LET me start with an apology. If you’re still busy absorbing the full magnitude of the sheer stupidity that went into the making of the Broadsheet scandal, I have more bad news for you. The Roosevelt Hotel in Manhattan as well as the Scribe Hotel in Paris, both iconic landmarks in their respective cities and prized assets of the national airline, have been seized (or ‘charged’ in legal language) by a court order in the British Virgin Islands (BVI) as settlement of the liability to the Tethyan Copper Company (TCC) to whom Pakistan lost an international arbitration case after cancelling the contract that awarded them the Reko Diq gold and copper mines.
Here is what the BVI court said. “The following property in the Territory be provisionally charged … to secure the sum of $3,114,339,607.50 namely a) 100% of the shares in the capital of PIA Investments Limited BVI Company … b) 100% of the shares in the capital of PIA Hotels Limited … c) 40% of the shares in the capital of Minhal Incorporated….”
It continues: “To the extent that the Shares yield or pay income, dividends or other forms of value, the provisional charge shall extend to” all of these as well. The court has scheduled a hearing on this “provisional charging order” for March 15, and the Attorney General’s office is already on record saying they will fight the order. PIA is a listed company and has not yet made any announcement to its shareholders via the Pakistan Stock Exchange website about this provisional charging order. But the order itself is public information.
In July, plans were finalised for a joint venture under a long lease via a cabinet committee decision and the Roosevelt Hotel was placed on the active privatisation programme. By August, they were talking about a proposed transaction structure, hiring of financial advisers and inviting expressions of interest from domestic and international parties for interest in a long lease on the Roosevelt Hotel and making the investments necessary to convert it into a mixed use facility. Some reported estimates that fluttered through the news flow during these days said the required investment could approach $1 billion. This was no small transaction they were seeking to undertake.
It is worth noting that massive plans have been upended and assets are now on the verge of being seized.
In September, the Economic Coordination Committee, another cabinet body, approved the allocation of $142 million for settling various “financial requirements” of the hotel. By October, the news broke that the hotel would be closing its doors permanently, fixed on their website along with a sentimental farewell note. The news was denied vehemently at first, the notice on the website removed, but later it proved to be true. A few weeks later, the CEO of PIA told a Senate committee that the hotel will be closed for “renovation” on Dec 31.
But today, the hotel’s website is barren, carrying only a note that says “[w]e thank you for letting us be part of the very best of New York for the last 100 years. We leave you with this thought….” and there follows some sort of an inspirational quote from Theodore Roosevelt. This doesn’t sound much like a “closed for renovation” type of announcement to me, but who knows. And what does it matter anymore anyway?
In the meanwhile, the committee arbitrating Pakistan’s dispute with TCC ruled in October that the copper mining firm could proceed with collecting half of the award amount and the next month TCC filed for attachment of PIA properties in a BVI court, where the said companies of the national carrier are incorporated.
Those hearings began in November 2020 when the TCC sought enforcement of the international tribunal’s order and asked a high court in BVI to ‘charge’ PIA properties in response to an arbitral award that gave them the power to seize government of Pakistan properties around the world. Hearings around that are now in progress and the attorney general is on record with robust statements of confidence, saying they will challenge this order and hope to win.
One wishes them the best of luck. But in the meanwhile, it is worth noting that massive plans have been upended, and even more importantly, massive assets are now on the verge of being seized. Let’s recall that in both cases — that of Broadsheet as well as the Reko Diq mines — what brought us to this pass is when some crusading individual at some point in the distant past thought that they will embark on a personal drive to rid the country of corruption.
This might sound like a noble intention, but look at how they went about doing it. In the case of Broadsheet, they ended up paying a penalty that was larger than the amount they sought to recover, simply because what was supposed to be a drive against ill-gotten assets was revealed to be more an exercise in political blackmail. Once the objectives of the blackmail were achieved, they thought they could simply cut themselves loose from the contractual obligations they had entered into along the way, not realising that in some parts of the world you cannot do that.
In the case of Reko Diq, a massive contract was annulled on a technicality so minute most people would have a hard time recalling what it was. Along the way, the PPP government moved to sell the Roosevelt Hotel to pay for PIA losses in preparation for possible privatisation but was restrained from doing so on objections that the price they were aiming to fetch was too low. The PML-N government sought an out-of-court settlement with TCC back in 2014, but were restrained from doing so, with some folks asking ‘why is the government in a hurry to pay TCC’?
The result is that today we are on the verge of losing the hotel which will pay only a fraction of the award. The righteous brigade should sober up and tally up the costs of what they have done.
The writer is a business and economy journalist.
Published in Dawn, January 21st, 2021