This blogpost is based on the notes I had taken and short posts I had written, mainly from September to November 2013, when Malik Riaz launched Bahria Town Karachi. I was away and trying to understand why friends were going crazy to buy a piece of it. All the links, excerpts, analyses mentioned here are from that period i.e. I haven’t googled anything now nor these were written with the wisdom of hindsight. It was obvious that it will be a scam yet people (including my close friends with whom I kept sharing my notes) choose not to see it. Do read the bold parts in the excerpts as I derive extra enjoyment from those statements. Note the dates. Enjoy.
The timeline picture below (click the picture to enlarge) reinforces my thesis that Bahria Town Karachi fraud was evident from Day 1 yet investors chose to ignore it.
Though the Capital Development Authority (CDA) has submitted a report to the Suddle Commission which states that around 1,400 kanals of civic agency’s land located in Zone-IV has been encroached by Bahria Town…..
“Bahria Town will be charged Rs 12 million per Kanal. It is the same price that the Authority has earlier charged against one kanal of land in the Park Enclave,” official said. This shows that according to CDA’s estimates Bahria Town has encroached land worth Rs 16.8 billion.
Official sources said that Bahria Town had already started selling commercial plots carved out on encroached land.
Former chairman and present consultant of Bahria Town, Malik Riaz Hussain has signed an agreement with His Highness Sheikh Nahyan bin Mubarak al Nahyan, Chairman Abu Dhabi Group, Union National Bank and United Bank Limited under which $45 billion will be invested in Pakistan.
Out of the total investment value, $10 billion will be invested in Islamabad and Lahore whereas $35 billion will be invested in Sindh. These projects also include the construction of the tallest building of the world (Taller than Burj Khalifa, Dubai) in Karachi.
BT was coming to Karachi after making its mark in Lahore. There was excitement and over-the-top coverage of this news. Amir Mateen had written a 10-part expose in The Spokesman (website doesn’t exist anymore) analyzing the business history and practices of Malik Riaz. When the above announcement was made, every newspaper and channel parroted the press release. BT even “leaked” to the press that the development will be taking place on Kutta Island. Amir Mateen was the only journalist who tried to dig into it. He did a brilliant job.
Is this funny, sad or simply stupid. The clarification by Abu Dhabi Group about their alleged $45 billion investment in Pakistan may have exposed lots of things — and lots of people. One Malik Riaz of Bahria Town for sure.
He virtually conned the Abu Dhabi Group, Pakistani media and the public. We already knew about his hold on the Pakistani media….The Bahria advertisements worth billions of rupees have simply blinded media owners who ensure that nothing is published against Bahria Town.
The announcement of a whopping $45 billion investment in Pakistan was a dream-come-true story. This too at a time when nobody wants to invest a penny in Pakistan, and half of my foreign friends want to send their mothers-in-law for ‘sight-seeing’ in FATA.
It was simply mind-blowing. The UAE sacrificed its pride for having the world’s tallest building, Burj Khalifa. And because Malik charmed them so well, they let Karachi have the honour. Apart from building the world’s tallest building in Karachi, the other attractions included a financial hub, sports city, international city, media city, educational and medical City, miniatures of the world’s seven wonders. It was amply flashed that “these projects would employ more than 2.5 million people and boost more than 55 industries like cement, bricks, iron, steel and glass.”
The so-called most credible English newspaper went a step ahead by giving a joint dateline of Karachi and Islamabad instead of Dubai. It added colour to the story by quoting a Karachi magnate, of course on the condition of anonymity, that the construction site would be “Kutta Island,” which is 3 to 4-km off the coast of Karachi. It went a step further than what Malik Riaz had claimed, informing readers that “the Abu Dhabi Group-Malik Riaz would, apart from the above mentioned projects, also launch into building of 125,000 houses on the island.” (sic)
Not a single journalist bothered to even check if there was any news of this sort on any website of the UAE companies or whether Sheikh Nahayan had actually said those words. The half-page advertisement on newspapers’ front pages, showing Malik shaking hands with the Sheikh seem to have blinded everything. Or perhaps they were told not to test their editorial discretion.
