Turkish firm sues gov’t in Pakistan for seizure

ISTANBUL - Hürriyet Daily News

A Turkish firm’s ships have been seized in Pakistan on fraud claims.

Turkey’s Karadeniz Energy Group (Karkey) is set to apply to an international arbitration court against the Pakistani government after Islamabad impounded the company’s power-generating ships in Karachi port last year.

“Pakistani domestic politics have been going through a chaotic period, and we were stuck between a rock and a hard place in this political war. We had no choice but to go to an arbitration court to get our ships back,” Nuray Atacık, chief commercial officer at the group, told the Hürriyet Daily News in an interview last week.

Two Turkish power-generating ships, whose contracts were canceled around two months ago, have been kept in Pakistan following a request from an opposition member of the Pakistani Parliament amid an ongoing legal case into corruption.

Atacık said the company had made every effort to end the dispute amicably, but the ships remain impounded amid the continuing investigation. “We will apply to an international arbitration court against the Pakistani government in the following weeks; we have realized this is the only way to get our rights,” she said.

The ongoing political crisis in Pakistan accelerated when the Pakistani Supreme Court ordered the arrest of the country’s prime minister, Raja Pervaiz Ashraf, on accusations of profiting from short-term rental deals for electricity-generating stations, including the deal that was made with Karkey.
However Pakistan’s anti-corruption chief refused on Jan. 17 the order by the country’s top court to arrest the prime minister, saying he did not have sufficient evidence to do so.

‘Internal clash’

The government and the Supreme Court have repeatedly clashed over the last year, and the chief justice’s demand on Jan. 15 that Ashraf be arrested set the stage for a new round of political crisis in Pakistan.

The case involves kickbacks that Ashraf allegedly took during his time as water and power minister that were related to private power stations built to provide electricity to energy-starved Pakistan. The prime minister has denied the allegations.

Karkey’s ships have generated electricity for Pakistan over the past two years, but were set to return to Turkey after the Pakistani High Federal Court canceled all energy rental agreements in the country on the grounds that the energy deals were undertaken in an irregular manner. Authorities decided the ships had to leave after repaying the unused amount of the $17.2 million deposit issued by the Pakistani government.

However, a Pakistani member of the country’s Parliament lodged an objection with the court, claiming that Karkey should pay $229 million, including interest, for the release of the ships, which are valued at $400 million. The court blocked the ships, Kara Bey and Ali Can Bey, from leaving the country. The fine was reduced to $120 million after a local court decision, but the move failed to end the crisis.

“Karadeniz Electric Group has been completely acquitted on all corruption claims as of Oct. 11, 2012, and has been provided with a ‘no-objection certificate’ by the competent institution, the Pakistani National Accountability Bureau (NAB),” Atacık said.

The ongoing dispute between Pakistan and Karkey is over financial matters, and they had annulled their contract with the Pakistani government due to delays in payment, she said, but added that they were investigated by the NAB for six months after they canceled the contract.

“We became the victim of political rivalries in Pakistan and we understand now that we cannot expect a healthy and logical decision in this atmosphere from the Pakistani authorities,” Atacık said.

Karkey recently signed a three-year contract with Lebanon to supply electricity, she added.