The business of real estate in Pakistan is big, and the fraud surrounding it is even bigger and more rampant than over. Real estate developers all over the country use the same tricks of the trade to get money out of people quickly in the name of developing land, and then leave projects hanging for decades. And with big bucks involved, even the smallest frauds in the sector are worth tens of millions of rupees.
Normally, and we have discussed this time and time again, what these housing schemes do is a classic case of having the cart before the horse. Any real estate developed should first acquire the land, get permission from the authorities, and then start marketing and selling the project. However, they market first, collect the money second, and then try to get permission from the authorities.
Over the past decade, there have been some changes in the real estate market. There are some reliable societies that are more expensive precisely because they come with a guarantee of not being held up in court for decades. However, there is a general impression that during the PML-N era, Punjab, especially Lahore, was ruled by land grabbers and many real estate projects were started which committed fraud on a large scale from the people. This impression is somewhat correct as the governments of the past, including the present, have always made claims but have never taken any significant steps to curb fraud in this sector.
Normally these fraud’s are familiar in the way they are structured and people continue to fall for them. Lahore’s real estate industry is rife with incidents of fraud and fooling the public, but the Ferozepur City Housing Scheme was a project whose style of fooling the public was new and the level of fraud was historic.
What was the project?
Picture this. It is 2008, and Pervez Musharraf is finally on his way out. The near decade-long reign of Pakistan’s last military ruler is coming close to an end, and the democratic process is close to being as free as it has ever been in the country. And with this ushering in of democracy, an end is also coming to the PML-Q – the breakaway political party of the PML-N that became the King’s party under Musharraf’s presidency.
Desperate to maintain some political goodwill among the electorate, the PML-Q government in Punjab under Chauhdry Pervez Elahi was quick to complete all the projects that had been started in his tenure but had been delayed due to some problem or the other.
One of these projects was the extension of Ferozepur Road from Chongi Amr Sadhu to Kahna. A historic road of epic proportions, Ferozepur Road gets its name because it literally leads to Ferozepur in India all the way from Mozzand. Today, it is a relatively fast and convenient road which despite heavy Lahori traffic manages to get the job done, and is a single highway from which most of the city can be accessed at different points.
Within Lahore (from Mozang Chungi to Gajjumata) it is referred to as Ferozepur Road and from Gajjumata to Kasur it is referred to as Lahore-Kasur Road. Good for traffic, although a little troublesome for luxury vehicles and bikers. Back in 2008, the road from Mozang to Kalma Chowk and Model Town was beautiful and wide, but as soon as the Chungi Amrsadhu bridge came down as part of the PML-Q’s hastily planned expansion, the road changed its view. Dust, dirt, rush, and the pollution of heavy vehicles made travel on this road difficult.
Despite all of the rush, the centrality of Ferozepur Road was paramount and nobody could challenge it. Which is why even back in 2008 housing schemes were popping up in and around the road, all boasting their proximity to the location. According to the document available from the Lahore Development Authority (LDA), many schemes were illegal. Later, when the PML-N came to power and from 2008 to 2018, not only was the road improved to Kasur, but the metro bus service was also started here and the intersection of Ring Road near Kahna was started. Due to this, the movement of people here had also increased. During all this time, Ferozepur Road had become an attractive area for real estate and people had started investing here in droves.
Now the situation is such that Ferozepur is being considered as the economic lifeline of Lahore and people associated with real estate are considering it as a suitable place from the point of view of investment. This was why the Ferozepur City Housing Scheme project was introduced in the market at the end of 2017. The project was widely discussed in the market and it was claimed that it would be a project with residential, commercial plots as well as land for farmhouses and luxury apartments. The developers claimed that the project was designed keeping in mind the luxury lifestyle and modern age.
