An Inquiry into the Reko Diq Mine Scandal

An Inquiry into theReko Diq Mine Scandal

Class – BS VII

An Inquiry into the Reko Diq Mine Scandal

SUBMITTED TO: Dr. Asim

COURSE TITLE: Business Ethics

Submitted by

Kamran Tahir (14) Bilal Jawaid (23)

Zeryab Naseer (49) Irfan-ul-Haq (11)

Syed Fahad Ahmed (41) Waseem Aslam (26)

Dated: May 1, 2013

Acknowledgement

All Praise, and Thanks to Allah!

We are very thankful to our teacher, Prof. Dr. Asim, who guided us for the preparation of this report. Sir, you have been very helpful and co-operative throughout. We thank you for being there for us always.

We are presenting to you our report on Reko Diq mine, covering the different aspects of the scandal. Extracting and summarizing the data and presenting the same in the prescribed report format was a real challenge, but with the help of Almighty Allah, we were able to overcome all hindrances that came our way throughout the course of preparation of this report.

Lastly, the materialization of this report would not have been possible without the commitment and hard-work undertaken by each group member.

Thank you very much, and we hope you enjoy reading this report as much as we have relished preparing it.

Kamran Tahir

Syed Fahad Ahmed

Zeryab Naseer

Irfan-ul-Haq

Muhammed Bilal Jawaid

Waseem Aslam

Table of Contents

I – EXECUTIVE SUMMARY....................................................................5

II – GENERAL INTRODUCTION.............................................................6

III – HISTORY AND GEO-POLITICAL IMPLICATIONS.........................7

IV – FINDINGS........................................................................................9

V – DISCUSSION..................................................................................14

A – SIGNIFICANCE OF THE DEPOSITS...........................................14B – TECHNICAL DETAILS..................................................................15C – POLITICAL GOVERNANCE.........................................................17D – JUDICIAL PROCEEDINGS..........................................................22E – ROLE OF MEDIA..........................................................................24F – CURRENT STATUS.....................................................................26G – INTERNATIONAL INFLUENCE...................................................27H – NEW DEVELOPMENTS...............................................................28

6 – RECOMMENDATIONS & CONCLUSION.......................................29

7 – REFERENCES................................................................................33

5

Executive Summary

I – EXECUTIVE SUMMARY

6

General Introduction

II – GENERAL INTRODUCTION

Reko Diq copper and gold deposits are located near the small town of Reko Diq, Chagai District in Baluchistan. The town is named after named after an ancient volcano however the literal meaning of the word is ‘sandy peak’ It is named so, because of the geographical landscape of the area.

The town recently gained popularity not because of its history or culture but because of the discovery of huge gold and copper deposits, which are among one of the biggest mines in the world to date.

Inspite of bringing fortunes to the region, these resources became a bone of contention because of malicious organizational practices and greedy commercial motives.

The trillion dollar resources were allegedly sold for peanuts by those having administrative authorities, which not only caught the eye of the media but also reeled in the apex supreme court to the case.

Though the case is certainly another reminder of corrupt and non-transparent political and administrative practices herein, however one can’t ignore the fact that this fiasco became one of the many controversies that have marred investment and shaken the belief of the corporate financier because of the added litigation cost they might incur as a result of investment in Pakistan.

The case study is an ideal example of unethical practices that affect the well-being of societal forces. Furthermore, the case study also enlightens about the significance of the proper set of laws and legislation that must act as a source of guidance to budding entrepreneurs and corporate world.

7

History and Geo-political Implications

III – HISTORY AND GEO-POLITICAL IMPLICATIONS

Reko Diq is a small town in Chagai District, Balochistan, Pakistan, in a desert area, 70 kilometers north-west of Naukundi, close to Pakistan's border with Iran and Afghanistan. The area is located in Tethyan belt that stretches all the way from Turkey and Iran into Pakistan. [1]

Reko Diq is a remote location in the North-West of Chagai district. Chagai is a sparsely populated western desert province of Balochistan. It is mostly low relief and thinly populated desert. The weather of Chagai ranges from very hot summers of 40-50°C to very cool winters of up to -10°C with less than 40 mm precipitation (winter rain and minor snow). It also exhibits periods of high wind and dust/sand storms which have a demobilizing impact on the local activities and trade. Access to the Chagai district is via the Zahidan - Quetta highway also known as the London Road.

The Reko Diq area is part of the Tethyan Magmatic Arc, extending through central and southeast Europe (Hungary, Romania, Bulgaria, Greece) Turkey, Iran and Pakistan through the Himalayan region into Myanmar, Malaysia, Indonesia and Papua New Guinea. It contains wealth of large copper-gold ore deposits of varying grades.

The eastern and central sections of the belt are well recognized hosting world class mineralization such as Grasberg, Batu Hijau in Indonesia, Ok Tedi in Papua New Guinea and Sar Cheshmeh in Iran. Whereas in the eastern Europe it host world class porphyry/epithermal cluster of Bor, Majdanpek in Serbia and more recent developments include Skouries and Olympias Greece, and Copler in Turkey.

Reko Diq area is one of many eroded remnant volcanic centers in the Chagai volcanic chain of mountains which runs in an east west line across Balochistan between the Quetta to Taftan railway and the border with Afghanistan. TCC has identified a large low grade copper-gold resource at Reko Diq.

Geo-political Implications:

The current short-sighted mineral mining policy is hindering the progress of the nation as well as the lesser urbanized province. The expected financial jackpot associated with the Chagai’s mines needs to be worked upon. In the current scenario while our own team of entrepreneurs and scientists are being gathered and resources are accumulated it won’t be wrong to let international mining giants enter the arena and do some ground work.

That said it needs to be seen that terms are favorable and just to us. It would be illogical to shut the access to overseas investment and transmission of machinery in the state by a just giving a simple ‘no’ to international excavators. Baluchistan administration’s comprehensive governing over the metallic mining business would be fruitful in the sense that till we ourselves are equipped the province can collect levies, chiefly

8

History and Geo-political Implications

corporate tax. This would all be possible only when a separate autonomous constitutional organization of specialists is established that would be able to assess and screen the mining processes at the location. [2]

American, Chinese, Australian, Chilean and Canadian companies have been in the duel for acquiring an excavation contract for the Reko Diq mine. The worldwide attention in Baluchistan’s massive mineral reserves has the potential to thrust the area into an age of copper driven political affairs.

9

Findings

IV – FINDINGS

According to the Tethyan Copper Company (TCC), a joint venture of Chilean Antofagsta group and the Canadian Barrick Gold Corporation; the Reko Diq project is estimated to produce 22 billion pounds of copper and 13 million ounces of gold over some 56 years.

The exploration license to the BHP (Broken Hills Proprietary), of the Chagai Hills dates back to 1993 when Pakistan was being run by a caretaker administration but according to Dr. Samar Mubarakmand (Member Science & Technology, Planning Commission of Pakistan) Geological Survey of Pakistan had discovered the Reko Diq reserves way back in 1978.

BHP then sold this exploration license to TCC in the floating market for millions of dollars, out of which Baluchistan did not even received a single penny. While Under the agreement called CHEJVA, the Chagai Hills Exploration Joint Venture Association, 75 per cent shares were given to TCC and 25 per cent to the Baluchistan Development Authority BDA.

