DOWNFALL OF PAKISTAN STEEL MILLS RELATED TO CORPORATE

GOVERNANCE
Pakistan Steel Mills is another model of how corruption and miss handling of vital national assets
were spoiled in recent times, with billions of Pakistan’s tax payers money was put into bonfire of
bailout packages. The latest example of misconduct in the country is miserable Petrol Crisis.
PSM was Pakistan’s biggest industrial production unit established back in 1985. The foundation
of these gigantic multi steel plants was laid at 40 Km southeast of Karachi on massive 18,200
acres. The land was proportionately divided for various activities, such as plants was developed
over 8,070 acres, 200 acres were assigned to setup water reservoir, which was the largest in Asia
and additional land was designated for storage of raw and various end products after
manufacturing.

Moreover, Pakistan Steel also employed considerable 28,000 people till 1991; the significant thing
is that steel mills required 14,000 only at the time. The production capacity was about 1.1 million
ton with the expansion scoop upto 3 million tons. The main dignitary behind PSM establishment
one was a Russian scientist known as Mikhail Koltokof, from native side involved skillful
and spirited Pakistani Professor Dr. Niaz Muhammad and Wahab Siddiqui.
Professor Dr. Niaz Muhammad was the main striving force behind execution of this dream, amid
at making Pakistan able to produce substantial amount of steel and iron products for coping up
with domestic needs and even producing surplus to export to other countries as well. Dr. Niaz
Muhammad was also the man behind training abundance employees of PSM including scientists
and engineers.

Golden Era:
Pakistan Steel Mills was a profitable well managed organization since its establishment, although
was bit overloaded with extra political recruitment of employees time to time. PSM even remained
a profitable unit in last Military ruler Pervaiz Musharraf’s regime mainly in years 2001 to 2008.

Collapse:
Nobody could imagine that this country’s largest industrial unit will ever become bankrupt and
won’t be able to even pay even its employees’ salaries. The worst time for PSM and its employees
started after PPP (Pakistan People’s Party) came into power in 2008. Although, Steel Mills was
starting deteriorating in Musharraf’s rule to be fair. Thus, because of overcrowding of useless
employees, incompetence of top management, week policies and most significant reason behind
PSM collapse was corruption of its top management and affiliated politicians and bureaucrats in
the past many years and affluently after 2008 till now.
Privatization Attempts:
As from the first day of PSM establishments, many international countries mainly big steel players
of the World began dubious activities against this vital national asset operation. Many local
organizations and rich people were also found guilty in its bankruptcy. In 2006 while Pervaiz
Musharraf was still in command of the country, when the privatization of the Pakistan Steel Mills
took place abruptly by passing many rules and regulations.

Saudi Arabia-based Al Tawairqi Group of companies, Russian based Magnitogorsk Iron and Steel
Works and local hefty Arif Habib Securities paid nominal amount of Rs 21.6 billion ($362
million), or Rs 16.8 per share mutually. This deal authorized these big firms to take control of
Pakistan’s largest steel manufacturing plant.

Criticism on Privatization and termination:

The analysis and apprehensions was stated surfacing as soon as this PSM privatization deal tool
placed in 2006. Later, it was considered as the one of the biggest con and ruining of countries
biggest industrial unit by experts. Furthermore, Transparency International report, employees,
print and electronic media and even civil society also raised their voice against this fraudulent
agreement.

Consequence, of this protest against PSM privatization was witnessed soon, when on June, 23 nine
member bench of Supreme Court Pakistan found serious irregularities in the process and ruled this
privatization decision illogical and moved this case to Council of Common Interests. So, that’s
how this privatization deal got terminated later, in the profound interest of the country?

Bailout Packages:
The toughest time for Govt initiated when the mentioned privatization deal got terminated by the
apex court. Last, PPP (Pakistan People’s Party) led Govt fueled PSM with Rs 40 billion bailout
package in its 5 years term to keep it functioning. And now PML-N pilot federal Govt also recently
assigned 18.5 billion bailout packages for Pakistan Steel Mills for financial year 2014-15.

