. So total is the fear of what NAB might do – and how vindictive its investigating officers have become – that none of them were willing to speak on the record, with their names published.

What they describe, however, is an environment both inside the government and inside companies that frequently do business with the government that was paralysed in terms of decision-making. Officials were terrified of signing routine contracts for fear of having that signature be used by NAB as the basis of an arrest warrant and prosecution. Planning for long-term projects that need government collaboration or even approval came to a grinding halt. And several major investment projects had been put on hold, including additional LNG projects.

Indeed, Iqbal Z Ahmed of the Associated Group was arrested by NAB from his offices while he was in a meeting with foreign investors to raise capital for additional energy sector projects.

Uncertainty itself is not extraordinary in Pakistan. Governments frequently change policies which can make it difficult for companies to navigate new laws and regulations. What made the situation extraordinary is the fact that this was happening even to businesses that supposedly had assurances from the senior military leadership that they would not be harassed by the unusually eager investigating officers at NAB.

For the military leadership to promise protection and not be able to deliver, at least until this past week, is almost without precedent in Pakistani history. And it happened because the Imran Khan Administration is unlike anything else we have ever seen before.

A brief history of business-military relations

While the military and large businesses in Pakistan may have had informal social ties before, the relationship between the two took off in earnest when General Ayub Khan took power in a military coup in October 1958.

The Ayub Khan administration had a significant focus on private sector-led industrial growth in the country as the cornerstone of its economic policies, and hence understanding the concerns and hindrances faced by large businesses in setting up and expanding their industrial operations was a key priority for the government.

The positive impact of this prioritisation was that it was very easy for business leaders of large conglomerates to gain access to key decision-makers and influence policymaking in a manner that allowed businesses – and ultimately employment – to grow rapidly during the 1960s.

The downside, of course, was that the government was far more responsive to the needs of businesses and not necessarily to those of its citizens, which resulted in policies that dramatically exacerbated income and wealth inequality in the country, culminating in even the architect of the Ayub administration’s economic policies, Dr Mahboobul Haq, to decry in 1968 that the vast majority of the country’s private wealth was owned by “22 families”.

One thing, however, was clear: if business leaders had a problem, they knew who to turn to. President Ayub Khan was the ultimate decision-maker and those whom he had empowered to speak on behalf of the administration really did have the power to make credible commitments on the part of the government of Pakistan.

The Yahya Khan administration did not really matter much since it was consumed almost entirely with the lead up to the 1971 war that led to the independence of Bangladesh. And then came the administration of Pakistan’s first democratically elected leader, Prime Minister Zulfikar Ali Bhutto.

Given his policies of nationalisation, Bhutto was universally reviled by the business community. The Bhutto administration did not lend a sympathetic ear to any complaints from business leaders, and had no qualms about treating many of them very badly. But given the political weakness of the military for much of the Bhutto administration, there was not much recourse either. Bhutto was in charge, and what he said was what mattered in terms of government policy.

After the Bhutto administration, one would expect that whoever came next would be a welcome relief for Pakistani business, but the reality was that the Zia Administration ended up not being a return to the “good old days” of the Ayub era and more of a remoulding of the business elite into the image of what the establishment – both civilian and military – wanted.

The Ayub era elite consisted largely of people who had money before Partition. The Zia era introduced a new elite which was dependent on – and, to some extent, created by – government largesse and political connections for access to coveted assets (in the form of re-privatised industries) and financial resources (in the form of loans from the still-state-owned banking system). One day we will be able to name names of who got wealthy in that era due to shady political connections. [Editor’s note: That day is not today.]

Then came the ‘decade of democracy’, lasting from 1988 through 1999, where the relationship of the economic elite with the government was somewhat complicated. Both the Benazir and Nawaz administrations pursued policies that created wealth tied to political largesse – Nawaz with his pursuit of re-privatisation, and Benazir with the creation of the independent power producer (IPP) policy and aggressive pursuit of the politically motivated lending by state-owned banks.

But both also created camps where businesses were effectively forced to pick sides: if you were friends with Nawaz, the Benazir government would come into power and go after your businesses with prosecutions, and other forms of harassment. And likewise with friends of Benazir in the two Nawaz administrations.

For example, Sultan Lakhani – a major shareholder in the Lakson Group and a senator under the Benazir administration – faced prosecution and was imprisoned under the Nawaz administration. Likewise, Mian Mansha, believed by some to be friendly with Nawaz back then, faced significant harassment under Benazir’s administrations.

