Fauji Foundation: Waqar Malik – the Man Behind ‘Revolution’

Exclusive Interview Conducted by Farooq Awan Arranged by Adnan Arif   Photos by Ramzan Mughal Waqar Ahmed Malik, MD & CEO, Fauji Foundation Throughout the years, FF has grown to become a prominent hybrid social enterprise in the nation, providing essential welfare and social services to veterans and their dependents, with a strong emphasis on widows and families of “Shuhada” (martyrs). In an exclusive interview with Daily Times, FF MD and CEO Waqar Ahmed Malik said the Foundation has successfully established a vast network of Medical Facilities and Educational Institutes, encompassing over 1,940 beds spread over 11 Hospitals, 35 Medical Centers, and 28 Health Clinics. Additionally, FF also manages 126 Academic Institutions, which includes a University, Medical, Dental, and Nursing colleges, Tertiary colleges, Schools and Vocational Training Centers. FF annually allocates PKR 12-14 Billion for welfare and social services, saving public funds that would have been government-allocated. Foundation was established using PKR 18.2 million (USD 5 Million approx), from the post-war repatriation fund of the British government for Pakistan’s veterans in 1954. Fauji Foundation manages its endowment fund by investing wisely in sectors such as agriculture, infrastructure, food chain, energy, and financial services. These investments are now publicly listed on the Pakistan Stock Exchange, with a focus on corporate governance and integrity. 1. Can you explain who is eligible for the welfare services provided by the Fauji Foundation? The Foundation provides social security benefits to support retired soldiers and their families, with a special focus on the families of “Shuhada”. In recognition of selfless service rendered by soldiers who have served Pakistan, the Foundation offers quality education and healthcare services. Our organization is committed to ensuring that all veterans and their families can sustain a respectable standard of living and reap the rewards of their dedication to the nation. Over the last three years, Fauji Foundation Education System has distributed over PKR 600 million as education stipends to over 48,000 eligible beneficiaries, including dependents of martyrs, disabled, or deceased veterans. These students encountered challenges in financing their education without a reliable source of support. It is heartening to note that in the past three years alone, through this initiative, we have successfully enabled over 4,000 aspiring doctors to pursue their MBBS degree by utilizing the stipend. We also prioritize supporting disabled veterans and have established a modern Artificial Limb Center with advanced 3D-Printing capabilities to provide comprehensive support to enhance their quality of life. 2. There have been circulating rumors suggesting that Fauji Foundation enjoys certain privileges exempting it from paying taxes. Can you confirm whether or not there is any truth to these claims? Fauji Foundation is a respected charity in Pakistan, established under The Charitable Endowment Act 1890. This allows the organization to be exempt from withholding tax on its income of around circa PKR 2.5 billion per year. However, its investments are not exempt from taxes, and it pays over PKR 175 billion in taxes annually. Its primary aim is to support ex-servicemen and their families across Pakistan. Other reputable charities established under the same act, such as Cancer Research Foundation of Pakistan, Al-Shifa Trust Eye Hospital, Shaukat Khanum Memorial Trust, ICIC Foundation, and LUMS, also qualify for the same exemption. Fauji Foundation and its group companies pay over Rs. 175 billion in taxes each year, making them one of Pakistan’s largest taxpayers. Although only the Foundation itself is exempt from taxes, its associated companies comply with Pakistan’s tax laws and regulations. Most of Fauji Foundation’s dividend income comes from companies listed on the PSX, which follow high levels of corporate governance. Shareholders of these companies include the general public (55%) and the Foundation (45%), indirectly benefiting the wider population. The Foundation receives approximately PKR 30 billion in dividends each year, of which PKR 16 billion is paid out to the public. Four companies in Fauji Foundation’s group, namely FFC, FFBL, MPCL, and AKBL, were among the top 10 performing companies at the PSX Awards 2020. The awards’ eligibility criteria are based on financial credibility, including tax performance and share trading. The assessment process evaluates companies in