My Dubai friend, knowing Bahria’s leverage on Pakistani media, could understand that the news got carried on the first day. “But how about the five days after that,” he asked, confused. “Why nobody followed-up on the story that was supposed to be the biggest investment in the country’s history.” It turns out that the Abu Dhabi Group and the UAE government was aghast at the development. But since they have lots of investment here they did not want to embarrass Pakistanis.
March 2013
Eventually, Abu Dhabi Group had had enough. They took out, not quarter-page, not half-page but full-page ads in the newspapers that there is no such investment forthcoming from their side. This must have been a historical first that MoU cancellation is announced in such a manner.
April 2013
Had it been an honest person, he would have felt ashamed or gone into hiding for a few months so that people forget this episode before launching his next scam. But Malik Riaz, we know, is not such a person. Less than a month later, Malik Riaz makes another announcement of “Pakistan’s first island city: Bahria Town signs $20 billion deal with US tycoon”.
ISLAMABAD: American real-estate tycoon Thomas Kramer and Bahria Town CEO Ahmed Ali Riaz Malik signed a $20 billion agreement for Pakistan’s first-ever Island City, Bundal & Buddo Islands, Karachi.
A joint consortium of international investors will join hands to develop this project and the deal with Kramer is the first level of this agreement. Announcement of other global investors from the Middle East and around the globe will be made soon.
Island City will be connected to the DHA Karachi via a six-lane modern bridge. The entire city will be a ‘high security zone’, having its own drinking water (converting seawater into drinking water) and power generation plants to enable it to be self-sufficient in electricity.
Speaking on the occasion, Thomas Kramer said, “I have full confidence in the people and economy of Pakistan. In 1970 when I started my project in Germany it was the worst era of their history. Likewise when Miami Beach project was started, the area was in full control of Cuban criminals, different mafias and gangsters. Dead bodies used to be scattered on the beaches. I completed my projects successfully. Today they are the world’s most secure and advanced regions.
“Current situation in Pakistan is much better than those areas. I am confident that this project along with boosting the economy will also eradicate terrorism from Pakistan. This is a once in a lifetime chance to bring Pakistan back on the map to the leading nations in the world.”
Please re-read the bolded sections once again. Just for kicks. Also, note that the project has moved from Kutta Island to Buddo and Bundle island and no one is raising eyebrows.
It continues
The current consultant and former chairman of Bahria Town, Malik Riaz Hussain, said, “Our slogan is ‘Bahria Town Commits – Bahria Town Delivers’ and Alhamdulillah we have fulfilled all our promises made with Pakistan and Pakistanis. We know that the construction sector has played a key role in transforming the USA, Malaysia, Japan, Turkey and Germany into developed nations. In the same manner, Insha Allah, Pakistan will also become a developed nation, which is our vision. This project will not only provide 2.5 million jobs but will help revive 55 national industries and provide housing to 1 million Pakistanis. It will also help eliminate terrorism and crimes.”
Thomas Kramer is a visionary businessman commonly known as TK. He surveyed an island hideout of Cuban pirates in 1991-92 and later on developed it into the present day Miami Beach, which is one of the biggest international tourist destinations today. He is specialist in building skyscrapers in coastal areas. His company has successfully constructed several projects around the globe.
A spokesman for Bahria Town said that it’s an honour to join hands with a visionary developer of Kramer’s caliber.
Abu Dhabi Group were honest businessmen. Malik Riaz had made a mistake by signing up with them. But now Malik Riaz has wizened up. This time he is bringing the “quick-change artist” Thomas Kramer (TK) as his partner. TK has no qualms as he repeats the same on his website i.e. Karachi is getting the Biggest Island Development in the World! I am reproducing the page in full as it is just that good.
A bold step was made for the future of Pakistan: Its biggest real estate tycoon Malik Riaz was able to convince the US-German real estate visionary Thomas Kramer to jointly develop the first Island City off the coast of Karachi, named Bundle & Buddo Islands.
A spokesman of Bahria Town expressed what an honor it was to join hands with a entrepreneur of Thomas Kramer’s caliber: After all, the “quick change artist,” as Thomas Kramer is described in a recent New York Times article, has a reputation for knowing how to get impossible things done.