During this time, some of the wealthier business leaders kept their links with the military alive, and were often among the groups of ‘concerned citizens’ who would frequently visit the then Army chief practically begging him to conduct a coup.

So, when the Musharraf administration came into power through a military coup in October 1999, the business community, by and large, was somewhat relieved. And the Musharraf administration absolutely did not disappoint. Indeed, in terms of access to the corridors of power and receptivity to the concerns of businesses, the Musharraf administration was far more democratic than the Ayub era.

“Back in the Musharraf days, if you were the CEO of even a mid-sized company, or a partner at a Big Four accounting firm, you could get an appointment with [then-Finance Minister] Shaukat Aziz in a matter of a week or two,” said one partner at a Big Four accounting firm who wished to remain anonymous. “And they would genuinely listen to what you had to say and at least tell you what they could or could not do for you.”

The laissez-faire ideology of Shaukat Aziz, the administration’s boss on all matters economic, meant that the government tried not to play favourites. And, somewhat shockingly, they largely succeeded. Virtually every major conglomerate expanded manifold during the nine years of the Musharraf administration, and the ones that crashed afterwards (the Dewans, the KASB Group, et al) were not because of government policy but rather more traditional reasons for business failure: over-borrowing, bad timing, and poorly executed strategy.

In short, in the Musharraf era, if you had a bit of money, you could get time with the person whose word counted the most when it came to economic policy matters: Aziz, who had solid support from President Musharraf, the person who ultimately called the shots. Aziz would listen to you. He would take you seriously. He would try to help to the extent possible. And if he could not, he would be honest enough to tell you why.

Needless to say, that party had to end in the opposite coming to power.

When President Asif Ali Zardari took over the reins he was referred to in most circles as “Mr 10%”, a title alleging that he would ask for 10% of your wealth to be left

“We raised an investment fund once, and got an actual call from a man whom we know for sure was acting at the behest of the party leadership because he said so quite plainly,” said an executive at a major financial institution in Pakistan who wished to remain anonymous. “And they actually wanted 10% [of our assets under management]. Their logic was ‘you were able to raise this fund because of the policies of this government. Please give us [an amount exactly equal to 10% of the fund’s assets].’”

The PPP government was, in a way, egalitarian about its harassment: everyone was fair game, unless they were friends with the decision makers in the party or unless they were somehow able to continue doing business with little need for help from the government.

It worked in different ways, but one of the most common methods was this: if you wanted the government to do you a favour, or stop harassing you, you would reach out to someone with access to the party leadrship to intercede on your behalf. The friend would arrange for a meeting, and ‘parenthetically’ mention a business opportunity of their own in which they wanted you to ‘invest’. You would never be asked for money personally in your meeting, rather the common acquaintance would almost always structure the transaction to make it look like a normal investment or asset sale. But if the deal went through successfully, so would your transaction or request with the government. And if you were lucky, maybe it was a price you were willing to pay, or an asset you were willing to lose.

You could ask the military for help, but they had other concerns: an actual war on the home front, and the bruising their reputation had taken politically under Musharraf. In rare cases, you might persuade some senior officer to put in a good word, and that might have been honoured, but the Army largely did not pretend like it had any sway over the government beyond its own policy priorities.

The third Nawaz Administration was, in many ways was a civilian replica of the Musharraf administration as far as relations with business were concerned, with two major exceptions. The first was that, unlike Musharraf, who largely drew economic policy from what business leaders wanted, the Nawaz administration came in with their own agenda (expand power generation) and so had more internal reasons to say yes or no. And the second was that the top man himself was the one in charge: Nawaz.

The textile lobby learned this the hard way when they first decided to approach Finance Minister Ishaq Dar for favours. Dar was dismissive of them. Then they discovered that, while Dar had the PM’s confidence in many respects, it was not absolute and that Nawaz was more than willing to overrule his finance minister.

During this era, almost nobody sought to persuade the military to lobby their case. Business leaders figured out quickly that Nawaz was the man in-charge and the only key decision-maker. And his relations with the military were famously frosty.

The chaos of the ‘hybrid regime’

This brings us to the Imran Khan Administration. Given the visible levels of amity between the Imran Khan administration and the senior military leadership, the business community initially assumed that the two were almost completely in harmony over all key policy matters, and certainly the ones that pertained to the economy. They also assumed a relatively pro-business attitude, given the rightward ideological tilt of the ruling Pakistan Tehreek-e-Insaf (PTI). And they assumed that Finance Minister Asad Umar would have the full confidence of the PM on all matters economic and would serve as the point-man on the economy.

