MUSHTAQ GHUMMAN

ISLAMABAD: The Cabi-net has approved a supplementary grant of $ 1.37 million to contest cases filed by M/s Karkey in different countries, sources close to Minister for Power Division told Business Recorder. On January 17, 2019, the Power Division briefed the Cabinet that M/s Karkey, a Turkish power company, had set up a 232 MW Ship Mounted Rental Power Project pursuant to Rental Power Policy 2008, announced by the Government of Pakistan (GoP).

M/s Karkey entered into Rental Services contract dated April 23, 2009 (RSC) for generation of electric power with the Lakhra Power Generation Company Limited (LPGCL). Pursuant to the terms of the RSC, the GoP issued sovereign guarantee to secure payment obligations of LPGCL. Karkey achieved commercial operations in April, 2011.

In the meanwhile, the Supreme Court, in its judgment of March 30, 2012, declared all RSCs void ab initio, being illegal and against public policy. The Supreme Court also directed the National Accountability Bureau (NAB) to carry out investigation under the NAB Ordinance 1999.

Pursuant to the judgment of the Supreme Court, NAB commenced investigation and also restrained Karkey ships from leaving territorial waters of Pakistan. M/s Karkey filed arbitration claim against the GoP for various breaches, unilateral termination of the RSC and detention of its ships, before the International Center for Settlement of Investment Disputes (ICSID) under Pakistan-Turkey Bilateral Investment Treaty (BIT), 1995.

Pakistan was represented by the Attorney General, British law firm and a team of erstwhile Ministry of Water and Power officials headed by the then Minister Khawaja Asif.

The proceedings before ICSID were held between March 23 and March 26, 2018. On August 22, 2018 the ICSID awarded against GoP amounting to $ 760 million along with interest thereupon. After the award, Karkey has gone into enforcement of arbitration award against Pakistan in various jurisdictions including the USA, UK, Germany and France.

“With this action, Government of Pakistan’s assets abroad are at potential threat of being attached or lien being created on them and will result in huge financial implications,” the sources added.

In this regard, a request was made to the Attorney General for Pakistan to hold a meeting to develop a way forward. Meeting was held on November 20, 2018, Attorney General’s office informed Power Division to arrange funds to the tune of $ 1.37 million of which $ 0.395 million is advance payment on urgent basis to engage counsel, initiate remedies including revision, reviews, defence of the enforcement proceedings etc, to be started, reviewed and completed on the critical timeline.

Power Division had placed this proposal before the Economic Coordination Committee (ECC) of the Cabinet in December, 2018 which recommended placement of the case before the Cabinet for consideration and approval.

According to the Attorney General’s office, Pakistan is to file an application for revision of the award on the basis of recently uncovered evidence by a UK-based private investigator hired by the investigating agency to have the award suspended/ delayed.

Attorney General office further stated that to enhance the admissibility of uncovered evidence, Pakistan will engage a Swiss lawyer to initiate legal proceedings before the Swiss Federal Prosecutor General against the banks requiring them to disclose information where corruption is alleged (this is required to be done urgently as the information disclosed from the banks will be placed on record in the revision proceedings).

The estimated cost for completing the ongoing investigation is $ 1 million, of which $ 0.3 million is required immediately whereas $ 0.7 million to be paid within a month’s time. Estimated cost for engagement of Swiss lawyer and proceedings before the Swiss Federal Prosecutor is $ 0.15 million of which $ 75,000 are required immediately and remaining $ 75,000 within due course. AG office further stated that $ 20,000 are required for filing revision of the award and $ 0.2 million as initial cost for defending enforcement proceedings .

The sources said as the approved amount is released, Attorney General’s Office will hire a law firm to represent Pakistan in different countries where M/s Karkey has filed suits.