PTI donor who won Nathiagali hotel contract was PSM defaulter

ISLAMABAD: Mumtaz Muslim, the PTI donor who won the contract for the construction of a luxury hotel in Nathiagali, is a defaulter of Pakistan Steel Mills (PSM) for the last 25 years.

In 2018, the Sindh High Court (SHC) issued an order against him and ordered him to return PSM’s Rs120 million plus 10 per cent mark-up. An investigation carried out by The News revealed that Mumtaz Muslim worked as a supplier for the PSM in 1990s. In March 1996, he was awarded a contract by thesteel mills management for provision of a Roll Turning Lathe Machine. As per the agreement, he was given 33 per cent of the total amount in advance, but he failed to supply the machine and refused to return the money. Later, he left the country and settled in Dubai. Instead of returning the advance amount to the PSM, which he defaulted for almost 25 years, Mumtaz filed a suit for damages against the steel mills. However, on May 4, 2018, the SHC passed a judgment against him and ordered him to return Rs120 million plus 10 per cent mark-up to the PSM as he failed to fulfil the agreement. Just a week prior to the SHC judgment, Imran Khan appointed him as a senior advisor to the chairman on special projects on April 26, 2018.

The Election Commission of Pakistan (ECP) released the scrutiny committee’s report on the PTI foreign funding a few days ago. The report revealed that Mumtaz Ahmed Muslim is one of the party donors who gifted $24,979 to the PTI. He is the president and owner of a hotel chain and also owns Dreshak Security Solutions that provides security services in war zones. In October 2021, the PTI-led government awarded him a contract for construction of a luxury hotel in scenic Nathiagali. The SHC judgment, a copy of which is available with The News, revealed that Mumtaz won the contract for provision of the machinery as he was the highest bidder. However, he failed to fulfil the agreement despite getting 33 per cent mobilisation advance from the steel mills. Similarly, he won the contract for the construction of a five star hotel in Nathiagali being the highest bidder.

As per the court documents, on March 5, 1996, the PSM issued a tender in the newspaper for purchase of machinery. Mumtaz offered Rs184.99 million for the machine in collaboration with a Chinese company M/s Dalian Machinery Import & Export Corporation. His commercial offer incorporated the following conditions in regard to payment: a) 33pc mobilisation advance against the insurance guarantee, b) 62pc through an immediate inland letter of credit in favour of the bidder and payable upon delivery of the machine, c) 5pc upon installation and commissioning of the machine.

The SHC, in its 2018 judgement, said, the perusal of the record indicated that plaintiff (Mumtaz Muslim) had neither spent a single penny out of mobilisation advance nor he produced any evidence about it. However, on realising the ground reality within first six months on a contract in which time period was two years, the plaintiff (Mumtaz Muslim) instead of filing a suit for specific performance of contract, filed the suit for damages.

“The purpose was to stop immediate recovery/ adjustment of mobilisation advance which seemed to have been achieved on the date of expiry of bank guarantee way back in 1997. However, in ultimate analysis, the plaintiff (Mumtaz Muslim) failed to prove his entitlement to forfeit mobilisation advance and damages. The plaintiff had not produced evidence of any expenses incurred by him and there was no explanation that how they calculated the losses and what was prospective loss to be compensated in the sum of Rs120.5 million,” the SHC judgment says.

The SHC ordered, “In view of the above facts and discussion, the plaintiff’s suit is dismissed and the counterclaim of defendant (PSM) is decreed with 10pc mark-up from the date of decree till its realisation.” The financial experts claim that before the award of a contract for mega projects like a five star hotel in Nathiagali, the governments always carried out due diligence of the bidders in order to evaluate their financial health. It was not clear if the bidding committee carried out any research to make sure the winning company or its owner had no default record or court cases against him.

It is important to note here that there were 11 members of Galiyat Development Authority (GDA) including five private members Ahsan Mani (chairman), Naveed A Khan, Javed Turk, Muhammad Alam, Najeeb Abbasi, two local MPAs (one from PTI) and four government officials (Secretary Tourism, Secretary Environment, Commissioner Hazara and DG GDA). The board decided and finalised the entire process of Nathiagali hotel bidding.

Earlier, Federal Minister for Information and Broadcasting Fawad Chaudhry, told The News on Wednesday that Mumtaz Muslim was a staunch supporter of the party. He said he had no information about Mumtaz Muslim’s security company. About the hotel contract, he said Mumtaz Muslim won it in an open bidding.

When contacted, Director GDA told The News that the bidding process was transparent and the GDA board ensured that only those companies whose financial health met the criteria could qualify for the bidding. The committee also checked the bidding company’s financial statements from the SECP record after which they were allowed to participate in the bidding process.

The director further said the board had fixed Rs200 million benchmark for the bids and the winning bidder Barron Hotels (owned by Mumtaz Muslim) offered Rs850.2 million for the project which is four time higher than the benchmark price.

Talking to The News, Mumtaz Muslim said he won the project purely on merit because he was the highest bidder. He also forwarded a written briefing explaining the process of the bidding and details of the project according to which a total of eight companies received the tender documents. Four out of those eight companies were disqualified for not meeting the criteria whereas Barron Hotels won the project being the highest bidder. When asked about his default to PSM and Sindh High Court judgement, Mumtaz said, “I do not want to talk about this issue,” and hung up the phone.