The Federal Investigation Agency’s (FIA) Anti-Corruption Circle (ACC) has registered a multi-billion-rupee corruption case against the Karachi Port Trust’s (KPT) former officials, including ex-chairman Vice Admiral (retd) Ahmed Hayat, P&D Division ex-general manager Brigadier (retd) Syed Jamshed Zaidi and Karachi International Container Terminal (KICT) ex-CEO Khurram Sajid Abbas.
FIA authorities told The News that the initial agreement was executed between the KPT and two foreign companies on a build-operate-transfer (BOT) basis. Under the 1996 agreement, the companies were to operate the terminal for 21 years, with the facility scheduled to return to the KPT in 2017.
However, the agreement was allegedly illegally amended in 2005, with additional berths allotted to the KICT, and the period of operation extended to 2029. Had the terminal been returned to the KPT in 2017, all revenues would have accrued to the port trust and the national exchequer.
Instead, the accused allegedly allotted additional land without tender or competitive bidding, and extended the operation period, depriving the national treasury of revenue and resulting in wrongful gains for the KICT. The total estimated loss to the national exchequer is approximately Rs50 billion.
The FIA’s ACC filed the case under Sub-Section 2 of Section 5 of the Anti-Corruption Act, 1947. The action follows a reference from the National Accountability Bureau (NAB) Karachi.
According to the FIA authorities, the KPT land was allocated illegally, and in 2005, an amendment to the contract resulted in an additional 124,000 square meters being allotted without a proper bidding process.
The officials said that these illegal allocations caused losses of over Rs2.8 billion in royalty and other dues to the national exchequer. Furthermore, between 2017 and 2020, the irregularities led to a total financial loss exceeding $157 million.
The FIA has confirmed that the investigation would continue under its anti-corruption mandate to recover public funds and hold the individuals responsible accountable.
A copy of the FIR obtained by The News shows that consequent to the referral of NAB Karachi’s reference No. 3/2021 by the NAB chairman, pursuant to Accountability Court No. IV Karachi’s order dated February 28, 2024, enquiry No. 15/2026 was registered at the FIA’s ACC.
NAB had arraigned the following as accused in the reference: Vice Admiral (retd) Hayat, Brigadier (retd) Zaidi, Abbas, and the KICT through its CEO.
The reference was under trial before Accountability Court No. IV when it was returned to the NAB chairman, who, after fulfilling legal formalities, referred it to the FIA.
The examination of evidence and materials available have revealed that American President Lines Ltd. (a company incorporated in the State of Delaware, USA, having “1111 Broadway, Oakland, California 94607, USA” as the registered address) and International Container Terminal Services, Inc. (a company incorporated in the Philippines, having “ICTSI Administration Building, MICT South Access Road, North Harbour, Manila, P.O. Box 279, Manila Central, Philippines” as the registered address) entered into a three-party agreement with the KPT on a BOT basis in 1996 through an implementation agreement (IA 1996), whereby both companies set up (holding 50 per cent share each) KICT Ltd. and established a container terminal on berths 22, 23, 24 and 24-A (600 meters sea-facing length) at West Wharf, KPT, over an area of 136,222.4 square meters.
According to the IA, the terminal was to be transferred to the KPT in 2017, i.e. 21 years after the agreement. The KICT assumed the role of terminal operating company (TOC) and was to pay royalty charges and harbour master services charges to the KPT under IA 1996.
Abbas submitted a proposal to the KPT for the extension of the KICT through the introduction of a new Phase III and extension of the concession period to 2029 (both in violation of IA 1996).
Initially, an area of 7,000 square meters was allocated to the KICT on the pretext of “revised procedure of Customs examination” on a temporary basis.
Following this, an illegal “first amendment agreement” was executed between the KICT and the KPT in December 2005, whereby an area of 124,126.15 square meters was handed over to the KICT by introducing a new Phase III in the ongoing project without open/competitive bidding and in sheer violation of (i) rules / manner of granting long-term leases as devised in Chapter 4 of KPT Estate Manual, 1983, and (ii) provisions of IA 1996, wherein no allowance existed.
The amendment of 2005 illegally enhanced the scope of the initial site comprising phases I and II, which was set to expire in 2017, and the KPT was to act as below per article 21.3 of IA 1996:
“The KPT will invite competitive bids for the operation of the terminal from pre-qualified parties... unless the KPT intends to operate the terminal itself after the expiry date... In the event the KPT does not intend to operate… it shall give the TOC the first right of refusal to match the financial and other terms and conditions of the most successful bidder and stipulate a period of not less than 30 days within which the TOC would have the right to exercise the said option.”
The alleged violations, i.e. illegal allotment of additional space measuring 124,126.15 square meters and illegal extension of the concession period of existing terminal from 2017 to 2029 caused the following losses: Rs2,802,322,214 in terms of low royalty and HMS (this is calculated using a bid received by the KPT for the Pakistan Deep Water Container Port [PDWCP] in 2007).
The assets of the KICT not transferred to the KPT as a consequence were valued at Rs465,204,000 by Mashoud Ahmed Jan, chief accounts officer, KPT.
Considering the PDWCP’s rates, the estimated loss for the period from 2017 to 2029 is $157,638,000. Estimated loss in lieu of HMS charges for 12 years is Rs3,050,420,648.
Hayat and Zaidi, in connivance with each other, concealed material facts from the KPT Board, i.e. articles 7.31 and 7.32 of IA 1996 were for stevedoring services and container handling at other berths outside the terminal but were not meant for the expansion of the terminal through the allotment of additional land to the KICT.
Moreover, Zaidi concealed the legal opinion prohibiting the amendment of IA 1996 from the KPT Board and obtained a new favourable legal opinion without reasonable cause to obtain a decision in favour of illegal allotment of additional space to the KICT.
The KICT was extended an undue benefit through misuse/abuse of authority by Hayat and Zaidi, in connivance with Abbas, resultantly causing wrongful gain of at least Rs50.3 billion.
The wrongful gain to the KICT translates to a direct loss to the KPT / national exchequer, thereby attracting the provisions of Section 5(2) of the Prevention of Corruption Act, 1947.
Hence, pursuant to the above findings in the enquiry, with the approval of the competent authority, a case was registered under Section 5(2) of the Prevention of Corruption Act, 1947. The role of other accused in the instant case will be ascertained during the course of investigation.
