Tainted banker rewarded – Zardari’s cesspool continues to take shape

Salim Raza, the banker who helped arrange President Zardari have unverified bank accounts at Citibank (facilitated money laundering) to facilitate SGS Cotecna money laundering scam is now nominated by Zardari to be the State Bank of Pakistan’s Governor replacing Shamshad Akhtar.

Of course Zardari does not forgets his friends and benefactors…… On the other hand his government has not even begin the murder investigation of Benazir Bhutto who was assassinated this month last year. Conflicting stories have surfaced with PPP leadership and Benazir’s close confidants giving conflicting accounts of what happened on that fateful day of 27 Dec 2007.

However, let’s pull back to the topic of this blog… Yes the premier banker of Pakistan (our Alan Greenspan) is to be a past money laundering facilitator as noted by the US Senate.

Read the story and enjoy or be saddened whatever suits your view!!!

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In addition to Mr. Shaukat Aziz, current Prime Minister of Pakistan, numerous former Citibankers occupy highly influential positions in the government and the private sector in Pakistan.

Citibank is one of the largest banks, and operates one of the largest private banks in the US and globally. Of the 40 private banks reviewed by the Federal Reserve during its industry wide examination of private banking in the 1990s, only one — Citibank — was reviewed in detail by Federal Reserve examiners three years in a row. It is a private bank that has struggled with a wide range of anti-money laundering issues. Although Citibank, under Shaukat Aziz’s leadership (from May 1997 to October 1999) and his successors’ has done much to tighten controls, it was beset by numerous scandals during the 1990s.

A 1999 US Congress investigation (exact reference given at end) into Citibank, provides a fascinating inside look at how Citibank helped launder the ill-gotten gains of four high profile corrupt figures: Raul Salinas, brother of the former president of Mexico, Carlos Salinas, Asif Ali Zardari, the husband of Benazir Bhutto, former Prime Minister of Pakistan (reproduced below), El Hadj Omar Bongo, the elected president of Gabon since 1967, and Mohammed, Ibrahim, and Abba Sani Abacha, three sons of General Sani Abacha, who was the military leader of Nigeria from 1993 until his death in 1998.

Of the four case histories provided in the Report, the following is a complete excerpt of the Case History for Asif Zardari. The report also provides photocopies of signed documents, banks records, etc. (listed below, at the end).

[Beginning of Excerpt]
(2) Asif Ali Zardari Case History

The Facts
The second case history involves Asif Ali Zardari, the husband of Benazir Bhutto, former Prime Minister of Pakistan. Ms. Bhutto was elected Prime Minister in 1988, dismissed by the President of Pakistan in August 1990 for alleged corruption and inability to maintain law and order, elected Prime Minister again in October 1993, and dismissed by the President again in November 1996. At various times, Mr. Zardari served as Senator, Environment Minister and Minister for Investment in the Bhutto government. In between the two Bhutto administrations, he was incarcerated in 1990 and 1991 on charges of corruption; the charges were eventually dropped. During Ms. Bhutto’s second term there were increasing allegations of corruption in her government, and a major target of those allegations was Mr. Zardari. It has been reported that the government of Pakistan claims that Ms. Bhutto and Mr. Zardari stole over $1 billion from the country.

During the period 1994 to 1997, Citibank opened and maintained three private bank accounts in Switzerland and a consumer account in Dubai for three corporations under Mr. Zardari’s control. There are allegations that some of these accounts were used to disguise $10 million in kickbacks for a gold importing contract to Pakistan.

Structure of Private Bank Relationship. Mr. Zardari’s relationship with Citibank began in October 1994, through the services of Kamran Amouzegar, a private banker at Citibank private bank in Switzerland, and Jens Schlegelmilch, a Swiss lawyer who was the Bhutto family’s attorney in Europe and close personal friend for more than 20 years. According to Citibank, Mr. Schlegelmilch represented to Mr. Amouzegar that he was working for the Dubai royal family and he wanted to open some accounts at the Citibank branch office in Dubai. Mr. Schlegelmilch had a Dubai residency permit and a visa signed by a member of the Dubai royal family. Mr. Amouzegar agreed to introduce Mr. Schlegelmilch to a banker in the Citibank branch office in Dubai.

According to Citicorp, Mr. Schlegelmilch told the Citibank Dubai banker that he wanted to open an account in the name of M.S. Capricorn Trading, a British Virgin Island PIC. The stated purpose of the account was to receive money and transfer it to Switzerland. The account was opened in early October 1994.

According to Citibank, Mr. Schlegelmilch informed the Dubai banker that he would serve as the representative of the account and the signatory on the account. Under Dubai law, a bank is not required to know an account’s beneficial owner, only the signatory. Citibank told the Subcommittee staff that Mr. Schlegelmilch did not reveal to the Dubai banker that Mr. Zardari was the beneficial owner of the PIC [Private Investment Company: an offshore company often used to launder money], and the account manager never asked him the identity of the beneficial owner of the account. Instead, according to Citibank, she assumed the beneficial owner of the account was the member of the royal family who had signed Mr. Schlegelmilch’s visa. According to Citibank, the account manager actually performed some due diligence on the royal family member whom she believed to be the beneficial owner of the account.

Shortly after opening the account in Dubai, Mr. Schlegelmilch signed a standard referral agreement with Citibank Switzerland private bank guaranteeing him 20% of the first three years of client net revenues earned by the bank from each client he referred to the private bank.

On February 27, 1995, Mr. Schlegelmilch, working with Mr. Amouzegar, opened three accounts at the Citibank Switzerland private bank. The accounts were opened in the name of M.S. Capricorn Trading, which already had an account at Citibank’s Dubai branch, as well as Marvel and Bomer Finance, two other British Virgin Island PICs established by Mr. Schlegelmilch, according to Citibank. Each private bank account listed Mr. Schlegelmilch as the account contact and signatory. Citibank informed the Subcommittee that the Swiss Form A, a government-required beneficial owner identification form, identified Mr. Zardari as the beneficial owner of each PIC.

