By: Nadeem Ahmed Jamal
The group of few Japan residents Pakistanis had raised the questions and reservations regarding the sale of old Pakistani Embassy Compound and purchase of new embassy complex and alleged that time ambassador of Pakistan and head of chancery that they had received huge gratification in this transaction. Consequently the bureaucracy exhibit tremendous efforts to scandalize the issue to diminish the honour and progress of former ambassador of Pakistan Mr. Kamran Niaz. The matter has been put on to Public Accounts Committee to ascertain the facts and allegation. Whatever decides by the PAC in inquiry it is later topic. The Business Monitor has achieved the clarification regarding the matter. The sources disclosed the ground realities and argued that the allegations are fabricated, concocted and baseless. On the behalf of sources BM is publishing the story, which covers all the aspects and proper reply of the allegation. Sources revealed that the basic questions that need to be addressed in order to set at rest the engineered controversy about the Pakistani Embassy Project in Tokyo are the following:
i- Was the project in accord with Government's policy?
ii- Did the Project promote Pakistan's interest?
iii- Were the prevailing rules and procedures followed in the approval and the execution of the Project?
iv- Is there any credible evidence of any financial corruption (Commissions, kickbacks etc.) in the project?
This paper attempts to answer the questions outlined above in a comprehensive manner.
Was the Project in accord with Government's Policy?
2- The expenditure on renting premises for our chanceries, Ambassadors' Residences and accommodation for Pak-based officials of our Missions abroad constitutes a major burden on the public exchequer. Owing properties for housing our Missions abroad has therefore been a long-standing Government policy/priority.
3- Indeed, the Honourable Chairman of the Public Accounts Committee has in his opening remarks in the PAC meeting on the Tokyo Project (12 March 2010), himself observed that, as a Cabinet Minister in the last PML (N) government at the Center, he had been a strong ado vacate of acquiring properties abroad in order to save the valuable foreign exchange being spent by our Missions abroad on rents. The Honourable Chairman had emphasized that this had constituted a priority with the PML (N) government.
4- Subsequent governments have maintained this policy objective. Indeed a Committee on the Restructuring of the Foreign Ministry set up in December 1999, also looked into this matter, Paragraph 27-C of its Report, presented to a committee of the Cabinet on 14 March 2000, stated: Government property management abroad is another area of concern. Huge sums of money, in billions of rupees, are spent annually on rents often at highly inflated rates. Adequate efforts have not been made in buying or constructing properties both for the Missions and official residences.
5- The foregoing is sufficient to show that acquiring properties abroad to house our Missions ands their personnel has been a policy objective of successive governments.
Did the Project promote Pakistan's interest?
6- The next important point is that even if the Tokyo Embassy Complex Project was in line with the Government's policy, has it actually been of benefit to Pakistan. The following points, verifiable through a scrutiny of Government records or others mean provide the answer.
a) in exchange for the old Embassy compound, which carried a market value of Yen 6.32 billion, the Government of Pakistan has acquired a state of the art complex whose land value in 2006 was in excess of yen 8.50 billion. Thus only in terms of land value the Government of Pakistan gained by more that 34%. A conservative estimate of the Embassy complex built on this land would raise its value beyond yen 10 billion. As a result of this project, the Tokyo increased by around 587% (in terms of 2006 prices).
b) On the basis of Government of Japan's official assessment figures of September 2006, the value of the old Embassy compound worked out to Yen 4.35 billion (at Yen 1.98 million per sq meter), as a consequence of the Project, even going by official figures, the land value of GoP assets in Tokyo increased by almost 27%. Adding the cost of the brand new structure of the new premises would take its value beyond Yen 7.0 Billion. Thus working again on the basis of Government of Japan's official estimates of the overall value of our assets in Tokyo increased by close to 61%.
c) Looking at the Swap arrangement form another angle, the land for the new Embassy complex was acquired for Yen 3.745 Billion i.e. at 44% of the its assessed market value and 68% of its officially assessed value. By comparison the old Embassy compound was disposed off for Yen 6.30 Billion, i.e. at 100% of its market value and 145% of its officially assessed value. Thus the Government of Pakistan benefited at both ends of the arrangement.
d) While the previous compound comprised only the chancery and the Ambassador's Residence, the new complex, besides the aforementioned, also has 24 apartments for the Pak-based complement of the Embassy. Thus, after moving into the new premises, in June 2008, the Government of Pakistan has bee saving US$ 1 million per year, previously being spent on renting accommodation for the Pak-based officials of the Mission.
