National Contributions of Pakistan Army

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National Contributions of Pakistan Army
National Contributions of Pakistan Army

Turkish power rental company’s corruption & role of Pakistan Army

In 2009, Pakistan was facing a huge energy crisis. The country produced 17000MW electricity, but the 60% electricity generation of Pakistan was from Fuel. Due to hike in fuel prices the electricity production was badly affected which caused load shedding of 10-12 hours in the country. Load shedding caused problems for the Pakistan’s industrial sector as well as the common man was badly affected. Following the need to compensate the energy crisis of Pakistan, the ruling political party of Pakistan PPP (Pakistan People’s Party) decided to move towards rental power.

12 international rental power companies were awarded contracts for electricity production. A Turkish company named Karkey Karadeniz Electrik Uterim (Karkey) was also among the 12 rental power companies awarded contracts for electricity production. A rental services agreement was signed by the Turkish Company Karkey in April 2009 under the Rental Power Policy 2008 to produce electricity in collaboration with the Lakhra Power Generation Company. An agreement of 560 million usd ($) was signed with the Turkish rental company (Karkey) of 5 years. According to the agreement the company had to produce almost 250MW of electricity. 9 million usd ($) were paid in advance to the company.

During the agreement it was observed that Turkish rental company Karkey’s ship was not able to generate more than 30MW to 50MW. The electricity generated was also at a cost of Rs. 41 per unit, this was against the contract. In 2011, Government of Pakistan filed a petition against Karkey company in NAB of violation of agreement. Government of Pakistan wanted 200 million usd ($) from Karkey company as a fine for violation of agreement. During the case in NAB court Karkey company decided to pre-bargain with the government of Pakistan and offered 18 million usd ($) as a compensation and agreed not to file any kind of arbitration case against Pakistan in ICSID (International Centre for Settlement of Investment Disputes). The NAB court decided in favor of the pre-bargain and approved company’s request of 18 million USD ($) payment. But the Government of Pakistan stated that 18 million USD ($) are not enough and at least 200 million USD ($) should be paid.

This led the Supreme Court of Pakistan to interfere in the matter. Supreme court of Pakistan took SUO MOTU against rental power projects. The contract was struck down by the decision of Chief Justice Iftikhar Chaudhry in 2012. Supreme court of Pakistan fined the company with 200 million usd ($) and Karkey’s ship was also seized. This led Karkey company file an arbitration case against Pakistan in ICSID (International Centre for Settlement of Investment Disputes) under the Bilateral Investment Treaty.

The case was officially registered on February 8, 2013. The ICSID (International Centre for Settlement of Investment Disputes) heard the arbitrary case filed by Turkish rental company Karkey. After detailed consideration of issues and evidence led by the parties, on August 22, 2017, ICSID gave ruling in favor of the Karkey and Pakistan was asked to pay amount of 760 million USD ($) along with interest [Total = 1.2 Billion USD ($)] to the Karkey company. The assets of Pakistan abroad were at great risk of being seized in case if Pakistan refuses or fails to pay the amount to company.

On October 27, 2017, Pakistan filed a petition in ICSID for the annulment of the amount it had to pay to the Karkey company. This time a team comprising military officers Brigadier Rana Arfan Shakeel Ramay, Lt Col Farooq Shahbaz and International Dispute Unit Head Ahmed Irfan Aslam handled the case. The team collected information from international banks and foreign countries pertaining to corruption in Karkey. They also gathered information from Lebanese, Swiss, and Dubai banks regarding the corruption of Turkish power rental company Karkey. The team also collected evidence from Panama and British Virgin Island which proved useful in winning the case against the company.

As a result of their investigations, Turkish company Karkey was forced to withdraw six cases from ICSID it has filed against Pakistan. The team members were later awarded with Sitara-i-Imtiaz for their efforts in saving Pakistan from international embarrassment and heavy penalty of 1.2 billion USD ($).

Reko Diq Case and Pakistan Army Efforts

Reko Diq is a mine located in Chagai District, Balochistan, Pakistan. It represents one of the largest copper and gold reserves in the world having estimated reserves of 5.9 billion tonnes of ore grading 0.41% copper and gold reserves amounting to 41.5 million oz.

The “Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan” case and “Reko Diq” case, is an ongoing legal case between the Government of Pakistan and the TCC (Tethyan Copper Company) over the breach of the Australia-Pakistan Bilateral Investment Treaty (BIT) and illegal denial of mining rights to TCC at the Reko Diq Mine in Chagai District, Balochistan.

In 1993, “Chagai Hills Exploration Joint Venture Agreement (CHEJVA)” was signed between Australian mining company BHP Billiton and the Balochistan government for the exploration and mining of copper and gold at the Reko Diq Mine. As per the contract, BHP would hold 75 percent interest in the project while the government of Balochistan held the remaining 25 percent share on a joint-investment basis with 2 percent royalty payment. But in April 2000, due to some financial crisis and controversy BHP withdrew from Pakistan but BHP handed over its obligations to a little-known Australian company Mincor Resources. While in 2006 Australian company Mincor Resources was acquired by TCC (Tethyan Copper Company) in 2006. The TCC (Tethyan Copper Company) is an Australian company which is a (50:50) joint venture between Canada’s Barrick Gold company and Chile’s PLC Antofagasta. TCC got the mine development rights in 2007.

A petition was filed in the Balochistan High Court that TCC gave bribe to the Balochistan Government officials to acquire Reko Diq resources at cheap price. This appeal was dismissed by Balochistan high court in 2006.

