Creek Marina Project Fraud: FIA Registers case over siphoned off billions

Staff Report

Federal Investigation Agency (FIA) has registered a case against the management of Meinhardt Singapore and Creek Marina PVT Ltd in the Creek Marina Project over multibillion rupees involvement fraud.

Consequent upon the report of JET constituted in vide DG office Order No 184/2023 dated 25.07.2023 and the Director FIA Islamabad Office Order No 184/2023 dated 25.07.2023, it transpired that on 27th September 2004, Pakistan 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.

Both parties 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 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. Creek Marina Project: A Tale of A Billion-Rupees Scam, Corruption, and Greed

However, no Escrow account was opened till 10 July 2020 after a settlement agreement between DHA, and MSPL. And CMPL dated 18th June 2019. On 5th May 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.

The CMPL is the subsidiary of another foreign special-purpose vehicle company namely 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 namely Swiftearn Holding Limited in the British Virgin Island.

In violation of the aforesaid agreement, the CMPL fraudulently opened two bank accounts i.e., A/c account number 001-028463-001 Titled: Creek Marina Pvt. Ltd. In HSBC Bank Karachi on 20-04-2005 [authorized signatory Nasim Shahzad & others], and A/c 0007-70002286-03 Titled: Creek Marina Pvt. Ltd. In HBL Commercial Banking Branch in 15-05-2007 [authorized signatory Nasim Shahzad & others].

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 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) CMPL’s HBL Investment Plus Account No. 0007-79005746-80 Titled: Creek Marina Pvt. Ltd., in HBL Commercial Banking Branch, Karachi.

During that period, the Creek Marina construction project remained halted, and no substantial construction work was being carried out by CMPL.

Again, in April 2011 the management of Creek Marina fraudulently opened another account No. 001-170315-020 Titled: Creek Marina Singapore Pte Ltd- an Investment Holding Foreign Company – at HSBC Pakistan Main Branch Shaheen Complex Karachi, which was later transferred to the Meezan Bank in 2014 after HSBC’s merger with the Meezan Bank as having new A/c No. 9902-01014732-33.

The account remained non-operational and dormant till 16 June 2016 when Faisal Jamil Khan, the then-operational Manager, and Syed Ali Murad Naqvi, the Branch Manager of Meezan Bank Shaheen Complex Kiyani Road Karachi reactivated the bank account on the reactivation request of Nasim Shahzad (as its authorized signatory).

The account was fraudulently re-activated 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., Board of Investment (BOI) Government of Pakistan’s approval.

During the operation of this account, the funds [Total Credit Turnover: Rs 4.3 Billion] accrued in this account from the buyers [general public] and investors were subsequently siphoned off mainly through cash withdrawals and third-party payments.

Again, the management of CMPL/MSPL fraudulently opened another bank account bearing A/c No. 2010568668 Titled: Creek Marina Singapore Pte Ltd. (CMSPL) in Silk Bank Main Branch Karachi on 30th December 2021 [account authorized signatories: Nasim Shahzad, Muhammad Omar Shahzad, Nudrat Mand Khan & Muhammad Abdur Raheem] with active connivance of Silk Bank officials.

This account was opened in Silk Bank without obtaining mandatory documentation viz. 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. Shehryar Khalid-GM and Faisal Hameed ROSM of Silk Bank Karachi, with criminal intention and connivance, got these accounts opened by securing deferral (for submitting required documents) on this account from Silk Bank Management.

The Account Service Department proceeded to open the account while adhering to instructions regarding its status as ‘Post No Debit’ (PND). Later, Faisal Hameed merely obtained a scanned copy of the Account Opening Form with incomplete documentation.

Despite PND, the account remained operational with a total credit turnover of Rs 182 Million and a total Debit turnover of Rs158 Million. During the inquiry, the management of CMPL admitted 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.

Furthermore, the Board of Investment vide its letter, No. 1 (9)/2023-FTP-(MISC) date 09-08-2023, has categorically stated 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) is not registered as a branch/liaison office with BOI as per available records.

Hence, while fraudulently establishing a series of undisclosed bank accounts and deceitfully obtaining and embezzling investment funds under the pretense of the project, the management of CMPL/MSPL with criminal intentions and connivance of Meezan Bank officials namely Faisal Jamil Khan and Syed Ali Murad Naqvi and Silk Bank officials namely Shehryar Khalid, and Faisal Hameed opened and operated Bank accounts at Meezan Bank Shaheen Complex Kiyani Road branch Karachi, and Silk Bank Main Branch Karachi, respectively.

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.

Prima facie, the Directors and Ultimate Beneficial Owners (UBOs) of CMPL/MSPL/CMSPL namely Nasim Shehzad [POC: 70258-6811455-1; Singaporean Passport: E6334933H], Mohammad Omar Shehzad [POC: 70258-6100255-1], Nudrat Mand Khan [CNIC: 42000-0553910-5] and Muhammad Abdur Raheem [CNIC: 37405-3609042-7] with criminal intent and connivance of Silk Bank officials, GM(SAM) Shehryar Khalid [CNIC: 42501-6817549-9] and ROM Faisal Hameed [42101-7835120-9] and Meezan Bank officials namely OM Faisal Jamil Khan [CNIC: 42201-5058048-5] and BM Syed Ali Murad Naqvi [CNIC: 42501-3437036-9] have committed offenses, u/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 competent authority vide letter no FIA/CBC/ KHI/ENQ-93/2023/14576-77 dated 08.09.2023 directed the undersigned to register FIR. Hence, a case is registered accordingly, and an investigation of the case has been taken up by` the undersigned, revealing the FIA report.