ISLAMABAD: A subcommittee of the Public Accounts Committee (PAC) criticised the Capital Development Authority (CDA) for allegedly favouring the owners of two commercial plots, for the planned Grand Hyatt project and the construction of a three-star hotel.

The subcommittee met at Parliament House to discuss audit paras related to the CDA.

While discussing the Grand Hyatt luxury hotel, the committee expressed surprise that the CDA – in contravention to its original advertisement – accommodated the successful bidder by allowing him to pay for the plot in instalments spread over years.

“This was mala fide intention of the CDA,” the committee’s convener, MNA Abdul Mannan, said, adding that the plot owner paid just Rs1.2 billion into CDA accounts while collecting a large sum from people and receiving bank loans.

PAC subcommittee asks NAB to expedite probe into Grand Hyatt case

“This is a big fraud case,” the convener said, adding that the Federal Investigation Agency (FIA) had previously pointed out this fraud case but was now saying there was no evidence of fraud in the files.

He said the FIA was not focusing on the CDA’s rescheduled payment plan for the plot’s allottee. “The allottee was given years to deposit the payment, which should have been deposited within three years,” he said.

During the course of the meeting, an FIA official told the subcommittee that while there could have been fraud and there were chances of mala fide intention behind the project, there was no evidence of this in the case files.

Last month, the FIA dropped charges against former CDA chairman Kamran Lashari and other authority officials, as well as the owner of the firm that had bought the plot in question, paving the way for the regularisation of the controversial project.

FIA Director General Bashir Ahmed Memon approved the findings of a de novo inquiry into the lease of the 13.5 acre plot to the private company BNP. The report cleared influential former bureaucrats and the firm’s owner.

The construction of luxury apartments on land meant for serviced rooms of the luxury Grand Hyatt hotel was declared illegal in March last year by Islamabad High Court Justice Athar Minallah, who upheld the CDA’s cancellation of the lease for the plot. The status of the plot remains cancelled.

Subcommittee member Arif Alvi said the case is being investigated by the National Accountability Bureau, and the committee should recommend that NAB expedite its investigation. Committee member Shahida Akhtar Ali also raised questions about the CDA’s competency.

The committee convenor asked the NAB chairman to expedite the case.

Earlier in the meeting, CDA Chairman Usman Akhtar Bajwa told the committee that according to the rules, the CDA board was authorised to reschedule the payment schedule of the plot, but adding that there is need to check the grounds on which the board approved the rescheduling.

The committee decided to take up the case during the first week of the next month.

Plot allotment for three-star hotel

The subcommittee discussed an audit para in which audit officers told the committee that the CDA has leased plot no.13, measuring 5.66 acres on Club Road in Islamabad.

The plot was auctioned and allotted to the Pak Gulf Company for Rs60,500 per square yard in 2007. According to audit reports, the allottee was supposed to pay Rs414.3 million as a down payment, as well as a quarterly instalment of Rs103.6m – a total of Rs1.7bn – over three years.

The report said the CDA received the down payment and instalments until October 2008, after which the payment rate instalment schedule was revised to Rs29.3m, including the Karachi Inter-Bank Offer Rate (Kibor).

The report said that despite the revisions to the payment schedule and instalment rate, the company did not deposit instalments for January, April and July 2009, resulting in “the non-recovery of Rs87.9m and unjustified revision of schedule of payment”.

The report said CDA representatives explained that the instalments have been recovered. During the meeting, CDA officials said the instalments for the price of the plot had been paid but there was an outstanding sum against the delayed charge for not building in the stipulated timeframe.

The committee convenor said the CDA board had approved the rescheduling of payments on the grounds that the company was having financial issues and asked whether the CDA was responsible for the company’s financial conditions that it had revised the payment schedule.

Audit officers also briefed the subcommittee that the company was given special favour by the CDA in terms of the number of storeys. The plot was originally meant for ground-plus-one storeys, but the CDA board allowed the allottee to construct an 11-storey building.

The CDA chairman told the committee that the CDA would, after checking the records, move to cancel the plot.

Published in Dawn, March 16th, 2018