This misdoing was first identified by one of the leading Pakistani media outlet, the News on November 3rd, 2010 which led to opening of the entire cause as the matter not only went to court but international arbitration was also involved in the settlement.

The News of November 3 reported that some 20 top corporate bosses and lobbyists of two of the world’s largest gold mining groups have been meeting President Asif Zardari, Prime Minister Yusuf Raza Gilani, Governor State Bank and others in Islamabad throughout last week, pressing them to quickly hand over one of the world’s biggest gold and copper treasures found in Balochistan at Reko Diq, worth over $260 billion, to their companies, and for peanuts.

A constitutional petition was filed on November 6th, 2010 in the Supreme Court, praying to direct the Federation not to sell the minerals of gold and copper worth of over $260 billion to the companies under negotiations arbitrarily and in unlawful manner.

Tariq Asad Advocate has filed the petition under Article 184(3) of the constitution, making the federal government through its federal secretary, Ministry of Petroleum and Natural Resources, chief secretary, Balochistan, Quetta, head of the Department of Mines and Mineral Development of Balochistan Steering Committee through its chairman, Ministry of Petroleum and Natural Resources, Board of Revenue of Balochistan through its chairman, former Board of Directors through its chairman Dr Samar Mubarakmand and The News Rawalpindi through its reporters, Shaheen Sehbai and Ahmad Noorani as respondents.

He prayed to the apex court to call the whole record of the deal/executory agreement, if any, with respect to the sale of gold and copper mines to the TCC or any other foreign companies, as well as Lease Deed, from the respondents, and direct the respondents no 1 to 5 to refrain from issuing the license of mining in an arbitrary and unlawful manner and without the consultation of the parliament and Government of Balochistan.

The petitioner questioned as to whether the selling of gold mines worth $260 billion (rather due to the rise of the prices of gold and copper, the total yield could be even $500

10

Findings

billion or may be a trillion dollars) to the foreign companies at a very low price, behind closed doors, secretly, is not fraud and criminal breach of trust.

He further questioned as to whether national wealth being disposed off by the respondents to the foreign companies against peanuts price is not high treason. [1]

The Tethyan Copper Company Pakistan (TCCP) issued a long clarification on November 23rd, on the eve of the Supreme Court hearing of the case, and strongly denied what it called allegations and misrepresentation of facts about the company and the Reko Diq.

November 24: In its clarification TCCP said: “A clear social, business and economic understanding needs to be developed around this very important public-private JV which is the first of its scale and sophistication in Pakistan’s mining history. It is therefore unfortunate that a project of great national importance is being sabotaged through gross misrepresentation of facts.

“Under the current circumstances when many other investors are leaving the country, it is a good sign for Pakistan that despite the problems it is facing on account of country perception and the low trend of FDI, two major mining companies are interested in making an investment in the country’s mining sector after having undertaken the full risk of mineral exploration.

“The district of Chagai where the project is being developed is one of the most backward and least-developed areas of Pakistan with very low human development indicators. It is in this context that a project like Reko Diq can really boost the economy and social uplift by employing and training local people, promoting local procurement, community investment programmes, and revenue generation for the provincial government through profits, taxes and royalties and transferring technology.

“The estimations of the mine-able quantity of resource for the Reko Diq project and calculations of projected prices of copper and gold have not been done by TCC but through one of the world’s top 3 engineering firms which prepared the feasibility study along with long term prices worked out by international analysts of copper and gold pricing. The bankable feasibility study was submitted to the government of Balochistan more than two months ago to be examined by themselves or by independent external experts on their behalf.

“The analyses being published in the press, without verifying the facts about TCC and the Reko Diq project, clearly indicate lack of understanding of the mining industry and also of the existing Balochistan Mineral Rules 2002 (BMR) and other applicable regulations.

“According to the extensive drilling and technical studies, Reko Diq is a large deposit in size but in terms of quality it is relatively low grade (percentage of copper & gold per ton) and furthermore it requires huge investments to build supporting infrastructure, which does not exist in the area. The mineral resource at Reko Diq is estimated at 5.9 billion tons. From this resource, an estimated 2.2 billion tons of economically mine-able ore, with an average copper grade of 0.5% and an average gold grade of 0.3 gms/ton will be processed to produce 2.2 billion pounds of copper (10 million tons) and 13 million ounces of gold in form of payable metal in about 56 years of mine life.

11

Findings

“The value of a mining project deposit is related to the value of the metal, which can be economically delivered to the marketplace on average long-term prices and not on spot prices. The value or worth of this project is grossly overstated in the recent press stories which do not consider that the valuation of a mineral resource involves understanding of several factors such as investment costs, financial costs, operating costs and risk. The Reko Diq project being the first of its kind in Pakistan has to bear the costs of development of a huge infrastructure, which does not exist in this region.

“As per the feasibility study submitted to the government of Balochistan, more than 50% of the distributable cash flow over the life of mine will go to the federal and the provincial governments by way of profits, royalties and taxes. These figures are based on the feasibility study estimates based on long-term price projections and are subject to changes in prevailing copper and gold prices. If prices go up, or technology enables more extraction, both parties as partners will share benefits proportionately.

“Considering the worldwide standard practices in the mining industry, it is also pertinent to point out that it is very unusual for the host country to have a share in profits since the mining business is not an affair of the state. Balochistan Mineral Rules 2002 also stipulate exclusive rights of exploration to the investor with mining lease entitlement upon discovery of a viable resource. Governments secure their interests through royalties and taxes. It is very rare to find any example around the world where the host government has been given 25% share without bearing the risks and cost of the exploration and feasibility study expenses.

“By any standard this deal, where 50% of the distributable cash flow over the mine life will go to the federal and the provincial governments by way of profits, royalties and taxes, is an exceptionally good deal. “It is important to point out that Chagai Hills Exploration Joint Venture Agreement (CHEJVA) under which TCC is developing the Reko Diq project was signed in 1993. At that time no ore deposit had been identified at Reko Diq. CHEJVA has proven to be a long standing agreement respected by both parties including all the governments since then as it relieves the government of any costs associated with the risk of exploration.

“TCC has always remained committed to transparency and categorically denies making any illegitimate payments to anyone either in Pakistan or abroad. TCC being a joint venture of companies of international repute cannot risk indulging in any unlawful activities and at no stage any demands for unlawful payments have been placed upon the company. Moreover, TCC has been compliant of all the existing rules regulations of the country including the BMR 2002 and as a partner of government of Balochistan under the CHEJVA. Additionally, the acquisition of the TCC shares by the current owners, Antofagasta plc and Barrick Gold Corporation in 2006 was in full compliance with existing laws and regulations, which has been validated by the Balochistan High Court in its 2007 ruling.

“TCC as a partner of government of Balochistan shares all the information, both technical and financial, on a regular basis through an operating committee formulated under CHEJVA. In addition, a quarterly report on all aspects of project development including details of every single drill hole and chemical assays is submitted regularly.

“The Reko Diq project has tremendous potential to contribute in the uplift of Baluchistan’s economy in specific and the national economy in general and TCC

12

Findings

remains committed to developing this project in the interest of all stakeholders,” it concluded. [2]

The Supreme Court on 23rd November, 2010 on the first hearing of the case, declined to grant stay order on awarding of contract for exploration of Reko Diq mines in Balochistan and put off hearing till December 15.