e) Since June 2008, the Pakistan Embassy in Tokyo has become our first and thus far only Mission abroad (out of 117 Missions and Sub-Missions) where the expenditure on rents has been reduced to zero.
f) In the old compound, with the Ambassador's Residence built in the mid-1960s and Chancery in mid -1970s, a significant expenditure was being incurred on repairs and maintained. Under the terms of the contract for the construction of the new complex, the lead contractor is obliged to maintain the air-conditioning, elevators, plumbing and the security system for a period of 15 years (2008-2023) free of charge. There is no example of such conservative estimate, entails a saving of US$ 10,000per annum.
g) The Project, being a Swap arrangement was entirely self-financing. Budgetary provision for the Project was neither sought from nor made by the Government of Pakistan
h) The total area of the old compound was 21987 sq meters. The new property covering 2400 sq meters is 9% larger area.
i) The above-ground covered area of the old compound was less than 1600 sq meters, while that of the new premises, at 5600 sq meters, i.e. 3.5 times greater.
j) The lead constrictor has provided basic furnishing for the entire complex (officials and residence) as part of the contract.
k) Some special features, which were absent in the old compound, but have been provided in the new complex, include: a state of the art multi-purpose hall with multimedia facility with a capacity of 250 persons, premium security system with surveillance comers, automated doors and restricted access through computerized cards and parking facility for about cars.
l) Accommodating the entire Pak-based complement at one location has eliminated the commuting time from residences to office. This is not only convenient and economical for the Embassy officials but also adds to the Missions' proficiency.
m) The new complex is situated within 400 meters of the old compound in the same posh district. The new complex's location is much superior to that of the old compound, which was sandwiched between a school to the north and as apartment blocks to the south with one-way streets the east and the west. The new complex has the Embassy of Finland across the road to the east, the complex to the west. The new complex is on a corner plot with two-way roads on its east and south sides.
n) Against s sanctioned strength of 6 officers and 11 Pak-based officials (in 2006), the new complex provides apartments for 8 officers and 16 officials, thus making an allowance for expansion. Consequently, the addition of an Economic Minister in the Embassy in 2008, did not pose any accommodation problem. Similarly, the Chancery in the new complex provides room for 8 officers in addition to the Ambassador and 20 support staff.
o) The new chancery also has a much more spacious waiting area for those visiting for Consular work.
In the light of the foregoing it appears to be a fair assessment that the beneficial package secured in the Pakistan Embassy complexes Project at Tokyo has no equal in our country's diplomatic history
Were the prevailing rules and procedures followed in the approval and the execution of the project?
7- Questions have been raised through the process, which the project was approved. In this regard the issue of "bidding" has been specifically mentioned. This matter needs some explanation.
8- In order to ensure expeditious processing of proposals about Government properties abroad, the Government had, in 2001, set up an Inter-Ministerial Committee (IMC) vesting in it the authority to decide about all such proposal. The modalities approved forth IMC, inter alia, provided for "Swap proposals". The IMC comprised: Special Secretary (Ministry of Foreign Affairs); secretary (Housing & Works); Additional Secretary -Administration (Ministry of Foreign Affairs); and Financial Advisor -FA (Ministry of Finance) as representative of the Secretary Finance. In addition, Joint Secretary (Planning & Development Division), DG-A1 & SP (Ministry of Foreign Affairs), and Deputy Financial Advisor -FA (Ministry of Finance) among others also participated in the IMC meetings.
9- In September 2006, the Embassy of Pakistan in Tokyo proposed the construction of an Embassy complex comprising the Chancery, Ambassador's Residences and apartments for all the Pak-based Officers/Officials of the Embassy. The Proposal was based on a "Swap arrangement" (provided under the rules) worked out by Japanese Developer M/S Kyoristu Create Company limited (the lead Contractor) in conjunction with M/S Nomura Real State Company. Under the arrangement it was proposed that the Government of Pakistan give up the plot of land containing its Embassy Residence (42 years old) and the Chancery (30 years old) and in exchange acquire a new state of the art Embassy complex in the same locality on a piece of land slightly larger than the former Embassy compound plot, comprising Ambassador's Residence, Chancery and 22 apartments for Pak-based officers/Officials. A swap proposal does not require competitive bidding. Instead, such proposals are examined on a case-by-case basic.