It was also claimed that national and international consultants were being enlisted for the development work on the project site. However, such claims are made by almost every developer for their project. To get the public’s attention, the project owners and developers claimed that a grand mosque would be built for the community in the housing scheme. Similarly, an education city, a hospital, wide roads, uninterrupted power supply, security, sports complex, zoo, disaster management system, multiplex cinemas, and a Bulleh Shah Library would also be set up here. As far as this goes, it all sounds very familiar. These are exactly the kind of promises that these developers make and that work. To the eyes and the ears, the project was fascinating and it was marketed in a way that many people from Ferozepur Road, Kasur and the city were eager to invest and buy plots here. The project was owned by three owners, two brothers named Naeem Ahmed and Nadeem Ahmed and the third partner named Nazar Mohammad.
Method of fraud
The first thing that the project did was to get planning permission from the LDA and then publish advertisements in leading Urdu and English newspapers. They claimed that the LDA had given its approval and they were now taking investments and even selling plots or certificates. However, the problem here was that they had only gotten permission from the LDA to begin planning, and not to actually take money or start developing. The marketing, however, portrayed it as if they had actually started development work.
Planning permission means that only planning work can be started on the proposed site while an NOC from the LDA is required to place advertisements on newspapers and TV channels but the owners of the scheme suppressed the matter by bribing LDA officials. After that, the services of real estate agents of Ferozepur Road were hired to sell the project and advertisements were placed in the newspapers by them. Interestingly, in the advertisements given regarding the agents, the importance was first mentioned by the agents from the investment point of view on Ferozepur Road and all the agents told elaborate success stories in advertisements in the form of interviews. The purpose of doing so was to convey the message to the common man that Ferozpur Road is the best place for investment and big projects have started here, and that this one was a reliable project. The second purpose was to introduce the real estate agents through whom the project was to be sold, to name the success stories and to circulate the names of these agents in terms of customer service. It was a new method and all such real estate associates and agents were advertised. Disappointingly, all this activity was not noticed by the LDA. For the first time, the society was not just marketing itself but also agents that they had hired to promote their project.
The next stage of fraud by developers was the sale of files. It is pertinent to mention here that such illegal housing schemes never sell plots but always sell files which have no legal status. Profit has repeatedly raised the point before that the sale of a plot is possible only if the land in the record is transferred to the name of the seller by going to the Patwari and only those who are selling their personal land can do so. When the land record is transferred in the name of the buyer, the buyer can not only get the land demarcation by the Patwari but also can establish his possession while selling files is just a way to commit fraud. However, all the real estate agents who had already advertised in the newspapers were selected to sell the files.
Mian Amjad, a property dealer on Ferozepur Road, informed Profit that three years ago, the sale of files under the scheme was at its peak. “The owners of Ferozepur City Housing Scheme hired as many real estate agents as they could and each agent received an attractive commission on the sale of the files and they were looting the people with both hands. Files of five marla, ten marla, one kanal and two kanal plots were being sold in the scheme and every investor investing in this area wanted to get three to four files of this scheme,” he explains.
“I did not deal with the files of this housing scheme. Our job is to buy and sell plots, for which as soon as we get the Fard (Land Document) from the Patwari, we know whether there is any dispute or court case over the plot we are trying to buy or sell. I saw with my own eyes that the LDA field staff visited the said scheme, drank tea, took bribes and got on with it. The scheme was so popular that people from other cities also wanted to invest here,” he revealed.
Profit’s investigation further revealed that the third tactic of the scheme owners to commit fraud was extremely attractive and that was that the prices of plots were highly unrealistic and despite the unrealistic prices, these plots were also available on installments.
The scheme owners had fixed the price of the five-Marla plot at Rs 2.09 million while the plot was also available on easy three-year installments. For booking of this plot, a down payment of Rs 395,000 was to be deposited and the remaining amount was to be paid to the scheme owners in three year installments. Similarly, the price of a ten marla plot was Rs 3.7 million for which a down payment of Rs 595,000 while a one-kanal plot was available at Rs 6.9 million on three-year installments plan and a two-kanal plot was available at Rs 12 million. Overall, the scheme owners were selling plots at Rs 400,000 to 300,000 per Marla, while commercial plots were also offered by the society.
