Now Reading : ISI Officials to Get Reward for Exposing Corruption in Karkey Rental Power Project
It is decided that the Federal government will reward ISI officials (members of the Core Committee), for exposing corruption in the Karkey Rental Power Project. As per reports concerning damages avoided, the federal government estimates that the investigation helped save $1.2 billion in rental power payments.
Karkey Rental Power Project
The Karkey Karadeniz Elektrik Uretin (KKEU) was one of 12 rental power companies that had been awarded contracts by the PPP government in 2008-09 to ‘resolve’ the power crisis.
A ship was brought to Karachi port in April 2011 to provide electricity to the national grid under the then government’s Rental Power Plants (RPP) policy to overcome the energy crisis. However, it failed to generate 231 megawatts as was required under the agreement. So $120m was claimed as a refund.
According to (NAB), after a reference was filed against Karkey, the Turkish company had requested a plea-bargain deal and said it was ready to pay $18m to NAB and promised not to go for international arbitration.
However, some politicians moved the Supreme Court and then chief justice Iftikhar Mohammad Chaudhry cancelled the deal and insisted on recovering the full $120m from the Turkish firm.
In March 2012, it was determined that all rental power projects stationed along with Karachi port, including Karkey, had been authorized against Public Procurement Rules. In due course, the Sindh High Court ordered the seizure of all Karkey vessels the very next year in May.
As a result, Karkey moved the International Centre for Settlement of Investment Disputes (ICSID), seeking compensation for the losses incurred by its vessels in terms of damage or depreciation for not being allowed to leave Karachi port for almost 16 months. The Turkish company later won the case in 2017.
The court also awarded the Turkish company settlement payments in access of $800 million. On 1st December 2019, this amount increased to $1.2 billion inclusive of interest.
Formation of Core Committee
Local authorities became furious with the verdict leveled against Pakistan, so Power Division formed the Core Committee in September 2017.
As per records, the committee comprised of the Head of International Dispute Unit, Ahmad Irfan Aslam, Joint Secretary Power Division, Zargham Eshaq Khan, Sector Commander ISI, Brig. Rana Arfan Shakeel Ramay, and Col. Farooq Shahbaz (ISI).
The Core Committee devised a strategy for the case, as explained below:
- Initiating investigation into the grant of the contract to Karkey, and to challenge the ICSID Tribunal’s decision on evidence of corruption, if found.
- Resisting enforcement of the award in domestic courts of countries where Karkey had initiated enforcement proceedings, including the U.S., the UK, Canada, France, and the Netherlands.
- Engaging with Karkey to explore possibilities of an out-of-court settlement.
The next phase of the committee’s action plan revolved around putting the strategy into action. What followed was a series of astonishing revelations that uncovered footprints of money laundering and other corrupt practices in Dubai (UAE), Lebanon, Turkey, Switzerland, and Panama.
When presented with the newfound evidence of malpractice and corruption, Karkey was left with no other choice but to forego its claim on damages worth $1.2 billion. The Turkish President personally intervened to deal with the situation, offering his sincerest apologies to the government of Pakistan.
Prime Minister Imran Khan was presented with the zero-settlement deal on 4th November 2019. A meeting of the federal cabinet later approved the terms of the settlement.
Indeed, the Core Committee deserves commendations for its efforts to help save Pakistan a sum of $1.2 billion.
A study claims that if Pakistan had paid the sum, its GDP would have shrunk by nearly 2 percent. Perhaps even worse, the country would’ve defaulted on its international obligations, potentially giving insurgents an undesirable opening.
President Arif Alvi conferred Sitara-e-Imtiaz upon three ISI officers for their exceptional role in drawing the case to a close.
Now, as per ministry sources, PM Imran has approved the Finance Division’s viewpoint, thereby directing relevant authorities to present the proposal before the federal cabinet for awarding Rs. 2 million each to concerned officers of ISI and the Attorney General’s Office.
The award ceremony will be conducted if the federal cabinet approves the proposal under the designated time.