In perhaps the biggest ever real estate ‘deal’, the Employees Old-Age Benefits Institution (EOBI) has purchased 321.3 kanals of land from the Defence Housing Authority (DHA) at an unbelievably exorbitant price of about Rs16 billion, while outrightly denying to the Ministry of Human Resource Development (HRD), it had ever gone for such transaction.
The purchase was made ignoring the hard fact that the EOBI had already invested much more than what it could under the rules as investments in real estate must not be more than 12.5% of the institute’s total available funds.
This mega deal was made despite a strong objection from Muhammad Naseer Jamali, the Sindh Labour Secretary and member Board of Trustees (BoT), who, among other points, had noted that the EOBI had negotiated with a single party i.e. M/s Elysium and no competitive bidding was conducted; hence, the proposed investment could not be treated as transparent.
He also observed in the current situation, this investment might cause heavy financial losses to the Institute as the land is in raw shape, under-developed and might lead to allegations’ charges for the EOBI.
Jamali continued the firm was also not ready to provide vital bank guarantee of pay back of 31 percent return after one year. He noted the bank guarantee would protect the interest of the EOBI. He opposed any deal in a hurry and advised for BoT approval, the copy of the letter he had written to the Ministry of Labour and Manpower is with this scribe. Similar concerns were raised by Punjab Labour and Human Resource Secretary Abdur Rauf Khan in his letter No PSO/Secy/10/2010. However, ignoring these points, even the proposal of bank guarantee was also dropped.
Sources at the HRD revealed to The News that Minister of State PML-Q’s Shiekh Waqas Akram had repeatedly written to the EOBI about the deal after learning from certain quarters about it. The copies of letters, he wrote to the EOBI are with this correspondent. EOBI functions under HRD.
However, the institute, which deals with pensions of retired employees and widows, maintained that no purchase was made.
The minister had asked the EOBI these questions, through a letter, dated April 03, 2012: Did the EOBI ever have any negotiations with DHA, Islamabad, to buy a piece of land formerly known as Commoners Town or land related to Commoners Town?
The minister had also asked was this issue ever brought up as an agenda item of the Board of Trustees of EOBI? Was this issue ever discussed in BoT in any manner? If this issue was brought up to BoT, it should be clearly stated as to why and what was discussed and also provide minutes of those meetings?
At the end, Waqas Akram had regretted that the requisite information was still awaited by the ministry. He had cautioned that anyone who becomes responsible for delaying the answer to the questions will be taken to task.
When approached on telephone in Jhang, Waqas Akram confirmed he was never given answers to his questions about DHA deal despite he had written to the institute more than twice.
It is interesting to note that the EOBI, which works under Zafar Gondal, younger brother of influential PPP Federal Minister Nazar Gondal, while having grossly misled the minister, the institute made payments to DHA quietly even ignoring the BoT objections to opting for such purchase.
As per record, the EOBI through cheque No 04299440 made payment of Rs100 million on November 02, 2011, Rs2.10 billion on January this year through cheque No 0429496, again Rs2.50 billion on January 26, 2012, through cheque No 1054525, Rs5 billion on February 08 through cheque No 1054536 and Rs6.043 billion through cheque No 1603414 on April 23 this year.
This investment was made despite clear observations by the BoT in its 86th meeting with regards to the purchase from any private entity that after due deliberations, the board decided that in the light of previous practices and the decision of the Public Accounts Committee (PAC), the EOBI should continue with the same practice to avoid purchasing land/plot from private parties. The board also decided to drop the proposal of buying Intercontinental Hotel, Islamabad.
The Lahore High Court, in its order early this year, had also barred the EOBI from any deal and later a divisional bench had allowed it only day to day business to ensure timely pension payment to the pensioners, the HRD sources said.
Syed Imran Ali Shah, employees’ representative, had also pointed out in the BoT 85th meeting the DHA project was not allowed, but the minutes of the meeting afterwards revealed that the management was considering the same. The BoT president had clarified on being pinpointed that the board had only allowed signing of the MoU, and there was no mention of considering the project in the minutes. Imran was later sent home; however, the court had restored his BoT membership.
Prior to that on November 12 last year, with headline ‘minutes of 188th investment committee meeting held on October 27, 2011, Imdad Ali Shaikh, who is financial adviser/DG (F&A), had asked for approval of the board for such a huge investment before making any payment. Moreover, the price of land had not been evaluated by an independent firm/NESPAK. It was also widely felt that the price of land was much higher than its value as per market rates.
He also noted that the EOBI, as per rules, could invest 12.5 percent of its total funds. He continued the real estate section of investment department had informed and provided a list of 17 properties approximately amount to Rs24.13 billion, excluding DHA land and 40 kanals at Ring Road.
When contacted on phone, the EOBI media adviser brushed aside the facts narrated here and claimed the land deal was approved by all forums and Waqas Akram was forwarded a brief twice through a proper channel.