In-Depth Arena

Is there a nexus between fishing and terror financing?

Updated 15 Jul, 2016 01:41pm
Illustration by ZC
Illustration by ZC

Mehar Bux is reported to have told a seemingly straightforward story of corruption to his investigators. As a supervisor at one of the six auction markets run by the Fishermen’s Cooperative Society (FCS), he has been allowing more fish through the gates of the Karachi Fish Harbour than officially recorded — with a nod from his superiors, and in collaboration with his colleagues.

This made around one million rupees everyday in unearned profits for the mole-holders who facilitate the auction and sale of fish at the harbour. They shared this windfall with their FCS patrons, among them Bux and many senior officials.

Otherwise little known, FCS burst into television news highlights in the summer of 2015 — though not because of Bux’s disclosure (he was not even arrested by then). A Joint Investigation Team (JIT), comprising officials of different law enforcement and intelligence agencies, claimed to have found something even more startling: Sultan Qamar Siddiqui, the then vice chairman of the FCS, was funding terrorist activities in Karachi with money he was stealing from the illegal movement of fish consignments. Then came another surprise: Siddiqui (who was arrested in June 2015) and some other top FCS officials had supplied weapons used in a May 2015 attack on a bus carrying Ismaili Shias in Karachi’s Safoora Goth area. The attack resulted in the killing of at least 45 people, including women and children.

Over the next few weeks after Siddiqui’s arrest, the Sindh Rangers arrested a former FCS chairman (Abdul Saeed Khan Baloch) two of its directors (Muhammad Khan Chachar and Rana Shahid) and three employees, including Mehar Bux. Saleem Deedag, another director, was arrested in January this year. Nisar Morai, the FCS chairman, who had been living abroad since December 2014, was the last person arrested, from Islamabad in March 2016.

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The FCS was established in 1945 under a 1925 law to work for the welfare of poor fishermen. Its 9,000 members are divided into two categories: bona fide (fishermen) and non-bona fide (mainly fishing vessel owners). It is run by a board of 15 directors. Seven of them – six bona fide and one non-bona fide – are elected by the members at annual general meetings for a three-year term. Eight directors are nominated by the Sindh government. The chairperson and vice chairperson are elected by the directors.

The first office of the FCS was in a small room in Lyari’s Khadda Market, where all the catch from the sea was unloaded and auctioned at the time. In 1959, these activities were shifted to the Karachi Fish Harbour — as was the FCS office. In June 2015, the Sindh government dissolved the FCS board after Siddiqui’s arrest and instead appointed a three-member committee which, in turn, was also dissolved when Deedag was arrested.

The Safoora Goth bus attackers were sentenced to death early last month, but the arrested FCS men remain in the custody of law enforcement agencies, with their cases at various stages of investigation and prosecution. It was during these investigations – in April 2016, to be precise – that Bux told the investigators about the pilferage.

Fishing boats at Kemari | AFP
Fishing boats at Kemari | AFP

How the auction and sale of fish is meant to work is essential to understand how the pilferage was made possible: each mole-holder gives loans to vessel owners and fishermen to meet expenses on fuel, ice and food required for fishing trips; this binds vessel owners and fishermen to bring their catch only to the mole-holders they owe money to; the catch is weighed and auctioned in the presence of the FCS officials; the mole-holder receives money from the successful bidder; he deducts the amount that the vessel owner and fishermen owe to him; he then deducts another 6.25 per cent from the total bid money — half of it being his commission and the other half the FCS fee; the remaining amount goes to the vessel owner and the fishermen; the FCS issues a gate pass and the fish consignment exits the harbour.

Here is how it is manipulated: the auction supervisors only record some of the fish consignments; others are allowed to pass through the gates under a system known as ‘dhai per cent’ (or 2.5 per cent). The FCS does not get anything on those unrecorded consignments, but corrupt officials make 2.5 per cent in cash and the mole-holders pocket a 3.75 per cent commission instead of the 3.125 per cent they normally make (of the 6.25 per cent in total). From every hundred rupees thus stolen, 60 go to the mole-holders and 40 to the officials.