Lack of Due Diligence. The decision to allow Mr. Schlegelmilch to open the three accounts on behalf of Mr. Zardari, according to Citibank, involved officials at the highest levels of the private bank. The officials were: (a) Mr. Amouzegar, the private banker; (b) Deepak Sharma, then head of private bank operations in Pakistan; (c) Phillipe Holderbeke, then head of private bank operations in Switzerland (who became head of the Europe, Middle East, Africa Division in February 1996); (d) Salim Raza, then head of the EMEA Division of the private bank; and (e) Hubertus Rukavina, then head of the Citibank private bank. Mr. Rukavina told the Subcommittee staff that when he was asked about opening the Zardari accounts, he did not make the decision to open them, but rather directed that the matter be discussed with Mr. Sharma. According to Mr. Rukavina, he never heard whether the accounts were ultimately opened. Mr. Rukavina left the private bank in 1996 and left Citibank in 1999.

Citibank informed the Subcommittee staff that the private bank was aware of the allegations of corruption against Mr. Zardari at the time it opened the accounts in Switzerland. However, Citibank reasoned that if the charges for which Mr. Zardari had been incarcerated for two years had any merit, they would not have been dropped. Bank officials also believed that the family wealth of Ms. Bhutto and Mr. Zardari was large enough to support a large private bank account, even though Citibank was not able to specify what actions were taken to verify the amount and source of their wealth. Citibank said that bank officials were also aware of the M.S. Capricorn Trading account in Dubai, and they were comforted by the fact that there had been no problems with that account. According to Citibank, Mr. Amouzegar informed his superiors that Mr. Zardari was the beneficial owner of the Capricorn account in Dubai when they were considering the request to open the accounts in Switzerland. Inexplicably, however, the Dubai account manager was apparently still operating under the assumption that the beneficial owner of the Dubai Capricorn account was a member of the Dubai royal family. Subcommittee staff have been unable to determine whether Citibank officials were unaware of or inattentive to the serious inconsistency between Citibank Switzerland and Citibank Dubai with respect to the Capricorn Trading account. Citibank also informed the Subcommittee staff that bank officials had some concerns that if they turned down the accounts, their actions may have implications for the corporation’s operations in Pakistan; however, they said they never received any threats on that issue.

Citibank told the Subcommittee staff the private bank decided to allow Mr. Schlegelmilch to open the three accounts for Mr. Zardari on the condition that the private bank would not be the primary accounts for Mr. Zardari’s assets and the accounts would function as passive investment accounts. Citibank told the Subcommittee staff that Mr. Holderbeke signed a memo delineating the restrictions placed on the accounts, including a $40 million aggregate limit on the size of the three accounts, and transaction restrictions requiring the accounts to function as passive, stable investments, without multiple transactions or funding pass-throughs. None of the Citibank personnel interviewed by Subcommittee staff could identify any other private bank account with these types of restrictions. Other private banks interviewed by the Subcommittee staff were asked if they had ever accepted a client on the condition that certain restrictions be imposed on the account. The banks all said they had not. One bank representative explained that if the bank felt that it needed to place restrictions on the client’s account, it didn’t want that type of client. The existence of the restrictions are in themselves proof of the private bank’s awareness of Mr. Zardari’s poor reputation and concerns regarding the sources of his wealth.

Movement of Funds. Citibank told the Subcommittee staff that, once opened, only three deposits were made into the M.S. Capricorn Trading account in Dubai. Two deposits, totaling $10 million were made into the account almost immediately after it was opened. Citibank records show that one $5 million deposit was made on October 5,1994, and another was made on October 6, 1994. The source of both deposits was A.R.Y. International Exchange, a company owned by Abdul Razzak Yaqub [since then, the owner of several ARY television channels that, incidentally, have been providing favorable coverage of Ms. Bhutto’s recent political activities], a Pakistani gold bullion trader living in Dubai.

According to the New York Times, in December 1994, the Bhutto government awarded Mr. Razzak an exclusive gold import license. In an interview with the New York Times, Mr. Razzak acknowledged that he had used the exclusive license to import more than $500 million worth of gold into Pakistan. Mr. Razzak denies, however, making any payments to Mr. Zardari. Citibank could not explain the two $5 million payments. Ms. Bhutto told the Subcommittee staff that since A.R.Y. International Exchange is a foreign exchange business, the payments did not necessarily come from Mr. Razzak, but could have come from a third party who was merely making use of A.R.Y.’s exchange services. The staff invited Ms. Bhutto to provide additional information on the M.S. Capricorn Trading accounts, but she has not yet done so.

On February 25, 1995, a third deposit of $8 million was made into the Dubai M.S. Capricorn Trading account. Records show that the payment was made through American Express, with the originator of the account listed as “Morgan NYC.” Citibank indicated it does not know who Morgan NYC is, nor does it know the source of the $8 million.

All of the funds in the Dubai account of M.S. Capricorn Trading were moved to the Swiss accounts in the Spring of 1995. On March 6, 1995, $8.1 million was transferred; and on May 5, 1995, another $10.2 million was transferred. Both transfers involved U.S. dollars and were routed through Citibank’s New York offices. Citibank informed the Subcommittee staff that M.S. Capricorn Trading closed its Dubai account shortly after the last transfer was completed.

Citibank has indicated that significant amounts of other funds were also deposited into the Swiss accounts. As described below, the $40 million cap was reached, and millions of additional dollars also passed through those accounts. However, Swiss bank secrecy law has prevented the Subcommittee from obtaining the details on the transactions in the Zardari accounts.

Account Monitoring. Citibank told the Subcommittee staff that, in 1996, the Swiss office of the private bank conducted a number of reviews of the Zardari Swiss accounts, finally deciding in October to close them.

The first review was allegedly in early 1996, triggered by increasing publicity about allegations of corruption against Mr. Zardari. Citibank told the Subcommittee staff that Messrs. Holderbeke, [Salim] Raza, Sharma and Amouzegar participated in the review, and apparently concluded that the allegations were politically motivated and that the accounts should remain open. The Subcommittee staff was told that the review did not include looking at the accounts’ transaction activity.

In March or April, 1996, Mr. Amouzegar asked that the overall limit on the Zardari accounts be increased from $40 million to $60 million, apparently because the accounts had reached the previously imposed limit of $40 million. Citibank told the Subcommittee staff that Mr. Holderbeke considered the request, but declined to increase the $40 million limit.

