Real estate: Revelations as Reps probe alleged fraud in FCT

Back in June 2021, the House of Representatives passed a resolution to the effect that an Ad hoc committee will be constituted to look into reported fraudulent activities of real estate developers in the Nigeria’s capital city of Abuja. JOSHUA EGBODO reviews issues from the probe as the panel under the leadership of Hon. Blessing Onu commenced sitting last week .


Committee’s mandate
Attention of the House of Representatives was drawn to allegation of massive fraud in the operations of real estate developers in the Federal Capital Territory (FCT), Abuja, through a motion under matters of urgent public importance by Hon. Boma Goodhead, praying for an investigation into allegations of misconduct and violation of relevant laws and rules laws by the developers.
The lawmaker from Rivers state wanted the creation of a forum through which the public can present complaints against fraudulent real estate developers who were in the habit of defrauding innocent people through phantom promises of mass housing schemes.
Flowing from this, the House directed the panel, to also liaise with law enforcement agencies to ensure where necessary, prosecution of those found to have breached laws and rules guiding operations of participants in the sector.
In addition, it was resolved that following the executed findings from the committee’s investigation, the House may work with relevant stakeholders and MDAs towards formulating laws, issuing guidelines and other appropriate legislations, as well as regulations for the sector with a view to enhancing monitoring, regulation, and protection of subscribers from illegal, and or unethical transactions, with a call for efforts to be directed at creating a database on landed property transactions which must only be handled by licensed and trusted operators. 
Presenting the motion, Goodhead argued that the FCT was one of Nigeria’s top property hotspots as well as the political headquarters of Nigeria, as well as one of the two primary international business gateways of the country, adding that the potentials has given rise to allow FCT to a burgeoning real estate industry in a bid to meeting the growing need for housing. 
She said, “Real estate development means further economic growth as evidenced by the growing number of real estate developers in the FCT proposing off-takers housing solutions to individuals”.


On the flip side, the lawmaker said there had been repeated complaints of misrepresentation, deceit, fraud, non-delivery, incessant breach of contracts with zero consequences, impunity, unethical as well as illegal clauses that offers no protection for  clients’ investment, money laundering, and poor quality houses within the sector, adding that many Nigerians who have paid for property, and yet could  not access such due to fraudulent breaches on the part of developers. She blamed the development partly on lack of requisite regulations, impunity and lack of accountability by real estate developers.
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Gabajabiamila excited
Speaker of the House, Hon. Femi Gbajabiamila in a speech presented on his behalf by the Majority Leader, Hon. Ado Doguwa, when the committee commenced the investigative hearing last Thursday appeared elated by the probe initiative. “As you are aware, one of our primary tasks and constitutional responsibilities as elected representatives of the people and of our various constituencies is to, amongst other things, ensure the welfare and prosperity of our people. Access to decent and affordable housing is one of the primary indicators of such economic empowerment. “With the current housing deficit in Nigeria, which is estimated to be between 17 and 20 million housing units and also said to be increasing annually by 900,000 units, the potential cost of overcoming this deficit is about N6 trillion. This highlights the huge opportunity that exists in the real estate sector. “However, there are gaps in the relevant legislation that empowers some real estate developers, while they capitalise on this opportunity to also operate with impunity, stealing away the dreams and billions of naira of hardworking Nigerians. A lack of accountability and regulation in the dealings between these real estate developers and home buyers has caused untold hardship to many already struggling Nigerians, who desire to own their own houses. It is our responsibility to introduce effective regulations to resolve these issues. “I am happy to commend the efforts of the ICPC and EFCC in sanitizing the sector. Hardworking Nigerians should not lose their money to fraudulent developers with no consequence. Nigerians are crying out over these sharp practices, and we cannot turn a deaf ear to their cries. That is why I was very happy when Honourable Boma Goodhead brought the motion to the floor on the need to investigate the operations of real estate developers in the Federal Capital Territory”, Gbajabiamila said

The revelations
The most damning revelation, or so it seemed in the opinion of analysts, on the perceived illicit practices in the FCT housing sector came through Chairman of the Independent Corrupt Practices and other related offenses Commission (ICPC), Professor Bolaji Owasanoye, who said that the Commission has over the years received a number of petitions since inception. 
“Even though we have not aggregated the numbers that relate to land matters, we have however received a number of petitions from stakeholders in the real estate and housing sector, off-takers, prospective buyers and the general public regarding the behavior and antics of real estate developers within the FCT and sometimes outside of the FCT on this very important subject matter. These complaints and petitions are varied. They border on forgery, the closing of land documents, double or multiple land allocations, allocation of land without the minister’s approval, revocation of land title without due process, non delivery of projects”, he named am still other issues.
According to him, there were also cases of “embezzlement of sourced capital, land racketeering, the use of land syndicates and speculators, the marketing of fake layouts, fraudulent allocation of land, inordinate delay in processing of land documents for those who subscribe to their projects. General abuse of office, bribery, dishonesty, fraud, payment scams, or the refusal of government itself to pay fair value for acquired land and the concomitant refusal of settlers and traditional owners to give access to legitimate land allottees and other related issues and challenges”.

Subsidiary issues
Beside administrative frauds and related issues, the ICPC Chairman said from the petition before the commission, there were other noticeable problems of real estate development in Abuja in particular, and Nigeria as a whole. These he said include generally the high cost of home acquisition, the unstable capital market, environmental, social and governance factors, currency volatility. Increased rural to urban migration, ineffective property protection laws, perceived multiple tax and poor building quality, etc.

REDAN, FCDA complicit?
With the reeled out breaches, the ICPC boss disclosed that “Our investigations has led to the recovery of assets and funds, which are either considered to have been diverted that were retrieved in the public interest. In some situations, we have simply ensured that the projects that contemplated were delivered to the beneficiaries who had paid for them. 
“Furtherance to the above, we conducted a systems study and review of mass housing delivery in the FCT in 2010 and 2011 where it was discovered that members of the Real Estate Developers Association of Nigeria (REDAN), who had been allocated huge plots of land for mass housing development in the FCT in collaboration with the Federal Government through the Federal Mortgage Bank and its responsibility to provide infrastructure upon which the allocations were made to them, and they were to work with National Housing Fund contributors. These developers failed in the payment of counterpart funding and the delivery of infrastructure to project site, and rather they resorted to offering and selling the plots to the highest bidder contrary to the policy. 
“Some of these abuses were hardly ever sanctioned by the FCDA. In other words, the FCDA in full knowledge of these abuses simply looked the other way. That the effect of the action of REDAN members of course is that low and middle income earners who are supposed to be the direct beneficiaries of NHF because some money is taken out of our salaries as contribution to the NHF. They were denied housing because the plan and objective was totally frustrated by the mischievous and fraudulent approach of the REDAN collaborators…”.



REDAN in vague defence
In the opinion of many pundits, the REDAN appeared to be very vague in all it said as the probe progressed. President of the association, Ali Wamako who disclosed that a bill at its initiative was already before the two houses of the National Assembly, for the purpose of regulating the sector, blamed some of the issues on the absence of a law to compel membership of the association.
“There is no law mandating anybody to be member of REDAN. Those perpetrating this act (fraud) are not members of REDAN, and we are not aware of their activities”, he said, adding that “some of them are even in government, working with government. They are the ones doing this” (fraud).

Any hope in sight? 

With conflicting figures about registered estate developers in the FCT presented before the Blessing Onu-led panel by the FCDA, REDAN, ICPC and others, it is yet unclear on how many operators are genuine, leaving the question on whether the committee will be able to provide the much needed solution to the lingering problem.