KARACHI: CEO of HBG Investment whose project Shaukat Khanum Memorial Trust (SKMT) invested $ 3 million in 2008 is also trustee of SKMT.

SKMT's records sharing online said that project essentially got seven-year interest-free loan from Shaukat Khanum. In Twitter thread shared former President of Sindh High Court Bar Association Barrister Salahuddin Ahmed broke down details of investment, raising some questions regarding role of trustee and prudence of such an investment.

Ahmed said that Trust invested $ 3 million in "Real estate project in Oman in 2008 and exited investment in 2015 after seven years only getting its original $ 3 million back. Bad investment? Sure. But is it bad faith?"

Saying that what intrigued him was reason SKMT invested in Omani real estate in first place given its speculative nature Ahmed tweeted, "Charitable endowments are not private equity firms. Their investments are usually and should be held in safe government bonds and bonds/shares of blue-chip companies and not speculative real-estate projects".

Ahmed he said SKMT did this "By buying all Class B (non-voting) shares of Cinnabar (British Virgin Islands Company owned by HBG). So while SKMT shared in risk/reward of any investments of Cinnabar, it would not have any voting rights/control over Cinnabar which would stay with HBG".

Per records being referred to by Ahmed, "Total value of land in project collapsed from $ 28 million to only $ 10 million. We don't know if this was due to global crisis or because land was overvalued in first place. But in any case, project became unviable".

"In 2012 SKMT told HBG it wanted to pull out. HBG promised to find buyer for SKMT's share. Finally in 2015 HBG bought out SKMT for same $ 3 million it had paid back in 2008," he added.

After media reported SKMT investment, trust issued clarification saying that it was common for charity organisations to create an endowment fund. According to SKMT, "Endowment fund is supervised by an investment committee with all investments made by fund upon recommendations of this committee.

SKMT spokesperson stated all its funds, including those invested in its endowment fund are used only to support its mission, namely provision of world-class care to cancer patients.

Published in The Daily National Courier, January, 25 2023

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.