ISLAMABAD, June 29: The Supreme Court on Saturday took notice of reports that the Employees Old Age Benefits Institution (EOBI) had caused a loss of Rs 40 billion to the exchequer by investing huge amounts in private sector projects without approval of its board of trustees (BoT).

Chief Justice Iftikhar Muhammad Chaudhry took the action on a note sent by the court registrar, based on a TV programme aired on June 27, suggesting that the institution had violated article 9 (security of person) and 24 (protection of property rights) of the constitution.

The court issued notices to Attorney General Muneer A Malik, Director General of the Federal Investigation Agency Saud Mirza, the secretary of the ministry of human resources development, the chairman of the EOBI and its former chairman Zafar Iqbal Gondal to appear before the court on July 1.

The note mentioned the following schemes:

•Land purchase at exorbitant rate: a deal with the Defence Housing Authority to purchase a plot of land for Rs16bn, although its market value was a mere Rs1bn.

The deal caused a loss of Rs15bn to the EOBI. The payment was made in spite of the issuance of a stay order by the Lahore High Court against the sale of the land. Following the deal, it initiated contempt proceedings which are still pending in the court. The director general (investment) of the EOBI was arrested in the scam. According to the Transparency International, a business tycoon was said to be involved in the deal.

•Purchase of a plaza in Islamabad: The EOBI purchased the Crown Plaza for Rs1.2 billion, though its actual price was Rs550mn, causing a loss of Rs650m. A case relating to the purchase is pending in the high court. Surprisingly, the sale agreement was signed by an unauthorised person.

•Purchase of two Prado jeeps for personal use: The then chairman, Gondal, bought two 4,300cc jeeps for personal use, causing a loss of Rs41m to the organisation, though government policy allowed purchase of 1,300cc cars only.

•Purchase of controversial land in Sukkur: Due to alleged pressure put by a PPP Senator, two disputed plots of 40 kanals were purchased in Sukkar for Rs120m, an amount much above the market value. The sale agreement was made with a person who was not the sole owner of the property which belonged to three persons. Despite the payment, the land is still under occupation of land mafia.

•Development of a cricket ground: A huge amount of about Rs70m was spent on the development of a cricket ground in Islamabad, which did not generate any income.

•Purchase of seven plots from the CDA: It was alleged in the TV report that contrary to an order of the LHC, seven plots of land were purchased from the Capital Development Authority for Rs20m.

•Purchase of land in Lahore area: Allegedly, 40 kanals and16 marlas land was purchased in Sehjpal village near Lahore through an unknown company for Rs1.4b, an amount 300 per cent above its market value. The former chairman is accused of having received commission and kickbacks over the deal.

•Purchase of four floors of a plaza/hotel: Allegedly the former chairman purchased for the EOBI four floors of a plaza/hotel of a close relative for Rs250m and its parking area for Rs320m and spent Rs50m on its renovation. No revenue was generated from the property which was worth Rs100m according to its market value.

•Construction of a seven star hotel outside Lahore airport: Work on the project began in 2005 at an estimated cost of Rs4bn to 5bn. Later, Gondal stopped the construction, started “digging a well” at the site and spent Rs550m on it. The matter went to court which imposed heavy fine on the EOBI. The episode caused Rs9bn to the organisation.

•Construction of a motorway: Allegedly, the former chairman involved the institution in bidding of Rs6 billion for the construction of M-9 Motorway contrary to rules which do not allow any risky investment.

•Purchase of land near Karachi airport: Allegedly, the former chairman and others purchased for the EOBI the land having market value of Rs200m for Rs2bn from a person other than the owner. The deal caused huge loss to the EOBI.