Back in the mid-2000s, the proposed, glitzy Karachi Financial Towers in the city’s financial district were a symbol of progress and prosperity.
Six years later, the abandoned construction site along the II Chundrigar Road is a glaring manifestation of financial misappropriation and possible embezzlement.
Embroiled in the mismanagement is the state-owned National Logistic Cell (NLC) which purportedly suffered a loss of Rs1 billion due to “fraudulent activities in a joint venture project which ultimately failed,” according to a draft audit report for 2011-12.
NLC made an investment with UAE-based M/s Enshaa Group and entered into a joint venture agreement with the firm “against basic principles of the said business,” the report stated. Enshaa, meanwhile, has completed several reputed projects in Dubai.
The audit added that “NLC refused to provide a complete file of the said investment … the audit could [therefore] not assess the exact loss that NLC had suffered in that joint venture.”
“However, it is established that the NLC sustained a loss of Rs1 billion in this project,” the report added.
Project details
The twin towers were ambitious nonetheless.
Minutes of the NLC Board meeting revealed that Pakistan Railways awarded a piece of land measuring 12,950 square yards to NLC on a 99-year-lease at a cost of Rs2.3 billion in February 2006.
NLC then entered into a joint agreement with M/s Enshaa Group for the construction of the 45-storey twin towers on the Railways land. NLC held 49% of the shares compared to Enshaa’s 51%. The initial financing plan envisioned equity of Rs1.2 billion, a term loan of Rs1.68 billion and the remaining amount to be generated from sale of office space by the joint venture company.
Six years later, the project remains abandoned and lack of records by the NLC management means it is difficult for the auditors to assess the reason for failure of the project, the total investment made by the joint venture firm, the share of M/s Enshaa Group in the company and the loss sustained by the NLC on this account.
Details also show that the cost of land, Rs2.3 billion, was paid by the NLC, and in the absence of records, any share of Enshaa in this payment could not be ascertained by the auditors.
Meanwhile, despite NLC making the major investment, a majority shareholding by Enshaa also appeared unjustifiable.
Admitting irregularities
NLC management, meanwhile, itself admitted to the auditors that the project was a glaring example of past mismanagement and irregularities. The management added that there had been massive corruption in the joint venture.
The management also admitted that a large sum, in excess of Rs1 billion, has been siphoned off from the company accounts through connivance of members of the board of directors and contractors.
The issue was reported to the NLC management on November 29, 2011 and the ministry of planning and development on Dec 8, 2011, but no reply was furnished by the latter.
Published in The Express Tribune, December 15th, 2012.
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I wonder how many of these "commercial" companies acting as fronts for Pak Army's retirement plan are actually profitable, given that they are not accountable publicly and any (billion rupee ?) shortfalls are met through Army budget, further preventing any scrutiny. This essentially allows unfettered gambling by said organizations. Wasn't there another scandal a few years ago about investing some billions in some company shares by NLC directors causing a huge loss ?
@Ishrat salim:
Army is not the solution to everything. They should stick to their job which is defending our borders. God knows they have failed miserably but have still managed to conquer their own country a number of times. I will not enter into the debate about who is less corrupt. All I will say is that we as a nation lack character.
@Adeel Nasir: NLC has a whole lot of civil engineers. but they have no experience of high rise bldgs. But ask the ex DG who enjoyed his stay in Mush's tenure and reported to PM Shaukat Aziz.
@Adeel Nasir:
Not necessarily....according to our PM....nobody should teach them how to run the country.....meaning....nobody should teach them how to make money,left,right n center....what i meant was hang all such people involved in such loot n plunder.....not only NLC.....corruption in 4.5 years by civilian govt has no match for total 60 years....and it is open secret....even conceded by NAB appointee of PPP govt....n minister for food security govt of Pakistán has also conceded in senate 2 says back that poverty level has increased since 2008 compared to pre civilian govt period.....yes! you are right....Gen M period.....suggest ask anyone in the street whether they are happy today or then...hence, let us not be paranoid of our Armed forces.....it seem to have become favorit pastime of many literate individuals in our country.
@Ishrat Salim: Dont't you know good sir, that once you graduate from PMA, Kakul, you are an expert in everything?
This can happen only in Pakistan.....why NLC with no experience entered into such venture ? ....means all was pre-planned & all respective officials involved....hang them.....