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. This recommendation is part of the AGP’s Audit Report for 2022-23, which highlights several irregularities and calls for accountability and transparency in the auction process.
Unveiling the Auction Irregularities
The AGP’s report has raised serious concerns about the manner in which the CDA handled the auction of these commercial plots. The report points out that there were significant deviations from the standard procedures, particularly in the way base prices were determined and how the auction process was conducted.
Non-Transparent Process
The report recommends a thorough investigation to determine the responsibility for the irregularities. It stresses the need for the CDA to justify the changes in the criteria for determining base prices and to provide the data supporting those calculations. This is crucial to ensure that the process was fair and that the base prices were not manipulated.
Issues with Pay Orders
One of the key issues highlighted in the report is the handling of pay orders received from prospective bidders. These pay orders, which are generally used to ensure participants’ financial commitment, were not deposited in a bank. Moreover, their authenticity was not verified by the issuing bank. This raises the possibility of fake pay orders being used in the bidding process, which could undermine the integrity of the auction.
The Role of the CDA Board
The AGP’s report also underscores the importance of the CDA Board’s role in the auction process. According to the report, bids received during open auctions were required to be presented before the CDA Board, in line with the criteria approved by the Board on June 3, 2011. The Finance Wing was supposed to submit detailed information, such as previous sale prices, the General Price Index (GPI), and market trends, to help the Board evaluate the bids.
Lack of Critical Records
During the audit, it was noted that critical records, including detailed calculations for average auction prices, GPI, market price trends, and reserve price determination, were not available. This lack of documentation makes it unclear how the CDA arrived at the reserve prices for the plots. Furthermore, there were no details available regarding the five deferred plots or the legal complications surrounding the withdrawn plot.
The Auction of August 2021
The audit focused on the auctions held on August 4 and 5, 2021. In these auctions, 29 commercial plots in various sectors, with differing sizes and land uses, were offered for bidding. Out of these, 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.
Changes in Auction Criteria
The decision to change the auction criteria from the highest sale price to the average sale price of the year was criticized as imprudent and contrary to market trend criteria. This change, according to the AGP, led to a non-transparent process for auctioning the commercial plots.
Conclusion
The AGP concluded that the acceptance of auction bids without detailed calculations of previous sale prices, GPI, and market trend analysis resulted in a non-transparent auction process. This has significant implications for the credibility of the CDA and the overall transparency of the auction process.
FAQs
1. What prompted the AGP to recommend an inquiry into the CDA’s auction process?
The AGP’s Audit Report for 2022-23 highlighted several irregularities in the auction process of 29 commercial plots valued at Rs. 37.82 billion. These irregularities included non-transparent criteria for determining base prices and handling of pay orders, prompting the recommendation for an inquiry.
2. What were the key issues identified in the auction process?
The key issues included changes in the criteria for determining base prices, non-verification of pay orders, and the absence of critical records such as detailed calculations for average auction prices, GPI, and market trends.
3. How did the CDA Board’s role impact the auction process?
The CDA Board was supposed to evaluate bids based on detailed information provided by the Finance Wing, including previous sale prices, GPI, and market trends. However, the lack of critical records and detailed calculations undermined the Board’s ability to make informed decisions.
4. What were the consequences of changing the auction criteria?
Changing the auction criteria from the highest sale price to the average sale price of the year was criticized for being imprudent and contrary to market trend criteria. This change led to a non-transparent process and raised questions about the fairness of the auction.
5. What steps has the AGP recommended to address the irregularities?
The AGP has recommended that the CDA conduct a thorough inquiry to determine responsibility for the irregularities, justify the changes in criteria for determining base prices, and provide data supporting those calculations. This is aimed at ensuring transparency and accountability in the auction process.
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