PAKISTAN: Pakistani authorities are investigating a housing developer based in Singapore for allegedly cheating residents out of billions of rupees.
Despite the passage of almost 18 years, the affected individuals have not yet seen the return of their funds.
The victims, who invested their hard-earned money in the project, approached authorities, including the Federal Investigation Agency (FIA), to report the alleged fraud.
For the years to come, the investigation led to complex legal battles, amendments to agreements, and accusations of money laundering.
PAC refers ‘Creek Marina’ project case to FIA for investigation
The FIA is already investigating allegations of defamation, banking fraud and money laundering against Singaporeans Dr Naseem Shehzad and his son Umar Shehzad as well as other associates of the project and has put their names on the watch list.
On 9 August this year, in a letter signed by the Public Accounts Committee (PAC), Joint Secretary Aurangzeb instructed the FIA to thoroughly investigate alleged corruption and fraud in the Creek Marina project based on a complaint from a victim named Syed Danish Ghazi, who is among those affected by the issue.
Ghazi, who had paid Rs16.8 million over four years for a Rs20 million apartment booking, reported that the developer is now asking for additional funds.
Despite his request for reassurances, the company did not provide any and instead cancelled his allotment through a letter from a well-known law firm.
The letter mentioned that the PAC chairman had directed an inquiry into the matter and, if the company is found to be engaged in irregularities, it should be blacklisted according to the rules, with a comprehensive report promptly sent to the PAC Secretariat.
Creek Marina project
In 2003, Pakistan was experiencing a boom in constructing high-rise luxury flats.
During this time, Meinhardt Singapore Pte Limited, a company based in Singapore, unveiled plans for a prestigious project known as Creek Marina, located near the Arabian Sea in Karachi’s affluent Defence Housing Authority (DHA).
Pakistan-origin Dr Shahzad Nasim, a representative of Meinhardt, signed an agreement with DHA Karachi to secure the lease of a prime waterfront property spanning 92,000 square yards (19 acres) in the ongoing development of Phase 8. The estimated current value of this land exceeds US$150 million.
As outlined in their contract, Meinhardt was tasked with designing, constructing, developing and marketing the luxury flats on the land within three years.
Furthermore, DHA undertook this bold venture in collaboration with a company lacking a history of constructing residential projects and was primarily focused on design and consultancy services, in hope that, once the project is built, DHA would eventually gain a 15% stake in the apartments constructed.
For that purpose, Meinhardt established a local company called Creek Marina Private Limited.
However, through another shell company, Meinhardt allegedly opened “fake” accounts in local banks without undergoing registration with the Board of Investment, the Securities Exchange Commission of Pakistan, or the State Bank of Pakistan.
In the meantime, the company began marketing the project as a luxurious 6-star venture with eight towers of 24 floors, offering three and four-bedroom apartments and several penthouses.
This collaboration between DHA and Meinhardt boosted public trust and encouraged them to invest their savings.
The apartment sales began on 20 June 2007, and following the usual practice for housing projects, people were asked to make deposit payments to reserve flats and other commercial units.
Consequently, more than 300 families deposited Rs2.5 billion, but authorities suspect the reported transactions are incomplete and the actual sum is much more.
Originally intended to be completed and handed over to buyers by 31 December 2009, the project encountered delays that hindered its timely execution.
Instead of fulfilling the promise, Meinhardt allegedly transferred funds abroad, potentially violating foreign exchange laws.
Upon discovering that the project, for which they had invested substantial sums, was nothing more than an empty promise, the investors reached out to federal investigators to report the fraudulent conduct.
Halted construction and discord with DHA
When the project’s construction didn’t begin on time as planned, the housing authority in Karachi and the project managers changed their agreement on 5 May 2005.
This revised arrangement divided the project into two phases instead of eight.
Despite the amendments to the agreement, this project could not be completed in time.
On 4 June 2009, a second change was made to the agreement. In this amendment, DHA unexpectedly decided to decrease its portion of the apartments from 15% to 3.75%, despite there being little progress in constructing the project.
According to the new agreement, the project would be finished and handed over in three phases instead of the initial two. The first phase had a target completion date of June 2011, the second phase by December of the same year, and the third phase by June 2012.
Again, the company was unable to finish the project within the designated timeframe.
In 2010, work on the project came to a halt when the Chinese contractors employed by Creek Marina (Pvt) Limited, using funds from the allottees, left the project.
Eventually, Creek Marina encashed the performance guarantees of these Chinese contractors.
Instead of transferring around Rs1 billion to the project’s accounts, there was an effort to divert the money through a fraudulent account of a related entity, Creek Marina Singapore Pte Ltd, based in Singapore.
This was done to move the money abroad, benefiting local partner Aftabuddin Qureshi.
When DHA noticed these fund diversion attempts, they filed money laundering cases in the Sindh High Court and froze the accounts.
However, both cases were later retracted, even though they involved significant charges of fraud and illegal gain.
Creek Marine Action Committee
Meanwhile, around half of the allottees, approximately one hundred in number, established the Creek Marina Action Committee under the leadership of Yousaf Mirza. This group chose to engage with DHA and CMPL to address the problem.
The committee members had a meeting with Dr. Shahzad Nasim, the company’s owner, in Dubai in May 2012. They were persuaded that cooperating and fulfilling their payments would lead to the delivery of their apartments within three years.
However, the committee harboured doubts about Dr Nasim’s assurances and thus lodged a complaint with the National Accountability Bureau (NAB). This action prompted NAB to initiate an investigation, subsequently leading to additional legal proceedings.
While legal proceedings were ongoing, it’s said that NAB facilitated a resolution between the Creek Marina Action Committee and Dr. Nasim.
The arrangement concluded with the NAB investigation being closed and a partial project delivery expected by June 2022.
Although NAB officially closed its case in 2019, there has been minimal advancement on the project since then, leaving the allottees with limited options but to approach NAB once again.
Legal conflicts between DHA and development project management
In 2014, the DHA initiated a First Information Report (FIR) against the proprietor of the company, who holds Singaporean citizenship.
In the FIR, DHA accused them of fraud and money laundering to the tune of Rs3 billion.
Even with the grave accusations, the charges were eventually dropped, leading to a third amendment of the project agreement between DHA and Creek Marina on June 18, 2019.
This new arrangement stipulated that all funds for the project would be safeguarded in an escrow account, and an accelerated development approach would be adopted. Additionally, DHA’s 15% ownership share was reinstated according to this agreement.
Meanwhile, Creek Marina still remains unfinished.
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