Renowned Karachi Developer Faces Money Laundering Case

Customs Intelligence has initiated legal proceedings against the well-known builder and developer, Muhammad Hanif Jewani, on charges of money laundering. Customs Intelligence Karachi has built a unique case of money laundering amounting to over Rs. 3 billion. This case involves the processes of placing, mixing, layering, and integrating the proceeds of criminal activities into the economy.

The owners, directors, and partners of a group of companies are alleged to have conspired and executed the placement, parking, and integration of the illicit funds into a residential project called “HSJ Icon” under the group entity “HSJ Construction.” This entity was found to be unregistered with the Federal Board of Revenue (FBR) and not a tax-filer.

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In reality, it was HSJ Builders and Developers that initiated and is currently constructing the said building. This company is an association of individuals, including the accused persons, Muhammad Hanif Jewani and his son Ahmed Hanif Jewani. They were found to be involved in the commission of various offenses under the Customs Act of 1969.

During the initial investigation, it was revealed that the accused individuals used another company, HSJ Metals Pvt. Ltd., to commit a predicate offense involving the illegal removal of 14,392 metric tons of iron and steel waste and scrap, as well as Silico-Manganese, from a private bonded warehouse on Super Highway, Nooriabad.

Upon stocktaking, only 3,761.89 metric tons were found, along with an estimated remaining stock of 700 to 1,000 metric tons, instead of the expected balance quantity of 18,854 metric tons as of March 20, 2023. This established that the directors of the importer/licensee had illicitly removed 14,392 metric tons of in-bonded goods valued at Rs. 2.17 billion, without paying the associated duties and taxes amounting to Rs. 716 million.

Legal proceedings were initiated against the accused under the Customs Act of 1969, as well as Sections 3, 6, 33, and 34 of the Sales Tax Act of 1990, and Section 148 of the Income Tax Ordinance of 2001. Subsequently, an order was issued, determining the liability of the importer/licensee at Rs. 716 million, in addition to default/additional surcharge to be calculated upon actual payment and a personal penalty of Rs. 10 million.

However, the recovery proceedings initiated under section 202 of the Customs Act of 1969, amounting to Rs. 1.38 billion as of June 30, 2023, did not succeed, as the bank accounts of HSJ Metals Pvt. Ltd. were found to have no available funds.

It is reported that until the wrongdoing of the accused persons was uncovered, they had been manufacturing and selling steel bars, which were both sold in the market and used in the construction of HSJ Icon. The accused individuals not only used steel bars made from non-duty/taxes paid waste scrap and Silico Manganese but also diverted the funds generated from the sale of illegally manufactured steel bars towards the construction of HSJ Icon.