CPEC mess: Chinese company building Gwadar Port operating in Pakistan illegally, lawmakers told

Pakistan found itself in yet another mess with regards to the China-Pakistan Economic Corridor (CPEC). A high-level committee of the country's National Assembly has ordered an investigation into the Chinese company that is building and operating Gwadar Port. The move came after the committee was told that the company has been functioning illegally as it does not have security clearance.

The Standing Committee's decision to order the probe comes on the basis of concerns raised in a recent article by a leading Pakistani financial daily that Pakistan officially has no idea who owns China Overseas Ports Holding Company-Pakistan (COPHC-Pakistan), which is building and operating the Gwadar Port. The report had also said COPHC-Pakistan's parent company operated out of a single-room office in Hong Kong, which it shared with four other companies, one of which was named in the Panama Papers.

The Standing Committee on Finance was informed on Tuesday that the Interior Ministry is yet to issue a 'No Objection Certificate' to China Overseas Ports Holding Company (COPHC), Pakistani media have reported. The NOC is a mandatory security clearance that would give the company the legal right to function in Pakistan.

The Securities and Exchange Commission of Pakistan (SECP) told the Standing Committee on Finance that COPHC lacks the security clearance, and that the SECP letter about this in 2014 had received no response from the Interior Ministry, reported Pakistani daily The Express Tribune.

Under Pakistani law, any company which has foreign directors needs security clearance from the Interior Ministry.

SECP had recently issued a notice to COPHC-Pakistan since the company has not filed its mandatory financial disclosure documents for any of the three years that it has operated in Pakistan. Financial daily Business Recorder also reported that no one in Pakistan's government structure seemed to have a clear picture of the ownership of COPHC, and that most had just assumed it was a Chinese state-run company.

This is just the latest instance of Pakistan finally looking at the Chinese gift horse in the mouth. The mad rush of the entire establishment to hail CPEC as a gamechanger seems to have worn off. Policy makers, at least now, seem to be weighing the different sort of costs that Pakistan has to bear to allow China to ride roughshod.

Pakistan's attempts to show spine against Chinese demands have not gone down well. The Chinese have threatened to cancel projects and have pressured their way into having trade in the yuan. Public backlash also seems to be growing thanks to security clearance now being made mandatory not for the foreign Chinese workers but for the Pakistanis working with them. There have also been protests over China's usual practice of bringing in Chinese workers instead of hiring locally.

CPEC is so far the only operational part of Chinese President Xi Jinping's ambitious Belt and Road Initiative. That probably explains why China has reacted sharply to any questions that have been raised against it in Pakistan.