All three assumptions turned out to be completely wrong.

The first to go was the assumption of a pro-business administration. That illusion was shattered when the government set NAB loose, almost indiscriminately, on just about any company that had done significant transactions with the government under the Nawaz administration.

These include – famously – the case of Engro Elengy, the subsidiary of Engro Corporation that set up Pakistan’s first liquefied natural gas (LNG) import terminal and had the temerity to enter into a sale agreement with the state-owned Sui Southern Gas Company. Its CEO Imranul Haq was thrown in jail by NAB, including 49 days of solitary confinement. And the company’s chairman and major shareholder Hussain Dawood is also named as a defendant in the NAB investigations.

There is also the case of KSB Pumps, the German engineering company whose Pakistani subsidiary supplied water pumps and filtration equipment to the Punjab government’s Saaf Paani projects during the tenure of former Chief Minister Shahbaz Sharif. The CEO of KSB Pumps Pakistan, Mohammad Masud Akhtar, was arrested by NAB and kept in confinement for over eight months.

And while the KSB Pumps case had begun before the PTI government came into office, NAB investigators and prosecutors appear to have significantly increased the zeal with which they were pursuing the case. Once they lost the case in the Lahore High Court in February 2019, they continued an appeals process, despite having completely failed to prove their case.

And, according to some executives who have experienced NAB interrogations, it appears that the strategy being deployed by NAB officers was not one of a diligent prosecution of white-collar crime based on evidence they have managed to collect. It was instead one based on harassment of individuals in the hopes that they will confess to somethinganything – that can be criminally prosecuted for.

“The NAB IOs [investigating officers] did not seem to understand how business works,” said one person who has been interrogated by NAB. “They are not willing to do the legwork. You see, prosecuting a white collar crime is hard work. You need to patiently build up a case over months before you confront people with evidence you have collected. And you need to understand what you are doing.”

Then came the shocking revelation of the ignorance of NAB investigators: “These IOs did not understand the difference between revenue and profit when calculating how much money we were making in our contracts with the government. They kept quoting the revenue number and calling it an inflated profit. They completely did not understand the concept of operating costs, let alone complex things like IRR [internal rate of return, a measure of profitability]. And even then, they had no way of benchmarking what constituted an abnormal rate of return and what was illegal about our contract.”

The strategy appeared to be to intimidate people who have never seen the inside of a jail cell and hope they confess to something. “Why are you putting people in jail who are cooperating? These are private sector employees who would be scared of fleeing. They show up whenever you call them. They cooperate, they provide whatever you ask of them. Why are you arresting them? Just because you aren’t willing to do the hard work and hope they confess?” said the executive who had been interrogated.

The result of all of this is that executives at practically every major energy company in Pakistan that did business with the government were, until just last week, spending a substantial portion of their day preparing responses to NAB queries rather than planning the future growth of their businesses and, by extension, the country’s energy supply. Even now, it is unclear just how real the relief announced by the government will be.

At first, it looked as though Finance Minister Asad Umar might be able to help. In meetings with executives, he was certainly understanding of their perspectives. But he never seemed to be able to do much, and was frequently contradicted in public by the prime minister. Then came his ouster in April 2019, and the illusion that he was the point man on the economy – already on the brink of collapse – was completely shattered.

Along with it went the notion that the civilian government was operating in collaboration with the military. Nobody – absolutely nobody – in Pakistan’s business community believes that Prime Minister Imran Khan would have chosen Abdul Hafeez Shaikh as his de facto finance minister. It is abundantly clear that he is in his office because of his cordial relations with the military.

Hafeez Shaikh’s appointment confirmed – at least apparently – what had already been a hypothesis swirling among Pakistan’s business leaders: that the way to get anything serious done was to bypass the civilians and speak to the military leadership directly. When it came to their money, then, business leaders began operating under the assumption that the ‘hybrid regime’ was really just a military government in a civilian dress.

Here is the problem with that hypothesis: it does not hold true. Several business leaders known to have very strong social ties with the military leadership – including Chief of Army Staff General Qamar Javed Bajwa – had appealed for his help in fending off the worst of NAB’s overzealous prosecutions, and had received assurances from him of support, and found those assurances to not have resulted in any slackening of the pressure from NAB for several months.

