Who’s pulling strings of Chinese company?

ISLAMABAD: A genuine inquiry originating from Beijing, involving alleged corruption of US$17 million (around Rs1.8 billion) and naming the Punjab chief minister, has an interesting twist about Pakistan. A local probe shows the story is fake but there is someone leaking distorted “information” to the media to target the younger Sharif.

The facts ascertained by the investigation of The News reveal that the Chinese company being probed by Beijing had neither any role whatsoever in the Multan Metro Bus project nor any of its local partner was even registered in Pakistan.

However, what the media here sells is that Shahbaz Sharif had made billions from kickbacks from the Chinese company — Jiangsu Yabaite Technology Co. Ltd — in the Multan Metro Bus project.

Chinese authorities had initiated the probe after unusual transactions of money were detected in the company’s accounts. Pakistan came into focus only after the Chinese company informed the Beijing authorities that the money involved in its unusual transactions was actually the profits it had earned from the Multan Metro Bus project through its Pakistani partner company Capital Engineering and Construction Company Pvt Ltd.

Later, it is claimed, the company presented a statement of CEO of its so-called Pakistani partner company — Faisal Subhan — in which he alleged that the company was basically owned by the Sharif family and he was merely a CEO. Probe by Pakistani institutions SECP, SBP, FBR, PEC found all this a cock and bull story as neither the company could be found nor its CEO Faisal Subhan as of today.

Additionally, appreciation letters purported to have been given to the Chinese company by Shahbaz Sharif and an endorsement of another letter by Senator Mushahid Hussain also turned out to be fake. The other letter allegedly endorsed by Senator Mushahid Hussain was issued to the company by a Senator from Balochistan, Kulsum Perveen, who though claimed that the document is fake, The News probe has yet to establish this fact.

Interestingly, this appreciation letter from Kulsum Perveen (bearing fake endorsement of Senator Mushahid Hussain) was also shown to have been attested by the Foreign Office, Pakistan. How and why the FO did it are the questions yet to be answered by the foreign ministry.

While the story is being sold here by the electronic media as a hot cake, there is no clue to the accuser and the CEO of the so-called Pakistani company (which claimed to be the partner of Yabaite Company) — Faisal Subhan. No money was ever transferred from Pakistan to China, rather it is being claimed that the money was transferred in the accounts of the Chinese company from other countries.

All this makes it a dubious story which raises the question as to who has managed and masterminded all this to target the Sharif family, especially Shahbaz Sharif, within weeks of the disqualification of Nawaz Sharif.

According to the investigation by The News, different steps of this whole episode are as follows:

Track of unusually high profit of a company in China:

The Chinese company Yabaite received some US$17.78 million (almost Rs1.8 billion) from some offshore companies in Mauritius, Singapore, Malaysia and Dubai in the first quarter of 2016 in terms of company’s profit. This was an unusually high profit for this Chinese company and there were no chances that this remarkably high turnover could not be monitored and subsequently probed during annual financial audit of the company by concerned regulators. The transaction ultimately attracted the attention of the China Securities and Regulatory Commission (CSRC) which started an inquiry into this matter. During the investigations, Yabaite stated to the CSRC that the amount was received from Pakistan as it (Yabaite) worked on Phase-III of the Multan Metro Bus Project through its partner “M/s Capital Engineering and Construction Pvt Ltd” under an arrangement with M/s Habib Rafiq (pvt.) Limited and other entities. On being questioned, Yabaite gave the CSRC a statement of CEO of Capital Engineering that he (Faisal Subhan) was merely an employee of the company and the company is basically owned by the Sharif family.

Contact of Chinese regulator with SECP & Investigations of Pakistani institutions:

The documents available with The News reveal that the China Securities Regulatory Commission approached the Securities and Exchange Commission of Pakistan and asked for its assistance pursuant to International Organisation of Securities Commissions (IOSCOs) and Multilateral Memorandum of Understanding (MMoU) about the Chinese construction company, Jiangsu Yabaite Technology Co. Ltd, and Capital Engineering and Construction Company. The CSRC also inquired from the SECP whether these two companies participated in the construction of Multan Metro Bus Project as claimed by Yabaite.

The then Chairman of the SECP, Zafarul Haq Hijazi, wrote a letter to the Punjab Chief Secretary on February 13, 2017 for provision of certain information about M/S Yabaite and Capital Engineering and Construction Co. Ltd. The SECP asked six specific questions about the Multan Metro Bus Project and the companies which were awarded the contract of this project. In addition to this, the SECP launched a comprehensive probe into the issue and sought complete information from Pakistan Engineering Council (PEC), Federal Board of Revenue (FBR), State Bank of Pakistan (SBP) in addition to checking the company Capital Engineering from its own record.

The Punjab chief secretary responded to the SECP on March 13, 2017 after obtaining the information from the relevant departments and private companies which worked on the Multan Metro Bus Project. The chief secretary in his letter, a copy of which is available with The News, categorically stated neither any Chinese company namely Yabaite Technology nor Capital Engineering has worked on Multan Metro Bus Project. Similarly, a consortium of three companies including Habiq Rafiq, Matrocon Pakistan (Pvt.) Ltd and China Railways First Group, which was awarded the contract of Phase-III of Multan Metro Bus project, jointly submitted their reply to the SECP, a copy of which is also available with The News.

