Over 95,603 kanals of land, bank accounts attached: Mega Benami properties case unearthed

Benami Transaction (Prohibition) Zone-1 Islamabad has unearthed Pakistan's mega corporate Benami case by provisionally attaching over 95,603 kanals of land and seven bank accounts of a registered company with market value of attached assets between Rs 15-20 billion.

Benami Transaction (Prohibition) Zone-1 Islamabad has issued an order of provisional attachment of Benami properties Wednesday. Sources told Business Recorder that it is a first of its kind case of corporate landlord where land of around 12,000 acres has been attached by the concerned Benami Zone.

The land is located in different areas of Attock, Mianwali, Jhelum, Chakwal, Rawalpindi, Sargodha, Muzaffargarh, Sialkot, Khushab and Layyah. Both the Benamidar and beneficial owner are companies with same director. The Benamidar company is a paper company and the beneficial owner invested and held assets in the name of the Benamidar without any shares, loan and authorized share capital in the Benamidar company.

The investigation official found that the Benamidar company is merely involved in purchase of immovable properties with no investments, but is acquiring properties though money of actual beneficial owner.

The investigations of expert team particularly Muhammad Fiaz Hussain, deputy commissioner IR (initiating officer) of Benami Transaction (Prohibition) Zone-1 Islamabad, has resulted in detection of this biggest corporate Benami case in the history of Pakistan.

Registrar Securities and Exchange Commission of Pakistan (SECP) informed the concerned Benami Zone that Benamidar company has applied for increase in authorized share capital to sell the shares to the beneficial owner company. Benami Transaction (Prohibition) Zone-1 Islamabad has intimated the SECP that all the shares of the company have been attached and it is prohibited from enhancing authorized share capital of the company to avoid transfer of Benami assets.

Details revealed that a case was reported by the Commissioner Rawalpindi on the nationwide general directives of the Prime Minister Office to deputy commissioners for reporting suspected Benami properties to the Benami Zones.

It was reported to the Benami Zone Islamabad that large pieces of land holdings have been recently registered in the name of a company M/s SAS Pvt Ltd (Benamidar).

Detailed inquiry/investigations of more than three months was conducted after getting concrete evidence by engaging Securities and Exchange Commission of Pakistan (SECP), National Accountability Bureau (NAB) and district administrations, detailed tax record analysis and all scheduled banks.

Benami Transaction (Prohibition) Zone-1 Islamabad has material evidence of the provision of considerations directly from the bank accounts of the beneficial owner to the bank account of the seller, evasion of statutory dues under NAB Ordinance 1999, avoidance of contingencies and commitments to defraud the bank creditors, circumventions of the provisions of the Companies Act 2017, tax evasion of millions of rupees of non-deduction of tax under section 150 and concealment of financial statements from FBR, SECP and irregularities (contradictory stance in the tax returns).

It was held in the Supreme Court of Pakistan in rental power projects suo motu case judgment that the beneficial owner (Techno engineering PVT Ltd) and its directors got the illegal financial benefit of about Rs 13 billion. Consequently, a case was registered in NAB and dues of Rs 1,912 million were recovered from them.

The beneficial owner made a plea bargain of Rs 771 million and the remaining amount was due to them during the same period in which these Benami assets were acquired in the name of the Benamidar.

Sources said that the Benamidar company is a paper company, a shell company holding about 125,000 kanals of land. In violation of the SECP regulations and sections 84, 85, 199, 200, 242 of the Companies Act 2017 the beneficial owner invested and held assets in the name of the Benamidar without any shares, loan and authorized share capital in the Benamidar company.

When the director of the Benamidar and beneficial owner company was summoned under section 16 to give statement and produce record relating to the Benami assets held on and after the commencement of the Benami Transactions Prohibition Act 2017, they did not comply with and did not provide complete record. Their counsel refused that they would not provide further record and started delaying tactics, officials said.

However, it was revealed by the Registrar SECP that meanwhile the Benamidar has applied on December 9, 2019 for increase in authorized share capital in order to sell the shares to the beneficial owner company and to mislead the Benami investigations.

According to sources, this action promoted the legal action of prohibition of the transfer of Benami assets under section 5 and hence the provisional attachment under section 22(3) of the Act was made based on the evidence and the cause of action so that the Benamidar may not alienate from these assets during the investigations and before filing of reference.

Benami Transaction (Prohibition) Zone-1 Islamabad may file reference to the concerned adjudication authority within 90 days period, they added. The order of provisional attachment of Benami properties was issued to the Benamidar company (under section 22(3) of Benami Transactions (Prohibition) Act 2017 read with rule 7 of Benami Transactions Prohibition Rules 2019).

According to the order, "Whereas proceedings u/s 22(1) of the Benami Transactions (Prohibition) Act 2017 have been initiated against Principal Officer, SAS (Pvt) Ltd. The approving authority, Commissioner IR Zone-I has approved u/s 22(3) of the said Act to provisionally attach the Benami assets held in abovementioned name.

In view of the approval, and in terms of section 22(3) read with section 5 of the Benami Transactions (Prohibition) Act 2017, the said company is hereby prohibited and restrained until further orders from transferring of these properties or subjecting the same to a charge in any manner and, that all persons are prohibited from taking any benefit under (such transfer or charge).

This order of provisional attachment shall take immediate effect and shall remain in force within 90 days from the date of issuance of the notice u/s 22(1) i.e. 17-12-2019 or the order of continuation of attachment u/s 22(4)(a)(i), if any, whichever is earlier, order added.

Benami Transaction (Prohibition) Zone-1 Islamabad has also informed Senior Member, Board of Revenue, Punjab for information and immediate circulation in all civil divisions and enforcement of this order through respective deputy commissioners with respect to properties mentioned. All commissioners of Punjab (Bahawalpur, Dera Ghazi Khan, Faisalabad, Gujranwala, Lahore, Sheikhupura, Multan, Rawalpindi, Sahiwal and Sargodha) with respect to properties mentioned for information and circulation.

Benami Transaction (Prohibition) Zone-1 Islamabad has also informed about the order to the Member (Estate), Capital Development Authority, Islamabad, and all respective deputy commissioners (Attock, Mianwali, Jhelum, Chakwal, Rawalpindi, Sargodha, Muzaffargarh, Sialkot, Khushab and Layyah), for enforcement of these orders, it added.