KARACHI: Early morning on Feb 23, armed personnel of the vigilance branch of the Defence Housing Authority (DHA)over 100 of them, according to an area resident raided the Carlton Hotel located in Phase 8, DHA, and sealed it off.
So far, 22 functions booked at the hotel have been affected, with those hosting them having to either take their deposits back or settle for alternative venues at short notice.
Venus Pakistan (VP), a subsidiary of the US-based Venus Group, which was running the hotel under licence from the DHA, the owners of the property, has filed a case against the takeover, and the first hearing is scheduled for Wednesday (today).
When contacted, DHA secretary retired Brigadier Karim said: `Carlton was taken over because VP is a defaulter and has not paid its rent for 13 months.
Much is being made of the government`s efforts to attract foreign investment, but recent events concerning the hotel may give business interests some pause. Claiming nonpayment of rent, the DHA sent a notice to the VP to clear its dues by Feb 28, failing which it would cancel the licence.
On Feb 23 five days before theDHA set deadline armed DHA personnel raided the property without a court order or warrant, and forced the employees present out of the hotel. [The DHA is not a security company, and its personnel are not licensed to carry weapons.] Computers in the hotel offices were taken away, as were vehicles belonging to the employees one car was found abandoned later with its CNG kit removed and boats owned by the hotel were moved to the Marina Club next door.
According to a complaint filed at the Gizri police station the same day by the VP director `...they even went to the extent of saying they had orders to shoot anyone who would insist on remaining or entering the premises of the hotel`.
Moreover, a number of men with equipment allegedly went into action digging up part of the hotel`s front driveway and lawn to access the gas pipelines. A meter reader who visited the gas sub-station the next day found the gas company property`s lock broken and the meter running though the hotel was closed.
According to the VP, the raid was carried out to `connect the new Creek Lodge [located next door on the DHA-owned Creek Club premises] with the gas connection at the Carlton Hotel. This amounted totheft and violation of the gas connection policy in force within the country`. At present, new gas connections for commercial use are not allowed.
The VP`s suspicions of theft were later confirmed by an inspection team constituted by the Sui Southern Gas Company, which has lodged an FIR based on its findings.
According to VP owner and CEO, Adnan Asad, the rent was not paid for the period mentioned by the DHA secretary because the hotel had been shut down since Jan 2013 as a consequence of the DHA not meeting its contractual obligations.
`Clause 6 [of the licence agreement] shows that the hotel will be provided in running condition. Well, it was not. One floor was closed, there was no hot water etc, etc`.
Brig Karim says that another reason for the action taken by the DHA was that `objectionable activities were taking place on the premises`.
However, he was unable to say whether the DHA sent any notice to the VP to that effect. Mr Asad says no such issue was even mentioned and that the hotel was `VIP cleared`, and included some top military personnel among its occupants at various times.
Earlier, the VP was managing the hotel for the original lessees, the Plaza Company. During that time,multiple problems with hardware led to one floor of the three-storey hotel being shut down, severely impacting its revenue.
The DHA decided to cancel the Plaza Company`s lease, and license d the property to the VP in March 2012.
Inspections were made before and after signing the agreement one by a six-member board, five colonels and Mr Asad. `The entire team knew from day one that the hotel was non-functional and required major changes,` says Mr Asad.
In its licence agreement, the VP agreed to increase the monthly rent from Rs3.2 million to Rs4.2m because the DHA included in the deal additional 600 square yards of land on which the VP planned to build a banquet hall for weddings.
That handover never materialised.
Then, realising that fixing the problems entailed major expenses, the DHA began delaying tactics.
Meetings were cancelled on one pretext or another. Documents with Dawn reveal the VP`s repeated attempts to get the DHA to hold up its end of the bargain. By now, fans had been installed in the rooms because the air-conditioning was not working, hot water was being delivered to guests in buckets as the geyser was not operational, etc.After writing numerous letters and making repeated visits to the personnel concerned, the VP shut down the hotel in January 2013, though it remained open for functions with outsourced catering.
Several months later, the DHA suggested that the VP come up with a viable way forward. The company enlisted the services of a professional company to assess the cost of Carlton`s refurbishment to a fivestar hotel.
Mr Asad sent the DHA the report with a letter on Feb 17 informing it that in lieu of reducing the rent by 30 per cent and extending the lease to 15 years, the VP would fund the cost of refurbishment estimated at Rs300m.
Instead, two days later, the DHA sent a notice demanding Rs84m as rent (whereas the due amount was Rs50m, says Mr Asad) by Feb 28, failing which it would invoke clause 20 of the contract and take over the property. However, as per clause 20, the DHA had to issue `a written notice giving 60 days for rectification`. Morever, the default on rent had to be for three consecutive months with show-cause notices issued `on a monthly basis`. This was not done.
Meanwhile, Mr Asad has had a Rs84m bank guarantee taken out and deposited in court.