On December 15 The Supreme Court (SC) called Dr Samar Mubarakmand, Science & Technology member of the Planning Commission, to assist the court in a case relating to natural resources in Balochistan area of Reko Diq.

After numerous hearings the TCC got the impression that the Supreme Court of Pakistan-s ruling will come against it therefore, they started to seek other options of settlement. This led to their pursuance of the Reko Diq case in the International Chamber of Commerce (ICC) and the International Centre for Settlement of Investment Disputes (ICSID). As TCC on on Tuesday filed a case against Pakistan in an international court of arbitration “to protect its rights”.

As Samia Ali Shah, Manager, Corp Communications for TCC in a written reply to The News confirmed that TCC filed for international arbitration on Tuesday. “We firmly believe that our feasibility study and MLA submission are in accordance with the Balochistan Mineral Rules 2002, and that there should be no regulatory or legal obstacle to the granting of the MLA. We have to initiate arbitral proceedings in order to protect our legal rights, but we remain open to meeting with the Government of Balochistan and its regulatory body to work towards an amicable, negotiated resolution to the dispute,” she stated. [3]

“We are disappointed we have not yet been given the opportunity to resolve this by negotiation,” said Tethyan Chief Executive Tim Livesey in a brief statement to Reuters.

But again this effort of TCC also proved to be futile as on December 13 the verdict of ICSID came which was in favor of the Government of Baluchistan and Dr. Samar Mubarakmand.

After the verdict of the International Arbitration the verdict of the apex court also came which too was in favor of the Government of Baluchistan. On January 7 th, 2013 The Supreme Court declared the Reko Diq mining lease case (Chaghai Hills Exploration Joint Venture Agreement) illegal, saying its execution was contrary to the provisions of various laws of the land.

A three-member bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, in its 16-page short order, declared this in response to identical petitions filed against leasing out the gold and copper mines, including the world’s biggest gold mine worth over $260 billion situated at Reko Diq, in Balochistan, to foreign companies by the federal government. Earlier, on December 21, 2012, the court had reserved its judgment after completion of arguments of all the petitioners and respondents.

“The CHEJVA dated July 23, 1993 is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970 framed there under, the Contract Act, 1872, the Transfer of Property Act, 1882, etc., and is even otherwise not valid, therefore, the same is declared to be illegal, void and non est,” the court ruled.

13

Findings

The court maintained that the ‘Novation Agreement’ for the Reko Diq mining lease was purportedly made for the purpose of substituting CHEJVA, adding that the Government of Balochistan was also made party to the joint venture. The court ruled that it was not permissible under the Balochistan Mining Rules (BMR) 2002 as well as the Rules of Business of the government of Balochistan (GOB), particularly Rule 7 and other rules.

“The Government of Balochistan in purported exercise of the powers vested in it under the BMR 2002, granted relaxations in violation of Rule 98 ibid as no reason was assigned for the relaxation of the relevant rules”, says the court order.

Declaring all the amendments in the CHEJVA illegal, the court held, “The Addendum No1 dated March 04, 2000, Option Agreement dated April 28. 2000, Alliance Agreement dated April 03, 2002 and Novation Agreement dated April 01, 2006, which are based upon, and emanate from, CHEJVA are also held to be illegal and void.”

The court further noted that all the agreements in result of the addendum in the instant matter do not confer any right on BHP, MINCOR, TCC, TCCP, Antofagasta or Barrick Gold. [4]

The verdict on The Reko Diq case is being appreciated and celebrated by the Leaders of mainstream nationalist parties in Balochistan as they previously opposed any hasty deal on the multi-billion-dollar Reko Diq gold and copper deposits and charged the present ruling set-up in the province was not a true representative of the Baloch.

These nationalists charged that both the incumbent Raisani-led government and the Balochistan Assembly on the whole were not genuine representatives of the people of the province, alleging certain legislators had made their way to the legislature just because of their pro-Musharraf background.

They proposed a halt to the Reko Diq-related process until a new assembly consisting of genuine public representatives was elected. [5]

The entire fiasco was an eye-opener for Pakistan as how its national resources can be exploited by wise-yet-malicious business practices, to overrule these acts our country needs to strengthen its lwas and legislation that not only empower the nation economically but also provide a route to follow for progress.

Dr. Viqar Hussain a geology professor at Karachi University said that there is no mineral policy in the country; the issues of exploitation of the mineral resources of country will keep haunting the country until and unless a proper policy is formulated.

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Discussion: Significance of the Deposits

V – DISCUSSION

A – SIGNIFICANCE OF THE DEPOSITSThe area is said to hold US$260 billion worth of proven copper and gold reserves, which according to one estimate are also the 5th largest copper reserves in the world. [6] Reko-Diq gold and copper mining project is considered to be a big national strategic asset that would transform Baluchistan as the richest province in the country. According to experts involved in mining and exploration, some 12.3 million tons of copper and 20.9 million ounces of gold lie in the Reko Diq area (EL-5) in the Chagai area of Pakistan’s southwest Baluchistan province – bigger than those evaluated at Sarcheshmeh in Iran and Escondido in Chile. [7]

The Reko Diq project will definitely change the lifestyle of the people of Chaghai district where it is located and have a significant impact on the economy of Baluchistan. The amount of direct and indirect employment during the mine development phase and then during the commercial operations phase will mean that each of the families scattered over hundreds of kilometers around the project shall have a direct interest or a business transaction with this project. Just to share a few impressive facts: approximately 11,500 construction jobs are expected to be created at the peak of the project construction. During the operations period, 2,500 full-time, permanent job opportunities will be created. The selection and hiring of 2,500 permanent workers will trigger a large-scale training program. The program will take several years to produce highly specialized workers. These will include technicians, supervisors, managers and executives. Eventually this is going to be a 98% locally staffed company and special emphasis will be placed on engaging the local communities, especially the youth. The project will be the first mover of modern mining in Baluchistan and would showcase Baluchistan as a good investment venue on the world map. Socio-economic development can come in many ways: employment, an improvement in the standard of life, permanent high-skill workplaces for generations, vested interests for local households in a large radius around the project, educational facilities. All these benefits shall bring change for the better not only in the lives of the surrounding communities but also generally for the people of Baluchistan. The Reko Diq Project will also be an example for other local or international companies. Reko Diq represents only a very little spot of the vast Chaghai province where the Tethyan Copper belt passes through. Once this project starts to take off, other potential investors will feel more confident in huge investment projects within the mining industry and the related industries. [8]

In Baluchistan, mining could well be the engine of economic growth for the whole province with a significant spill-over effect into the rest of Pakistan. This could well be a large mining cluster as exists in Canada, Australia, South Africa and Chile. All these thriving mining economies ensured that the state institutions facilitated potential investors; their laws were transparent and the regulatory framework enabled commercial activity ensuring progress and development. In the long-term, Baluchistan could very well find a world-class mining sector to be the backbone of its economy.

15

Discussion: Technical Details

B – TECHNICAL DETAILSThe deposit at Reko Diq is large low grade copper porphyry, with total mineral resources of 5.9 billion tons of ore with an average copper grade of 0.41% and gold grade of 0.22 g/ton. From this, the economically mineable portion of the deposit has been calculated at 2.2 billion tons, with an average copper grade of 0.53% and gold grade of 0.30 g/ton, with an annual production estimated at 200,000 tons of copper and 250,000 ounces of gold contained in 600,000 tons of concentrate. [9]

An estimated production of 200,000 tons copper and 250,000 ounces of gold is expected through annual processing of 600,000 tons of copper concentrate.