In June, press reports in the United Kingdom that Mr. Zardari had purchased real estate in London triggered still another review of the Zardari accounts. Citibank private bank told the Subcommittee staff that its Swiss office internally discussed the source of the funds for the property purchase. Mr. Amouzegar and Mr. [Salim] Raza then met with Mr. Schlegelmilch, who allegedly informed them that funds had been deposited into the Citibank accounts, transferred to another PIC account outside of Citibank and used to purchase the property. Mr. Schlegelmilch allegedly indicated the funds had come from the sale of some sugar mills and were legitimate. Citibank told the Subcommittee staff it is not sure if anyone at the private bank attempted to validate the information about the sale of the sugar mills. In addition, even though this account activity violated the condition imposed by Citibank that the accounts were not to be used as a pass through for funds, the accounts were kept open.

Closing the Accounts. In July 1996, after Mr. Amouzegar left the private bank to open his own company, another private banker, Cedric Grant, took over management of the Zardari accounts. Citibank told the Subcommittee staff that Mr. Grant began to review the Zardari accounts about one month later to familiarize himself with them. He also reviewed the transactions that had taken place within the accounts.

In September and October 1996, press accounts in Pakistan repeatedly raised questions about corruption by Mr. Zardari and Ms. Bhutto, as Ms. Bhutto’s re-election campaign increased its activities prior to a February election date. In September, Ms. Bhutto’s only surviving brother, Murtaza Bhutto, was assassinated, and Ms. Bhutto’s mother accused Ms. Bhutto and Mr. Zardari of masterminding the murder, because the brother had been leading opposition to Ms. Bhutto.

In October, Mr. Grant completed his review of the Zardari accounts and provided a written analysis to Messrs. Holderbeke, Sharma and [Salim] Raza, according to Citibank. Mr. Grant had found numerous violations of the account restrictions imposed by Citibank, including multiple transactions and funding pass-throughs. Citibank told the Subcommittee staff that the accounts had functioned more as checking accounts than passive investment accounts, directly contrary to the private bank’s restrictions. Apparently, well over $40 million had flowed through the accounts, though Subcommittee staff were unable to ascertain the actual amount because Swiss bank secrecy law prohibits Citibank from sharing that information with the Subcommittee. Citibank indicated that Mr. Amouzegar had either ignored or did not pay attention to the account activity. Mr. Grant recommended closing the accounts, and they were closed by January 1997.

[Note: In May 1997, Mr. Shaukat Aziz was transferred at Citibank’s New York headquarters, from his position as head of credit card operations to head of private banking. In November 1996, Mr. Farooq Laghari had dismissed the government of Ms. Benazir Bhutto-Zardari; and in February 1997, Mr. Nawaz Sharif became Prime Minister.]

Legal Proceedings. On September 8, 1997, the Swiss government issued orders freezing the Zardari and Bhutto accounts at Citibank and three other banks in Switzerland at the request of the Pakistani government. Since Citibank had closed its Zardari accounts in January 1997, it took no action nor did it make any effort to inform U.S. authorities of the accounts until late November 1997. Citibank contacted the Federal Reserve and OCC [Office of the Comptroller of the Currency, the banking supervision arm of the US Department of Treasury] about the Zardari accounts in late November, in anticipation of a New York Times article that eventually ran in January 1998, alleging that Mr. Zardari had accepted bribes, and that he held Citibank accounts in Dubai and Switzerland. On December 8 and 11, 1997, Citibank briefed the OCC and the Federal Reserve, respectively, about the accounts and the steps it had taken as a result of the Zardari matter. These steps included: closing all of the accounts that had been referred by Mr. Schlegelmilch to the private bank and terminating his referral agreement; reviewing all of the accounts opened in the Dubai office; and tightening up account opening procedures in Dubai, including requiring the Dubai office to identify the beneficial owner of all Dubai accounts. Citibank did not identify any changes made or planned for the Swiss office, even though the majority of the activity with respect to the Zardari accounts had taken place in Switzerland.

On December 5, 1997, Citibank prepared a Suspicious Activity Report on the Zardari accounts and filed it with the Financial Crimes Enforcement Network at the U.S. Department of Treasury. The filing was made fourteen months after its decision to close the Zardari accounts; thirteen months after Mr. Zardari was arrested a second time for corruption in November 1996; and nearly two months after the Swiss government had ordered four Swiss banks (including Citibank Switzerland) to freeze all Zardari accounts.

In June 1998, Switzerland indicted Mr. Schlegelmilch and two Swiss businessmen, the former senior executive vice president of SGS and the managing director of Cotecna, for money laundering in connection with kickbacks paid by the Swiss companies for the award of a government contract by Pakistan. In July 1998, Mr. Zardari was indicted for violation of Swiss money laundering law in connection with the same incident. Ms. Bhutto was indicted in Switzerland for the same offense in August 1998. A trial on the charges is expected.

In October 1998, Pakistan indicted Mr. Zardari and Ms. Bhutto for accepting kickbacks from the two Swiss companies in exchange for the award of a government contract. On April 15, 1999, after an 18-month trial, Pakistan’s Lahore High Court convicted Ms. Bhutto and Mr. Zardari of accepting the kickbacks and sentenced them to 5 years in prison, fined them $8.6 million and disqualified them from holding public office. Ms. Bhutto, who now lives in London, denounced the decision. Mr. Zardari remains in jail. Additional criminal charges are pending against both in Pakistani courts.

On December 11, 1997, Citicorp’s Chairman John Reed wrote the following to the Board of Directors:

“We have another issue with the husband of Ex-Prime Minister Bhutto of Pakistan. I do not yet understand the facts but I am inclined to think that we made a mistake. More reason than ever to rework our Private Bank.”

Mr. Reed told the Subcommittee staff that it was the combination of the Salinas and Zardari accounts that made him charge Mr. [Shaukat] Aziz [currently, Prime Minister of Pakistan], the new private bank head, with taking a hard look at the bank’s public figure policy and public figure accounts.