Later a senior journalist of Pakistan claimed that the resources of the mine are of 260 billion USD ($) worth. Balochistan government started calling the involvement of TCC in the Reko Diq as an attack on their soil. Later Balochistan government revoked the “Chagai Hills Exploration Joint Venture Agreement (CHEJVA)” agreement of 1993 and under the leadership of Dr. Samar Mubarakmand a new company was setup so that Balochistan government could get the whole resources themselves. But at that time Pakistan didn’t have any metal mining and metal refining technologies and lacked equipment.

On the other side TCC had planned to extract the metal from Reko Diq and refine it in Canada, Chile, and Australia, later they had planned to sell it in the international market to gain profit. They had estimated their 10 years’ profit of almost 104 billion USD ($).

[This way Pakistan won’t know how much resources are being extracted from its soil and sold abroad]

The TCC had already completed the Bankable feasibility of mine development and they almost had spent 360 million usd ($) in the Research and Development. When they went to the Balochistan government for mining license the Balochistan government rejected their demand.

This matter was later taken to Supreme Court of Pakistan. The Supreme Court ruled in favor of the Balochistan government.

After this TCC filed a complaint in ICSID (International Centre for Settlement of Investment Disputes). In 2017, the ICSID ruled in favor of the TCC and Pakistan was asked to pay 11 billion USD ($) to TCC for the damages caused.

In 2015, Pakistan had already given lease of mining and exploration of Reko Diq to a Chinese company Metallurgical Corporation of China. But in 2019, this license was also suspended.

Due to the corruption of Balochistan Government officials this mine project was pending from 1993. Some used it for their political purposes while some tried to conduct riots over this issue.

The (PTI) Government of Pakistan, PM Imran Khan with the help of Pakistan Army (COAS General Qamar Javed Bajwa) decided to settle this issue out-of-court. The issue was settled in the early 2022 and the 11 billion USD ($) fine was also waved off. Now 25% percent share of Reko Diq belongs to Balochistan government, 25% share of Federal Government of Pakistan and remaining 50% shares will be owned by Barrick Gold. Due to Pakistan’s efforts no private company was included in the project. Almost $10 billion will be invested in Balochistan for project development, including $1 billion for social uplift projects [roads, schools, hospitals] and creation of technical training institute for mining. The project will make Balochistan the largest recipient of foreign direct investment in the country. After the successful agreement Pakistan PM Imran Khan Tweeted:

Pakistan Military played a key role in the out-of-court settlement of the issue and has become the most important voice on the future of Reko Diq according to many former provincial and federal government officials in the Balochistan. Pakistan Military sees it as a strategic national asset. In a statement in response to Reuters’ questions about its role in Reko Diq, the military spokesman’s office said: “(The military) may only participate in government’s plan of development of Reko Diq, as per national requirements.”

It is said that Frontier Works Organization (FWO) best known for building roads through Pakistan’s rugged and lawless border regions, has developed “substantial” mining capability in recent years will also be involved in the project.

FATF and role of Pakistan Army

The Financial Action Task Force (FATF) was founded in 1989. It is an intergovernmental organization formed on the initiative of the G7 to develop policies to combat money laundering. Its mandate was expanded to include terrorism financing in 2001.

In 2012, Pakistan was placed in the Grey List of FATF for failing to combat money laundering and terror financing. To avoid being blacklisted in FATF, it posited Pakistan with a 27-point agenda to combat terror financing and 7 points for money laundering.

After the exit of Pakistan from FATF grey list in 2015, Pakistan was again placed in FATF’s grey list again in 2018. Main reason of grey listing in 2018 was false-flag operations done by India and India advocating state-sponsored terrorism in Pakistan. India has always wanted to isolate Pakistan and declaring it a terrorist nation so that it can hide Indian Army’s atrocities on Kashmiris in IIOJK (Indian Illegally Occupied Jammu and Kashmir) and the state sponsored atrocities of BJP/RSS on Muslim minority of India. Through influencing international institutions and various other means India has been extensively tried to black-list Pakistan in FATF. The main concern of FATF’s was terror financing and the lack of action taken against abettors, facilitators, and financing sanctuaries in Pakistan.

The Pakistan Military has always played its vital role in Pakistan’s defense. The government of Pakistan under leadership of PM Imran Khan and Pakistan Army (COAS General Bajwa) together laid efforts to debunk Indian propaganda and the terrorism threats to Pakistan and took steps to help exit Pakistan from FATF’s grey list. Pakistan Army formed the National Counter Terrorism Authority (NACTA) that would work with the national institutions to comply with FATF’s action plan. A series of military operations were conducted under the National Action Plan (NAC) which incorporated almost 20,000 IBO’s (Intelligence Based Operations) which were to destroy the terrorist’s networks (Indian backed terrorist organizations) complying with the FATF’s plan and National security. The efforts of Pakistan military resulted a serious decline in terrorist attacks and Pakistan army through a new wave of (Kinetic, Non-Kinetic) operations including [Rad-ul-Fasaad, Rah-e-Raast, Al-Mizan] dismantled the terrorists funding and activities which led to the successful eradication of their handlers and financers.

COAS General Bajwa established a special cell in GHQ which comprised of high-ranked military officers, headed by DGMO. The task of this special cell was to control the incidents of money laundering, extortion, kidnapping, terror financing and target killings. When the cell was established, Pakistan had only compiled 5 points of FATF. This special cell played a vital role in complying with the FATF’s points.

Through the joint efforts by PM Imran Khan’s government and the COAS General Qamar Javed Bajwa Pakistan compiled FATF’s all points which resulted in the successful removal of Pakistan from FATF’s Grey list and shattered Indian dreams of blacklisting Pakistan. Pakistan has complied all the 34 points of FATF, now later this year a team will visit Pakistan and Pakistan will be formally removed from Grey list of FATF.

Author: Ali Hassan

#TeamPakistanStrategicForum

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