Total mineral resources at Reko Diq are estimated at 5.9 billion tons. The breakdown of this resource includes:

Measured Resource: 1.7 billion tons

Indicated Resource: 1.3 billion tons

Inferred Resource: 2.9 billion tons

As previously explained, only a portion of Measured + Indicated resources could potentially become reserves, accomplishing all the requirements from international standards. In Reko Diq, the economically mineable resources have been estimated by the Feasibility Study at 2.2 billion tons. [10]

The total expected investment is about $3.3 billion that will be spent on developing the supporting infrastructure to make the mine operational. An expenditure of $300 to $400 million annually on procurement of goods and services of which 45-50% will be spent locally is also expected. [10]

The Reko Diq mine will employ state-of-the-art mining equipment, support systems and maintenance practices. To operate this project latest technological innovation will be introduced, putting the Reko Diq project at the cutting edge of technology. This will include 360 tons haul truck equipped with computer controlled engine management systems, and the Reko Diq process plant will be one of the only few hard-rock mines in the world to apply High Pressure Grinding Rolls (HPGR) between crushing and milling. Use of latest technology is critical to create efficiencies in the processes to make Reko Diq a long term economically viable project. [10]

Power Plant

From mining to the processing of the ore requires considerable amount of electricity. Since there is no power supply in the area, the project will have its own power supply. A 189 MW power plant is planned to be built at the site to provide uninterrupted supply of electricity for the project, ancillaries and the residential colony. Heavy furnace oil based combined cycle reciprocating engines will be to be installed to provide 99.5% availability.

Pipeline

16

Discussion: Technical Details

The concentrate produced at the processing plant will be further fluidized into a 53-57% slurry and transported to the Gwadar port via a pipeline. The main features of the pipeline are:

Underground pipeline 682 km from Reko Diq connecting to Gwadar port.

Leak detection equipment will be installed and the pipeline will be encased in concrete at river crossing.

Three booster stations will be established along the route.

Port

A number of facilities will be built at Gwadar port in order to handle the concentrate for its final shipment for export. These include:

De-watering facilities and pressure filters; wherein concentrate is removed from the slurry.

Warehouse consisting of a covered shed which will store the dried concentrate.

Conveyor belt arrangement to transport the concentrate from storage yard to the shipping berth.

Ship-loader to load the ship with the concentrate cargo.

Project Village

Due to long life of Reko Diq Project, TCC will build a permanent village to provide lodging at the camp site for Reko Diq workers. Design of the proposed village takes into consideration the local social and cultural milieu. This village will accommodate up to 10,000 persons during construction phase and up to 3,000 for operations phase.

Local materials and labour will be used for the construction of this village at a sheltered location, 10 km from mine site to reduce wind, dust and noise.

The facilities include: [8]

Education and sports facilities

Mosque

Clinic and library

Public square

Semi private courtyards for afterhours socializing

Dining halls and retail outlets

Bus shelters

17

Discussion: Political Governance

C – POLITICAL GOVERNANCEThe Reko Diq episode is another grim inkling of the widespread corruption in the political and bureaucratic administrations in Pakistan. The administrative set-up has always presumed itself to be above law and justice, and as such, its demeanor in matters of public importance has been substandard at best.

If the matter is studied prudently, some very thought-provoking observations come fore. The Chagai Hills Exploration Joint Venture Agreement (CHEJVA), signed between the Baluchistan Development Authority (BDA) and BHP Minerals International Exploration Inc, was fully endorsed by the federal government at the uppermost levels. The then-interim Prime Minister of Pakistan, Moeenuddin Ahmad Qureshi, a former civil servant, who was running a caretaker administration setup had the sole responsibility of conducting general elections of 1993. [1] Yet, within few days of his assuming the office of the Prime Minister on 18 July 1993, the CHEJVA was inked on 29 July 1993 under his instructions. As observed by the Supreme Court of Pakistan, the agreement granted major concessions to the foreign party and Pakistan’s local mining and others laws were relaxed. This impudent feat was done by a man who was under the employment of the World Bank until 1992, and before assuming the charge to lead Pakistan to elections, he had acquired permanent residence status in the United States and later founded Emerging Markets Partners (EMP Global, as of now), a private equity firm focusing on emerging markets investment.

In sheer violation of authority and chain of command, the then-Secretary Industries and Commerce (Baluchistan), allowed the BDA in 1994, to relieve BHP from a number of rules from Baluchistan Mineral Concession Rules, 1970 (BMCR 1970), in force at that time. [2] Although, if civil service rules are to be followed, for a secretary to approve or order a major non-routine action, it is absolutely necessary to have the provincial government move an associated summary in the first place. It is reasonably discernible from this action that civil servants may not mind twisting rules occasionally to favor their favorites, nonetheless, in this particular case, it is likely that the then provincial administration was on-board with these dealings, since the matter in enquiry is material and graft, engulfing all levels of governance, can’t be ruled out.

Factually, this is extremely infrequent for a government to grant stupendous slackening of procedures in mining, but the matter went un-noticed from public eyes as all the deals were signed behind closed-doors. Recently, the Attorney General of Baluchistan, Amanullah Kanrani, divulged in a court room that the then Governor of Baluchistan, Gul Mohammad Khan Jogezai, had been in loop and sanctioned the Reko Diq project, without obtaining prior consent of the cabinet. [3] Most evident is the fact that the Governor himself had taken oath of the office a little over a week ago, at the time of signing of the agreement, and this leads us to believe that appointments of such people to high-ranking, executive-posts, could be part of a grander plan to have a pliable government in place, which would support all un-lawful actions without instigating uproar.

18


One may call it luck, however, that due to these un-lawful actions on the part of government officials, the Baluchistan government was absolved of any responsibility towards the foreign mining companies, since it was never party to the agreement, which allowed mining firms to expand mining area and alter the original joint venture agreement materially. [4]

Pakistan’s anti-corruption measures writhe from deficiency of noteworthy powers to confront the crimes and malpractices in bureaucracy effectively. All suceeding governments in Pakistan have focused on the need to eliminate the menace of corruption from their ranks, but always pursued a one-sided accountability policy to uncover previous governments’ wrongdoings, to castigate their adversaries, and all the while existing officials have enjoyed the perks of their hard-earned “black-money”. This practice has led to a culture of political oppression, where those in power consider it their right to loot the national exchequer, at the same time prosecuting the office-bearers of the previous government for the same offences. [5] Although, few governments, both a federal and provincial level, have enacted relevant legislations to counter corruption and established quite a number of anti-corruption bureaus and establishments, yet a critical evaluation of these organizations lead us to believe that the same have been nothing more than tooth-less tigers, whose only purpose was to terrify opponents than accomplish public welfare.