This huge amount was mainly used for paying remaining salaries of PSM employees and starting
some sort of manufacturing through purchasing raw material for PSM few operational plants.
Moreover, present is Govt also making efforts for boosting production capacity of PSM gradually
in the coming few months by this financial aid.

Current Situation:
The good news has now starting going off from Pakistan Steel Mills according to latest reports,
the production capacity of PSM has touched 45 % out of total capacity at present. This drastic
improvement has been seen ever since Govt appointed Major General (Retd) Zaheer Ahmed Khan
as CEO, who is in charge of PSM since April 7, 2014. The notable thing is that national steel mill
was working at 1.4 % of its total production capability – at the time Major Gen Zaheer took over.

Moreover, the authorities are also claiming that this vital national asset will soon become profitable
again in April, 2015 eyeing the present enhancement in its production capacity. This proves that if
right people having the will to evolve any sector deployed on right positions, no one can stop
Pakistan to progress towards its due place on World’s map.
FAIR TRADE PRACTICES

Fair trade is an important movement, constantly developing and looking for new ways,
ideas, and models to come closer to sustainable world economy, community, stakeholders
and small producers to gain common benefits. It provides an important platform for the firms to
develop CSR and provides a convenient access of fair trade products to customers and generates
customer’s awareness. Fair trade permits a realistic set of improved trading conditions that allow
substantial volume to be traded against these improved conditions and it actually leads to an
increase in producer income. It develops code of conduct and standards that really come to the
reality of compliance, sustainable production and a better product with a better price. Fair trade
creates new ways in CSR to define better trading conditions that do not interfere with the market
and create a social framework which allow prices to tell the truth about social and environmental
production costs.

Fair Trade is taken to include the goals and challenges that are ambitious and straightforward.
According to Raynolds et al. (2007), fair trade has the following key goals:
Fair trade develops the security and sustenance of the producers by providing aassurance and
stability in trading association, good price, strengthening producerorganizations and market
access.
 Fair trade develops the security and sustenance of the producers by providing an assurance
and stability in trading association, good price, strengthening producer organizations and
market access.
 It is a trade which also promotes growth prospects for the women and deprived producers,
but on the other side, it defends child labor and promotes their rights.
 It is useful to situate a model of corporation in trade activities with the development
of discussion, precision and respect, because it protects human privileges and economic
security with the support of social fairness and sound environmental activities.
 Fair trade is a useful activity to create a trust between consumer and producer
internationally, and it brings new and fair ways of trade by creating the relationships
between consumers and producers.

WHAT IS UNFAIR TRADE PRACTICE?

Unfair trade practice refers to the use of various deceptive, fraudulent, or unethical methods to
obtain business. Unfair trade practices include misrepresentation, false advertising or
representation of a good or service, tied selling, false free prize or gift offers, deceptive pricing,
and noncompliance with manufacturing standards. Such acts are considered unlawful by statute
via Consumer Protection Law, which opens up recourse for consumers by way of compensatory
or punitive damages. An unfair trade practice is sometimes referred to as a “deceptive trade
practice” or an “unfair business practice.”
UNDERSTANDING UNFAIR PRACTICES

Unfair trade practices are commonly seen in the purchase of goods and services by consumers,
tenancy, insurance claims and settlements, and debt collection. Most states’ unfair trade practices
statutes were originally enacted between the 1960s and 1970s. Since then many states have adopted
these laws to prevent unfair trade practices. Consumers who have been victimized should examine
the unfair trade practice statute in their state to determine whether they have a cause of action.

UNFAIR PRACTICES

An act is unfair when it meets the following criteria:

 It causes or is likely to cause substantial injury to consumers.

 It cannot be reasonably avoided by consumers.
 It is not outweighed by countervailing benefits to consumers or to the competition.

DECEPTIVE PRACTICES

An act or practice is deceptive when it meets the following criteria:

 A representation, omission, or practice misleads or is likely to mislead the consumer.

 A consumer’s interpretation of the representation, omission, or practice is considered
reasonable under the circumstances.
 The misleading representation, omission, or practice is material.