According to Profit’s investigation, three years ago, the price of a clear plot on Ferozepur Road in the Gajumata area was nearly Rs 800,000 to 1,000,000 per Marla, so this unrealistic price was also one of the reasons for the attraction in this society.
The second thing to consider was that the Ferozepur City housing scheme consisted of 25 acre (or 200 kanal or 4,000 marlas) of land. The developer and owner advertises to sell plots of 3, 5, 10 Marla and 1 and 2 Kanal. If the hypothetical situation is considered where they had all of this land developed, even then there would be at most 800 files of 5 Marla plots. But the scheme ended up selling not just more than 800 files, but a whopping 5154 such files. And this was if they were only selling files of 5 marla plots – the 5154 files sold include plots of 10 marlas, 1 kanal, and even 2 kanal – naturally more expensive depending on the size of the plot for which the file was. Thus, the project has already sold more land than it has by a huge amount. This is not even considering that within the 4000 marlas that they actually have, the project is also supposed to build the promised mosque, community, roads, and all the other trapping were to be built including parks and sports complexes. All the sales were illegal with the involvement of LDA officials and the owners of the society were telling bare faced lies and collecting money in exchange for pieces of paper.
However, after displaying their skills at fraud with great aplomb, Nazar, Nadeem and Naeem had amassed more than Rs 2 billion. During this time people started demanding plots and development and when the demands of investors gained momentum, the owners of the society had nothing but to give a lollipop to the investors. That is when the National Accountability Bureau stepped in.
How did the NAB intervene?
When Profit discussed the scheme with National Accountability Bureau (NAB) officials, they believed it was one of the major frauds that had taken place in the history of real estate in Lahore, and that the NAB had already made a major breakthrough in this scam.
A NAB spokesperson informed Profit that NAB was receiving many complaints regarding the scheme and NAB officials headed by the Director General Lahore decided to investigate the case. “It has been alleged that the management of ‘M/s Ferozepur city Housing Scheme’ including the accused Nazar Muhammad, Naeem Ahmed and Nadeem Ahmed under the garb of said illegal housing scheme received huge amounts from the public at large through inducement and luring them by issuing files of the said illegal housing scheme. Accused Naeem and Nadeem also alleged that for getting NOC/Approvals they have given a bribe of RS 115,500,000 to accused Muhammad Shahzad who was the Director Headquarter LDA and Malik Liaqat who was the PA of DG LDA,” the spokesperson revealed.
The spokesperson further informed that on the above said allegations five accused persons were arrested in this case whereas three of them were from the management of Ferozpur City Housing Scheme and two of them were from LDA. “Claims against the management of the scheme were invited from the general public and for this purpose, advertisements were placed in the same paper where the housing scheme had advertised itself. As per our records, 6195 plot files were affected in this case. As claims were still pouring in so the total liability was calculated on the basis of actual record recovered from the accused persons which include the liability of those claims which were still to be filed with NAB and total liability against the 6195 plots was of RS 2,222,358,727 (2.2bn approx.). To date claims of approximately 5600 plot files were submitted with NAB and for remaining claims fresh publication is also being published in leading newspapers on all over Pakistan basis,” he added.
The spokesperson further informed Profit that meanwhile the three accused of Ferozepur City Housing Scheme had also applied to NAB for plea bargain (PB). “Plea Bargain application of three accused persons of the said housing scheme for an amount of RS 2,222,358,727 were accepted by the Regional Board Meeting (RBM) and the same was approved from the Accountability Court, Lahore. However, reference against two LDA officials [Rana Muhammad Shahzad and Malik Liaqat] has also been filed in Accountability Court, Lahore,” they informed.
When asked about the present status of the case, the spokesperson replied that investigation has been completed and work was being done for verification of the claims and disbursements to the affectees.