Procurement of land near Lahore: NICL caused Rs 1.045 billion loss to exchequer: NAB

[Lahore_Real_Estate]

ISLAMABAD (August 30 2010): The National Accountability Bureau (NAB) has confirmed that National Insurance Corporation of Pakistan (NICL) had caused Rs 1.045 billion loss to the national exchequer in procurement of 803 kanals and 19 marlas land near Lahore. Official documents, available with Business Recorder, also verified that the NICL had abused Public Procurement Regulatory Authority (PPRA) Rules.

National Insurance Corporation Chairman Ayaz Niazi was reportedly the key man who struck a deal with the landowner with the approval of the Board of Directors, duly represented by the Commerce Ministry.

A subcommittee of the Senate, headed by Ishaq Dar, is also investigating the matter. However, the committee has not met for the last several months due to unknown reasons.

The NAB in its inquiry report, which was completed more than one month ago, has made the following revelations: a- 100 percent ownership record of land offered by Privilege Farms Pvt Ltd was not verified by NICL from concerned departments.

b- Punjab Board of Revenue confirmed that a vast gap existed between the market sale price of land and the price on which NICL purchased the land. The revenue staff of concerned areas reported that the market price of the purchased land was Rs 3,12,500 to Rs 4,12,500 per kanal whereas NICL purchased at exorbitant rate of Rs 21,00,000 per kanal, causing loss of approximately Rs 1.045 billion to national exchequer/NICL.

c- In the absence of basic requirement/eligibility of having 100 percent ownership record, Privilege Farms was unable to qualify for award of contract, even then the management of NICL not only awarded the contract and made the payment but also violated PPRA Ordinance/Rules and purchased the land located in a remote area at exorbitant rates causing loss to the national exchequer which reflected misprocurement, corruption and fraudulent practice.

d- NICL had hired two evaluators registered with Pakistan Banks Association (PBA), named as Medallions Pvt Ltd and S A Associates, for valuation of the land but the Board of Directors of NICL approved to purchase the land five days before receipt of report from one of the two evaluators. This haste creates suspicion and reflects the mens rea (criminal intent) of the management of NICL.

e- On the panel of PBA, the concerned evaluators not only quoted high rate in a remote areas but also manipulated the rates in favour of interested party ie Privilege Farms, thus causing loss to national exchequer.

f- Privilege Farms, seller of the land to NICL, was registered on May 18, 2006 with SECP. Director of Privilege Farms issued 35.78 million shares of Rs 10 each against purchase of land but did not intimate to SECP as per provisions of Companies Ordinance.

g- Privilege Farms was registered in 2006 while the amount received from NICL was deposited in an account opened on February 4, 2010 in Dubai Islamic Bank, Gulgerg Branch, Lahore. Subsequently, an amount was transferred two personal joint accounts of Directors of Privilege Farms.

h- During inquiry, the complainant to Supreme Court of Pakistan was revealed as real brother of the failed bidder Danish Ahmed, owner/Director of Dream Resort Limited.

i- During inquiry following price/value of 803 kanal and 19 marla land located at Mouza Toor Warraich, off Ferozepur Road, Tehsil Cantt, District Lahore, has been revealed: (i) valuation table price/schedule rate- Rs 0.1 million per kanal; (ii) average sale price -Rs 0.109 million per kanal; (iii) market price - Rs 0.312 million per kanal; (iv) price paid by Privilege Farms Pvt. Ltd- Rs 0.5 million per kanal; (v) price offered by unsuccessful bidder - Rs 0.8 million per kanal and; (vi) price paid by NICL- Rs 2.1 million per kanal.

Inquiry report concludes that prima facie the management of NICL failed to observe PPRA/government rules in purchase of 803 kanal, 19 marla land from a bidder who did not meet the basic eligibility criteria/requirements as advertised by NICL and mentioned in the tender documents resulting in purchase of the subject land at exorbitant rates.

A couple of months ago, Senator Ishaq Dar had told this scribe that NICL Chairman Ayaz Niazi has assured the subcommittee that it would "consider the deal as scrapped" but it is not confirmed whether the Chairman honoured his commitment or not.

Ishaq Dar, who also directed NICL Chairman to rent out the property purchased in Dubai, was not available for comments.

A number of phone calls were made to NICL Chairman, besides short messages on his cell number for comments on NAB inquiry report, but he did not reply till the filing of this story.