10- The IMC in its meeting on 19 September 2006 considered the Tokyo Embassy Complex proposal and directed that the price of the then current property be ascertained through a recognized evaluator, after which the I(MC would take a decision in the matter. Consequently, the Embassy of Pakistan in Tokyo engaged messres Nikkei Financial and Real Estate Appraisal Company for this purpose. In a detailed report submitted on 23rd October 2006, M/S Nikkei assessed the market value of the old Embassy compound at Yen 6.31 Billion. Simultaneously, in a separate report of the same date, M/S Nikkei assessed the market value of the proposed plot at Yen 8.507 million.
11- Though this question can be authoritatively answered by the member of the IMC, which was the Competent Authority in the matter, prima facie, given the nature of the proposal was well as its overwhelmingly beneficial character for the government of Pakistan. The IM Conley sough an evaluator's report before making a decision. Accordingly, the Ministry of Foreign Affairs, in a summary to the Prime Minister. In November 2006, endorse the project and highlighting its many advantages, submitted that "Before the proposal is finalized and in keeping with procedures" a four member Inter-ministerial team might undertake a visit to Tokyo "to assess and decide on the most economical and efficient implementation of project." The Prime Minister approved the IMC's visit to Tokyo, directing that the team should comprise the Special Secretary of Foreign Affairs and the Secretary, Housing and Works Division.
12- As per Prime Minister' approval, the IMC team visited Tokyo from 4-8 Camembert 2006. it undertook an in depth examination of the project, visited the site of the proposed complex and held discussion with all the parties involved. I its report dated 8 December 2006; the Committee stated that as a result of its exchange as well as its won analysis, it had determined "that the proposed project was of considerable advantage to the Government of Pakistan". The Committee's report then outlined a number of the benefits that would accrue to Pakistan. While supporting the project, the Committee also laid down its main features (parameters) - a copy of this report is included in the documents submitted to the PAC. While concluding its report, the Committee authorized "the Ambassador to complete all the formalities including the signing of the agreements where necessary for the execution of the project."
13- The IMC in its meeting on 18 December 2006, once again took up the Tokyo Embassy project. Paragraph 6 of the minutes of this IMC meeting reads "members expressed full satisfaction with the arrangements for the proposed Embassy Complex and accorded its (IMC's) approval for proceeding further in the matter. The IMC observed that the approval was accorded on the clear understanding that there will be financial liability to the GoP in this arrangement.
14- As per relevant rues as well as in the line with the instructions of the IMC, the Ambassador in Tokyo had already established a committee of the three officers to supervise al aspects of the Project under reference. No decision pertaining to the approved Project was taken without the unanimous recommendation of the three-member Embassy committee. The Embassy also continued to submit monthly progress reports on the project to the Ministry of Foreign Affairs, until its completion in June 2008.
15- It is clear from the foregoing that the Inter Ministerial Committee was the Competent Authority to take decisions regarding the project. On receiving the Project proposal it directed that the prices of properties involved be ascertained through a recognized evaluator. This was duly done. Had the IMC deemed it appropriate to issue any other instructions, the Embassy would certainly have complied with the same.
16- It may please be noted that once the Competent Authority, the IMC in this case, had approved the Project, and laid down its parameters; the Government of Pakistan became the owner of the Project. Thereafter, the role of the Embassy in Tokyo was that of an "Executing agency" required to complete the project in accordance with the parameters set by the IMC. In executing the Project the Embassy carried out every instruction of the IMC and met every single goal set by the Competent Authority.
17- If anything, the Embassy over-achieved on the parameters laid down by the IMC. The following facts are relevant in this regard.
I- While the IMC had sanctioned 22 apartments, the Project when completed had 24 apartments. The addition of two apartments did not entail any cost to the government of Pakistan.
II- Certain items, not contained in the parameters determined by the IMC were got included in the Agreement with the lead contractor (M/S Kyoritsu Create) with a view to eliminating any cost to the government of Pakistan. Specifically, under these clauses the lead contractor was made to meet all expenses pertaining to measurement of the land and others costs in the transfer of ownership of the old Embassy land to the buyer, arrange packaging and transportation of the moveable items from the old Embassy compound to the Temporary Buildings and from there to the new Embassy Complex, and bear any stamp duties on the agreement.
