KARACHI: Federal Investigation Agency (FIA) has initiated an inquiry into a major financial scandal involving the Directors and Ultimate Beneficial Owners (UBOs) of Pakistan Defence Housing Authority (DHA) Karachi’s Creek Marina project. The investigation, directed by the competent authority, comes after a detailed report from the Joint Investigation Team (JET) and orders from the Director FIA Islamabad Office.
According to the JET’s findings, the saga begins with an agreement signed on September 27, 2004, between Pakistan Defence Housing Authority (DHA) Karachi and Meinhardt Singapore Pte Ltd (MSPL) for the construction of the Creek Marina project in DHA Phase VIII Karachi. This agreement stipulated the establishment of an Escrow Account to manage payments from buyers and project expenses. The account was also supposed to be audited independently, with cash flows reported quarterly to DHA by MSPL.
However, it was discovered that the Escrow Account was not opened until July 10, 2020, following a settlement agreement involving DHA, MSPL, and Creek Marina Pvt. Ltd (CMPL). CMPL, a subsidiary of Creek Marina Singapore Pte Ltd (CMSPL), was added to the agreement in May 2005.
The investigation revealed that CMPL fraudulently opened two bank accounts in 2005, violating the agreement’s terms. These accounts, held in HSBC Bank Karachi and HBL Commercial Banking Branch, received approximately Rs12.1 billion and Rs17.1 billion, respectively, intended for the project. However, these funds were siphoned off through cash withdrawals and foreign telegraphic transfers (FTTs) rather than being used for construction.
In April 2011, CMPL opened another account with HSBC Pakistan Main Branch Shaheen Complex Karachi, which later transferred to Meezan Bank in 2014. This account, reactivated in June 2016, violated State Bank of Pakistan (SBP) regulations and was used for unauthorized transactions totaling Rs 4.3 billion.
Another bank account, bearing A/c No. 2010568668, was fraudulently opened in Silk Bank Main Branch Karachi in December 2021 with the active connivance of Silk Bank officials. This account lacked mandatory documentation and biometric verification, leading to unauthorized transactions of Rs 182 million.
The Board of Investment stated that CMSPL was not registered as a branch/liaison office in Pakistan, further highlighting the illegal nature of these operations.
The FIA inquiry alleges that the management of CMPL/MSPL, along with the complicity of Meezan Bank and Silk Bank officials, systematically established and operated these undisclosed bank accounts to embezzle investment funds intended for the Creek Marina project. The misappropriated funds were allegedly used for personal gain by the Directors and UBOs of CMPL/MSPL/CMSPL.
Prima facie, the Directors and UBOs of CMPL/MSPL/CMSPL, including Nasim Shehzad, Mohammad Omar Shehzad, Nudrat Mand Khan, and Muhammad Abdur Raheem, are accused of offenses under sections 409, 34, 109 PPC. The role of others involved and any beneficiaries will be determined during the investigation.
The FIA, acting on the competent authority’s directive, has registered a case, and the investigation is now underway. This financial scandal has sent shockwaves through the business community and underscores the need for robust regulatory oversight in Pakistan’s financial sector.