The Issues
The Zardari case history raises issues involving due diligence, secrecy and public figure accounts. The Zardari case history begins with the Citibank Dubai branch’s failure to identify the true beneficial owner of the M.S. Capricorn Trading account. As a result, the account officer in Dubai performed due diligence on an individual who had no relationship to the account being opened. In Switzerland, Citibank officials opened three private bank accounts despite evidence of impropriety on the part of Mr. Zardari. In an interview with Subcommittee staff, Citigroup Co-Chair John Reed informed the Subcommittee staff that he had been advised by Citibank officials in preparation for a trip to Pakistan in February 1994, that there were troubling accusations concerning corruption surrounding Mr. Zardari, that he should stay away from him, and that he was not a man with whom the bank wanted to be associated. Yet one year later, the private bank opened three accounts for Mr. Zardari in Switzerland. Mr. Reed told the Subcommittee staff that when he learned of the Zardari accounts he thought the account officer must have been “an idiot.”

Citibank has been unable to confirm that bank employees verified that Mr. Zardari had a level of wealth sufficient to support the size of the accounts that he was opening. In addition, the Swiss private banker took no action to validate the legitimacy of the source of the funds that were deposited into the account. For example, there was no effort made to verify the claims that some of the funds derived from the sale of sugar mills.

Citibank also performed no due diligence on the client owned and managed PICs that were the named accountholders. Because the PICs were client-created, the bank’s failure to perform due diligence on the PICs meant that it had no knowledge of the activities, assets or entities involved with the corporations. One of the PICs, Bomer Finance, has been determined to have been a repository for kickbacks paid to Mr. Zardari, and those kickbacks tainted funds deposited at the Geneva branch of Union Bank of Switzerland. Documentation has not been made available to determine whether Bomer Finance also used its Citibank account for illicit funds.

Another due diligence lapse was the private bank’s failure to monitor the Zardari accounts to ensure that the account restrictions imposed on them were being followed. When officials were presented with evidence in 1996 that the restrictions were being violated, they nevertheless allowed the accounts to continue.

The Zardari accounts in Switzerland were opened one day before Raul Salinas was arrested. The account was repeatedly reviewed in 1996, after the Salinas scandal became public. Yet there is no evidence that anyone in the private bank had been sensitized to the problems associated with handling an account of a person suspected of corruption.

The Zardari example also demonstrates the practical consequences of secrecy in private banking. Citibank claims that its decisionmaking in the Zardari matter cannot be fully explained or documented, since all Citibank officials are subject to Swiss secrecy laws prohibiting discussion of client-specific information. In light of the fact that U.S. banks are supposed to oversee their foreign branches and enforce U.S. law, including anti-money laundering requirements, this inability to produce documentation related to a troubling case again highlights the problems with U.S. banks choosing to operate in secrecy jurisdictions.

Pattern of Poor Account Management. The Zardari case history took place during a series of critical internal and federal audits between 1992 and 1997 of the Swiss office which, during most of that time, served as the headquarters of the private bank. The shortcomings identified in the audits included policies, procedures, and problems that affected the management of the Zardari accounts. They included:

* failure of the “corporate culture” in the Swiss office to foster ” ‘a climate of integrity, ethical conduct and prudent risk taking’ by U.S. standards”;

* inadequate due diligence;

* “less than acceptable internal controls”;

* lack of oversight and control of third party referral agents such as Schlegelmilch; and

* inadequate monitoring of accounts;

all of which resulted in “unacceptable” internal audit ratings. In December 1995, the Swiss office received the lowest audit score received by any office in the private bank during the 1990s. These audit scores indicate the office’s poor handling of the Zardari accounts was part of an ongoing pattern of poor account management.

[End of excerpt]

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Source: MINORITY STAFF REPORT FOR PERMANENT SUBCOMMITTEE ON INVESTIGATIONS HEARING ON PRIVATE BANKING AND MONEY LAUNDERING: A CASE STUDY OF OPPORTUNITIES AND VULNERABILITIES, November 9, 1999
http://www.senate.gov/~gov_affairs/110999_report.htm

The Report features as an annex toS. Hrg. 106-248
PRIVATE BANKING AND MONEY LAUNDERING: A CASE STUDY OF OPPORTUNITIES AND VULNERABILITIES, Hearings before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Sixth Congress, First Session, November 9 and 10, 1999.
This xiv+1114 pages report is available at:
http://www.gpo.gov/congress/senate/senate12sh106.html
as TEXT [424KB] and as PDF [30MB] files

It provides (on page numbers indicated) the following:
Documents relating to Asif Ali Zardari:

a. Swiss Form A identifying Asif Ali Zardari as the beneficial owner of the Capricorn Trading S.A. account in the Citibank Private Bank in Switzerland [600]…………………………………. 445 [Signed by “Asif Ali Zardari, Bilawal House, Karachi (Pak)”]

b. Wire transfer records documenting transfers of $18 million into Mr. Zardari’s Capricorn Trading S.A. account in Dubai and transfers of $18.3 million out of the Dubai account into the Capricorn Trading S.A. account in Citibank Private Bank in Switzerland ……………………………………… 446

10/5/94 transfer of $5 million from A.R.Y. International Exchange into the Capricorn Trading S.A. account in
Citibank in Dubai [X6903-4];

10/6/94 transfer of $5 million from A.R.Y. International Exchange into the Capricorn Trading S.A. account in Citibank in Dubai [X6900-2];

2/24/95 transfer of $8 million from Morgan NYC into the Capricorn Trading S.A. account in Citibank in Dubai;

3/6/95 transfer of $8.1 million from the Capricorn Trading S.A. account in Citibank in Dubai into the Capricorn Trading S.A. account in Citibank Private Bank in Switzerland;

5/3/95 transfer of $10.2 million from the Capricorn Trading S.A. account in Citibank in Dubai into the Capricorn Trading S.A. account in Citibank Private Bank in Switzerland;

5/4/94 record of Citibank Private Bank in Switzerland credit of $10.2 million to account of Capricorn Trading
S.A.

