ISLAMABAD: Work on about a dozen big investment projects of the Employees Old-age Benefit Institute has been at a standstill for almost a year as the EOBI leadership has stopped paying for the work.

Structures of some of the commercial, entertainment and office blocks, being built across the country, were more than 50 per cent finished and half of the total cost of nearly Rs20 billion already spent, when the sudden decision of the EOBI leadership, appointed by the newly-installed PML-N government, hit the contractors in June 2013.

`We are looking into whether these projects were approved by the Board of Trustees of the EOBI or were undertaken in haste,` Chairman Ayub Sheikh told Dawn. `We have approached the Ministry of Law and Justice to know if the EOBI Investment Rules 1979 provided for invest-ment in such projects as hotels, shopping malls and cineplex (cinema houses) etc.

Payments to the contractors were stopped, and the Board of Trustees of EOBI was dissolved, in June last year in the aftermath of an investigation into a land scandal involving the EOBI by the Federal Investigation Agency. All the trustees, and the then chairman of EOBI, were nominated in the FIR filed about the scandal. The FIA investigated how EOBI purchased a five acre property in Karachi for Rs2 billion in 2012 when its actual value was not more than Rs700 million in 2013.

It would take time to know whether the question of prudent investment or petty politics lay behind the decision of the reformed EOBI to halt the work on the projects in hand. But it could face penalties if contractors, hired to build these structures, filed claims in the meantime.

EOBI is a fund created in 1973 by the PPP founder Zulfikar Ali Bhutto and contributed by private sector employers and their employees forproviding old-age benefits to the employees.

EOBI invested the fund in commercial ventures and real estate like ZAB`s other creation the State Life Insurance Corporation of Pakistan.

Since 1973, the EOBI has collected Rs87 billion from more than 450,000 employers and their employees.

To date it has distributed Rs69 billion as pensions to employees and has assets worth more than Rs238 billion, including Rs150 billion in cash, says the EOBI on its website.

It has made investments in commercial plazas, shopping complexes, residential buildings, cinemas, guest houses and office buildings in Islamabad and other major cities, including Rawalpindi, Faisalabad, Lahore, Sialkot. The EOBI partly owns the Serena Hotel in Lahore and a multi-screen cinema and shopping complex in Islamabad.

Minutes of the 6th meeting of the Board of Trustees of EOBI, held in November 2013, show that its chairman had expressed his reservationthat the construction costs of the projects, now halted, were on the higher side and required to be looked into. One Board member explained how these Rs20 billion worth EOBI properties being developed in Lahore, Islamabad and Faisalabad would be more than Rs300 billion in the next 20 to 25 years.

However, the board members approved the completion of the projects, arguing that the returns would be much higher than keeping public money in banks where it devalues quickly. One board member estimated the properties being developed in Islamabad, Lahore and Faisalabad would bring in Rs300 billion to the EOBI over the next 25 years.

The EOBI has been investing in commercial and residential properties for over three decades. Documents available with Dawn show such investments made since 1982 from Karachi in the south to the northern areas. It even invested in agricultural land in 2003.

Whether it was a 6,600 square yard open plotin Karachi in 1984, the 1,000 kanals open plot for an industrial estate in Faisalabad in 2006 or the 400 plots in Defence Housing Scheme for residential purposes in 2004, the EOBI has been buying properties for value addition reasons.

A few of these investments made during the previous PPP-led government became scandalous and led to litigations.

A former president of the Supreme Court Bar Council,Tariq Mehmood, said the EOBI was within legal limits in investing peoples` money in real estate.

`Such investments offer better returns in the long run. Rents and value of properties eventually increase,` he said.

The Prima Co, a subsidiary of the EOBI overlooking the properties, said the EOBI developed them and gave them on lease.

The EOBI either owned the projects completely or had leased out to private investors to earn revenues. It has roughly 10 per cent share for its office spaces in all these projects.