Pakistan has had its fair share of play with accountability and anti-corruption efforts. For instance, the first Ehtesab law was promulgated in 1996 by then-President of Pakistan, Farooq Leghari [6], less than two weeks after deposing Prime Minister Benazir Bhutto. The President was made all-powerful under the ordinance, as he/she was to nominate the Chief Ehtesab Commissioner, after nominal consultations with the Prime Minister, the Leader of Opposition, and the Chief Justice of the Supreme Court of Pakistan. However, the President was not constrained to incorporate their suggestions and reservations in the final decision and in a major display of partiality, the members of armed forces of Pakistan and judiciary were exempted from the provisions of the said Ordinance. There can be no accountability when holders of public offices are differentiated by virtue of their positions, and elected representatives are singled out for punishment. This double-standard in application, fatefully, served as a fodder for incoming leadership to loot all they could, while in power. After the general elections, the subsequent federal government repealed the 1996 ordinance and passed, after seeking approval from the President, the Ehtesab Act, 1997 (ACT NO IX OF 1997) in the Parliament in mid-1997. The legislation gave birth to the Ehtesab Bureau (Accountability Bureau), whose mission was to “eradicate corruption and corrupt practices from public offices”. [7] The newly enacted Act contrasted from the Ehtesab Ordinance of 1996, amongst other matter, in that the accountability was to start for government from 6 th

August, 1990 onwards. Analysts and political experts have been unanimous that this was done so to protect the then-Prime Minister, Nawaz Sharif, from conviction for his alleged embezzlement during late 1980s, while he was the Chief Minister of Punjab. [8] Despite the inevitability and promise of keeping the newly-formed accountability bureau neutral

19


and apolitical, eventually the bureau became another tool of the government to harass political opponents. The legislation was quite delicate originally, however, it was further amended by a Presidential ordinance in 1998, after which, sweeping powers were conferred upon the Prime Minister through his nominated-Chief Ehtesab Commissioner. [9] Moreover, the ordinance stood repealed on 3rd June, 1998 [10], as it was not passed by the Parliament for reasons, comprehension of which are beyond the scope of this report.

The other legal framework for addressing corruption includes the Pakistan Penal Code of 1960 (PPC) [11], the Prevention of Corruption Act of 1947 (PCA) [12] and the National Accountability Ordinance of 1999 (NAO) [13]. The PCA proscribes both active and passive bribery, while the NAO outlines the authority of the NAB. The ordinance was re-promulgated in September 2000 with some modifications. The NAO has been condemned for excluding important categories of officials, including the judiciary and active personnel of the armed forces.

However, the anti-corruption framework of the country was perceived to be in a state of disorder following the issue of the National Reconciliation Ordinance (NRO) by President General Musharraf in October 2007, which circumscribes the NAO (however, late in 2009, the Supreme Court of Pakistan declared NRO null and void) [14]. In terms of international norms, Pakistan has endorsed the ADB-OECD Anti-Corruption Action Planning 2001, ratified the UN Convention against Corruption (UNCAC) in 2007 and signed, but not yet ratified the UN Convention against Transnational Organized Crime.

On the other side, public officials in Pakistan, both elected and bureaucratic, enjoy colossal, unchecked powers, which are not had by their counterparts in other civilized, democratic countries. For instance, high-ranking officials are empowered to make appointments to important positions, such as Secretary of any department, without seeking consent of legislature. This tainted procedure authorizes the officials to appoint or promote their close acquaintances and merit is disbanded, due to lack of transparency in system. The political interference has increased to an extent that the political leaders have come to regard the bureaucrats as their personal employees. If bureaucrats attempt to affirm their independence, they are rebuked, transferred and made Officers on Special Duty (OSD) which connotes that they are without any appointment. In addition, there have been “arbitrary dismissals, appointments and transfers” as well as lateral induction and destruction of service guarantees, which have “reduced the higher bureaucracy to a quasi-mediaeval instrument. [15]

At-least, on paper, Pakistan has a number of departments, with exclusive jurisdiction in certain realms, but the power conferred upon the same and the procedures adopted for inductions into these departments, renders their credibility highly susceptible and their performance dismissal. Constitution of Pakistan [16] mandates the creation of special administrative bodies known as service tribunals to exercise exclusive jurisdiction over issues relating to the terms and conditions of service of civil servants, including disciplinary matters. Thus, the Federal Services Tribunal, consisting of a chairman and

20


no fewer than three members, hears appeals made by a civil servant against any order by a departmental authority regarding his or her terms and conditions of service. Upon such an appeal, the tribunal may confirm, set aside or modify the order. Each of the four provinces has a similarly constituted provincial services tribunal, with equivalent functions. Since, top appointments are made at the federal level by the President [17] (Provincial Governors enjoy same powers for appointing provincial chiefs) by bypassing an elected legislature, disbanding of merit and political inclinations can’t be ruled out.

Another important regulatory body is the office of the Wafaqi Mohtasib, or federal ombudsman, authorized under the Wafaqi Mohtasib (Ombudsman) Order 1983 (which is now a part of the Constitution of Pakistan by virtue of Article 270-A) to “diagnose, investigate, redress and rectify” [18] any in-justice done to any person through “maladministration” by any governmental agency. Thus, while the Federal Services Tribunal adjudicates cases of alleged injustice by departmental authorities against civil servants, the office of the federal ombudsman investigates complaints by citizens against governmental agencies. The federal ombudsman may summon officials, compel them to produce documents, receive evidence on affidavits and recommend the concerned agency to initiate disciplinary proceedings against an official found guilty of maladministration. However, in a mockery of justice and unreasonably, these recommendations are non-binding, which makes all expenditure incurred on this office as pure wastage of taxpayers’ money. Each of the four provinces also has a provincial ombudsman to hear complaints against provincial governmental agencies.

The simple causes of flourishing corruption in Pakistan are (a) inept and crooked leadership (b) flagging of state institutions (i.e., legislature, executive, judiciary, and bureaucracy), (c) political instability, (d) political intrusion and abuse of power, (e) frail and incompetent governments, lack of transparency, and (f) disregard of the rule of law.[19] Unfortunately, successive governments have only kept themselves to chanting slogans against mal-administration, yet no single effort has been made address these issues.

In view of the problems discussed earlier, it is no wonder that Pakistan has had a consistently poor ranking at the Transparency International’s Corruption Perception Index, which ranks countries by prevalence of corruption in government and corporate sector. Higher rank denotes widespread corruption. Pakistan ranked 139 in 2012 [20], 134 in 2011 [21] and 143 in 2010. [22]

Importantly, even after having expended hefty amount of time and energy to lawmaking, jurisdiction of federal and provincial governments has not been properly established as yet. Obviously, federal government wants itself to execute the Reko Diq project, as that will bestow upon it greater negotiating powers to increase its expected gains. Interference from the federal government reached to the point where the Baluchistan government had to ask the federal government to stop meddling in the provincial affairs of Baluchistan. [23]

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Although, having a proper oversight over all functions of government aids in smooth administration, yet in Pakistan, as in all major scandals, we find complicity from the highest level of powers down to the executors. This does not, in anyway, means that Pakistan would always be subject to corruption and mismanagement, incurring huge losses upon national exchequer. Sad, but truly, all man-made structures, including rules and systems, can be tampered with by fellow men, and best of lawyer may always come up with loopholes in laws, for the benefit of their clients. However, this does not eliminate the need to have checks and balances in governance, as many other countries, such as the United States, Canada, etc., are rich in natural resources, yet multinational businesses find it a daunting task to subvert local laws, because power to rule and authority to approve actions, whether lawful or un-lawful, are not vested in one single position, rather those have been distributed amongst different personnel, each having distinct responsibility. Moreover, even if a state gets a corrupt Governor who wants to accomplish an agenda, bypassing relevant regulations, a civil service officer may not follow his instructions, since the power to terminate his employment rests not only with the Governor, but a Council too, and a public hearing is called upon for such cases, right under the scrutiny of independent media and judiciary. [24] Such systems may not cease corrupt practices for good, yet these have the potential to make it so hard for a wrongdoer to go undetected and unpunished that he/she may have think twice before he embarks upon such an adventure.