In the early 90’s Thomas Kramer took a helicopter ride over South Beach and had a vision: to create an international hot spot on the Southern tip of Miami Beach. What happened there, in less than a decade is absolutely mind boggling. The area was then a slum and full of dilapidated buildings. Thomas Kramer invited 11 world-renowned architectural firms to his world famous Charette. With his vision and foresight, he pioneered luxury living in Florida by transforming the once-blighted neighborhood of Miami Beach “South of 5th” into a sophisticated world-class destination.
Thomas Kramer’s South Beach Vision and South Beach today
Almost five years ago, Thomas Kramer met Malik Riaz in Islamabad where he invited him to visit his developments in South Beach. A year and a half later, Thomas Kramer was able to welcome Malik Riaz to 5 Star Island, his luxurious mansion. Malik Riaz was highly impressed by the degree of efficiency, innovation and quality that he saw in Thomas Kramer’s projects. Actually seeing the realization of a world-class development is better than any PDF presentation.
Mailk Riaz and TK visiting Apogee Towers in Miami Beach in front of Portofino Tower
Convinced that he found the right man for the job, Malik Riaz invited Thomas Kramer back to Pakistan where he offered him the use of a helicopter to spot potential development sites along the coastline. After days of inspection flights, Thomas Kramer was most impressed by the beauty of a chain of unoccupied islands, roughly 16,000 acres, located 2 miles outside of Karachi and just 12 miles away from Jinnah International Airport.
Most striking to him are the similarities between the Island of Karachi and Miami Beach in terms of climate and vegetation – obvious when comparing historic Miami Beach pictures, prior to its development in the early 20th century, with the Island of Karachi today.
View of the Island of Karachi today and Miami Beach in 1910
Finally, through unwavering persistence, Malik Riaz was able to secure a 100-year lease with an automatic additional 100-year lease renewal option on this land. Having signed the initial contract in March 2013 (The Express Tribune), both parties are now ready to bring their vision a high-end, self-sufficient waterfront hot spot to life.
Ali and Malik Riaz signing MoU with Thomas Kramer in March 2013
The deal is worth USD 20 billion and the project is expected to be completed within 10 to 15 years. The first committed financier was Abu Dhabi. At the deal signing, Thomas Kramer stated that this project − along with boosting the region’s economy and garnering the interest of international investors in the realty sector − will likely help eradicate terrorism in Pakistan. Furthermore, he believes that this is a unique opportunity that will put Pakistan back on the map of leading nations in the world.
Birds view of Miami’s South Beach and Bundle & Buddo Island
The project covers 16,000 acres of land. The global attractions of the project include the world’s most sophisticated marina, some of the world’s tallest buildings, the world’s most beautiful shopping arcades, a Sports city, an Educational and Medical city, an International city and a Media city. Each will have the latest in modern facilities and amenities as well as the most advanced infrastructure. Like in Miami Beach, Thomas Kramer was able to negotiate a connecting highway, 12 mile long and 8 lane wide, from the Island City to Jinnah International Airport. The entire city will be a “high security zone” with its own desalination plant that will convert sea-water into potable water. Power generation plants will enable it to be completely self-sufficient. Moreover, the project will have mosques, cinemas, spas, golf clubs, schools, hospitals and other global standard amenities to furnish a modern lifestyle. The first phases of the development will be available in 2016.
Did you notice that when BT announced the news in Pakistan, it was a six-lane highway from the islands to Karachi? TK says he negotiated it to an 8-lane highway from the island to Jinnah Airport. Who is he negotiating this with? He is one-upping our local criminal Malik Riaz. TK also mentions on his website that Malik Riaz has been able to secure a 100-year lease with an automatic renewal for another 100-years. Put a pin in this last announcement.
And again it was only Amir Mateen of The Spokesman who asked pertinent questions:
Malik Riaz has pulled another rabbit out of his Bahria hat. As the Abu Dhabi Group backs out of the $45 billion deal that never existed in the first place — enter Thomas Kramer.
Again, the same dazzling picture of the world class retreat, encompassing the world’s tallest building 3.5 km off the Karachi coast was painted. Only the protagonist of the fairy tale was changed from the Abu Dhabi Group to US investor Thomas Kramer. Geo TV quoted Bahria Town spokesman claiming that Kramer had committed $15 to 20 billion investment in developing “Bodha Island city,” which will have “Net City, Education City, Health City, Port City and other infrastructure projects.”
