ISLAMABAD: Less than a week after Roosevelt Hotel announced to permanently shut its doors on guests from Oct 31, the National Accountability Bureau (NAB) has decided to probe the closure of prime Pakistan International Airlines’ property in the heart of the posh borough of Manhattan, New York City.
According to a press release issued by the anti-graft agency, its chairperson Justice (r) Javed Iqbal, while taking notice of the closure, has directed the bureau’s Rawalpindi chief to probe the reasons behind the decision to close down the “national asset”.
The property which is valued at more than a billion dollars has been incurring for quite some time now.
On Monday, Aviation Minister Ghulam Sarwar Khan had revealed the hotel’s management had taken out a loan of $160 million from JP Morgan Chase, an American investment bank, and was making regular payments from its own revenue stream. The balance outstanding at the moment is $105 million, he had said.
However, following the virus outbreak, the hotel ran into financial trouble, giving the lender a pretext to sell off its liabilities to another company. That bank, Khan said, has now set its sights on purchasing the hotel.
It even attempted a takeover of the property, but the Pakistan government put its foot down and decided to take the matter into its own hands, he added.
The press release said the NAB will look into the reasons behind the alleged loss of hundreds of thousands of dollars borne by the government. The watchdog will also point out officials who allegedly showed “carelessness in performing their national duties” and failed to play a role in making the hotel into a profitable entity.
The Roosevelt Hotel opened on September 23, 1924, and was leased by Pakistan International Airlines (PIA) through its investment arm PIA Investments Limited in 1979, with an option to purchase the building after 20 years, which it did in 1999 for an additional $36.5 million.
Prince Faisal bin Khalid bin Abdulaziz Al Saud of Saudi Arabia was one of the investors in the 1979 deal. In 2005, the PIA bought out its Saudi partner in a deal that included the prince’s share in Hotel Scribe in Paris in exchange for $40 million and the PIA’s share of the Riyadh Minhal Hotel.
The flag-carrier has since controlled 99 per cent interest in the hotel while the Saudis have only 1 per cent.
After fully acquiring the hotel, PIA undertook its renovation. Following refurbishment, it started making a profit after a long time and continued doing so till 2018. But the onset of the coronavirus pandemic brought doom to the hotel and tourism sector.
Experts say the main reason for its decline is the obsolescence of its infrastructure and depleted room conditions.
After the news of the property’s closure become public, diplomatic sources clarified that the airline still owned the property as the building had not been sold.