ISLAMABAD: The Capital Development Authority (CDA) faced severe criticism after an audit revealed a lack of transparency in auction process of commercial plots valued at Rs37.82 billion.
According to the audit report (FY2023-2024) findings have raised significant concerns about procedural irregularities, weak financial controls and potential mismanagement within the authority.
The report further maintained that the CDA Board approved the auction of commercial plots in an open competition, yet the process was plagued by multiple issues. The criteria set by the CDA Board required the Finance Wing to present bids with essential information, such as previous sale prices, General Price Index (GPI) calculations, and market trend analysis, to enable informed decision-making by the board.
CDA: Audit observes Rs95.9bn financial ‘irregularities’
However, the audit discovered that the auction was conducted without these critical data points, raising questions about the fairness and legitimacy of the process.
The audit report highlighted the absence of detailed backup records for average auction prices, GPI calculations, and market trend analysis.
This information is vital in setting base and reserve prices. The absence of such data made it unclear how the reserve prices were determined, potentially leading to undervalued bids and a loss of revenue for the CDA.
The CDA Board made a controversial decision to shift from the “highest sales price” model to an “average sale price” approach for determining bid acceptance.
The audit noted that this change contradicted the “market trend criteria” and was not a prudent choice, as it could have impacted the final revenue generated from the auctions.
Out of the 29 plots auctioned, 23 plots with a collective bid price of Rs37.82 billion were approved, while five plots were deferred for future auctions due to a lack of interest, and one plot was withdrawn due to legal complications.
The lack of clear documentation on these deferred and withdrawn plots was also highlighted in the audit report.
Another alarming issue was the handling of pay orders from bidders.
The CDA reportedly did not verify the authenticity of pay orders with the issuing banks, leaving the possibility of fake pay orders entering the bidding process. The audit observed that in some cases, pay orders were received at the time of bidding itself, increasing the risk of fraud.
The audit pointed out that the Departmental Accounts Committee (DAC) meetings, essential for addressing audit observations, were not convened by the Principal Accounting Officer (PAO), despite repeated requests from the audit authorities on multiple dates. This lack of responsiveness from the CDA’s top management has fuelled suspicions of accountability gaps within the organisation.
The report noted that similar issues were raised in previous audit reports for the years, 2019-20, 2021-22, and 2022-23. The repeated occurrence of these irregularities suggests a systemic issue within the CDA’s financial and administrative practices, with a total financial impact spanning multiple years.
However, the audit has recommended a thorough investigation into the auction process, with a focus on identifying individuals responsible for these lapses.
The report urges the CDA to justify the change in criteria for base prices, provide data on all auction participants, and ensure that the verification of pay orders is recorded. Additionally, the CDA is expected to address why relevant documentation was missing from files and board directives.
Copyright Business Recorder, 2024
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