Creek Marina: A Tale of Billion-Rupees Heist

Real Estate is a very profitable investment in Pakistan, provided when one knows what to buy, have some holding power and then sell at just the right time. The returns are very handsome even more than 100% in some cases.

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However, there are also a plethora of fancy real estate projects that have turned out to be worst investments, often with an intent to defraud customers. One such example, that has recently come to light as a Federal Investigation Agency (FIA) investigation, is the Creek Marina Project.

Background

Creek Marina is an under-construction high rise ocean-front residential project located in DHA Phase 8 Karachi, launched in 2004 as a joint venture project between Meinhardt Group and DHA, while the masterplan was designed by Hirsch Bedner Associates. The project's masterplan includes eight 24-storey towers with a total of 780 apartments.

Emerged as a promising endeavor. It boasted ‘luxury living on a waterfront development’ in the Karachi metropolis. It aimed to create an iconic landmark showcasing sophisticated architecture. Its vision revolved around transforming the scenic waterfront into a property that set new standards for upscale living in Karachi.

Nestled in Phase VIII of DHA, residents would savor breathtaking views of the Arabian Sea and the city skyline, but unfortunately, all the above story was an illusion to attract investors.

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What Happened?

The development has been site of repeated delays, initially projected to be completed by 2009, conflicts between Meinhardt and DHA has stalled the project's development. Out of 780, 280 apartments were sold by 2010.

The construction of the project was a question mark even till 2009, which was supposed to be the completion date of the project. Construction process started in 2016, and till 2018 some construction took place only to hallucinate the clients.

And now after almost 19 years, the whole project emerges as dubious and an organized scam, found by the FIA in its initial probe. The investigation shows how local banks, regulatory bodies and financial institutions either ‘ignored’ the formalities or ‘connived’ with the foreign company in taking away some Rs33 billion from the country (Rs33 billion - let that number sink in!).

People Involved & Money Involved

The FIA nominated the owners of the Meinhardt and its senior management namely Naseem Shahzad Mohammad, Omar Shahzad, Nudrat Mand Khan and Muhammad Abdur Raheem; senior bankers Shehryar Khalid, Faisal Hameed of Silk Bank and Faisal Jamil Khan and Syed Ali Murad Naqvi of Meezan Bank under Sections 409 [criminal breach of trust], 109 [abetment] and 34 [common intention] of the Pakistan Penal Code.

The scam begins, when in an agreement between DHA and Meinhardt for Creek Marina, an escrow account was supposed to be opened, but instead, the Creek Marina owners secretly opened two current bank accounts in 2005 and 2007. Around Rs12.1 billion and Rs17.1 billion were deposited into these accounts, which should have been used for the project but were largely withdrawn in cash and transferred. In 2011, they quietly set up another account, letting it lie dormant until 2016, it was dishonestly revived, shockingly a sum of approximately 4.3 billion from the public and investors were collected through this account.

However, the two of them - namely Naseem Shahzad Mohammad and Omar Shahzad are nationals of Singapore. They both are accused of extorting billions of rupees from the people, colluding with the bank staff to open a fake account and sending more than Rs33 billion out of Pakistan.

Nasrullah Khan of the FIA corporate crime circle said, in the next phase the agency would take the named suspects into custody to grill them further on the charges.

For Naseem and his son Omer, the FIA has attempted to contact them, but to no avail. Sources at FIA have confirmed that a letter will also be written to Interpol to track the accused, as there is so far no trace of them in Pakistan.

As per an official of the FIA, the investigation is still ongoing, and the implicated individuals and banks are expected to cooperate fully with the authorities.

Affected Allottees

The affected allottees have formed an action committee, the Creek Marina Action Committee (CMAC), have sought redress and the apprehension of Dr. Shahzad Naseem, Omar Shahzad, and other involved parties. They have made appeals to Prime Minister Shahbaz Sharif, the Army Chief, and the Karachi Core Commander, urging them to ensure justice and to take decisive action against those implicated in the alleged crimes.

What’s Next?

Funnily enough, Creek Marina’s website is still up and functional. The list of team members has Naseem listed as the Group Executive Chairman, and sadly, the firm is asking the troubled investors for more money and threatening that their allotment may be canceled if they fail to pay.

It remains to be seen how the investigation will unfold and whether further actions will be taken based on the evidence gathered during the course of the inquiry. It is still an under developing story so, stay tuned.

Disclaimer

YAS Real Estate has gathered above data (Numbers & Names) from news articles available in the public domain. It takes no responsibility what so ever, other than simply summarizing the information in a easy to understand manner for interested readers.

For all things investments, investors are encouraged to do their own.

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