Interestingly, the same group had published news on Monday, quoting the same spokesman, who bragged about an investment of 15 to 20 billion ‘rupees.’ During the day, rupees turned into dollars.
Transparency International says Bahria could not be given the project as it was declared as “cheats and frauds” by three statuary and regulatory authorities -the Federal Tax Ombudsman (FTO), the Security and Exchange Commission of Pakistan (SECP) and the Lahore Development Authority. Transparency quotes the State bank of Pakistan and the SECP which issued advertisements on February 23 warning that “the public should beware and not be misled by the fraudulent activities of deposit, loan, and investments through such advertisement.”
Bahria Town, it says, took advance money from investors illegally, besides the tax evasion of Rs 119 billion as mentioned by the FTO. The report lies with the FBR and may be taken up by the next government to recover this huge amount from Malik Riaz. May be!
Transparency mentions numerous cases where Malik Riaz was found involved in, to name a few, “corruption, black-mailing, extortion, land-grabbing, forgery, fabrication of evidence.”
So where does this leave the glamourous project? Frankly, it suits everybody. Malik Riaz got the island through dubious means and will not mind to give a huge stake to the American investors. Money will come from the public who are already being shown the dreamy image of the recreated Miami. The media story flashed on Monday shed light on the dazzling projects that Kramer had accomplished in Florida and how he turned around the pirates’ den across Cuba into one of the priciest real estate in the US. And why should Kramer not be interested. He gets a good deal — the island, the naive public dying to book an apartment in the dream world, the official approvals — for just showing up.
May 2013
Who really was investing $20 billion? Was it $20 billion or Rs. 20 billion? Is it TK bailing out BT or BT bailing out TK. A month later,
That morning marked a new low in one of the most incredible rise-and-fall stories in Miami Beach’s storied history of booms and busts. In the 1990s, Kramer was SoBe royalty, the man who’d spearheaded the South of Fifth revival and ruled from a waterfront mansion where wild shindigs sometimes turned into outright orgies. More than anyone, he symbolized an era of glamour, decadence, and carefree excess.
Now it was all over thanks to a Swiss court ruling in January that Kramer had to repay nearly $200 million to a German currency-printing dynasty. His appeals were up. Everything had to go — the house, the staff, the jewelry, the extensive cellar of vintage wine, even the taxi-dermied giraffe that greeted visitors in the hallway. Because of my job in Kramer’s mansion, I had a unique front-row seat for his last days in Miami Beach. I saw one man’s desperate efforts to salvage his name and his livelihood, afraid but hopeful that some last-minute opportunity would save him from financial ruin.
In fact, by the time he dismissed his staff, Kramer had already found the man he believed could be his long-shot savior: a scandal-tarred Pakistani plutocrat named Malik Riaz who wanted a partner to build a $20 billion island city in Karachi. Riaz, Kramer said that morning between sobs, was his last best hope.
“This is a once-in-a-lifetime chance to bring Pakistan back on the map of the leading nations in the world,” Kramer later said of the project.
If he succeeds in Karachi, Kramer could pull off the ultimate coup in a career full of remarkable comebacks. If he fails, though, it’s anyone’s guess how low he could fall.
The Sindh High Court on Thursday restrained the Port Qasim Authority and other respondents from carrying out construction or any other activity on islands located at the western end of the Sindh coastal zone near Karachi.
The petition was filed by Shahid Hussain Soomro, a worker of the Pakistan Muslim League (Functional), who impleaded the chief secretary, port and shipping secretary, PQA chairman, senior member of board of revenue and the chief executive officer of the Bahria Town, Islamabad, as respondents.
The counsel stated that the PQA was an authority of the federal government that had nothing to do with the allotment of valuable lands and islands belonging to the provincial government. He said it was a matter of record that the then chief minister had in 1974 approved the summary for allotment of 13,000 acres for the PQA. However, he said, it was clearly mentioned that the PQA would not use the allotted land for commercial purposes.
The counsel argued that the deal between the PQA and the Bahria Town was contrary to fundamental rights guaranteed under Article 19-A read with Article 4 of the Constitution.
The petitioner prayed to the court to declare that the allotment of the islands to Bahria Town was illegal, unlawful and ultra vires of the law and without jurisdiction. He also prayed to the court to restrain the respondents from carrying out any construction and agreement on the impugned property.
