ISLAMABAD: The government’s top financial aide on Wednesday kicked off consultations with the country’s top two tax groups to make them accept the proposed appointment of Shabbar Zaidi, a chartered accountant, as head of the Federal Board of Revenue.
The issue became critical after an association representing inland revenue officers threatened to challenge the appointment of Mr Zaidi in court, citing a conflict of interest. They also expressed concern over the timing of the change of guard in the tax collection machinery as it coincides with bailout negotiations with the International Monetary Fund.
Dr Hafeez Shaikh, adviser to the prime minister on finance, and Shabbar Zaidi, the nominated FBR chairman, met Imran Khan on Wednesday. However, there was no official word about the outcome of the meeting.
A reliable source told Dawn that after the meeting, Arbab Shahzad, who is adviser to the prime minister on establishment, called 14 officers of the Inland Revenue Service and Customs Groups currently posted in FBR headquarters to the prime minister’s secretariat for a meeting. The establishment secretary was also present.
Eight of the 14 were BS-22 officers while the rest were in BS-21.
“We have conveyed the concerns of the field formations, especially Karachi-based officers, to the adviser,” one of them told Dawn.
Two major objections to the appointment were raised during the meeting. The first was that the move involved a conflict of interest as Mr Zaidi was a private sector chartered accountant whose job all along has been to advise large business houses on tax matters. The other was that the guidelines laid down by the Islamabad High Court for nomination of private sector individuals to such positions were not followed.
“Now, how you expect he will promote the interest of the tax machinery,” one of the senior officers said during the talks with Mr Shahzad.
When the disgruntled officers were reminded that the prime minister had exercised his discretionary powers, they told Mr Shahzad “we respect the PM’s authority”. But at the same time, they added, “we believe the induction of an individual” from the private sector would send a “message of distrust” to field formations.
On Tuesday, the establishment division had sent a summary to the cabinet containing strong reservations about the appointment. The summary proposed that Mr Zaidi be appointed as ‘pro bono’ (an honorary position) for two years subject to legal opinion of the law division.
However, the prime minister disagreed with the suggestion and returned the summary with a note that a solution must be found “at the earliest”.
In compliance with that order, the cabinet division sent a fresh one-point summary “by circulation” on Wednesday, in supersession of the previous one, recommending the appointment of Mr Zaidi as FBR chairman.
As confusion reigns over the status of the current and incoming chiefs of the FBR, an official hinted that the government was now considering putting off announcement of the federal budget till June 10. As of today, the budget is expected to be announced on May 22.
According to the source, the senior officers also told Mr Shahzad that they would not take responsibility for terms and conditions agreed with the IMF team regarding revenue measures and achievement of target.
The IMF is expected to conclude its policy talks by Friday and strike a deal with Pakistan. However, now it seems that the confusion may delay the process.
The outgoing FBR chairman Jehanzeb Khan had been conducting in-house meetings to coordinate the drawing up of a revenue plan and projections that are necessary preparatory work for any budget exercise when he learnt from television reports that a decision had been made to end his tenure as FBR chief.
Since a transfer order to that effect had not been received by him, sources at the FBR told Dawn, he continued with his assignment, discharging his responsibilities last Saturday as well.
After the announcement of the replacement, the incumbent chairman could not continue with his work and budget preparations at the FBR ground to a halt. He even did not come to office on Wednesday.
Another source in the law division said the law minister has given a go ahead to the prime minister house despite strong reservation from the establishment division.
A judgment of the Islamabad High Court holds the field in the matter of private sector appointments to such posts, especially in the case of Ali Arshad Hakeem. It lays down strict criteria that must be followed before making such an appointment.
Neither State Minister for Revenue Hammad Azhar nor Adviser to Prime Minister Arbab Shahzad responded to when this reporter sent them text messages to seek their comment on the controversy on the appointment of chairman from the private sector.