By Naziha Syed Ali- DAWN
The Pakistani state went out of its way to ensure that the property tycoon’s £190m settlement in the UK worked out in his favour.
TOWARDS the end of 2019, something unusual happened at a federal cabinet meeting in Islamabad. Special Assistant to the Prime Minister on Accountability Shahzad Akbar was allowed to present a ‘non-agenda item’; he had with him a sealed envelope that he said contained a non-disclosure agreement. It pertained to a multi-million pound settlement that the UK-based National Crime Agency (NCA) had recently arrived at with property tycoon Malik Riaz. According to a source present at the meeting, “[Human Rights Minister] Shireen Mazari objected, saying, ‘What approval are we giving when we don’t even know its contents?’ We were told that if it is opened there are implications for national security and the UK government also has reservations”.
A home cinema in 1 Hyde Park Place. — Photo: Knight Frank Real Estate
The NCA investigates money laundering and illicit finances derived from criminal activity in the UK and abroad, and in the case of the latter, returns the stolen money to affected states. It seems that Mr Riaz had for some time been the subject of a ‘dirty money’ probe by the Agency. On Dec 3, 2019 it announced a £190 million out-of-court civil settlement with Mr Riaz — its largest till date — adding that it “did not represent a finding of guilt”.
In this country, on the pretext of the non-disclosure agreement, the matter was swept under the carpet. Despite its claims of holding the corrupt to account and bringing back ill-gotten gains stashed abroad by Pakistanis, the PTI government has been curiously tight-lipped about the asset forfeiture deal.
More than one year on, the episode remains cloaked in secrecy. With the help of documents obtained by UK-based investigative journalism project Finance Uncovered, Dawn has pieced together a more complete picture.
The deal with the NCA took on particular relevance for Pakistani citizens when Mr Riaz tweeted: “I sold our legal & declared property in UK to pay 190M £ to Supreme Court Pakistan against Bahria Town Karachi.” It may be recalled that a few months earlier, in March 2019, the Supreme Court had accepted Mr Riaz’s offer of Rs460bn as settlement dues by his real estate firm Bahria Town Ltd after it was found to have illegally acquired thousands of acres of land on Karachi’s outskirts in district Malir.
The amount, which translates to almost $3 billion, was historic in scale. But the settlement with the NCA later that year was a travesty because, thanks to the Pakistan government, it afforded Mr Riaz a shocking reprieve.
The £50 million London property that forms part of the £190m settlement. Design and photography: Tessuto Interiors London
Lawyer Farrukh Qureshi of Samdani and Qureshi described it thus: “It is as if one is apprehended with the proceeds of a crime, and instead of such proceeds being reimbursed to the person wronged, they are used as reparations for another crime. …The amount recovered should [have] come straight back to Pakistan, rather than being put back into Malik Riaz’s pocket.”
Indeed, the British law-enforcement agency in this case may have allowed itself to be manipulated by Pakistan’s power brokers. The ‘accountability czar’, Mr Akbar, did not respond to Dawn’s questions despite repeated requests.
The settlement included 1 Hyde Park Place, a £50m property. Located in one of the most expensive areas of London, it was bought by former prime minister Nawaz Sharif in 2007. Over the next four years a number of high-end firms, including interior designers Tessuto, undertook a massive overhaul of what had been an office building and flats and transformed it into a single residential property. The changes included the excavation of a basement and the building of a swimming pool.
On March 21, 2016 the property was sold by Mr Sharif’s son Hasan Nawaz for £42.5m to a British Virgin Islands company named Ultimate Holdings Management Ltd. Mr Riaz’s son, Ali Riaz Malik, signed for Ultimate Holdings; he was represented by Mischon de Reya law firm. Mr Nawaz signed for himself, witnessed by his lawyer Jeremy Freeman. (A couple of weeks before the sale took place, Mr Nawaz had been contacted by the International Consortium of Investigative Journalists about the Sharif family’s offshore companies that had come to light in the Panama Papers.)