July 2013
People that invested in BT Karachi later claim that before the supreme court’s fine over BT Karachi, BT had a stellar reputation and didn’t have any cases against it. I am sharing the news of court cases that BT was involved in and being reported in the mainstream press at that time to show that people were being willfully blind.
The Supreme Court on Monday ordered to bring the looters of the public money to book, directing the Director General of the Federal Investigation Agency (FIA) to probe the alleged Rs40 billion corruption in the Employees Old-Age Benefits Institution (EOBI) and submit a report to it within 10 days.
At the outset of the hearing, former director Town Planning, Defence Housing Authority DHA, Col (retd) Tariq Kamal alleged that some 400 kanal land near Rawalpindi was handed over to Bahria Town without any financial consideration and the land was later purchased by the EOBI for investment purposes.
The Supreme Court on Wednesday ordered Defence Housing Authority (DHA) to submit Rs22.24 billion that Employees Old Age Benefit Institute (EOBI) had paid to it in a shadowy deal to purchase 321 kanals of land.
Rs 9 billion and Rs 11 billion had also been respectively provided to the DHA and Habib Rafique Group and Bahria Town for the developmental work.
..earlier through a tripartite agreement between DHA, Bahria Town (BT) and Habib Rafique in 2009 the authority had allowed the two other companies to develop the land and run its marketing campaign.
The aforementioned case eventually turned out to be part of the DHA Valley scam where BT and DHA scammed soldiers, families of martyred soldiers, residents, and overseas Pakistanis out of billions.
August - September 2013
Following ads are published in newspapers
My notes at the time
The registration fees range from Rs. 15,000 for Bahria Town Karachi to Rs.100,000 for Bahria Town Icon. In case of former, non-refundable processing fee is Rs.5,000 while in case of latter, processing fee is Rs.15,000. Balance of payment can be used towards installment credit if you are successful in booking yourself an apartment. This is a registration fee and not booking fee as Bahria puts a disclaimer on its website
Disclaimer: This is not the sale of the project but entitles you to the right of booking at the time of project launch.
This is the same modus operandi that ARY Laguna is following in collaboration with DHA City Karachi and probably soon in DHA Gujranwala too. This appeared absurd to me. I sent an email to a friend asking what kind of scam is this. He replied:
It is very difficult to say anything about Bahria Town Karachi upcoming projects 1. Bahria Town Icon – Pakistan’s Tallest Building Plan (62 Storey Building) 2. Bahria Town Tower – 24 Storey Building at final stage of completion 3. Bahria Town Karachi – Master Planned Community (Villas and Plots)
We do not have any information regarding rate, payment plan and possession date. For Bahria Town Karachi, (as per Bahria Town track record) there is no idea of location of this project. It is obvious that it would be planned out of city area. As Karachi is a very big city and commuting to city area is not safe so it may not attract the investors in the start.
I understand Bahria Town itself is not clear so it is asking for registration first. It is kind of feeler to understand the demand as well as to collect huge funds.
About 8 years ago Bahria Town Pvt. Ltd. started same strategy when it sold 85,000 HOME PLUS cards and charged Rs.6,000/= or US$100 with a commitment that the card holders will be receiving the application forms of upcoming projects at their door steps. It was January 2005 when Home Plus cards project was launched. Do you have any idea when was upcoming project launched? After 16 months, on March 22, 2006, Bahria Town started sending application forms of its Awami Villas Project to Home Plus Card Holders.
If we consider the track record and strategy of Bahria Town, the actual launch of Karachi projects would be after a year or so. This registration scheme will also help BT to understand the trend of investors in Karachi and the demand for these projects. This demand would be the main factor in deciding the pricing of project and payment plan.
Karachi is a business hub of Pakistan. Bahria Town can not afford to ignore its market and investors. Contrary to that, Karachi also needs these kinds of safe, secure living and business atmosphere which Bahria has planned to provide. As mentioned above, Bahria Town would take around a year or so to present some actual project plan. It will, in the meantime, play with the funds received from registration. I hope that Bahria Town will flourish in Karachi but it should be considered a long term investment.
People are going crazy buying the registration forms of Bahria Town Karachi and have no idea where the project is located.
