Guilty of tax evasion, deceptive market practices: Bahria Town ineligible for award of contracts: TI Pakistan

No contract could be awarded to Bahria Town, as its Director Malik Riaz is a declared tax evader by Federal Tax Ombudsman (FTO), and Bahria Town has been adjudicated by Securities and Exchange Commission of Pakistan (SECP) as guilty of deceptive market practices in Margala Enclave Project.
This has been stated in a letter sent on February 16 by Adviser, Transparency International-Pakistan , Syed Adil Gilani, to all the federal secretaries, and chief Secretaries of Governments of Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan. He has brought to their notice that Bahria Town has been adjudicated by SECP in March 2012 as guilty of deceptive market practices in the sale of Margala Enclave Project.
The Margalla Enclave Project, Islamabad for public sale was advertised by M/s Bahria Town (Pvt.) Limited in national newspapers on September 19, 2011 with the caption that the said scheme of the company is close to Capital Development Authority's (CDA) Scheme "Margalla Retreat" and the selling price of the plots is less than half the price of plots offered by the CDA.
The SECP on March 16, 2012 found M/s. Bahria Town (Private) Limited guilty of deceptive market practice and its Chief Executive, Directors and Company Secretary were penalised for fraudulent sale of Bahria Town Margalla Enclave and fined a total of Rs 1,000,000. The break-up of penalty imposed is as follows: Chief Executive/Director, Ahmed Ali Raza Malik Rs 500,000, Director Malik Riaz Hussain Rs 400,000, Director Bina Riaz Rs 50,000, and Company Secretary Shabbar Hussain Rs 50,000. SECP had started investigations against Bahria Town on the directives of Chief Justice of Pakistan, Iftikhar Muhammad Chaudhry.
The management of the Company was also directed in terms of section 472 of the Ordinance to clarify its position with regard to the aforesaid project in the print media within seven days positively. The order by the Executive Director (C&CD) SECP, Nazir Ahmed Shaheen on account was upheld on October 17, 2012, by the SECP which rejected the appeal filed by Bahria Town.The case was also reported to the Supreme Court by the Federal Tax Ombudsman in his report dated December 6, 2012.
(i) Cheating and fraud: "Margallah Enclave", a scheme launched by Bahria Town (Pvt) Ltd near CDA's "Margallah Retreat" was a project apparently to swindle the hard earned money of the general public. Securities Exchange Commission of Pakistan, on the basis of an inquiry into the scam, penalised all the directors of Bahria Town with maximum penalty to Malik Riaz Hussain.
(ii) 34.Advances from customers in contravention of Memorandum of Association of Bahria Town: Article 41 of the Memorandum of Association of Bahria Town reads as follows:
(iii) "It is undertaken that the company shall not, by advertisement, pamphlets, other means or through negotiation, offer for sale or take advance money for the further sale of plots, houses, flats, etc, to the general public or individuals unless such plots, houses or flats etc are owned and have been developed by the Company."
(iv) In contravention of Article 41, as per note no. 9 to the audited accounts for 2007 filed with SECP, the company has received advances for future sale of plots without undertaking any development work.
In another case, the Federal Tax Ombudsman inquiry commission report submitted in the Supreme Court of Pakistan on the Suo Motu case, on December 6, 2012 in the matter of Malik Riaz Hussain, tax evasion by Malik Riaz Hussain as Chairman/Director of Bahria Town of over Rs 119 billion had been reported.
26. Total Income Tax implications in respect of Malik Riaz Hussain: As explained in paras 21 to 25, total estimated income tax implications in respect of Malik Riaz Hussain in his individual capacity come to Rs119.42 billion
The acts of Bahria Town and its Directors of not paying the government dues, also comes under the National Accountability Ordinance 1999, Section 5 (r) as Willful Default, which under Section 9 a (viii) is Corruption and Corrupt practice. The act of cheating and fraud in Margallah enclave project comes under corruption and corrupt practice Section 9 a (ix).Cheating and thereby dishonestly indices members of the public at large to deliver any project.
Accordingly, Bahria Town does not qualify for any government contracts and land development contracts, till the time it pays the exchequers dues viz. Rs 119 billion income tax to FBR and TRs one million penalties to SECP.
All government departments have been requested to ensure application of verdicts of SECP and FTO in letter and sprit.
"TI Pakistan is striving to have transparency in procedures and Rule of Law in Pakistan, which is the only way to eliminate corruption and have good governance in country," the letter said.
Copies of the letter have been forwarded for action under rules and regulations to: Chairman Public Accounts Committee, Islamabad, Dr Abdul Hafeez Shaikh, Federal Minister of Finance, Islamabad, Chairman NAB, Islamabad, Federal Tax Ombudsman, Islamabad, PSPM, Prime Minister House, Islamabad, Auditor General Pakistan, Islamabad, Chairman FBR, Islamabad, and Registrar, Supreme Court of Pakistan, Islamabad.