After Bokhari’s departure, the board needed to appoint an acting MD until a permanent one could be found. The choice was obvious. There were three Deputy Managing Directors in the company. Any one of them could easily have been appointed. But Sikandar Raja decided instead to appoint Saeedullah Shah, a director on PPL’s board, as the acting MD.
Shah had spent his entire career in the Petroleum Ministry. During his time there he acquired a reputation for indecisiveness and extreme incompetence. Many in the industry accuse him single handedly for preventing the auction of new exploration blocks in Pakistan for several years. An act that seriously handicapped the search for new oil and gas reserves in the country.
Further, Shah had zero corporate and management experience. So, it was flabbergasting to all concerned why Sikandar wanted him as the acting MD. Yet he lobbied fiercely for Shah’s appointment by calling up several directors personally and asking them to support Shah. In the end most directors, despite knowing that Shah was unqualified, were unwilling to make an enemy of Sikandar. So, they gave in and made Shah the acting MD.
Shah remained as acting MD for six months from July to December 2018. His term at PPL was an absolute disaster for the company. The losses attributable directly to him by both his action and inaction are estimated to be in the range of $50 million of lost revenues. Morale at the company plummeted to new lows. Top technical talent, recruited from international oil and gas companies, with great difficulty by Wamiq Bokhari, headed for the exits. Talk to anyone at PPL and they will tell you that it was the worst period in the history of the company.
Sikandar Raja, in the meantime, was transferred to another post. The mess that he created while at PPL was left for others to clean up. But before he departed, he inflicted a cruel parting blow on the company. He appointed a junior Joint Secretary at the ministry named Sajid Qazi to the PPL board. Qazi, like his erstwhile boss, had zero corporate or oil and gas experience. He continues to be a disaster for PPL.
The PPL board, led by a spineless Chairman, Salman Akhtar, mistakenly accepted without question that Sajid Qazi is a ‘super shareholder’ of PPL and hence whatever he says must be followed. Qazi’s malign influence on the board has led to turmoil in the human resources department which seems to be the main focus of his interest.
He authored a fake and completely fictitious HR report. Based on this the highly professional head of HR, Aysha Chowdry, was replaced with one of his own completely incompetent favourites, a ranker named Afzal Siddiqui, who has no professional HR background. Further, Sajid Qazi, in cahoots with Ibne Hassan, orchestrated the removal of the head of internal audit Fazal Gaffoor, who is a scrupulous professional with a reputation for independence as required by the statutory nature of his position. This is something Qazi and Ibne Hassan were unwilling to countenance. Hence, he had to go
Sadly, Sikandar Raja’s successor as Secretary Petroleum, Asad Hayauddin, has remained a largely clueless and silent spectator to the havoc that his Joint Secretary Sajid Qazi is wreaking at PPL. Hayauddin is happy to attend board meetings and pick up his Rs 80,000 check per meeting. Normally he sits in his office at the ministry and joins the meeting by video link. During the meeting he is working on his own papers not really paying attention to what is happening. Frequently he gets called away to ‘a meeting with the cabinet’. But he still collects his full fee for the meeting. Recently, after it came to the public’s attention that he has appointed two of his cousins to the board of PPL, he has withdrawn from the board.
As for Saeedullah Shah – even his backers at the ministry finally realized the disaster that he was. Instead of being unceremoniously sacked, he was reappointed to the board of PPL. And in his place one of the DMD’s was made acting MD. Ironically, this is exactly what had been proposed to Sikandar Raja six months, and a loss of $50 million earlier, and which he so doggedly opposed.
This is the way that things stand today: There is still no permanent MD despite more than a year after Wamiq Bokhari left. Sajid Qazi – the Joint Secretary – is the defacto Chairman and MD of PPL. Foolish, one could argue criminal, decisions have been made in regard to cancellation of a critical gas processing project GPF-3 that will alone result in, wait for it… a colossal loss of $500 million. Not to mention years of expensive international litigation. Morale remains low. High quality professionals continue to leave. Drilling and exploration activity – the main business of PPL – has fallen sharply since Bokhari’s departure.
There are lessons to be learned from the tragedy of PPL’s fall from one of Pakistan’s best companies to a near basket case. Measures must be taken to prevent this from ever happening again at any public sector company.
From the above it is clear that the fiasco at PPL is the direct result of involvement of officials of the Ministry of Petroleum on the board. Hence these specific measures are needed to safeguard PPL from their malign influence: 1. The board must be completely independent of the Ministry of Petroleum. 2. Directors must be professionals with diverse corporate backgrounds. 3. At least one director, preferably the Chairman, must be a petroleum engineer with oil and gas experience. 4. No officials from the Ministry of Petroleum should be on the board. And in any case, the Ministry as regulator of PPL, due to an irreconcilable conflict of interest, by definition cannot have any of its people on the board.
Further, the Securities and Exchange Commission of Pakistan (SECP), the financial markets regulator and protector of shareholder rights, must take a more proactive stance in regard to assessing the performance of company boards. SECP has wide ranging statutory powers to take action against non performing boards. These include disqualifying directors, and, if needed, legal action against them to recover losses caused to the company. SECP has hesitated, in the past, to use these powers with public sector companies perhaps out of fear of offending powerful people. This must change.
It is true that the government has a majority share in PPL and the views of the majority shareholder should be taken into consideration by the board. But the way to do this is not by having a junior Joint Secretary, claiming to be a ‘super shareholder’, run roughshod on the board, which in effect renders the board nothing more than a rubber stamp for his whims and wishes, and violates all established rules and laws regarding corporate governance. Rather, government views must be conveyed in writing by the cabinet directly to the board. In other words, there must be no influence whatsoever of the ministry in running the company.
These are some simple prescriptions. But if applied they can vastly improve the governance and performance at PPL. In fact, the GOP would do well to apply these same principles at all public sector companies. That some of these companies are today on the verge of collapse can, in the end, be traced to the absence of these principles. Further, if corrective action is not taken urgently at PPL it will soon join the stable of failed public sector companies such as the Steel Mill and PIA.
Finally, there is a question that merits a serious answer: We know that officials who cause losses to the exchequer through corruption are pursued by NAB and FIA. In PPL’s case losses running into tens, or even hundreds of millions of dollars, verifiable by any independent audit firm, have been caused by Petroleum Ministry officials due to an extraordinary combination of ignorance, arrogance and stupidity.
Some of them, such as Sikandar Raja, have calmly moved on to other assignments in the government with no accountability for the immense damage they left in their wake. Some, such as Sajid Qazi, still continue to do damage. Should there not be a way to seek redress from them?