Take, for instance, the case of Engro. In December 2018, the company’s management helped conduct a tour of the Thar coalfields by Gen Bajwa, a tour that was publicly disclosed. Sources familiar with the matter tell Profit that Gen Bajwa assured the company’s leadership of support which, at least sources familiar with the management’s interpretation of events, took to mean that he would request the civilian government to get NAB to back off the aggressive inquiry into Engro’s energy projects, including the LNG terminal. Needless to say, that is not how things turned out because the most aggressive stage of the prosecution came after that visit to Thar by Gen Bajwa.

It is certainly possible that Gen Bajwa did not promise anything explicit to Engro. But there are others who had received far more public assurances from the chief and gotten quite the opposite in return.

Business leaders have been seeking Gen Bajwa’s help directly throughout all of 2019. The formal structure for this was created in July, when the army chief was named a member of the newly-created National Development Council, a body ostensibly put together to help coordinate the country’s civilian and military leadership’s efforts in stabilising the economy. This kind of direct, formal role for the army in economic decision-making during the tenure of a civilian government is highly unusual.

According to reporting by Faseeh Mangi at Bloomberg, at least three meetings with senior business leaders had taken place by October 2019. The last of these three meetings, which took place at a military building in Rawalpindi, was very well publicised and seen as publicly undermining Prime Minister Imran Khan, because it included members of his cabinet and administration appearing in public as supporting speakers, not to the PM, but to the army chief.

Initial reports even suggested some tension in the room, though those were quickly downplayed by some business leaders who participated, according to reporting by Khurram Husain at Dawn.

And while the subject of other economic reforms came up, a recurring theme in all of these meetings was NAB’s aggressive prosecution and the insistence of business leaders that the government fulfil its promise to repeal the 1999 National Accountability Bureau Ordinance, which gave NAB its draconian powers, which include almost indiscriminate authority to arrest anyone for up to 90 days.

While Gen Bajwa has been unwilling to commit to a full repeal of the law, he had committed – at least in private – to executives that the military would help intercede on their behalf to curb its excesses. At Gen Bajwa’s suggestion, the government created a committee comprising both government officials as well as private sector individuals to help create mechanisms that could curb those excesses.

However, that committee appears to be powerless, with sources telling Profit that some private sector members of that committee learning of their appointment via the news, and having yet to be informed of the parameters of their participation.

And far from going away, NAB’s prosecutions in the aftermath of the meetings only appeared to grow more aggressive over time, with several participants of those meetings with the military leadership continuing to face harassment from NAB even after meetings with Gen Bajwa, where, according to sources familiar with the meetings, they came away with the impression that the Army chief was sympathetic to their position would intervene to help them.

These businessmen include several of the largest real estate developers in the country (yes, we mean Malik Riaz of Bahria Town, but also others.) It is not clear if Gen Bajwa had the same recollection of these meetings.

Some movement, but will it be enough?

All of these developments came to a head on December 27, when the government announced that it had proposed some changes that would potentially restrict the jurisdiction of NAB in certain cases. NAB, for instance, would not be allowed to prosecute civil servants in cases where a departmental inquiry was already underway. And NAB’s jurisdiction over the private sector would be curtailed, with existing enforcement mechanisms available to the Federal Board of Revenue (FBR), the Securities and Exchanges Commission of Pakistan (SECP), as well as local Building Control Authorities (BCAs).

If the reforms succeed in reducing the scope of NAB’s activities, that may end up being enough to restore the economic elite’s confidence in the military’s ability to advocate on their behalf. However, this is not the first time the government has looked like it was beginning to take action to curb NAB’s powers before changing their minds again. If this ends up being more of the same, it will be back to square one all over again.

For now, though, Gen Bajwa can say that he delivered on his assurances to the country’s economic elite: he did not promise an end to NAB, and he did not give them that. But their impression that he would do something to curb NAB’s worst elements turned out to have been accurate, and he has delivered what they assumed he had promised them.

Democracy to the rescue?

Nonetheless, there remains a big question: is Gen Bajwa – or whoever eventually succeeds him as Army chief – really in charge of this government, or is he simply one among many parties that has influence over the government, but not a veto, and does not direct policy?

It also raises more uncomfortable questions: if the civilian prime minister and cabinet do not have final say in economic policy, and neither does the military – at least on some of the most pressing concerns – then who does?