Unfortunately, here in Pakistan, powers have been concentrated upon a few offices, with a sluggish system of checks and balances. Due to these deficiencies and short-comings in the administrative organization of Pakistan, individuals, in positions of power, are tempted to take actions in violation of law for their own personal benefits. Until resolution of these issues is carried out through honest efforts, the country will continue to be plagued by corruption and nepotism.

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Discussion: Judicial Proceedings

D – JUDICIAL PROCEEDINGSThe Supreme Court announced its reserved judgment in Reko Diq mining lease case declaring Chaghai Hills Exploration Joint Venture Agreement (CHEJVA) illegal as its execution was found to be contrary to several laws of the land. The apex court had reserved its judgment after completion of arguments of counsel for all the petitioners and respondents on December 21 last year.

A three-judge bench of Chief Justice Iftikhar Muhammad Chaudhry announced a 16-page short order in response to identical petitions filed against gold and copper mining lease in Reko Diq to a foreign company in Chaghai district of Balochistan which stands null and void after court's short order.

Announcing short order, the Chief Justice Iftikhar Muhammad Chaudhry ruled, "The CHEJVA dated 23.07.1993 is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970 framed there under, the Contract Act, 1872, the Transfer of Property Act, 1882, etc, and is even otherwise not valid, therefore, the same is declared to be illegal, void and non est".

The order maintained that the 'Novation Agreement' for the Reko Diq mining lease was purportedly made for the purpose of substituting CHEJVA, adding that the Government of Balochistan was also made a party to the Joint Venture. The order further ruled that the agreement was not permissible under Balochistan Mining Rules (BMR) 2002 as well as the Rules of Business of the Government of Balochistan (GoB), particularly Rule 7 and other rules.

"The GOB, in purported exercise of the powers vested in it under the BMR 2002, granted relaxations in violation of Rule 98 ibid as no reason was assigned for the relaxation of the relevant Rules," the order said. Declaring all the amendments in the CHEJVA illegal the order held, "The Addendum No 1 dated 04.03.2000, Option Agreement dated 28.04.2000, Alliance Agreement dated 03.04.2002 and Novation Agreement dated 01.04.2006, which are based upon, and emanate from, CHEJVA are also held to be illegal and void".

It also noted that all the agreements in result of the addendum in the instant matter do not confer any right on BHP, MINCOR, TCC, TCCP, Antofagasta or Barrick Gold. The order further held, "EL-5 is tantamount to exploration contrary to rules and regulations as the claim of TCCP is based on CHEJVA, which document itself has been held to be non est. Therefore, before exploration it was incumbent upon it to have sought rectification of its legal status".

Parallel arbitration lodged by the Tethyan Copper Company with the International Chamber of Commerce International Court of Arbitration (ICC ICA), the tribunal has denied TCC any relief under its interim measures application and supported the arguments of the government of Balochistan, said an official press release.

23

Discussion: Judicial Proceedings

It said that the case before the ICC ICA was lodged in late 2011 and over the course of the year the government of Balochistan had vehemently contested the same. In an obvious attempt to put pressure on the government not only did the TCC make two requests for arbitration one before the ICC ICA against Balochistan and another before the International Centre for the Settlement of Investment Disputes against Pakistan but had also made two similar requests for interim relief.

Instead of capitulating to the pressure, the government of Balochistan and the federal government contested the arbitrations and the interim relief applications and have now won the interim relief application in the ICC ICA.

It further said that through the interim measures application TCC wanted Balochistan to stop its plans for working on the H4 deposit in Reko Diq in the interest of Balochistan and Pakistan, claiming that Balochistan would damage the area and that TCC would suffer irreparable harm.

The legal team of Balochistan was successful in proving to the tribunal that TCC would not suffer any irreparable harm if Balochistan were allowed to continue with its plans. In fact, it has now been established that Balochistan is working on the site for the benefit of the Baloch people and Pakistan in general.

It is also established that Balochistan would suffer more loss than TCC if it were ordered to stop its plans.

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Discussion: Role of Media

E – ROLE OF MEDIA‘The News’ and ‘Jang’ reported the Reko Diq scandal in complete detail in the first place after which the petition was filed by Advocate Tariq Asad about how a huge Pakistani resource was being sold for a literal song in mysterious circumstances. The management of the TCC was spreading the words that more than 11,000 jobs that included more than 6,500 direct and around 2,500 in-direct jobs will be offered to the local people of Balochistan through the local newspapers of the province. [35]

However, 8 days prior to the hearing of the case in the Supreme Court, the Tethyan copper Company made extensive use of the local print media flooding the advertisements justifying its mining business in Chagai to influence the ongoing Supreme Court proceedings and misleading the people of Balochistan.

Furthermore, it was also being reported that the agreement signed between the two concerned parties violated the Mining Rules 2002 (BMR) and other applicable regulations. [36]

‘The News’ had some documents which also included a sample of the license which was issued on Aug 24, 2011 evidences which were reproduced later.

TCC spokesperson reporting to the local media said that the Reko-Diq project is estimated to produce 22 billion pounds of copper and 13 million ounces of gold over some 56 years. The mine development phase will span over the two to four years’ time period.

Interviewing the local people of Balochistan, it was found that there was much talk between the local people of the province about the new jobs that would be coming up soon and that would benefit the people of the province to a large extent.

Reko-Diq, considered to be only the second significant project in the mineral-rich region and potentially a source of much needed inward investment holds an estimated 5.9 billion tones of mineral resources, with an average copper grade of 0.41 percent and an average gold grade of 0.22 grams a ton. The project, which would produce 200,000 tons of copper and some 250,000 ounces of gold a year, had been expected to begin production in 2015, but was pushed back due to delays over the rising controversies about the ill presentation of facts and figures between the concerned parties. Reko-Diq was reported to mark the largest foreign direct investment into Pakistan mining and a major investment in Balochistan, the country's poorest region. [37]

The facts and figures reported by the print and electronic media provided knowledgeable bit of information to the people of Pakistan reporting each and every fact and the hearings taking place which was an eye opener for every individual, the Supreme Court of Pakistan and the even the Government of Pakistan which signed the agreement prior to any investigation regarding the facts and figures of the total estimated profits and earning from the said project. What was profitable for the Federal Government, Ministry

25

Discussion: Role of Media

of Petroleum and Natural Resources Islamabad, Government of Balochistan, Governor of State Bank of Pakistan, Ministry of Mines Balochistan was to be defined very clearly in the agreement which was signed by the two parties which wasn’t the case until the scandal broke out.

It was the print media, specifically ‘The News’ and ‘Jang’ that reported how Pakistan can itself make use of the resources and pocket huge profits then the commitment made by the TCC in the agreement signed with the Government of Pakistan and the provincial government. Also, how facts were being manipulated and presented to the Government of Pakistan, the history, scandals and the propaganda’s of the TCC were brought up on the national and international level by the local media of the country. A vital role was played by the media in presentation of facts that proved to be enormously decisive in the case.