The consortium has categorically denied that any company with the name of Yabaite Technology or Capital Engineering were ever given any contract in Multan Metro Bus Project. It is pertinent to mention that the total cost of Phase-III of the Multan Metro Bus project was Rs2,499 million.

Meanwhile, the SECP also approached the State Bank of Pakistan to know if there is any bank account of Capital Engineering Company in any bank of the country. The SBP responded to the SECP that no account of a company Capital Engineering existed in any bank in Pakistan. Similarly, the SECP also wrote to the Federal Board of Revenue to know if there is any record of tax returns of Capital Engineering but no such record was found. The SECP also wrote to Pakistan Engineering Council to know if any such engineering company was registered with the council but no such company — Capital Engineering & Construction Co. Ltd — was found in the council’s record. Every engineering company has to be registered with the council.

The SECP, during search of its own database, including list of dormant or dead companies, also could not find out any company with the name of Capital Engineering.

Interestingly, the CSRC provided only a visiting card of CEO of Capital Engineering Mr. Subhan but it was illegible except the name of person. Hence, he could not be approached to know the veracity of his statement which he gave to Yabaite. The SECP conveyed the initial findings to CSRC.

Further investigations in China by the CSRC and more material Sent to Pakistan:

After the initial findings of SECP sent to the CSRC, the Chinese regulator in the light of the Pakistani regulator’s finding again questioned Yabaite. This time the Yabaite, in order to prove its claim, submitted to the CSRC two appreciation letters: one from Punjab Chief Minister Shahbaz Sharif, another from Senator Kulsoom Perveen and one blank paper signed by Senator Mushahid Hussain Sayed, which was endorsing Senator Kulsoom Perveen’s letter in May 2017.

It is interesting that the letters submitted by the Yabaite to the CSRC were dated May 24 and May 25, 2017. So these were only “obtained” much after the closure of the project once the company was informed by the Chinese regulator about SECP’s initial findings.

Again the CSRC requested the SECP to verify the veracity of these letters after which the SECP wrote letters to the chief minister and the two senators on August 15, 2017.

Further investigations in Pakistan on latest Chinese material, i.e. appreciation letters:

The Punjab chief minister as well as the two senators have categorically denied writing any such letter. The Punjab chief minister, while responding to the SECP about the letter, has categorically denied writing any such letter and termed his signature as forged/fake. The chief minister stated that the record of Chief Minister’s Office, Lahore, corroborates the CM’s statement since no issuance of any such letter on the subject or Diary No. could be proven.

Similarly, Senator Mushahid Hussain Sayed also denied endorsing the letter of Senator Kulsoom Perveen and demanded the SECP hold an inquiry into this matter. The News has the copy of the letter of Senator Kulsoom Perveen which is purportedly endorsed by Senator Mushahid Hussain Sayed on a blank page.

This correspondent contacted Senator Mushahid to know if he endorsed Senator Kulsoom’s letter, he categorically denied endorsing anyone else’s letter on this count. He said whenever he writes any letter, he uses his official letterhead as Chairman of Parliamentary Committee on CPEC and this endorsement letter is quite unusual and forged.

Interestingly, Senator Kulsoom’s letter, which has been presented by Yabaite Technology, is written on her letterhead when she was the Chairperson of the Senate Standing Committee on Health. It is pertinent to mention here that after the passage of 17th Amendment, the health ministry was devolved to the provinces. It means that the letterhead used for making this letter was old enough.

Who is behind this mission?

Interestingly, the Chinese regulators have provided “appreciation letters” to the SECP but question arises whether the Chinese company, which claims to have worked on Multan Metro Bus Project, has any letter of acceptance and supplemental agreements of Yabaite’s engagement in the Metro Bus project? Another question which needs to be addressed is whether Yabaite Technology Co. Ltd has provided the copies of construction technical plans, drawings and acceptance certificate? Most importantly, whether Yabaite provided any of its agreements with the so-called company Capital Engineering or its contracts with Habib Rafiq or any other company regarding the Multan Metro Bus Project or it was never even asked?

Everything claimed by the Yabaite with regard to Pakistan has been proved fake, but the letters, the letterhead used, the foreign office attestation clearly shows things were also managed from within Pakistan. Who was masterminding all this is yet to be ascertained.

Monitoring desk adds: Speaking in Geo News programmes, Aaj Shahzeb Khanzada Ke Saath and Apas Ki Baat, Punjab government spokesman Malik Muhammad Ahmad Khan said Chief Minister Shahbaz Sharif is a man of stainless character. The Punjab government is ready for any investigation into the Multan Metro scam. He said the SECP (Securities & Exchange Commission of Pakistan) has been offered all help for a thorough probe. He said someone Shahzad, whose name came to the fore during the process, has no record with even Nadra (National Database and Registration Authority). The case has been highlighted by a private TV channel to malign the Punjab chief minister only. He said the entire Punjab government would be answerable if even a small corruption allegation is proved against the chief minister.