KARACHI: Records of Shaukat Khanum Medical Trust shared online have revealed that Imtiaz Hydari, CEO of HBG Investments in whose project SKMT had invested $3 million in 2008. Tha, who was also a trustee of SKMT, and that the project mainly seven. Annual interest free loan from SKMT.
In a Twitter thread on Monday, Barrister Salahuddin Ahmed, former president of the Sindh High Court Bar Association, broke down the details of the investment – shared on Twitter – about the role of a trustee and the wisdom of such an investment. I raised some questions.
Ahmad says the trust invested $3 million in a “real estate project” in Oman in 2008 and exited the investment in 2015 after only $3 million was recouped seven years later. Bad investment? Sure, but is it bad faith?”
Saying that what made it interesting was the reason why SKMT invested in Omani real estate in the first place — given its speculative nature — Ahmed tweeted that “charitable endowments are not private equity firms. They are usually (and should be) invested in safe government bonds and bonds/shares of blue chip companies and not in speculative real estate projects. To understand the reason, says Ahmed. That the Trust’s statements shed some light: “A [company] called Sugarland started a real estate project in Oman. Sugarland, in turn, was owned by Dubai-based HBG Investments with an Arab partner that contributed land to the project. SKMT decided to invest $3 million in the project.
According to Ahmed’s details, he says that SKMT did this by “purchasing all Class B (non-voting) shares of Cinnabar (a company owned by British Virgin Islands company HBG). So while SKMT acquired any of Cinnabar’s participated in the risk/reward of the investment, will not have voting rights/control over Cinnabar which will remain with HBG”.
However, there is limited information on the exact arrangements between SKMT, HBG and Cinnabar — as Cinnabar is in the British Virgin Islands. “To be fair, it’s not uncommon for arrangements/investments that invest in private equity funds that are willing to take on more risk for higher returns on millionaires’ money,” Ahmed explains. However, he asks: “But for a Pakistani charity to invest in Omani real estate like this during the global financial crisis in 2008?”
According to the records cited by Ahmad, “[t]he total cost of the land in the project dropped from $28 million to just $10 million. We don’t know if that was because of [the global crisis] or because of that.” since [before] the value of the land was high. But in any case, the project became impracticable”. Ahmad adds: “In 2012, SKMT told HBG it wanted out. HBG promised to find [a] buyer for SKMT’s shares. Finally in 2015, HBG bought SKMT for the same $3 million. Which he paid back in 2008.
Rounding out the investment stream, Ahmad says the Omani project essentially “received a seven-year interest-free $3 million loan from SKMT”. He then answers the question of whether this could be a case of conflict of interest. Tweeting that: “Globally, it’s unusual for charities to invest in specific real estate. If they want a property portfolio, they buy a diversified REIT”, adding: “But It turns out that the CEO of HBG (Imtiaz Hydari) was also a trustee of SKMT. SKMT also made its investments through HBG (we don’t know if/what fees were paid). Such a clear conflict of interest? Well, I’m sure he did the polite corporate thing of shaking everyone’s hand and leaving the room before the vote. But while I don’t mean to impugn the integrity of anyone on SKMT’s board, it seems that the inquiry There are reasonableness/reasonableness flaws in the requirement.
The revelations regarding the investment of Shaukat Khanum Memorial Trust (SKMT) funds in a private housing project came out during the hearing of the Rs 10 billion defamation case filed by Imran Khan against Defense Minister Khawaja Asif. During his testimony, the former prime minister admitted to investing the funds in the project, saying that the SKMT board had told him about the investment and that $3 million had been deposited back by the board members. After that the matter was over.
After the media reported the SKMT investment, the trust issued a clarification saying that it is common for charitable organizations to create endowment funds. According to SKMT, “The Endowment Fund is overseen by an Investment Committee, with all investments made by the Fund on the recommendations of this Committee. The Chairman does not and has never taken investment decisions in isolation.” The SKMT statement also said that complete records of all donations are maintained and audited by independent third parties to ensure compliance with all applicable regulations, not only within Pakistan. , but also in all jurisdictions where funds are raised by, or intended to support, SKMT.
The trust, however, failed to mention that the CEO of HBG was an SKMT trustee. On Sunday, the management of the Shaukat Khanum Memorial Trust (SKMT) clarified that its funds were never misused by its chairman Imran Khan, or any other person or entity, nor for any reason. He was “Dorted”. A spokesperson for SKMT said that all its funds, including funds invested in its endowment fund, are used only to support its mission, namely to provide world-class care to cancer patients.