Interestingly, documents filed with the UK Land Registry show that a charge against the property was registered at the same time as the sale: Mr Nawaz is recorded as a lender to Ultimate Holdings. The terms of the loan were “as per the contract dated March 21, 2016 between the parties”. However the contract itself is not filed with the land registry. The timing of the sale and the loan to Ultimate Holdings suggest that Mr Nawaz was keen to divest himself of the property, the priciest in the Sharif family’s UK portfolio. On Sept 19, 2016, the loan by Mr Nawaz was discharged.
The sale illustrated the mutually beneficial relationships that exist among Pakistan’s rarefied elite.
Enter the Pakistani state
In 2019, Mr Riaz’s £190m settlement in the UK was effected with the use of new civil powers known as Account Freezing Orders (AFOs) which allow law enforcement to target suspected proceeds of crime using a civil rather than a criminal burden of proof. Because it was a civil case, the NCA was able to settle it privately with Mr Riaz rather than going to court to secure a Forfeiture Order.
In August 2019, eight AFOs pertaining to the investigation against Mr Riaz were secured from Westminster Magistrates Court in London. In compliance with the AFOs, more than £100m — which the Guardian reported NCA “suspected to have been derived from bribery and corruption overseas” — was frozen on Aug 12. Some £20m associated with the Riaz family had been frozen earlier in December 2018. The AFOs were made out against accounts held by Mr Riaz’s wife Bina Riaz, daughter Sana Salman, son Ali Riaz, daughter-in-law Mubashra Ali, as well as several companies, including Fortune Events and Ultimate Holdings.
Enter the Pakistani state, reportedly at the behest of Mr Riaz.
During September 2019, Mr Akbar is believed to have met Mr Riaz multiple times, at the Dorchester hotel and at the latter’s daughter’s residence. A widely circulated video showed him meeting the property tycoon outside his daughter’s Paddington flat.
According to a London-based Pakistani source well connected with the British political establishment and anti-corruption organisations in the UK: “Mr Akbar advised the NCA to settle with him [Riaz]. Otherwise, he told them, Riaz would finish their prosecution budget [by having high-powered lawyers drag out court proceedings].”
Mr Akbar clearly took up the matter at the very highest levels of the British government. How else can one explain its Home Office’s refusal to share information about the case despite a request under the Freedom of Information Act (FOIA)? An email to the Home Office’s Criminal Finances Team asking for details about Mr Akbar’s meetings with Mr Riaz received a reply requesting more time for a “full response”, which arrived on Feb 1. The gist of the response was: “We neither confirm nor deny whether we hold the information that you have requested.” They based their response on certain sections under the FOIA that allow for exemptions to disclosure if doing so may prejudice relations with another state or prejudice the prevention or detection of crime.
(The NCA is exempt from the FOIA and its actions can only be questioned through judicial review proceedings by a court. Even so, judicial reviews are a challenge to the way in which a decision has been made, rather than findings on the conclusion.)
Whatever the approach Mr Akbar adopted, it seems to have worked and the NCA in early December 2019 agreed to a civil settlement with Malik Riaz. While noting this, the NCA’s annual report does not name Mr Riaz but describes him as “a Pakistani national, whose business is one of largest private sector employers in Pakistan.”
The benign spin is remarkable: the Bahria Town behemoth indeed employs a large number of people. However, on May 4, 2018 the Supreme Court in separate hard-hitting verdicts found massive irregularities in the acquisition by Bahria of huge tracts of public and forest land for three of its housing projects across the country, declaring each of them null and void. In its judgement about Bahria Town Karachi (BTK) — which sprawls unofficially over 30,000 acres and is believed to be the largest such project in South Asia — the SC said: “We have been witnessing such nefarious activities in the past at a small level, but we have not even dreamt of such activities at such a huge, massive and colossal level…. Inaction would be disastrous and devastating for the state when the watchdogs of the public property allow the grabbers to grab it for a bone or a piece of flesh.”
It also said: “Grant of land to Malir Development Authority for an incremental [low-cost] housing scheme proved to be a gimmick to accomplish the agenda of Malik Riaz aiming at his personal enrichment at the cost of the state and the people.”
