A lawmaker has raised fears of money laundering after the central bank declared that it had not initiated any process for granting permission to a billionaire for remitting $75 million for the purchase of Saint James’s Hotel in London as the deal has already been sealed.
“The State Bank of Pakistan (SBP) neither gave any permission nor initiated a case for approval of the Economic Coordination Committee (ECC),” Irfan Ali, Director Banking of the SBP, told the Senate Standing Committee on Finance and Revenue on Tuesday.
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In July this year, the Senate committee had directed the SBP to furnish details whether the Nishat Group remitted $75 million for acquisition of the five-star hotel through proper channels. Billionaire Mian Muhammad Mansha had purchased the hotel in 2012 for $75 million.
Ali said the SBP had powers to give permission for investment up to $5 million abroad and initiate the case for approval of the ECC, if the investment is over $5 million.
Making investment abroad without the central bank’s green signal was a serious issue and could raise concerns of money laundering, commented Senator Saeed Ghani of the Pakistan Peoples Party, who is a member of the standing committee.
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Ghani also presented a notice of the Federal Board of Revenue (FBR), which was sent to Mansha. The FBR apparently moved against Mansha after the standing committee took up the issue and it served the notice on August 21.
“This office has credible information that your family has purchased St James’s Hotel and Club, an internationally famous and luxurious five-star hotel with 60 rooms/suites located at 7-8 Park Place, London. This property has reportedly been purchased from Mountain Capital in November 2012 through Savills and Gerard Nolan & Partners for a total price of 60 million British pound equivalent to around Rs9 billion,” reads the notice.
It adds, “tax declarations, including the prescribed wealth statements of your family members, do not reflect this property for the tax year relevant to the date of purchase. This omission reflects that the investment has apparently been made out of income which has not been subjected to tax in Pakistan.”
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The standing committee decided to summon FBR officials in the next meeting before making any recommendation to the government pertaining to non-declaration of the hotel in wealth statements.
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Presided over by Senator Saleem Mandviwalla, the standing committee also expressed its displeasure over the manner the National Accountability BureaAu (NAB) was handling the case of alleged irregularities in the privatisation of MCB Bank. NAB Rawalpindi Director General Zahir Shah disclosed that he was twice approached by Mansha, who had purchased the bank, but he refused to meet him.
He said this in response to the criticism that NAB was too soft and was not keen to complete investigations into allegations that MCB Bank was bought with the money of its depositors.
In 1991, the Nawaz Sharif government had sold 75% stake in MCB Bank for Rs2.42 billion.
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In the previous meeting of the standing committee, NAB had submitted a paper that said its 2002 inquiry established that sponsor-directors of MCB Bank had submitted a fake bid bond.
It added the sponsor-directors also used MCB funds for making payments for the acquisition of shares, which led to a substantial loss to the bank in terms of rightful income.
However, the NAB DG said the anti-corruption watchdog could not take action on the basis of the 2002 inquiry report. In July, NAB launched a fresh probe, but he did not give a timeframe when the process would be completed.
Published in The Express Tribune, November 25th, 2015.
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