III- While the IMC had given 24 months for the completion of the Project, it was actually completed in 18 months, leading to an additional saving of US$ 500,000, (on rentals) for the Government project involving large-scale construction work completed ahead of schedule.
Is there any credible evidence of any financial corruption commissions, kickbacks etc.) in the Project?
18. Unsubstantiated allegations of wrongdoing have bee leveled by a few Pakistanis living in Japan, Primarily against the then Ambassador and he then Head of Chancery.
These are allegations are:
1. The project was kept secret from the Pakistani Community in Japan.
II. The market value of the old Embassy compound was got assessed below its actual market value on the "pretext" that only a 3-storey building could be built on that site, whereas the buyer (Messrs Nmura) has actually built a seven-storey apartment building.
III. Former Ambassador Kamran Niaz and the former Head of Chancery Asghar Ali Golo have invested US $ 49 million, made from the sale of the old compound, in the Aisha Steel Mills Project in Karachi.
19. As regards the allegation of secrecy, the Project was not kept secrecy; the project was not kept a secret. It was launched following the approval by the Inter-Ministerial Committee of the Government of Pakistan, which comprised senior representative from the Minister of Foreign Affairs, Housing & Works and Finance. Similarly, the Japanese real estate companies as well as the government of Japan's Ministry of Foreign Affairs in the picture. The Pakistani community in Japan was informed about the new Embassy Project soon after the approval of the Government of Pakistan through a notice of change of Embassy preemies, as well as a special newsletter issued by the Press Wing of the Embassy in January 2007. This was also placed on the Embassy's Website. It may further be noted that there are no rules which require obtaining the prior concurrence of the resident Pakistani community before undertaking such projects.
20. The second charge raising the 3-storey/7-storey controversy is also incorrect. In its comprehensive report estimating the market value of the old Embassy compound land at Yen 6.32 Billion, Messrs Nikkei had inter alia stated, "for this property, a five-storey rental group housing for families is assumed, considering the restriction of public laws, and the price is calculated based on the normal actual rent amount calculated from examples of rental group housing in the vicinity….." Thus, the charge that Messrs Nikkei had assessed the value on the assumption that only a 3-storey structure could be built on the old Embassy land is false.
21. Additionally, a Description of the Planned Construction" annexed with Agreement between the Government of Pakistan and Messrs Nomura Real State Development Company. Limited indicated that the buyer intended to build a structure with "5 stories above the ground and 2 underground stories." It is understood that in actual fact, the purchaser has built an apartment block with 5 storeys above-ground. The underground floors do not count towards the height of the building. Thus, the claim that a 7 storey (above ground) has been built on the old premises is wrong. the foregoing clearly demonstrates that the Embassy officials did not mislead the Government of Pakistan as regards the Project.
22. Indeed, a controversy about the pricing of a plot of land in Tokyo can only be properly adjudicated by the competent Japanese court. it is surprising that despite the passage of over 3 years, the Japan-based detractors of the project have not found it fit to seek any legal recourse in Japan. They have also not obtained a written report from some other recognized Japanese evaluator on the validity of the estimate by Messer's Nikkei.
23. Furthermore, it was in the interest of the developer (lead contractor) to get the highest possible price for the old Embassy compound as, under the swap arrangement, this would have maximized his profit from the project. The government of Pakistan's primary interest was to get a larger and better Embassy complex in exchange for the old compound and in the process, among numerous other benefits, save about US $ 1 million per annum on rentals for our Pak-based officials in Tokyo. The Government of Pakistan met its entire objective.
24. The third accusation pertaining to the Aisha Steel Mills is similarly baseless Former Ambassador Kamran Niaz neither owns a single share in the Aisha Steel Mills Project nor has reinvested a single rupee in this project. The same holds true for former Head of Chancery Asghar Ali Golo. Kamran Niaz also does not own any financial or other assets out outside Pakistan.
25. Moreover, the Aisha Steel Mills Ltd is a company registered in Pakistan. If the PAC so desires, it may order an inquiry into the affairs of the Aisha Steel Mills Ltd, in order to determine if Mr. Kamran Niaz or Mr. Asghar Ali Golo have any financial stake in this company.
However, Business Monitor presented the story regarding the clarification, if the other party desired in the response, the paper would feel pleasure to publish their version in this concern, so that the readers itself assess the both side of coin.