The Auditor General of Pakistan (AGP) has recommended that the Capital Development Authority (CDA) conduct an inquiry into the non-transparent process related to the auction of 29 commercial plots valued at Rs 37.82 billion.
In its Audit Report 2022-23, the AGP called for an investigation to determine responsibility for the irregularities, justify changes in the criteria for determining base prices, and provide data supporting the calculation of those base prices.
The report also revealed that pay orders received from prospective bidders for issuing tokens and auction brochures were not deposited in a bank. Moreover, the authenticity of the pay orders was not verified by the issuing bank. Consequently, the possibility of fake pay orders could not be ruled out, as these pay orders were even accepted at the time of bidding.
Pay orders, also known as bank drafts, are generally used in bidding processes to ensure participants’ financial commitment and ability to pay the agreed-upon amounts if they win the auction.
According to the report, bids received during open auctions were required to be presented before the CDA Board, in line with criteria approved by the Board on June 3, 2011. Furthermore, the Finance Wing was to submit details such as previous sale prices, the General Price Index (GPI), and market trends to help the Board evaluate the bids for acceptance or rejection.
During scrutiny of the records from the Director Estate Management-II, CDA, the audit noted that results from auctions held on August 4 and 5, 2021, were approved by the CDA Board during its eighth meeting on August 26, 2021.
In these auctions, 29 commercial plots in various sectors, with differing sizes and land uses, were offered for bidding under the terms and conditions outlined in the auction brochure. Bids for 23 plots, amounting to Rs 37.82 billion, were accepted, while five plots were deferred due to a lack of interest from bidders. One plot was withdrawn due to legal complications.
The audit found that critical records, including detailed calculations for average auction prices, GPI, market price trends, and reserve price determination, were not available. It was unclear how the CDA Authority arrived at the reserve prices.
Additionally, no details were available in the records regarding the five deferred plots or the legal complications surrounding the withdrawn plot. The decision to change the auction criteria from the highest sale price to the average sale price of the year was also criticized as imprudent and contrary to market trend criteria.
The AGP concluded that the acceptance of auction bids without detailed calculations of previous sale prices, GPI, and market trend analysis led to a non-transparent process for auctioning commercial plots worth Rs 37.82 billion.