The Federal Investigation Agency's (FIA) Commercial Banking Circle (CBC) in Karachi has lodged a first information report (FIR) against Meinhardt Singapore and Creek Marina PVT Ltd for allegedly opening a series of undisclosed accounts in local banks and deceitfully obtaining and embezzling investment funds through Creek Marina Project, DHA Phase 8, Karachi, The Friday Times has learnt.
As per a copy of the FIR, available with The Friday Times, the complaint was registered after FIA completed its preliminary inquiry into the matter.
"Consequent upon the report of JET constituted in vide DG office Order No 184/2023 dated July 25, 2023, and the FIA Islamabad Office Director Order 184/2023 dated July 25, 2023, it transpired that on September 27, 2004, Defence Housing Authority (DHA) Karachi and Meinhardt Singapore Pte Ltd [hereinafter referred to as MSPL] entered into an agreement for the construction of Creek Marina project located at DHA Phase VIII Karachi it was agreed between both parties to open and maintain an Escrow Account for the purposes of the payments received for the buyers and for the payment of expenses and project costs related to the project Creek Marina," the text of the FIR read.
It added: "The Escrow Account was to be audited and agented by an independent auditor, and its cash flows were to be quarterly reported to the DHA by the MSPL. However, no Escrow account was opened till July 10, 2020, after a settlement agreement between DHA and MSPL. And CMPL dated June 18, 2019. On May 5, 2005, an addendum was made to the said agreement, Creek Marina Pvt. Ltd [hereinafter referred to as CMPL] was added as the sub-lessee third party was executing the project in Pakistan."
According to the FIR, CMPL is the subsidiary of another foreign special-purpose vehicle company called Creek Marina Singapore Pte Ltd [hereinafter referred to as CMSPL] – an investment holding company for CMPL – registered in Singapore entirely owned by another offshore company called Swiftearn Holding Limited in the British Virgin Island.
The FIR stated that in violation of the aforesaid agreement, the CMPL fraudulently opened two bank accounts. One was titled: Creek Marina Pvt. Ltd, which was opened in HSBC Bank Karachi on April 20, 2005, [authorized signatory Nasim Shahzad and others], and another account titled: Creek Marina Pvt. Ltd. on May 15, 2007 [authorized signatory Nasim Shahzad and others] in a different bank in Karachi. During the operations of these accounts, approximately Rs12.1 billion and Rs17.1 billion were credited into these accounts, respectively. It is pertinent to note that these two accounts were Current Accounts, not Escrow Accounts.
The funds were allegedly fraudulently accrued in these accounts from the buyers [general public], and investors were subsequently siphoned off mainly through cash withdrawals and foreign telegraphic transfers [FTTS] rather than using these funds for the construction of the project.
The management of CMPL fraudulently invested the same in another (new) account titled: Creek Marina Pvt. Ltd., in Karachi. During that period, the Creek Marina construction project remained halted, and no substantial construction work was being carried out by CMPL.
Per the FIR, in April 2011, the management of Creek Marina fraudulently opened another account titled: Creek Marina Singapore Pte Ltd- an Investment Holding Foreign Company – at HSBC Pakistan's Main Branch at Shaheen Complex in Karachi. This account was later transferred to the Meezan Bank in 2014 after HSBC's merger with the bank. However, the account remained dormant until June 16, 2016, when officials at the bank's branch in Karachi reactivated the account upon receiving a reactivation request from Nasim Shahzad (its authorized signatory).
The account, FIA claimed, was fraudulently reactivated in violation of the State Bank of Pakistan (SBP) 's regulation viz. AML/CFT regulations, CDD, EDD, etc., and without obtaining the mandatory documents required for a Foreign Investment Holding Company in Pakistan, i.e., the Board of Investment (BOI) and the Pakistan government's approval.
During the operation of this account, the funds [Total Credit Turnover: Rs4.3 billion] accrued in this account from the buyers [general public] and investors were subsequently siphoned off mainly through cash withdrawals and third-party payments, FIA claimed in the FIR.
The management of CMPL/MSPL fraudulently opened another bank account bearing the title: Creek Marina Singapore Pte Ltd. (CMSPL) in a fourth bank in Karachi on December 30, 2021, [account authorized signatories: Nasim Shahzad, Muhammad Omar Shahzad, Nudrat Mand Khan and Muhammad Abdur Raheem]. This account was also opened without obtaining mandatory documents such as the Company's Board resolution, Article of Association, Company Registration Certificate, Foam A and Form 29, Certificate of Incorporation, SECP-approved documents, verified signatures on the AOF by an Embassy official for the signatories residing abroad, and approval from the Board of Investment of Pakistan (BOI).
Moreover, no biometric verification of the authorized signatories of the account holders was conducted. The FIA accused bank officials of having "criminal intention" and "connivance" to open these accounts by securing deferral (for submitting required documents) on this account from the management of their bank.
The account service department proceeded to open the account while adhering to instructions regarding its status as 'Post No Debit' (PND). Later, a scanned copy of the account opening form with incomplete documentation was obtained. Despite PND status, the account remained operational with a total credit turnover of Rs182 million and a total debit turnover of Rs58 million.
FIA claimed that during its inquiry, the management of CMPL allegedly admitted that the majority of its debtors are employees of the company but failed to provide any plausible answer/justification for funds so siphoned off from this account.
The FIR further states that the Board of Investment wrote a letter on August 9, 2023, categorically stating that it is mandatory for a foreign company to get prior permission from BOI to operate a branch/liaison office in Pakistan.
M/S Creek Marina Singapore Pte. Ltd (CMSPL), however, is not registered as a branch/liaison office with BOI as per available records, the FIA claimed.
The FIR accused the suspects of fraudulently establishing a series of undisclosed bank accounts and deceitfully obtaining and embezzling investment funds under the pretence of the project, the management of CMPL/MSPL, with criminal intentions and connivance of bank officials at multiple banks, namely Faisal Jamil Khan and Syed Ali Murad Naqvi and Silk Bank officials namely Shehryar Khalid and Faisal Hameed opened and operated bank accounts in Karachi. The funds thus siphoned off were subsequently embezzled and misused for personal gains of the directors and Ultimate Beneficial Owners (UBOs) of CMPL/MSPL/CMSPL.
As per the FIR, it appears that the directors and Ultimate Beneficial Owners (UBOs) of CMPL/MSPL/CMSPL, namely Nasim Shehzad, Mohammad Omar Shehzad, Nudrat Mand Khan and Muhammad Abdur Raheem, with criminal intent and connivance of bank officials, allegedly committed offences under sections 409, 34, 109 PPC.
Moreover, the role of others involved and beneficiaries (if any) shall be determined during the course of the investigation, the FIR reads. The FIA, in a letter dated September 8, 2023, directed the Commercial Banking Circle in Karachi to register the FIR. Subsequently, a case was registered, and an investigation into the case has been taken up by FIA CBC Karachi Sub-Inspector Nasrullah Khan.