Procurement of 803 kanal 19 marla plot in Lahore: NICL may have to pay up to Rs 14.26 billion as penalty

National Insurance Corporation Limited (NICL) may have to pay up to Rs 14. 26 billion, which is total 10 times penalty of corruption of Rs 1.426 billion as reported by NAB in the procurement of 803 kanal 19 marla plot in Lahore. The plot reportedly belonged to ex-MNA, Habibullah Warraich, which has a current market value of Rs 312,000 per kanal, whereas NICL procured it at Rs 2,100,000 per kanal.
Transparency International Pakistan (TIP), Chairman, Syed Adil Gilani has requested the Supreme Court of Pakistan to consider that this act of the seller and NCIL in revoking the sale after effective finalisation would not have been possible if TI Pakistan would not have raised objections on this procurement and informed NICL, NAB, PAC, AGP, PPRA and the Supreme Court of Pakistan.
Gilani said that following the publication of TIP's letter of May 6, 2010 and NAB inquiry report submitted to the Supreme Court of Pakistan, the seller knowing that they have defrauded Government of Pakistan and are liable to pay fine up to 10 times, ie Rs 14.26, offered to return the money, and NICL Board accepted the offer.
He said that the guilty persons responsible for this illegal deal should not go escort free by just returning money to the exchequer and taking the plea that the crime has not been committed. Exemplary punishments are needed to be announced so that no one in future dare think of repeating such fraudulent practices.
Following is the chronology of the case: On December 13, 2009 tender notice was published in Lahore, Islamabad and Karachi. On December 14, TIP sent objection to NICL on the tender notice, stating that PPRA rule 11 is violated, as minimum 15 days shall be allowed to bidders, but NICL is allowing only 8 days. Also PPRA Rule 23 required bid documents to be issued, which was missing. Copies were sent to PM, PAC, AGP. NAB, PPRA and Supreme Court of Pakistan.
On December 16 PPRA registered TIP complaint and sought from NICL a comprehensive report and comments. On January 8 NICL sent clarification to PPRA and TIP stating the reason of the 8 days, as Emergency requirement. NICL stated that the time limit was extended and bidding documents with Evaluation Criteria including " Integrity Pact" was also prepared and issued.
Under Integrity Pact abiders are committed to pay 10 times fine if corruption id detected in the procurement at any stage. NICL also clarified that the Contract for Air Conditioning (HVAC) objected by TIP awarded to M/s Roma Computers at Rs 390 million, against the estimated cost of Rs 280 million, has been terminated.
On January 28 TIP sent objection to NICL on the Evaluation Criteria being a violation of PPRA Rule 32. Discriminatory and difficult conditions, as it is oriented toward a favoured bidder with discretions to NICL. Viz. 25 marks are kept for cost, and 60 percent is passing score. It was found later that only one bidder M/s Privileges' farms qualified by NICL under this sub criteria, and also whole evaluation criteria, though their quoted rates were highest out of 7 bidders.
On January 29 PPRA registered the TIP complaint, and directed NICL to submit a comprehensive report. On January 30 Asif Ahmed, brother of a bidder Danish of M/s Dream Resort Ltd, sent a complaint to the CJ Supreme Court for taking suo moto action in this tender, and a copy was also sent to TIP.
On February 4 TIP sent serious objection to NICL Advocates, on the Pubic Notice published on February 1 inviting objections of purchase of 803 kanal plot in Lahore published by Advocates of NICL for purchasing the property at Seven Time higher than market value. The complaint of Asif Ahmed was also sent to them.
Copies were also sent to PAC, AGP, NAB, PPRA, Supreme Court, FIA and all directors of NICL. TIP requested that the deal shall not be finalised till cleared by PPRA. Transparency International Pakistan requests NICL, and M/s Asif Cheema and Associates, to respond to TI Pakistan's complaint with a copy to PPRA before finalising procurement of this land.
On February 16 TIP informed NICL about the PPRA Rules of grivience handling. NICL was requested to hold inquiry on under Rule 48 on the violation of Public Procurement Rules, 2004 NIC Procurement 803 Kanal -19 Marla Plot for Housing Society at 8times market price, in Lahore, ie loss to exchequer of Rs 1.45 Billion.
Transparency International Pakistan requested NICL to conduct the inquiry through the designated grievance inquiry committee, as per Rules, and forward the report to the Federal Secretary Ministry of Commence, the Principal Accounting Officer for NICL, and communicate the final decision of the Principal Accounting Officer to TI Pakistan, prior to award of the Contract, as directed by PPRA.
On February 17 PPRA registered the TIP complaint, and directed NICL to submit a comprehensive report. On February 19 NICL replied to PPRA on TIP complaint clarifying their all allegations are false. And that the valuation of 803 Kanal was got assessed by two Pakistan Bank Association approved valuators. And that the Board of Directors has finalised the price. On March 4 2010 TIP again wrote to NIL for not responding to TIP letter dated 16 February 2010. Following objections were again raised.