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Discussion: Current Status

F – CURRENT STATUSThe Supreme Court last year declared the Reko Diq agreement invalid. A three-judge bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, declared “not valid” the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), the initial 1993 exploration agreement between the Baluchistan government and Australian mining group BHP.

“The CHEJVA dated 23.07.1993 is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970 framed there under, the Contract Act, 1872, the Transfer of Property Act, 1882, etc., and is even otherwise not valid, therefore, the same is declared to be illegal, void and non est,” the ruling stated.

The agreement was not permissible under the Baluchistan Mining Rules (BMR) 2002 as well as the Rules of Business of the Government of Baluchistan (GOB), particularly Rule 7, the SC said.

Recently it was heard that TCC had a secret meeting with the previous PPP government officials in ISL to get back the multi-billion dollar project. Mining sources say it was an attempt by the TCC to bypass the real powers and reach a settlement when everybody else was busy in elections and political issues.

But the key decision would be made by the Supreme Court which declared all agreements with TCC void. For any new agreement, a whole process of fresh international tenders was needed and that would be possible only if the SC orders it or a new elected government takes the decision.

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Discussion: International Influence

G – INTERNATIONAL INFLUENCEasas

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Discussion: New Developments

H – NEW DEVELOPMENTSRenowned scientist Dr Samar Mubarakmand said during a briefing to Balochistan Governor Nawab Zulfiqar Ali Magsi on Wednesday that the provincial government has won the Reko Diq case in the International Court of Justice (ICJ) and will now implement the project.

“Work will first begin on 2.2 billion tonnes of ore and gold reservoirs worth $400 billion,” he said.

He further said that, under this project, as many as 15,000 tonnes of raw material will be excavated annually worth $411 million and government of Balochistan is expected to earn an annual profit of $321 million.

The provincial government allocated Rs1, 400 million for this project whereas only the water supply will take Rs1, 980 million, being completed in a span of a year and a half.

Furthermore, Dr Mubarakmand said the local people of Balochistan will be recruited for the project’s non-technical positions.

Balochistan Governor Magsi stressed upon a timely execution of the project so that the masses can benefit as soon as possible and directed both the chief secretary and the finance secretary to ensure an efficient provision of funds. Additionally, he, too, emphasised the need for the local people to be given more jobs, and for project offices to be established in Quetta instead of Islamabad.

Furthermore, Magsi directed the authorities concerned to guarantee foolproof security arrangements.

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Recommendations & Conclusion

6 – RECOMMENDATIONS & CONCLUSION

Although Reko Diq case has been largely decided in Pakistan’s favor, nonetheless, the judicial proceedings and media publicity stained the standing of Pakistan and diminished investors’ confidence in the business environment here. Our recommendations (which we have based on the best practices in other countries), to resolve this issue and move the project forward to bring welfare and prosperity to the masses are hereunder:

1. Renewed tenders should be sought for licensing mining works in Chagai; however, preference should be given to resident companies, or in case of consortiums, to a consortium where a Pakistani firm is an equal partner. Furthermore, jobs should be given to the natives of area, with first priority, nevertheless, for special work; highly skilled manpower can be had from other parts of country.

2. A renowned Pakistani scientist, Dr. Samar Mubarikmund, has declared that Reko Diq mining project can be commenced by his team; provided the government co-operates with them. [25] This may be the greatest option, if true, as the smelting, refining and other processes workshops and laboratories will be erected in Pakistan, boosting national economy even more.

3. The federal government should instigate a more rigorous and authentic devolution process, whereby, financial and administrative powers of the provinces are aggravated. The provinces should be further reinforced to evaluate, grant, undertake and/or execute any strategic project and federal government’s role should be within such limits, as preferred by the provincial government.

4. The provincial governments and legislatures, for their part of the reforms, should vigorously pursue separation of powers and division of responsibilities, according to which, decisions, at least which are material, cannot be made without involvement and acquiescence of associated departments, which are independent and impartial.

5. There is a necessity to formulate rules and procedures for freedom of access to information. Currently, bureaucracy flourishes on concealment of information under the garb of secrecy. Information on any area of public concern (including strategic resources, customs, etc. and their intra-working decisions also (e.g. budgetary grants, expenditures, employee promotions, disciplinary actions etc.) must be accessible to citizens. The government may levy token fees for this purpose, but information must be available voluntarily. The freedom of access to information could make public dealings transparent; it will curtail the usage of discretionary powers if any, and would make the bureaucracy cognizant of accountability. Once the civil servants realize that any information from government can be acquired in public interest, expeditiously and at a small financial cost, their capacity to use discretionary laws would be constrained. Then discretion would be used only for public good and public welfare and not against public interest.

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6. Pakistan needs to realize its commitment as a signatory to the United Nations Convention Against Corruption (UNCAC) [26] by revitalizing the National Anti-Corruption Strategy which, despite its feebleness, is a coherent framework and can be the basis of consensus-driven concrete plans of actions in terms of intra-agency sub-strategies. High-level political commitment is needed to rejuvenate this agenda and include its specific targets into the monitoring framework of ministries and government departments.

7. Extra-constitutional pressures can be sidestepped through robust and effective institutions, which demand upholding of rules and procedures that are simple, clear and fair. This would require consultation among political leaders, parliamentarians and the various agencies and departments of the government that must be routinized. What is needed is decision-making process that is not only transparent but also reflects unanimity and continuousness of policies. [27] It involves introduction of such steps:

a. Office manuals (OMs) be prepared about each activity.

b. Detailed Job description be prepared for each post and quantifiable parameters be defined.

c. Criteria for periodical performance evaluations be prepared relevant to the jobs.

d. Feedbacks be obtained from concerned staff and also from institutionalized clients/interactive NGOs etc.

8. Certain key oversight institutions should be strengthened — in particular, the Public Accounts Committee and the Auditor General’s office. The potential within the Public Accounts Committee can be harnessed with the leader of opposition in its chair, albeit with the right technical inputs and civil-society engagement. The Public Accounts Committees also exist within the framework of the local government system but have not been made to function as a tool for strengthening district oversight and accountability. Although their fate is dependent on the overall decision relating to the local government system, every effort should be made to retain and strengthen institutional frameworks that can compel accountability. [28]

9. A balance between generalist practice and demands of professionalism in civil service should be advanced. In top-policy positions, the leadership of the generalist may be retained but professional’s advice and input must be encouraged and incorporated in the policy process. Twenty-five years ago, a Pakistani scholar making pioneer study of Civil Services perceptively suggested that “key posts” in government may be assigned to “generalist-specialist’— someone with “sustained practical experience in a single, well defined, broad area of government activity... who displays special aptitude for general management”. [29] Partnership between bureaucrats, professionals, academic community on policy issues should be encouraged. It must be recognized that internal changes in Pakistani society and external environment

31


have considerably weakened the monopoly of bureaucratic control on information and resources. Bureaucracies now need professional input for project formulation, project implementation and effective management. It demands an alteration in attitude and re-definition of their role. Since bureaucracies play a fundamental role in policy formulation, and development administration, therefore it is in their institutional interest to work for such a change. To strengthen processes that strengthen good governance, the bureaucracy needs to provide leadership in promoting a partnership among bureaucrats, professionals and academic community. [27]