c. Mandate Agreement between Asif Ali Zardari and Jens Schlegelmilch concerning Bomer Finance, Inc.
[601-2]………………………………… 466

d. Mandate Agreement between Begum Nusrat Bhutto and Jens Schlegelmilch concerning Mariston Securities, Inc.
[603-4]………………………………… 468

e. British Virgin Islands Certificate of Incorporation for Capricorn Trading S.A.
[605]………………………………….. 470

f. 6/29/94 letter from Cotecna Inspection S.A., stating that if it receives a contract from the government of Pakistan for the inspection and price verification of imported goods, it will pay Mariston Securities, Inc., 6 percent of the payments made under the contract [597]………………………………….. 471

g. 12/11/97 communication from John Reed to Citibank Board, including a discussion of the Zardari matter.. 472

h. List of meetings between Mr. Zardari and Citibank personnel, provided by Citibank ………….. 474

Source: http://www.chowk.com/ilogs/64054/44106

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And if it all sounds too fascinating.. then read this story from the respected newspaper “The News” on how Swiss prosectors had to withdraw the corruption cases after the Government of Pakistan pardoned all politicians under the garb of a National Reconciliation Ordinance signed by Musharraf, the dictator.

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With the withdrawal of money-laundering charges against Asif Ali Zardari by a Geneva prosecutor on Monday, the Co-chairman of the PPP must be a very happy man today after having fought the cases in several local and international courts for more than 10 years.

Irrespective of the merit of the case, the Swiss announcement is no surprise as the government of Pakistan, which initiated the money-laundering cases against Zardari and the late Benazir Bhutto, had been struggling for some time to withdraw the charges.

Now there is no case pending anywhere in the world against the contender for the Aiwan-i-Sadr, whose proud supporters will be able to keep their heads high when they walk into the office of the Election Commission on Tuesday morning to file his nomination papers for the country’s highest post. Only Asif Ali Zardari, whose political rivals had coined the nickname of “Mr Ten Percent,” knows how much he had to suffer during all these years to get a clean chit and become “Mr Clean.”

The money-laundering charges against Zardari were taken seriously by the international banking circles and the governments in 1999 when US Congress launched an intensive investigation into the allegations of money-laundering by Citibank through private banking.

A permanent sub-committee on investigation by US Congress found two cases intriguing enough to kick off a thorough probe. Nigeria’s military dictator Sani Abacha and Asif Ali Zardari’s bank accounts qualified for this investigation and US Congress found that both had been involved in money-laundering through Citibank’s negligence.

Pakistan’s former prime minister Shaukat Aziz, who was only known for his skills as a private banker before he joined Musharraf as his Finance Minister, was summoned by US Congress to appear before the committee and record his statement.

In that statement Aziz, who fled the country soon after the February 18 election results, had to disclose the number, amount, and details of the meetings that he had held with Benazir Bhutto and Asif Ali Zardari as a private banker.

In his written testimony submitted to US Congress, Aziz admitted that he held at least 12 meetings either with Zardari or Bhutto separately or when both of them were present. The meetings were held between January 1994 and 1998 and interestingly these were the same years when Zardari was accused of money-laundering through ARY International Exchange, according to the details of the US report.

In some of these meetings with Citibank officials, other persons such as John Reed, who became President Clinton’s top financial guru, Shaukat Tarin, William Rhodes, Paul Collins, Salim Raza, and Sajjad Rizvi also participated.

These meetings were held in Islamabad , Karachi, Davos (Switzerland), Singapore, Kuala Lumpur, and New York City. John Reed, who was then Citigroup co-chair, told the committee that before his trip to Pakistan in February 1994, he was advised to “stay away” from Mr Zardari for accusations of corruption which surrounded him and that “he was not a man with whom the bank wanted to be associated.”

Yet, one year later, for some unknown reasons, the American bank let Zardari open three accounts in Switzerland. Mr Reed told the committee that when he learnt of Zardari’s accounts he thought the account officer must have been “an idiot.”

Three years after the accounts opened and were operative in Swiss banks, Citicorp’s Chairman John Reed wrote to the Board of Directors on December 11, 1997: “We have another issue with the husband of ex-Prime Minister Bhutto of Pakistan. I do not yet understand the facts but I am inclined to think that we made a mistake.”

On the basis of the report findings, tougher systems were introduced in the US banking sector. However, the government of Pakistan, under the NRO, had withdrawn all cases from the local courts.

This local withdrawal was made the basis for the dropping of the cases in Swiss courts despite a voluminous investigative report by US Congress which had all the details of accounts and the route through which this money travelled to its destination.

The withdrawal of cases on Monday by the Swiss court will put an end to years of investigations. The 3.9 million Swiss francs, which were seized from these accounts, had been given to the Swiss government.

This is the same case in which former Attorney General Malik Qayyum, as judge of the Lahore High Court, had given a verdict against Benazir Bhutto and Asif Ali Zardari. Qayyum was later booted out of the judiciary for charges of misconduct and corruption. Qayyum, however, served the PPP’s government as attorney general and appeared before the Swiss Courts on behalf of the government of Pakistan pleading the withdrawal of cases in which he himself had convicted the accused.

AP adds: The Geneva prosecutor says he has dropped money-laundering charges against PPP Co-chairperson Asif Ali Zardari. He says that 3.9 million Swiss francs seized in the case are being given to the Swiss government.

Prosecutor General Daniel Zappelli’s move comes eight months after he dropped charges against the assassinated former Prime Minister Benazir Bhutto. Zappelli noted Monday that the Pakistan prosecutor had dropped his corruption cases against Zardari. He says Geneva’s 11-year investigation has produced too little for him to continue in light of the Pakistani prosecutor’s conclusion. He says he had no choice but to close the case.

Source: http://www.thenews.com.pk/top_story_detail.asp?Id=16828

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Conclusion: A cesspool of corrupt politicians, businessmen, bankers, military men and foreign governments’ pointmen continue to destabilise, loot and plunder Pakistan.

Bring the deposed Chief Justice of Pakistan back

Here is another story of the farcical de facto chief justice (CJ) who has occupied the highest seat of Judiciary unconstitutionally in Pakistan and the collusion of the PPP government to manipulate the education board (an independent institution) to get CJ’s daughter a higher grade …..   read on!

what a shame!!!

