Inside Pakistan’s Biggest Business Conglomerate: The Pakistani Military

In July 2016, the Pakistani senate was informed that the armed forces run over 50 commercial entities worth over $20 billion. Ranging from petrol pumps to huge industrial plants, banks, bakeries, schools and universities, hosiery factories, milk dairies, stud farms, and cement plants, the military has a finger in each pie and stands today as the biggest conglomerate of all business in Pakistan. However, the jewels in their crown are the eight housing societies in eight major towns where prime lands in well-manicured cantonments and plush civil localities in the possession of these societies are allotted to military personnel at highly subsidised rates. Even military awards are linked with the grant of farm lands and housing plots to military personnel.Shuja Nawaz in his book, Crossed Swords, expounds the landgrabbing propensities of Pakistani generals. He goes on to say that in the “late 1980s, as dictator fatigue set in during the Zia period, many army officers refrained from going out into the public in their uniforms as there was much resentment against the military for their over-indulgence in economic activities.” Later in 2007, “the country saw the jarring banners carried by lawyers who were protesting the removal of a chief justice by the military ruler: Ae watan ke sajeele Genrailo; saaray ruqbey tumhare liye hain (O’ handsome generals of the homeland, all the plots are just for you).”

Genesis in the General

The “Culture of Entitlement” in the military started during General Ayub’s time when he commenced the tradition of awarding land to army officers (the size of allotment depending upon the rank of the officer) in the border regions of Punjab and in the newly irrigated colonies of Sindh. General Zia also created a novel way of involving serving officers in commercial ventures by placing military lands and cantonments and the provisioning of logistics to the regional corps commanders. Thus, many senior army officers availed opportunities to acquire multiple plots in various cantonments for themselves at highly subsidised rates. These prime properties soon sparked nepotism in allotment and corruption among both the military and civil bureaucracies.

After being allotted plots in prime areas, it became common practice for army officers to sell their preferential allotments at exorbitant prices to well-heeled civilians. The military soon got involved in establishing several foundations ostensibly to help retired service personnel. These institutions virtually penetrated into all sectors of the economy and gradually propelled the military into a major business stakeholder in Pakistan’s economy. The military operates its economic endeavours at three levels with the ministry of defence (MoD) being at the top of the economic military network.

The MoD controls four major areas—the service headquarters, the department of military land and cantonments (MLC), the Fauji Foundation (also known as Fauji Group) and the Rangers (a paramilitary force). The department of military land and cantonments acquires land for allocation to the service headquarters, which distributes it among individual members. The three services have independent welfare foundations, which are directly controlled by the senior officers of the respective services. The military is also involved in public sector organisations like the National Logistics Cell (NLC), the Frontier Works Organisation (FWO) and the Special Communications Organisation (SCO), which are all controlled by the army. The Water and Power Development Authority (WAPDA) was placed under military control in 1998 with over 35,000 personnel now involved in its operations.

You name it and the military has it

The MOD does not directly manage the economic activities of the organisations under its control, but it is an instrument to mobilise resources, accord legitimacy to the varying commercial and other economic activities of its organisations and even field formations and units which run many subsidiary commercial ventures independently. In addition, there are four subsidiary organisations that are involved in the economic activities of the military. These include the Fauji Foundation, Army Welfare Trust, Shaheen Foundation (for retired Pakistan Air Force personnel) and the Bahria Foundation (for retired Navy personnel). These foundations, though controlled by their respective service headquarters, are run by retired military personnel. The profits accruing from the commercial ventures of these organizations are distributed to all shareholders who are retired military personnel. These are engaged in ventures like fertiliser and cement manufacture, cereal production, insurance and banking enterprises, education, and information technology institutes, besides airport services, travel agencies, shipping, harbour services and deep sea fisheries.

The influence of the MOD plays a vital role in securing public sector business contracts and financial and industrial inputs at highly subsidised rates. In recent years, profit making by retired military personnel has acquired even newer dimensions with them providing privatised security services to foreign contractors in security-sensitive regions like the FATA and KPK (Federally Administered Tribal Areas and Khyber Pakhtunkhwa). This follows the pattern as established by foreign security contractors in adjoining Afghanistan.

The Culture of Entitlement is getting stronger by the day. Several senior service officers have also been parked as ambassadors, governors, and nominated on other high-ranking bureaucratic posts in Pakistan. Successive army chiefs have continued with the practice of strengthening the special perks and privileges of their serving and retired personnel with respective civilian governments reluctantly acquiescing to all the fair and unfair demands of the armed forces.

It is an indisputable fact that Milbus contributes towards professionalism taking its toll when the military participates in nonmilitary commercial activities. The case of the People’s Liberation Army (PLA) in China is a classic example where some senior Chinese generals fell prey to the temptations of corruption and lucre. True to their style, the Chinese government stepped in and severely punished some of the offenders and thus discouraged the Chinese military from commercial activities.

Milbus in Pakistan is the never-fading and ever-growing clout of its military in its nation’s policies far beyond strategic and security matters. A major reason for this state of affairs is the independent, unaccountable financial muscle of the military. Since the Ayub era, no civilian government has ever bothered to tame in the military except, to some extent, Zulfikar Ali Bhutto for a short period. Most civilian governments have looked the other way at the financial handlings of the military’s commercial enterprises, primarily to buy peace with the powerful generals. Most members of Pakistan’s civil society and even its parliamentarians have wilfully ignored the military’s economic empire-building except for some senators like Sherry Rehman and Farhatullah Babar.

Among the many constants in Pakistan, Milbus too, in the foreseeable future, is likely to more than thrive as it is coterminous with the power wielded by the military in its national affairs. Currently, there are no indicators whatsoever that the Pakistan military will ever relinquish the primacy and unfettered powers it enjoys in its nation.

Excerpted from Lt. General Kamal Davar’s book Armed Forces and Their Corporate Interests with permission from Rupa Publications.