Investigative reports in this paper have detailed how indigenous communities have been strong-armed into ‘selling’ their land. On the one hand, police carry out raids on the goths, and book locals on fake terrorism charges. On the other, they say, Bahria personnel constantly threaten and intimidate them.
Dawn made multiple attempts to obtain Mr Riaz’s response to its questions, to no avail.
The Westminster Magistrates Court appointed Essex-based Haslers Accountants as receivers to handle the settlement. On Dec 5, 2019, Mr Akbar announced at a press conference in Islamabad that £140m had been repatriated to Pakistan, into the Supreme Court’s account — presumably the one set up by the court to receive Bahria Town’s liabilities — and the remaining £50m would be transferred later on the sale of 1 Hyde Park Place. When asked how the money could be transferred to the SC account, he deflected the question saying that the government, NCA and Mr Riaz had signed a “deed of confidentiality” which prevented him from elaborating on the matter.
‘The stuff of sheikhdoms’
This effort to conceal facts on the specious pretext of ‘national security’ amounts to a mockery of the Pakistani people’s right to information in a matter of public interest. Abdul Moiz Jaferii, partner at Haider Waheed Partners said: “In simple terms, it is the stuff of sheikhdoms. An unelected person [Mr Akbar] wields authority unknown to the public to settle a matter hidden from the public on terms sworn to secrecy… . The guise of confidentiality is used as an excuse, even though the only confidentiality that could possibly bind the Pakistani state here would be one it willingly agreed with the accused person, and not one which the NCA has imposed upon them… .”
According to David Corker, senior partner at the Corker Binning law firm in London, confidential settlements like the one in question are the result of a financial crime strategy that increasingly focuses on recovery of funds over criminal litigation. “Law enforcement concerning white-collar and financial crime has become fatigued by trial by jury, with all the attendant delay and costs and are increasingly seeing the re-designation of their effectiveness by how much money they have seized and how many alleged plots they have disrupted. This is the natural outcome of that process: the NCA gets a good result but it is willing to make concessions to get there.”
Back in London, 1 Hyde Park Place was first put up for sale with Knight Frank realtors: their brochure described it as “one of London’s last surviving Georgian palaces”. However, it did not find any takers, apparently because of the high price tag of £45m. According to a source in London, one of the realtors handling the property said that “mid to high £30m” would have been a more realistic number. The property is now being handled by Beauchamp Estates. It raises serious questions whether the price paid for its purchase was purposely inflated. Dawn made several attempts to contact Mr Nawaz but received no response.
As of now, however, 1 Hyde Park Place is not on the market. According to a source relevant to the process, “the sale of the property is on hold at the moment…. But it should be on the market soon, it just needs to undergo some due diligence before that happens.”
The NCA has given contradictory messages about the status of the property and the matter remains shrouded in mystery. A senior official from the organization first told Dawn in December 2019 that “The NCA has taken ownership of the property and it will be sold with the proceeds going back to Pakistan,” but then retracted their words in a subsequent email.
Meanwhile, several members of the Riaz family reside in the deluxe Lancaster Gate development just a short walk from 1 Hyde Park Place. Fortune Events Ltd, an offshore company based in the British Virgin Islands, bought nine apartments here between 2011 and 2018 for a total of £35.95m.
There are indications that the Riaz family is the actual beneficiary of the nine apartments. For one, Ali Riaz’s email is given as a contact address on one of the title deeds; another lists a Dubai PO Box address which links to Ali Riaz’s property at P69 Emirates Hills. The address for the Mischon de Reya law firm is also frequently given as a contact address.
On Nov 22, 2019 Westminster Magistrates Court set aside the eight AFOs dated Aug 12, 2019 and the first one from December 2018 to enable money in the accounts to be repatriated to Pakistan. Two of the accounts belong to Fortune Events, suggesting the Riaz family is indeed the beneficiary of the Lancaster Gate portfolio. The settlement appears to have left untouched his luxury portfolio worth £36m owned through a company served with two AFOs.
Read More: https://www.dawn.com/news/1618221