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The PPP government on Thursday aggressively blocked the parliamentary probe into the chief justice’s daughter case amid an uproar in the National Assembly committee meeting that witnessed a walkout by the government members, including the minister of state for education.

The chairman of the NA Standing Committee on Education, Abid Sher Ali, of the PML-N was not allowed to proceed as the state minister consistently pressed that the inclusion of the CJ’s daughter case in the meeting’s agenda was a violation of the rules. The State Minister, Ghulam Farid Kathia, also strongly objected to the presence of not only media persons covering the event but also that of Ansar Abbasi, Editor Investigations, The News, who was invited by the committee as a special guest to take part in the proceedings.

The whole proceedings, which included the suspension of the noisy sitting for 15 minutes and followed by walkout of the government members and even the Education Ministry mandarins, turned out to be a joke when the chairperson of the Federal Board for Intermediate and Secondary Education, Ms. Shaheen Khan, refused to brief the committee on the issue despite repeated requests by the committee chairman.

Every time she was given the floor, she said that she would not utter a word unless allowed by her secretary and the minister, who kept on pressing that the issue could not be included in the agenda of the meeting without his consultation. At her response to the committee, the chairman told her: “You are answerable to the committee and if you do not talk on the issue, then you may leave.”

The angry chairman even once announced to postpone the meeting against what he said the negative attitude of the government side but the members intervened and requested him to continue the meeting. He again asked the FBISE chairperson to tell the committee about the issue but time and again the minister interrupted him and did not let him proceed.

Chairman Abid conducted short census among the eight members of the committee out of whom four said the proceedings on this issue of public interest be maintained. The chairman, while using his discretionary power, resumed the proceedings.

State Minister for Education Ghulam Farid Kathia refused to brief the committee, saying it was not on the agenda of the committee’s meeting. However, he was of the view that the issue should be discussed in camera, not in the presence of newsmen. This irritated the chairman who observed that the issue was of immense public interest and must be discussed in the presence of the press.

The committee witnessed some rowdy scenes and exchange of harsh words between Abid Sher Ali and Ghulam Farid Kathia as well as the FBISE Chairperson Shaheen Khan, who also declined to speak without the minister’s permission.

“You are trying to sabotage this meeting by interrupting me again and again … you may leave,” Ali repeatedly told the state minister for education who argued that the issue of CJ’s daughter could not be discussed, as it was not on the committee’s agenda.

The situation remained tense, as the government side insisted that the issue be taken up some other day. Kathia was of the view that the committee chairman had not consulted him on the issue and, therefore, he was going against the rules and regulations. However, Abid Sher Ali said he had written letters to all the concerned officials, including the FBISE chairperson, to appear before the committee with all the required record.

He said the issue was of serious nature in which the top government officials were involved in misuse of powers. “But nobody is ready on this issue,” Kathia argued followed by Abid Sher Ali’s remarks: “If you are not ready, then you can leave.” However, the minister refused to do so.

The chairman of the committee said: “You are trying to block the committee to proceed in the case of high public importance and defending the corrupt. You and the government are against the voiceless students who are tens of thousands in number.” Abid Sher Ali also said that the minister was defending those who indulged in abuse of power.

On the minister’s signal, four MNAs left the proceedings and staged a walkout. One of the National Assembly’s senior officials told the minister that under such rules, the committee could not discuss the issue.

Meanwhile, sources told The News that the meeting of the committee, scheduled to continue on Friday, was postponed by the speaker National Assembly. The sources said it was an attempt to strangulate the voice of truth.

Source: http://www.thenews.com.pk/top_story_detail.asp?Id=18652

Denying the undeniable

A sad state of affairs indeed… and a long journey to a true democratic and welfare state..

“For us relief is only when our loved one is safe and sound standing freed before us. […] I believe that my husband Masood is held only three kilometres from my home, yet he continues to suffer unknown ill-treatment and we, his wife, his children and his very old parents cannot even see him. They [the new government] must act now to bring them back immediately.”

– Amina Masood Janjua, July 2008

The last time Amina Masood Janjua saw her husband, Masood Janjua, was on 30 July 2005 when he left home to meet his friend Faisal Faraz. Pakistani security forces apprehended both men on that day while on a bus journey to another city.

Since then, Pakistan’s government has been holding them in secret without charge or trial, repeatedly denying any knowledge of their whereabouts despite eyewitness testimony as to their detention.

Masood Janjua and Faisal Faraz are among hundreds of victims of enforced disappearance in Pakistan, including children as young as nine and ten years old. Many of them were detained after the attacks in the USA on 11 September 2001, their detentions justified in the name of the US-led “war on terror”.

The practice, rare before 2001, then spread to activists involved in pushing for greater ethnic or regional rights, including Baloch and Sindhis.

Despite undeniable evidence, the government of President Pervez Musharraf consistently denied subjecting anyone to enforced disappearances.

In the report Denying the undeniable, enforced disappearances in Pakistan, Amnesty International uses official court records and affidavits of victims and witnesses of enforced disappearances to confront the Pakistani authorities with evidence of how government officials obstructed attempts to trace those who have “disappeared.”

New government brings opportunity for change

The report urges the newly elected government of Pakistan – which has pledged to improve Pakistan’s human rights record – to end the policy of denial, investigate all cases of enforced disappearance and hold those responsible to account.

“By holding people in secret detention the government of Pakistan has not only violated their rights, but also failed in its duty to charge and try those suspected of involvement in attacks on civilians”, said Sam Zarifi, Amnesty International’s Asia Pacific director.

Crucially, Pakistan’s new government must reinstate deposed judges who had previously been investigating disappearance cases and were deposed by President Pervez Musharraf when he imposed a state of emergency in the country in November 2007.

Complicity of other governments

The report also calls on other governments – most notably the USA – to ensure that they are not complicit in and do not contribute to or tolerate the practice of enforced disappearance in Pakistan.

Many of those unlawfully held at the US detention centre in Guantánamo Bay, and those who have been held in secret CIA custody were arrested in Pakistan. Others were unlawfully transferred from Pakistan to countries where they faced torture and other ill treatment.

Many people who have been secretly held in detention centres in Pakistan say they were interrogated by Pakistani intelligence agencies, but also by foreign intelligence agents.