None of the sources we spoke to had specific answers to that question, though everyone had a theory. The most common one is that, in the absence of a clear chain of command due to the hybrid nature of the administration, the civil servants at NAB had nobody to check their power. However, the flaw in that explanation is that while it explains how NAB got started on its prosecutions, it does not explain why nobody stopped them for so long.

Unfortunately, that is a question that is difficult to answer since the government’s statements on the matter did not appear to offer any clarity. The opposition Pakistan Muslim League Nawaz (PML-N) believed, however, that NAB’s excesses were no accident, and were being used by members of the ruling PTI as a means of score-settling against political rivals, and against businesses that had previously done transactions when the opposition was in office at the federal and provincial levels.

We do not mean to exaggerate the effects of what we are reporting here: the confidence of Pakistan’s economic elite in the Pakistan Army and its ability to manage the country effectively had been shaken, but not broken. And the events of last week, where the economic elite’s biggest demand appears to have been fulfilled, at least on the surface (though it is too early to definitively say), suggests that the confidence may well be restored.

The military remains hugely popular with the nation’s wealthiest business owners, but the hybrid regime’s recent failures in addressing some key concerns suggests that business leaders may have to rethink their views on whom they trust with the management of the economy.

Which brings us back to those Engro ads: is it possible that Pakistan’s economic elite will have to rely on public good will, manifested in democracy and the rule of law, as their best guarantor of protection? Who knows? But one can certainly hope.


  1. Your facts are valid but it’s a surprise that you could not give the conclusion to what’s really been happening in this Imran Khan’s government. Unlike what many people believe (that it is a puppet Govt and Army is directing each and everything that is happening in the country), this current government is the democracy we all were wishing for, where every stakeholder has SOME power, but noone has absolute power to do anything. Hence, we see the mess we have today.

    The most powerful among all stakeholders these days is the ‘Judiciary’. They are the ones that gained power in 2007 and their powers have been growing ever since. There is noone to question them. Forget about the lawyers raid on Hospital, there is noone to question the biggest crimes committed by their CJ Iftikhar Chaudhry including stoppage of Pak Steel Mills privatization. There is noone to do anything about any judge. One judge in lower court gives one decision, whatever he likes, the other judge in higher court reject it, only for Supreme court to decide totally against both. It’s just down to that individual judge to do whatever he can with no consequence. Anyone who dares to question them, is handed a notice of Contempt of court.

    The other party is, as always the military, which has some, although an important influence on everything. You can’t obviously go against them and expect no consequence in the longer term. Unless of course if you are a journalist because this current lot of media hungry establishment wants to project its image and is always there to please the famous anchors and journalists no matter how much you criticize the institution. Needless to say, the power of military is far less currently as it was in any period of time in Pakistan’s history.

    The democractically elected Govt of PTI is another stakeholder that has influence over many things. Yet, there is no democracy within the party, so basically whatever significant the Govt is doing, or trying to do, is stemming from Imran Khan’s vision. He doesn’t trust many people around him. Case in point Asad Umar. It’s another matter if some MNA or provincial KPK Govt minister is doing something on its own that is deemed unimportant by Imran Khan, that much is allowed. Also, since Khan is extremely satisfied with the economic team of Hafeez Sheikh, SBP governor and FBR Chief, they are also important players.

    Another powerful stakeholder is the media, which is shaping Govt policy too (yes it’s true), as Khan is closely watching the daily discussions on TV channels and devise the media strategy all the time.

    Parliament and Senate are there too, but they are just there with nothing much to their credit. However rest assured, you can’t get anything meaningful passed from them.

    So all in all, it’s total mess, with no central command. When you see all this, you realize how much better Musharraf’s central chain of command model was for Pakistan and its progress!

    • I forgot to mention two other stakeholders that are also largely unchecked: NAB and Bureaucracy. Unlike in past, they are doing whatever they can on their own capacity and noone to challenge them or force them to toe the line. It’s just a mockery of a government.

  2. Why is the IMF missing from this entire article? They are the ones that appointed Hafeez Sheikh, Reza Baqir and Shabbir Zaidi. They are the ones in charge of economic policy in Pakistan. Even the army bows to the almighty dollar now!

  3. This is the sort of analytical reporting we need. We may not agree on everything, but I truly admire the focus and depth you’ve accorded to the issue, as well your willingness to engage with and research unsavoury themes and the widespread subterfuge in the country, without which even the most beautifully written, empirically sound analysis of Pakistan is utterly pointless.

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