ISLAMABAD, Dec 09 (NNI): Pakistan’s Federal Investigation Agency (FIA) has begun a high level money laundering investigation of property dealers advertising Bahria Town Dubai assets in Pakistan.
A senior FIA official, on the condition of anonymity revealed to The Pakistan Daily that billions of rupees were being laundered from Pakistan to the UAE in the guise of property investments in Bahria Town Dubai.
Pakistani investigators believe that official channels have not been used for this capital outflow, contributing to a significant money laundering operation which has so far evaded the attention of law enforcement agencies.
Investigators believe that there have been severe violations of Pakistan’s Anti-Money Laundering Act, 2010 which have so far gone unnoticed. BT (Bahria Town) Holding LLC recently entered into a partnership with Dubai South to create a master planned community in Dubai’s Golf District, near the Al Maktoum Airport.
The partnership was heavily advertised on national and international media with pictures showing the formalisation of the agreements by His Excellency Khalifa Al Zaffin, Executive Chairman of Dubai Aviation City Corporation and Dubai South and Malik Riaz’s son, Ahmed Ali Riaz Malik, Group CEO of BT Holding LLC.
Various property dealers have confirmed that privately, Bahria Town’s projects in Dubai were being advertised to Pakistani investors since at least a year, with an estimated six billion rupees already invested. This has raised alarm bells across Pakistan as the Accountability Court in Islamabad has frozen Bahria Town’s bank accounts in Pakistan.
Legally, Bahria Town cannot receive or send payments abroad however Pakistani investors are being offered high returns on Bahria Town’s projects in the UAE. It is believed that Hundi/Hawala services have been used to facilitate investors in Pakistan.
However, investors remain wary of Bahria Town’s potential to deliver its mega project in the UAE because of its inexperience in an international market. Construction costs in the UAE are significantly higher than Pakistan, however, Pakistani investors are being offered projects with prices similar to the local market, further exasperating suspicions.
This dichotomy has resulted in a loss of confidence of investors, particularly overseas Pakistanis who have historically invested significantly in Bahria Town. After investors lost up to 80% of their funds in Bahria Town Karachi 2, the confidence in Bahria Town’s brand has significantly diminished. Bahria Town’s legal troubles, including the 460 billion rupees Supreme Court fine as well as the UK’s National Crime Agency £190 million out of court settlement has come up in due diligence checks, putting Bahria Town’s partnership with Dubai South in jeopardy.
The UK’s crime watchdog had found evidence of money laundering in regards to Malik Riaz’s assets in the UK following which they were seized with an order to return them to the state of Pakistan.
Dubai South, which enjoys a good reputation is hesitant to get involved in international litigation, particularly involving the United Kingdom’s National Crime Agency which may tarnish their own reputation as a successful developer.
Investors have been cautioned that this agreement, whilst still in the initial phases may be reversed given the multiple controversies surrounding Bahria Town at home and abroad.
Pakistani investors who have lost hundreds of billions of rupees in Bahria Town’s projects in Pakistan are being offered lucrative returns in the UAE, however Bahria Town’s ability to deliver on these projects remain slim according to several property investors who spoke to The Pakistan Daily on the condition of anonymity.
Whilst Bahria Town has not stated when their first project will be complete, experts believe that it will take at least 10 years for Bahria Town’s customers to see any substantial development on ground.
This is a much higher time frame than what is being advertised to lure investors from Pakistan. There are also rumours suggesting that Chairman Bahria Town, Malik Riaz has been diagnosed with Parkinson’s disease.
This has further alienated top Bahria Town investors who remain suspicious of Ali Riaz’s ability to deliver successfully on this scale, especially considering this is the first international project by Bahria Town.
It also remains unclear whether Dubai South is aware of whether they will have to get involved with Bahria Town’s financial and legal liabilities at home and abroad. Both Bahria Town and Dubai South were reached out for a request for comment however they did not respond till the filing of this report. NNI