In Bux’s reckoning, money made everyday through this system stood anywhere between 750,000 rupees and one million rupees. Though this has been going on for decades, according to a source, it became even worse in 2008 when the FCS officials started letting whole consignments pass without even registering them. Bux claims that the auctioneers paid only 2,500 rupees per consignment in bribes and pocketed the entire 6.25 per cent deducted on its total price. This new system was so lucrative that the number of auctioneers increased from 42 in 2008 to around 65 in recent years.

Estimates vary on how much money was earned by the FCS officials rigging auctions and exit systems. “Fish worth more than 38 billion rupees is exported annually. The FCS is supposed to earn 1.18 billion rupees every year as its 3.125 per cent commission on the value of fish meant for export only,” says Syed Akhlaq Hussain, an exporter of seafood.

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Fish exports accounts for only 30 per cent of all catch that lands at Karachi’s fish harbour. If we include the fish sold in domestic markets, the FCS’s annual earning should go up to 3.89 billion rupees.

Muhammad Moazzam Khan, a former director general of the Sindh government’s Marine Fisheries Department, says export prices are a flawed measure because they are always higher than the prices at the harbour, which is the benchmark for fee deduction. He refers to an Export Promotion Bureau estimate made in 1999 that put the annual expected FCS income at 450 million rupees. Since the price of fish has shot up by 300-400 per cent since then, the FCS should be earning around 1.5 billion rupees a year, he adds.

The FCS’s own records show it earned only 30-40 million rupees a year in the late 1990s. Its income rose to 248 million rupees in 2011-2012, but dropped to 188 million rupees in 2012-2013. The income registered an increase in 2013-14 (278 million rupees) and improved further in 2014-2015 (332 million rupees). After the arrest of its officials, the cooperative society has earned 443 million rupees in the three quarters of the ongoing fiscal year: 2015-2016.

Fishermen anchor their boats at the fish harbour and pack up their belongings to head home with the last of their catch | Fahim Siddiqi, White Star
Fishermen anchor their boats at the fish harbour and pack up their belongings to head home with the last of their catch | Fahim Siddiqi, White Star

When the FCS was formed, its purpose was to offer facilities to the fishermen that they could not obtain on their own: auction markets, easy loans, children’s education, healthcare, etc. With time, it turned into an employment bureau. Though it runs some schools and dispensaries in some fishermen settlements, its successive managements have recruited staff under pressure from political parties as well as criminal groups, particularly Lyari gangsters, says an FCS insider, not willing to be identified by name. In 2014, the total number of FCS staff was 750. Since then, it has come down to 500, after many of its employees retired and contracts of others expired.

Sources within the cooperative society say Uzair Baloch – alleged Lyari gang leader and head of the banned Peoples’ Aman Committee – wielded considerable influence over the FCS board elected in 2012 and headed by Abdul Saeed Khan Baloch. Morai’s nomination as chairman in 2014 did not change this. “Bux also disclosed that the FCS paid 2.5 million rupees each to the Uzair Baloch and Baba Ladla groups every week,” reads his investigation report. According to his claim, 150 Lyari gangsters were also given jobs in the FCS.

An FCS official acknowledges that the Lyari gangsters were extorting money from FCS officials, but that this does not mean the society was willingly supporting their criminal activity. The connection (between corruption and violent crime) was an indirect one, he says, seeking anonymity. Only the courts trying the FCS officials will decide how correct his statement is.

Khan, however, argues that arrests and trials will only reduce corruption at the FCS for a while without eliminating it entirely. “The FCS is a failed body,” he says. He, therefore, suggests abolishing it.

Fishermen in Balochistan do not have a cooperative society and yet they have a functional system for auction, sale and purchase, he says. “Why can’t Karachi have a similar system?”

This was originally published in Herald's June 2016 issue under the headline "Fishy business". To read more, subscribe to Herald in print.

The writer is a reporter at the Herald