several areas, including Corporate Performance, Corporate Governance, Diversity & Inclusion, and Sustainable Development Goals. The awards have gained both domestic and international recognition, and the shortlisted companies are considered among Pakistan’s top performers and comparable to the world’s best companies. As a commercial entity, what contributions has the Fauji Foundation made to the economy of Pakistan, and in what ways is its portfolio benefitting the country? Fauji Foundation is a renowned investor in Pakistan, with investments in several sectors, including agriculture, power, oil and gas, marine terminals, financial services, and cement. These investments aim to achieve food self-sufficiency, improve infrastructure, enhance energy security, promote agriculture, and provide financial inclusivity. The Foundation identifies gaps in Pakistan’s economic structure to address critical needs and contribute to overall economic growth. FF’s contribution to Pakistan’s economic development is noteworthy, our investments have enabled us to commence exploration activities in the frontier regions of Pakistan. FF’s recent investment in Mari Petroleum has led to the discovery of a gas reserve in North Waziristan, estimated to yield 50 MMscfd. FF’s ongoing Sachal Gas Processing Complex project is expected to add 90 mmcfd of gas to the national supply, contributing significantly to Pakistan’s energy security objectives. Exploration activities in remote and frontier regions like Waziristan pose security challenges, and the FF Group has lost lives while securing Pakistan’s economic future. However, we are committed to expanding CSR initiatives and economic activity in the region. Our North Waziristan discovery has created over 300 direct employment opportunities and 700 to 1500 indirect employment opportunities, contributing to the economic and developmental growth of underdeveloped areas in Pakistan. To date, MPCL has invested PKR 5.5 billion in District Ghotki (Sindh) alone, initiating 336 projects aimed at improving healthcare facilities, renovating schools and colleges, providing clean drinking water, constructing crucial link roads, and implementing significant solarization projects. Furthermore, Fauji Foundation’s agricultural investments have modernized Pakistan’s agriculture sector and enabled millions of farmers to adopt Global Best Farming Practices, resulting in rich harvests. Fauji Foundation’s flagship project in the agriculture sector is FACE, which provides high-tech services to rural farmers, including expert supervision, access to the latest technology, financial capital, and other resources. Through FACE, nearly 60,000 acres of land have been provided with high-quality cotton seeds, and precision farming services have been given to around 50,000 acres of land. FACE has conducted training sessions for 12,000 farmers and their families to improve their knowledge of better farming practices and enhance their households. The project aims to modernize the agriculture sector and contribute to national food security in Pakistan. FF is committed to sustainability by implementing eco-friendly measures at its operational sites, including waste heat recovery, solar power, and wind energy. Similarly, at our cement manufacturing sites, we have substituted 60% of energy from the national grid with Green Energy, FF has avoided 140,000 tons of CO2 emissions. The Foundation has also transformed office spaces into eco-friendlier environments, such as switching parking spaces to solar panel grounds. FF’s success and contribution to Pakistan’s development are attributed to its strong partnerships with foreign companies. For instance, FFBL’s partnership with OCP Morocco provides phosphoric acid to produce high-quality fertilizers benefiting Pakistan’s agricultural sector. Additionally, FF’s partnership with Cargill allows the company to leverage Cargill’s expertise to increase operational efficiencies and safely handle agri-cargo. FF has also partnered with Infravest, a Singaporean investment firm, and Haldor Tapsoee of Denmark to enhance agricultural practices, improve efficiency, and increase productivity. Furthermore, Furthermore, FF has a strategic partnership with MOL group, a multinational E&P Company, which provides an opportunity to leverage MOL’s expertise in the energy sector and explore new opportunities. FF believes that strategic partnerships are essential to achieve its objectives and contribute to Pakistan’s economic development. Through partnerships with companies that have expertise in various sectors, FF can leverage their resources and knowledge to create a positive impact on Pakistan’s economy and people. Finally, we should not overlook the impact of the recent floods, which too was an economic crisis. The recent floods in Pakistan caused significant damage to infrastructure and agriculture, impacting millions of people. Fauji Foundation Group responded by mobilizing resources to provide immediate relief to those affected. The Fauji Foundation Group allocated PKR 1.5 billion for disaster relief and rehabilitation efforts, including rebuilding homes, improving livestock conditions, repairing embankments, and reconstructing schools and roads in affected areas. 