LNG Verdict: Further Sign of Military-Judicial Nexus?


The Supreme Court’s verdict against a billion-dollar liquefied natural gas (LNG) supply contract on Wednesday has been met mostly with uninterest, most people seeming to view it as a routine matter of the court policing a lack of transparency in the awarding of government contracts. While I will certainly not suggest that lack of transparency is not a problem, there are a few items about this particular case that I find curious. Namely, the little talked about relationship between the court and the military in this case.

CJ Iftikhar ChaudhryThe first curious thing about the case was that it was a suo moto action. That means that the court took it upon itself to take up the case without a complaint from any party. This might be the case, but if there was a problem with the award of the contract to French company GDF Suez, why did no other company make a complaint?

This brings us to the next curious fact: the company that supposedly had the lowest bid was Fauji Foundation – an investment group run by former military officers.

[The Supreme Court] took up the natural gas deal case after media reports that Pakistan had lost $1 billion when senior petroleum ministry officials ignored the lowest bid by the Fauji Foundation, an investment group run by former military officers, and European company Vitol, and chose France’s GDF Suez.

So, the government took bids for an LNG supply contract and awarded to a French company. The Supreme Court, without any complaint from another company, took it upon itself to step in and void the contract. One of the losing bidders just happens to be tied to the military.

This would be curious enough by itself, but the situation becomes more so when we take a step back and consider the context for this action.

Pakistan is presently suffering a severe energy crisis. Actually, the energy crisis is one of the top reasons that people are unhappy, and also a top reason why Pakistan has had difficulty attracting Foreign Direct Investment (FDI). The contract with GDF Suez would have provided 3.5 million tonnes of liquefied natural gas supplies every year for six years. Surely this would have gone a long way towards solving the energy problem and attracting new foreign investment.

LNGOf course, making progress on energy and foreign investment would also be seen as a success for the present government, which the court has constantly attacked. Cancelling this contract is also seen by foreign analysts as a means for the Chief Justice to assert his own power as supreme.

One analyst said a Supreme Court seen as intrusive would be bad for business, in a country struggling to keep its budget deficit at the levels required under politically sensitive reforms the International Monetary Fund is pushing for.

“To what extent is the action on the part of Chaudhry great and to what extent is it stifling matters?,” asked Kamran Bokhari, regional director for the Middle East and South Asia at STRATFOR global intelligence firm.

“This issue of cancelling a deal because it wasn’t transparent is a tool by which the judiciary asserts itself because ultimately it is also a power.”

Then there is the fact that the military is involved. Following Ahsan Iqbal’s (PML-N) recent statements that there is a “third force” trying to cause a clash between judiciary and government, one must wonder if there
is some relationship here. Is this all part of an effort to execute a ‘coup by judiciary’?

Awarding of government contracts should be transparent, fair, and in the best interest of Pakistan. The government should not give away contracts to one company if there is a better deal from another. Also, the government should not give away contracts to former military officers if some other company can do a better job. The fact that the Supreme Court has inserted itself into this situation without being asked by party to the contract process raises serious questions about whether the court is being honest and transparent itself.