1.If the mis-propcurment is proved in procurement of 803 Kanal -19 Marla Plot in Lahore (reportedly belonging to Habibullah Warraich), under rule 7, GoP is allowed to recover 10 times the corruption deducted, which may be Rs 14.5 billion in this case. Decision of the Secretary Ministry of Commerce as per PPRA directive is awaited.
Rule 7. Integrity pact.- Procurements exceeding the prescribed limit shall be subject to an integrity pact, as specified by regulation with approval of the Federal Government, between the procuring agency and the suppliers or contractors.
2. 27,000 Office space in Dubai in Liberty Tower was purchased in July 2009 @ UAE Darham 2,700 per sft. , against the market price of AED 1,200 per sft. Loss on AED 40 million.
3. 10 Acre plot purchased in Korangi Deh Phihai, in August 2009, @ Rs 90,000,000 per acres, against maximum market price of Rs 20,000,000 per acre. Loss Rs 70,000,000.
4. Award of Contracts of painting works and furniture to M/s Casa Bella Lahore, Karachi @ Rs 26.987 million, and at Islamabad @ Rs 9,310,000. M/s Casa Bella is not a license holder of Pakistan Engineering Council. The tender for Karachi was for 6 floors, but the Contractor has been asked to paint only 4 floors.
5. Rs 1.5 billion Land purchased in Lahore in 2009 from Mohsin Warraich, whose market value is Rs 30 million. Loss to GoP Rs 1.2 billion, and recovery can be Rs 12 billoin.
6. Award of Consultancy Work to M/s Architectural System, owned by Zaheer Khan reported to be relative of Chairman NICL, against Nespak, Habib Fida Au and Naqvi & Siddiqui.M/s Architectural System is not a license holder of Pakistan Engineering Counci1.
On April 26 Supreme Court ordered NAB to submit inquiry report within 1 month on the complaint of Asif Ahmed. On May 19 NAB submitted the inquiry report to the Supreme Court. A billion-rupee scam in the Commerce Ministry of Makhdoom Amin Fahim has quietly landed in the Supreme Court. NAB has now confirmed in its secret inquiry report before Chief Justice Iftikhar Muhammad Chaudhry that a dirty land deal had caused a Rs 1 .04 billion loss to the nation.
The CJ had now been told in writing that the National Insurance Company Limited (NICL) of the Ministry of Commerce had struck a dirty land deal with a private company M/s Privileges, which caused a loss of Rs 1.04 billion to the national exchequer.
The Supreme Court has been told in the NAB inquiry report that the NICL had purchased 803 kanals 19 marlas of land from a bidder (said to be the son of a former minister in the Musharraf regime) who did not meet the basic eligibility criteria/requirements as advertised by NICL and mentioned in the tender documents. It said this huge deviation from the rules led to purchase of land at Mouza Toor Warraich off Ferozepur Road, District Lahore, at the rate of Rs 2. 1 million per kanal against the market rate of Rs 325,000, thus causing a net loss of Rs l .04 billion to the national exchequer.
On July 20 NICL submitted report on TIP letters and NAB report to the Supreme Court. CJ ordered to obtain TIP comments on NICL report by 26 August 2010. On August 24 & 30 TIP sent the detailed report to SC. According to the inquiry report of NAB, corruption is proved, and according to "Integrity Pact", the violators M/s Privileges' farms, besides criminal indictment on corruption, shall also be considered to pay under Rule No 7, "Integrity Pact" 10 times the amount of corruption as fine, which and in this case as reported by NAB is Rs 1.426 billion and the total penalty at 10 times may become Rs 14.26 billion.
This fine as per rules is required to be deposited with the GoP. Similar could be the fine recoverable on the Lahore Commercial property, Karachi Korangi Property and Dubai Liberty House Property purchases, if the court is convinced that corruption has occurred in these deals also. After the TI Pakistan letter dated 6 May 2010, was lifted from TIP website and published in newspaper on 7th May 2010, and NAB inquiry report submitted to the court, the seller knowing that they have defrauded GoP and are liable to pay fine of ten times, ie Rs 14.26 billion, offered to return the money, and NICL Board accepted the offer (page 38 of NICL Report).
I request the court to consider that this acts of the seller and NICL would not have been possible if TI Pakistan would not have raised objections on this procurement and informed NICL, NAB, PAC, AGP, PPRA and the Supreme Court of Pakistan. The guilty persons responsible for this illegal deal shall not go escort free by just returning the exchequer money, and taking the plea the crime has not been committed. Exemplary punishments are needed to be announced so that no one in future dare think of repeating such fraudulent practices.