ISLAMABAD: Pakistan's Roosevelt Hotel in New York (USA), owned by Pakistan International Airlines (PIA) has reportedly been indirectly attached by a court in Reko-Diq case.
This was disclosed by Secretary Aviation Division before a Committee headed by Deputy Chairman Planning Commission, when it met to discuss additional funding requirement of the hotel.
"Additional funding required by RHC needs to be handled carefully particularly after decision of British Virgin Islands (BVI) Court in a Reko-Diq case wherein Roosevelt Hotel has reportedly been (indirectly) attached,” the sources quoted Secretary Aviation as suggesting to the committee.
Deputy Chairman Planning Commission/ Chairman of the Committee briefly explained the objectives of the committee constituted in pursuance of ECC of the Cabinet's Decision of January, 2021. CEO, PIAC/Chairman, PIA-IL sent an additional demand of $ 35.77 million to Aviation Division for taking it up with Finance Division and ECC of the Cabinet for arrangement of funds to pay the liabilities of Roosevelt Hotel.
Aviation Division moved a summary for ECC of the Cabinet proposing therein constitution of a committee comprising Deputy Chairman, Planning Commission, Secretary, Finance Division, Secretary, Aviation Division and Secretary, Law & Justice Division to deliberate on the additional funding of US $35.570 million to Roosevelt Hotel Corporation, New York, USA to overcome the financial challenges with viable options.
ECC of the Cabinet considered the proposal in its meeting held on January 20 2021 and approved the proposal duly ratified by Federal Cabinet on January 26, 2021. Aviation Division being initiator of the summary, notified the Committee on February 3, 2021 with following ToRS:- (i) PLA-IL will provide complete record of additional requirement supported by duly verified documents to the Committee for its examination/ consideration; (ii) the Committee shall also examine the propriety of the request for additional requirement of $ 35.577 million in the backdrop of BVI Court's decision in TCC's case; (iii) any other point as the Committee may deem appropriate; and (iv) it shall formulate its recommendations and submit report in this context for the consideration of ECC of Cabinet within 15 days from the date of its constitution.
Managing Director, PIA-IL, in his presentation to the Committee stated that the additional funds requirement will be $36.173 million as on December 31, 2021 annual carrying cost plus hotel's liabilities were $27.613 million, incremental pension fund withdrawal liability was projected at $6.560 million and estimated legal cost for litigation at $2 million.
MD, PIA-IL further added that requirement of $36.173 million has been worked out on the basis of GoP providing these funds as a grant in aid. In case, the additional requirement of $36.173 million is arranged through a loan then the requirement will increase further from $36.173 million to $39.565 million after inclusion of $3.392 million as cost of debt i.e. $36.173 million per annum.
MD, PIA-IL further informed the meeting that US $18 million already approved by ECC is available with National Bank of Pakistan which is yet to be paid as pension liability to the employees in March 2021. He proposed that the urgent nature of liabilities (pension) amounting to $7.754 million may be allowed to draw from the available amount of $18 million; adding that $7.754 million would be replenished into Pension Fund account on disbursement of additional funds by GoP which are required for payment of first instalment of Pension Fund withdrawal liability which was due on March 19, 2021.
Total payments already made by Roosevelt were $7 million, of which $4,854,919 were due on account of real estate taxes, $1,684,114 property insurance, $180,000 salaries and wages and $280,967 other expenses.
The Chairman sought views of the representative of Law & Justice Division who was representing the Secretary on payment of legal fee of $2 million who responded that it would be more appropriate if the case is referred to Law & Justice Division for advice. He informed the meeting that Attorney General of Pakistan is handling the case of Roosevelt Hotel in BVI Court in consequence of a decision in Reko-Diq case filed by Tethyan Copper Company Pvt (Ltd) vs Islamic Republic of Pakistan. He could give better updated input in this case.
Dr Imran JS (SF) Finance Division informed the Committee that funding of $142 million was arranged through National Bank of Pakistan on GoP guarantee as the RHC operations were shut down and there was no cash flow. Subsequently BVI Courts decision has further aggravated the situation. He informed the meeting that the Finance Division had not yet signed Guarantee Agreement with National Bank of Pakistan keeping in view the implication of BVI court decision.
Secretary Aviation Division informed the meeting that additional funding required by RHC needs to be handled carefully particularly after decision of BVI Court in Reko-Diq case wherein Roosevelt Hotel has reportedly been indirectly attached. The Committee needs to keep this aspect in view before finalising its report for submission to ECC of the Cabinet for consideration.
The Chairman categorised the additional demand of RHC as per following details and emphasised on taking urgent measures on priority basis so that ECC of the Cabinet can be approached to seek its approval and avoid any possible implication resulting in late payment thereof:- (i) emergent need of $7.754 million; (ii) additional demand and; (iii) financing mode.
After deliberations, the Committee unanimously made following decisions:- (i) Aviation Division may seek advice of Law & Justice Division on legal fee of $2 million and payment of other liabilities in consequence of decision made by BVI Court and; (ii) approved the establishment of a Sub-Committee comprising Sr Joint Secretary (CF) Finance Division (Chairman), Joint Secretary, Aviation Division, representative of Law and Justice Division and MD, PIA-IL to deliberate on urgent requirement of funding of $7.754 million.
The ECC, in its meeting held on March 31, 2021 did not approve the proposal of urgent requirement of funding of $7.754 million and constituted a sub-committee as Secretary Finance was of the view that since the case of Roosevelt is under investigation in NAB, the approval of funding should be delayed till the final decision of NAB.
Copyright Business Recorder, 2021