My notes again
One must be crazy for putting money for a project for which we don’t know where it is located, what is the size of the project, what is the shape of project, what are we buying in the project. Even small projects need approval from municipal development authorities but in Karachi whose infrastructure is already creaking, a project of this size would need major approvals for bringing in water, gas etc to the development but no one seems to care.
A friend who works in foreign bank in Karachi says colleagues around him are going crazy filling in multiple application forms. Friends in other banks also told me similar stories. People are calling in from up country even overseas (one friend received four phone calls from his friends and family abroad in one day inquiring about how to invest in the project).
People were afraid of missing out (FOMO) in this money-making scheme.
November 2013
My notes
So the premium on Bahria Town registration slip of Rs.15,000 has reached Rs.195,000 in less than two months if all the SMSs and emails are to be believed. That is a 1,300% return in less than two months. For a “piece of slip” which has nothing behind it (the slip entitles you to nothing) yet people are falling over one another to buy it, it boggles the mind.
We still don’t know where the project is located.
December 2013 - Jan 2014
BT finally announces that the project will be located on Super Highway next to DHA City and opens the booking. No details on how many plots of each type. Just submit the forms and balloting will be held to hand over the plots/units.
I have friends who submitted 2, 3 & 4 applications fearing that they might miss out on balloting. Another friend took some of them to a Bahria Town nominated estate agency in Defence and paid a bribe of Rs.15,000 per application to ensure that their application gets selected. This was in addition to the premium if any, they paid for the registration forms.
March 2014
Lo and behold, every application gets selected. There is no need for balloting. The friends who submitted multiple applications ended up with multiple plots.
Keep in mind that people from all over Pakistan and even overseas Pakistanis invested in this project. There is now way that there is this much land available for one project. Earlier DHA Valley was the first major project where all applications were accepted and DHA Valley turned out to be a scam as more applications accepted than there was land available leading eventually to encroachment over Dadocha dam land as well as other frauds. This is what ended happening here as well. BTK had to illegally encroach on land to deliver on all the bookings it had accepted and still couldn’t do it.
My friends continued paying the installments on all of their plots by foregoing other expenses thinking that one day these plots will come in handy for getting kids educated or married off. They finally stopped when it blew up a couple of years ago.
Conclusion
Maybe I had burnt my hands earlier in my get rich quick venture in Karachi Stock Exchange that I felt wary of investing in this scheme. But the red flags were there for those that had their eyes open.
A lot has happened in the last few years and one can join various Bahria Town affectees group on Facebook to see what is going on. I just leave you with this insult to the injury that Bahria Town Karachi sent out to buyers in Jan 2020 of the additional charges imposed. Quite a few of these buyers don’t where their plot is or if they have a plot.
People wonder that how Malik Riaz gets away with frauds of this scale. As the apocryphal anecdote goes, when you visit Malik Riaz, he asks you “Chaye Kis say mangwaein..brigadier say ya general say”
Malik Riaz: Larger than life
I leave you with these excerpts from Javed Chaudry’s columns on Malik Riaz. Each one of them shows a columnist at the peak of his craft. That last line about the chicken and crocodile: *chef kiss emoji*.
The Man
The Philanthropist
The Desi Bill Gates?
Afterword
ARY Laguna
ARY Laguna is following a similar modus operandi and in collaboration with the august institution of DHA (that was a partner in crime with BT in the DHA Valley scam). Someday I will write a post on ARY Laguna’s MO. Only time will tell if ARY Laguna is genuine. Unfortunately, none of my friends invested in ARY Laguna so I won’t have interesting first-hand anecdotes.
People joke that ARY Laguna investors shouldn’t wait and make “ARY Laguna affectees group” already so that they can hit the ground running when it all comes crashing down.
Bundal Island
Even Thomas Kramer didn’t dare mention that the investment size of the island city project will be as high as $50 billion like our governor and minister.
Sindh Governor Imran Ismail has claimed that the Bundal Island project off the coast of Karachi will attract a $50 billion investment, which will benefit the country’s overall economy.
Addressing a news conference along with Maritime Affairs Minister Ali Haider Zaidi on Thursday, the governor said that the federal government will take all the stakeholders on board before initiating this eco-friendly project.