See the full report by Amnesty International on http://www.amnesty.org/en/news-and-updates/report/denying-the-undeniable-enforced-disappearances-in-pakistan-20080723

“His” moment of truth

Of course, the Presidency has confirmed the Wednesday night meeting between President Musharraf and Chief of the Army Staff General Ashfaq Parvez Kiyani, but insists that it was of routine nature. There was not much in terms of elaboration from the army side as well, perhaps in keeping with the tradition that militaries do not talk much.

But that nonchalance about a meeting, which was reportedly a one-on-one lasting more than three hours till midnight, followed the day-long consultations between the army chief and his commanders, and had come about amidst a welter of speculation that the President may call it day anytime, is beyond one’s comprehension.

Only a day before, the rumour that he was quitting had plunged the stock market below a psychological barrier of 12000. And the man in the street asks: has the day arrived when President Musharraf would pack up and go? The reported meeting of Wednesday night brings back to one’s memory the saga of resignations of Ghulam Ishaq Khan and Nawaz Sharif that the then army Chief General Abdul Waheed Kakar had secured as a neutral arbitrator between the two squabbling centres of power.

A few years later, Farooq Leghari had to leave facing the threat of his impeachment in the backdrop of a situation not very different from the one President Musharraf faces today. A sense of deja vu surrounds.

Ever since March 9 last year, when he filed a reference against the then Chief Justice, Iftikhar Muhammad Chaudhry, the President at the eye of a storm. All of his moves ranging from the ill-advised and motivated reference against Justice Chaudhry, to his dubious election in uniform, to his November 3, 2007 mini-martial law, had received public opprobrium.

But that did not discourage President Musharraf who soon after his party PML (Q)’s defeat in the elections perceptibly set about conspiring to steal the PPP-led coalition’s electoral victory. That has added fuel to the fire already raging against him in the wake of the judicial crisis.

If he does not suffer from some kind of megalomania, his failure to see the reality of the situation can be certainly attributed to his total insulation from the public opinion, apparently thanks to the barriers raised by his cronies and the flawed intelligence available to him.

He conceded his November 3 action was unconstitutional but made it part of the constitution. He made a promise before the entire nation that he would doff his uniform by the end of 2004, but he did not, caring two hoots about the public opinion, rule of law and constitutionalism. Now the birds are coming home to roost as demands range from his resignation to his impeachment and trial.

Irrespective of the truth in the matter as well as the statements made by his office and the ISPR, the general public tends to view the Army Chief, General Kiyani, counselling President Musharraf against any action that may further add to the ubiquitous uncertainty which is already taking a heavy toll of the national economy and political stability.

It is generally believed that the general asked him to banish the thought of exercising his power under Article 58-2(b) to dissolve the National Assembly and dismiss the government. He has been probably told that he has failed to act as the President who is expected to be apolitical after his election and equally accessible to all manner of people and politicians.

General Kiyani’s advice should sink with President Musharraf because the latter’s options are now extremely limited. His nemesis, Sharif brothers, want his head; his former military seniors want his trial; and PPP leadership will not hesitate to impeach him. In these circumstances, it would not be entirely unrealistic to think that for President Musharraf the moment of truth has arrived.

Source: http://www.brecorder.com/index.php?id=748886

Chief Justice – will he get justice?

The Pakistan Muslim League-Nawaz (PML-N), which has so far been a great champion of the restoration of the judiciary through parliament, is considering the option of a Chief Justice Iftikhar Muhammad Chaudhry-specific constitutional amendment, slashing his tenure from June 2013 to 2010.

Though no decision has been taken by the party leadership as yet on this highly controversial issue, there are certain PML-N leaders arguing that this compromise solution is being deliberated upon to save the PPP-PML-N coalition. The PPP leadership is adamant that it would not allow Justice Iftikhar Chaudhry to continue till June 2013.

The PML-N finds itself in a tight corner as it is being made to concede to slashing the tenure of the deposed chief justice in exchange for the PPP’s willingness to table the resolution in the National Assembly for the restoration of the deposed judges to their Nov 2, 2007 position.

Interestingly tenures of judges of the superior judiciary are not fixed either in Britain or India whereas in the United States the judges of the Supreme Court and those of the federal courts are appointed for life. However, there is a tradition in the United States where superior judiciary judges get voluntary retirement when they reach the age of 70-75.

If finally approved and agreed between the two parties, the PML-N might consider this formula a “compromise” to achieve the greater goal of the judges’ restoration and to save the PPP-PML-N-ANP coalition from possible demise. However, it is believed that such a solution might not be acceptable to the lawyers’ fraternity and the civil society, which had struggled relentlessly after March 9, 2007 for the cause of the independence of the judiciary.

While Asif Ali Zardari is also facing a great fall in his overall popularity among these quarters after dithering on his commitment to restore the judges within 30 days of the formation of the federal government, there is a realisation within the PML-N that the fate of Nawaz Sharif and his party could also be no different if such a compromise solution is reached. Perhaps, it would be more damaging in the case of the PML-N.

A party source believed that getting the PML-N to back off from its clear stance on the judges’ issue might be a trap set by the PPP to politically damage the Nawaz-League, which has so far been attaining more and more popularity for speaking out on the judges’ issue. The PML-N was the only political party which had contested the Feb 18 elections on the slogan of getting the deposed judges restored.

As in the world’s leading democracies, Pakistan has traditionally been setting the maximum age limit for the retirement of the superior judiciary judges without fixing any tenure for the chief justices of the Supreme Court or high courts. However, it was only during the government of Zulfikar Ali Bhutto when, in 1976, a constitutional amendment was passed to fix the tenure of the high court chief justices to four years and that of the chief justice of Pakistan to five years.

Bhutto got this amendment through because he was not happy with the then chief justices of the Lahore High Court Justice Sardar Muhammad Iqbal and the Peshawar High Court Justice Justice Safdar Shah. In the case of Justice Safdar Shah, Bhutto got annoyed after this highly respected judge had dismissed from service political appointees in the police department besides accepting bail of some workers of the then National Awami Party, now Awami National Party.