10.Pakistan needs to ratify a new and comprehensive environmental law, regulating besides other things, the industry of mining, on the pattern of international best practices, as mining considerably distresses the quality of human environment and mining firms should be encouraged to contemplate environmental costs of their undertakings. The proposed law should also require potential mining firms to submit an environment impact statement (EIS). A typical EIS should include [30]:

a. An introduction including a statement of the ‘Purpose and Need of the Proposed Action’.

b. A description of the ‘Affected Environment’.

c. A ‘Range of Alternatives’ to the proposed action.

d. An analysis of the environmental impacts of each of the possible alternatives. This section covers topics such as:i. Impacts to threatened or endangered speciesii. Air and water quality impactsiii. Impacts to historic and cultural sitesiv. Social and Economic impacts to local communitiesv. Cost analysis for each alternative, including costs to mitigate expected

impacts, to determine if the proposed action is a prudent use of taxpayer dollars

11. Anti-corruption and malpractices agencies/establishments should be constituted anew, both at federal, provincial and local levels. Appointments into such departments should be subject to confirmation by a related legislature (or a committee, thereof) and should not be disposed to influence, from the executive or any other quarter, since their trustworthiness may be comprised in doing so. The anti-corruption strategy should not exclude or discriminate holders of public office by virtue of their positions, or divide the public officials into various categories, and having dissimilar sets of laws to deal with them.

Lastly, in the ending words, the aggregate worth of minerals buried under the gravels of Reko Diq has been variably estimated by experts (through projections of future market prices), from a low of US $260 billion [31], US $400 billion [32], to as high as US $1 trillion [33]. Traditionally, copper and gold prices have shown a propensity to escalate,

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even in face of recessions, and therefore, the aforementioned approximations could essentially turn out to be undervalued. Monetary compensations of this magnitude could alter the landscape of the region and transform Pakistan into an Asian center of commerce and trade. If Pakistan were to exploit all the reserves, they would yield precious metals worth trillions of dollars. Samar Mubarikmund has determined these facts taken from the feasibility report on Reko Diq, comprising thousands of pages.

Pakistan has the required expertise for extracting and refining gold and bronze from the Reko Diq mines. It is just the 0.02 per cent uranium which is perplexing to exploit. Under the old contract, Baluchistan was receiving $160 million whereas it can now earn $2 billion if Pakistan were to extract the metals and export them after value-addition. Surplus cash flow may change the fortunes of Pakistan in general, and of Baluchistan in particular, provided the province is facilitated to gather its outstanding portion.

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References

7 – REFERENCES

[1] "Reko Diq," Wikipedia, [Online]. Available: http://en.wikipedia.org/wiki/Reko_Diq. [Accessed 30 April 2013].

[2] Behram, "Reqo Diq: Its History and Future Prospects," Pakistan Insider, 2 March 2012. [Online]. Available: http://insider.pk/national/reqo-diq-its-history-and-future-prospects/. [Accessed 29 April 2013].

[3] "SC moved against sale of Reko Diq gold mines," The News, 29 April 2013. [Online]. Available: http://www.thenews.com.pk/Todays-News-13-1889-SC-moved-against-sale-of-Reko-Diq-gold-mines. [Accessed 7 November 2010].

[4] "TCCP clarifies position again by Ahmed Noorani," The News, 29 April 2013. [Online]. Available: http://www.thenews.com.pk/Todays-News-13-2260-TCCP-clarifies-position-again. [Accessed 24 November 2010].

[5] A. Maken, "TCC moves international court on Reko Diq," The News, 30 November 2011. [Online]. Available: http://www.thenews.com.pk/Todays-News-13-10647-TCC-moves-international-court-on-Reko-Diq. [Accessed 29 April 2013].

[6] S. Khan, "SC declares Reko Diq lease deal illegal," The News, 8 January 2013. [Online]. Available: http://www.thenews.com.pk/Todays-News-13-20080-SC-declares-Reko-Diq-lease-deal-illegal. [Accessed 29 April 2013].

[7] M. Alvi, "Baloch nationalists strongly oppose Reko Diq deal," The News, 15 November 2010. [Online]. Available: http://www.thenews.com.pk/Todays-News-2-15717-Baloch-nationalists-strongly-oppose-Reko-Diq-deal. [Accessed 29 April 2013].

[8] Utrade, [Online]. Available: www.utrade.co/magazine/utrade-magazine.aspx?key=251. [Accessed 29 April 2013].

[9] K. A. Khokhar, "Reko Diq project — exploiting own treasures," The News, 18 July 2011. [Online]. Available: http://www.thenews.com.pk/Todays-News-13-7499-Reko-Diq-project-%E2%80%94-exploiting-own-treasures. [Accessed 29 April 2013].

[10] "Mining Project," Tethyan Copper Company, [Online]. Available: http://www.tethyan.com/TheRekoDiqProject/MiningProject.aspx. [Accessed 24 April 2013].

[11] "Reko Diq Resource," Tethyan Copper Company, [Online]. Available: http://www.tethyan.com/TheRekoDiqProject/RekoDiqResource.aspx. [Accessed 22 April 2013].

[12] Tethyan Copper Company, "Reko Diq: Great future prospects," Yaqeen, vol. 1, no. II, pp. 1-12, 2010.

[13] "Pakistan," in Political Chronology of Central, South and East Asia, Europa Publications, 2001, p.

34

References

2167.

[14] T. J. Sigamony, "Secy, not Balochistan govt, relaxed exploration rules: SC," The Nation, p. 3, 10 February 2011.

[15] "Governor signed Reko Diq accord without cabinet’s approval, says AG Kanrani," DAWN, 10 December 2012.

[16] "Reko Diq case: Balochistan government was never party to agreement, Supreme Court told," Business Recorder, 21 December 2012.

[17] "Ehtesab [Accountability] Bureau," [Online]. Available: http://www.fas.org/irp/world/pakistan/ehtesab/. [Accessed 25 April 2013].

[18] Ehtesab Ordinance, 1996 (ORDINANCE CXI OF 1996), 1996.

[19] Ehtesab Act, 1997 (ACT NO IX OF 1997), Majlis-e-Shoora (Parliament of Pakistan), 1997.

[20] A. S. Ghazali, "Chap. X: Nawaz Sharif's Second Stint in Office," in Islamic Pakistan: Illusions and Reality, Islamabad, National Book Club, 1997.

[21] Ehtesab (Amendment) Ordinance - ORDINANCE II OF 1998, 1998.

[22] Supreme Court of Pakistan Order, Constitution Petition No. 24 of 2011, 2011.

[23] Pakistan Penal Code (Act XLV of 1860), 1860.

[24] The Prevention Of Corruption Act 1947 (ACT II OF 1947), 1947.

[25] National Accountability Bureau Ordinance (XVIII of 1999), 1999.

[26] J. Perlez, "Pakistan Strikes Down Amnesty for Politicians," The NewYork Times, 16 December 2009. [Online]. Available: http://www.nytimes.com/2009/12/17/world/asia/17pstan.html. [Accessed 29 April 2013].

[27] I. Niaz, in The Culture of Power and Governance in Pakistan, Oxford University Press, USA, 2010, p. 114.

[28] Article 212, Constitution of Pakistan, 1973.

[29] Section 3, Service Tribunals Act, 1973.

[30] Wafaqi Mohtasib (Ombudsman) Order, 1983.

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[32] Transparency International, "Corruption Perceptions Index 2012," 2012.


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Documents

An Inquiry into the Reko Diq Mine Scandal