3. Can you provide details on the current expansion initiatives of Fauji Foundation? FF has made remarkable progress in expanding its welfare initiatives, including the inauguration of Eastridge Prime Care Hospital, a 140-bed state-of-the-art facility that employs advanced diagnostic technologies. The hospital is a testament to FF’s dedication to advancing public health and well-being. In the past two years, FF has achieved success with 942 Angiographies and 544 Angioplasties. The Nursing College, equipped to enroll 100 students and manage a student body of 500 annually, is addressing the skill and competency gap in Pakistan. Additionally, the new Artificial Limb Center, equipped with modern technologies, is dedicated to addressing the needs of disabled veterans and civilians with precision and accuracy. FF’s commercial strategy focuses on underrepresented sectors or regions that have potential for contributing to Pakistan’s economic development. In agriculture, FF is exploring opportunities in corporate farming with modern techniques. In the energy sector, FF is expanding oil and gas exploration, production, and renewable energy projects. FF is also enhancing port terminal efficiency through initiatives like reducing ship turnaround time and increasing terminal capacity. FF relies exclusively on its commercial portfolio as the primary source of funding for its social mission. With the number of beneficiaries served increasing every year, it is crucial to expand the commercial portfolio in proportion to sustain and expand the welfare infrastructure. 4. How does Fauji Foundation address the perception that it mostly employs retired military personnel, and what is their strategy for their employees? Fauji Foundation has 27,000 employees, with only 15% (4000 only) being retired military personnel, showing a diverse workforce. FF prioritizes hiring people with the right skills for the job to ensure employee success. The foundation believes in hiring the right people for the right job, and it places a strong emphasis on ensuring that each employee is well-suited to their role and possesses the necessary skills to excel. FF has created a culture of high performance, where employees are motivated to perform their best through a pay-for-performance system. This system rewards employees based on their contributions, fostering a sense of motivation and accountability. This approach to hiring and performance management has contributed to FF’s success. Furthermore, 46% of FF’s workforce is women, which the foundation sees as important for creating an inclusive and dynamic workplace. Gender diversity is believed to lead to better outcomes, and FF is committed to prioritizing it to foster a more equitable workplace culture. The journey of success Waqar Ahmed Malik’s corporate and business experience spans over 30 years across three continents. He is a fellow of the Institute of Chartered Accountants in England and Wales and is also an alumnus of the Harvard Business School and INSEAD. Earlier, his career with The ICI Plc Group based in the UK spanned over 27 years and then later with Akzo Nobel N.V. based in The Netherlands. He has also been the Chief Executive Officer of ICI Pakistan Limited and the Chief Executive Officer and Chairman of Lotte Pakistan Limited (formerly Pakistan PTA Limited). During his career with ICI and Akzo Nobel, he worked in Europe and Americas’ in Corporate Finance and Strategy Mr. Waqar Ahmed Malik joined Fauji Foundation as Managing Director and Chief Executive Officer on 9th April 2020. Presently, he is serving as Chairman on the Boards of Fauji Group Companies. He is also Chairman of Pakistan Oxygen Limited (formally Linde Pakistan, a subsidiary of Linde AG) acquired by Adira Capital Holdings (Private) that he co-founded. Mr Malik is a non-executive Member of the Board of JAZZ Pakistan which is a subsidiary of Veon Limited, as well as non-executive Director of Rafhan Maize.