These constitutional amendments were undone by the martial law of General Ziaul Haq, who reverted to the system of getting the judges, including the chief justices, retired on their set age of retirement.

The retirement age for high court judges remained 62 years whereas in the case of the Supreme Court it has been 65. In his legal framework order, Musharraf had enhanced the retirement age of SC judges to 68 and that of the HC judges to 65 but the 17th Constitutional Amendment reverted to the original retirement age.

In a strange coincidence, it is almost after 32 years of not so appreciable 6th Amendment of Zulfikar Ali Bhutto that his son-in-law, Asif Zardari, is determined to introduce a person-specific constitutional amendment targeting Justice Iftikhar Chaudhry. Pakistan’s irony is that the Constitution has been repeatedly amended to the advantage or disadvantage of personalities instead of strengthening the system and institutions.

Justice Iftikhar Chaudhry has given a new hope for the independence of the judiciary in the country. Because of what he did on March 9 and later on Nov 3 and for the kind of decisions the Supreme Court handed down during his tenure as chief justice, he has become a symbol of the independence of the judiciary. Cutting his tenure only because a powerful soul is allergic to him would mean making a mockery of the dreams of the people of Pakistan.

http://www.thenews.com.pk/top_story_detail.asp?Id=14282

End note: It is clear from the outset that the PPP has been ambiguous on this issue since time immemorial. The people of Pakistan must take a clear stand whether they want an independent proactive judiciary, a key founding pillar of a strong and progressive democracy which is ready to deliver speedy justice and keep the executive in check or a mock judiciary as we have seen in the past. It is all about do we still want to live in the regressive past or move ahead towards a brighter and progressive future.

A strange country indeed!

After much effort and hassle, the caretaker Human Rights minister, Ansar Barni got released a poor Indian chap who was accused of spying, on a death sentence and kept languishing in a jail for two and a half decades – well done!

This chap, Kashmir Singh was indeed a spy and claimed he had done the duty to his nation.

http://www.hindu.com/2008/03/08/stories/2008030850020100.htm

Again.. we would say fair he was doing his duty…. and also can’t question the endless efforts by the Human Rights minister Ansar Barni to obtain his release including requesting personally a presidential pardon of death sentence… all well and good.

… But stop.. isn’t he oblivious of what is happening to Pakistani citizens…. doesn’t he know that the Chief Justice of the country is confined to his home since November. His whole family is confined. Recently there was a news items that one of his daughters annual school examination was conducted in their house (which was declared the Examination center by the Education Board)…. what a joke!….

This minister does not have the decency and courage to visit the Chief Justice.

So, in short, this is a country where a declared spy is pardoned and sent home with full protocol and the country’s Chief Justice and his family are confined to their house indefinitely…

🙂

How to strongarm a third-world country

Interesting stuff.. a little scary too! It is a recipe for disaster.

Read on!

Pakistan has given them bases and logistic support as well as intelligence sharing but what the US is now demanding from Islamabad has shocked the Defence and Foreign Ministries and the initial reaction has been a rejection of what are highly intrusive demands for the US military and auxiliary personnel in Pakistan.

This scribe has learnt of the latest set of 11 demands the US has put to the Government of Pakistan through the Ministry of Defence. As one goes down the list of the demands, they become increasingly untenable.

The first demand is for granting of a status that is accorded to the technical and administrative staff of the US embassy. The second demand is that these personnel be allowed to enter and exit Pakistan on mere National Identification (for example a driving licence) that is without any visas.

Next, the US is demanding that Pakistan accept the legality of all US licences, which would include arms licences. This is followed by the demand that all these personnel be allowed to carry arms and wear uniforms as they wish, across the whole of Pakistan.

Then comes a demand that directly undermines our sovereignty – that the US criminal jurisdiction be applicable in Pakistan to US nationals. In other words, these personnel would not be subject to Pakistani law.

In territories of US allies like Japan, this condition exists in areas where there are US bases and has become a source of major resentment in Japan, especially because there are frequent cases of US soldiers raping Japanese women and getting away with it. In the context of Pakistan, the demand to make the US personnel above the Pakistani law would not be limited to any one part of the country! So the Pakistani citizens will become fair game for US military personnel as well as other auxiliary staff like military contractors.

The next demand is for exemption from all taxes, including indirect taxes like excise duty, etc. The seventh demand is for inspection-free import and export of all goods and materials. So we would not know what they are bringing in or taking out of our country – including Gandhara art as well as sensitive materials.

At number eight is the demand for free movement of vehicles, vessels including aircraft, without landing or parking fees! Then, at number nine, there is a specific demand that selected US contractors should also be exempted from tax payments.

At number ten there is the demand for free of cost use of US telecommunication systems and using all necessary radio spectrum. The final demand is the most dangerous and is linked to the demand for non-applicability of Pakistani law for US personnel. Demand number eleven is for a waiver of all claims to damage to loss or destruction of others’ property, or death to personnel or armed forces or civilians. The US has tried to be smart by not using the word “other” for death but, given the context, clearly it implies that US personnel can maim and kill Pakistanis and destroy our infrastructure and weaponry with impunity.

Effectively, if accepted, these demands would give the US personnel complete freedom to do as they please in Pakistan – in fact, they would take control of events in areas of their interest.

It is no wonder then that Pakistan’s Defence Ministry, the Foreign Office and the Law Ministry have reacted with complete rejection. But, as one official source feared, “This is just the opening salvo of demands and the US can be expected to bargain in order to seek the most critical of these demands.”

As he put it, “Any hesitation or weakness that the US senses on part of Pakistan will put us on a fatal slippery slope to total submission. This would result in increasing instability in the country.”

So, for those who feel there is bonhomie and complete understanding between the Pakistan military and the US military, and the trouble only exists at the political level, it is time to do a serious rethink. The first step in dealing rationally with our indigenous terrorist problem holistically and credibly is to create space between ourselves and the US. As the US adage goes: “There is no free lunch”. For Pakistan lunching with the US has become unacceptably costly. When US embassy in Islamabad was approached for reaction to this report, Elizabeth Colton, US Embassy Spokesperson, said, “We will not dignify this attack with a comment.”

http://www.thenews.com.pk/top_story_detail.asp?Id=13430