Sunday, April 8, 2012

"A Bubbling Cauldron": Facts about corruption of Sharif, Zardari & Bhutto Families

Originally written by Ahmer Murad and posted at http://redwishdotcom.wordpress.com/
Sincere Thanks to Ahmer Murad for writing this wonderful piece to expose the Status-Quo players.


A Bubbling Cauldron
I recently came across a book called Capitalism’s Achilles Heel: Dirty Money and How to Renew the Free-Market System by Raymond W. Baker, who is an internationally respected authority on corruption, money laundering and foreign policy issues, and director of Global Financial Integrity, a research and advocacy organisation in Washington DC. Apart from a comprehensive global view of corruption and financial misdeeds all over the world, it also contains some very interesting insights about Pakistan and its political and military leadership.
What hit me as I read those parts of the book was how easy it is for us to forget the specifics and how difficult it is to comprehend the magnitude of corruption that our nation has been subjected to. While we all talk about how corrupt Asif Zardari and his cronies are, how much benefit the Sharif brothers have taken of being in positions of power, all the various incidents that we hear about merge into a blur of mismanagement, cronyism and financial impropriety.
The amounts involved are so large that they are beyond my comprehension. I get lost in a whirl of billions and millions, and my brain does not have the capacity to truly understand the magnitude of the extent to which national wealth has been looted. Raymond Baker estimates that the total wealth siphoned away by corrupt politicians could be anywhere between 60 billion and 100 billion dollars. The enormity of that number started to make some sense to me when I compared it to the allocation for Education in the 2011-12 Federal Budget. Believe it or not, the lower end of this estimate would fund education at current levels for 135 years!
It also hit me that, despite their protestations of innocence and assertions of politically motivated false accusations, international experts are convinced of the involvement of our respected leaders in shady deals of mega-millions, and are aware of transactions funneled through offshore corporations using the best available money laundering techniques, with the help of top professionals, (lawyers, bankers, accountants) who, no doubt, charge top dollar for their services.
In his book, Raymond Baker describes Pakistan as a bubbling cauldron of corruption and crime where politicians, generals, smugglers & terrorists mix in a volatile web of deceit. Corruption runs from top down, he says, with the political class constantly looting the national treasury and distorting internal and external financial policy for personal gain. Sounds harsh? It did to me, initially, but then I read on.
The author reminds of the following mega-corruption cases associated with Benazir Bhutto and her husband, Asif Zardari, known globally as Mister Ten Percent.
  • In 1988 Benazir Bhutto appointed 26,000 party hacks to government jobs, including in state owned banks, through whom an orgy of lending without adequate collateral followed. Benazir Bhutto & Asif Zardari issued instructions for billions of Rupees of unsecured loans to be sanctioned in the names of front men but going to the ‘Benazir-Zardari combine.’
  • Asif Zardari used Rs 421 million to acquire major interest in 3 new sugar mills, done through nominees acting on his behalf.
  • In another deal Asif Zardari allegedly received a Rs 40 million kickback on contracts involving Pakistan Steel Mill, with the deal being handled by two cronies.
  • In the case currently at the centre of the NRO case, Baker says that US$ 12 million were paid to Bomer Finances Incorporated and Nassam Overseas Incorporated, offshore companies, based in the British Virgin Islands and controlled by Benazir Bhutto & Asif Zardari, by SGS-Cotecna in kickbacks and commissions.
  • In a deal worth a total of US$ 83 million for the import of tractors, Ursus Tractor, Poland, paid 7% commission to Asif Zardari’s Caribbean company, Dargal Associated.
  • In a US$ 4 billion contract for French Mirage fighter jets, Asif Zardari (via Marleton Business SA, another offshore company owned by him) stood to make US$ 200 million in commissions and kickbacks, but was prevented from doing so after the PPP government fell.
  • Records of Citibank showed that, in October 1994, Abdul Razzaq Yaqub (ARY), a Dubai based businessman of Pakistani origin, depositedUS$ 10 million into the account of Capricorn Trading, one of Asif Zardari’s companies. Soon after that, in December of that year, ARY was given an exclusive license to import gold into Pakistan and over the next three years shipped more than US$ 500 million worth of gold to the country.
  • Offshore corporations associated with Asif Zardari or known to be directly or indirectly controlled by him include Bomer Finance, Mariston Securities, Marleton Business, Capricorn Trading, Dargal Associated, Fargarita Consulting, Marvil Associated, Penbury Finance, Oxton Trading, Brinslen Investment, Climitex Holding, Elkins Holding, and others.
In Baker’s words, while Benazir Bhutto tried to portray herself as a persecuted democrat, “In the global collection of displaced leaders, Benazir Bhutto may be the least sympathetic character of all.”

Hallway of the 20-room mansion on Rockwood Estate
Baker references documents that were taken in 1997 from offices of a Bhutto family lawyer and reached the National Accountability Bureau (NAB) through a deal struck deal that PML struck with a private investigator, for which they paid US$ 1 million. These documents showed the extent of assets that were acquired by Benazir Bhutto and Asif Zardari using the services of that one lawyer. These assets include Rockwood Estate, the famous “Surrey mansion”, which Asif Zardari first denied but later admitted owning in 2004, which includes a 20-room mansion and two farms and a polo ground on 365 acres of land. In addition, four flats in London, a chateau in Normandy, properties in Cannes and bank accounts in the UK, France & Switzerland are listed in the documents provided to NAB.
About Nawaz Sharif and his family, who are at the helm of the second largest national political party in Pakistan, Baker reminds his readers of these instances:
  • When Ittefaq Foundries was de-nationalised by General Zia-ul-Haq in 1980, Nawaz Sharif became a director of the company and began to cultivate relationships with senior military officials.
  • During the eighties and nineties, while Nawaz Sharif was in power, Ittefaq Industries grew from one foundry to a group consisting of 30 units producing steel, sugar, paper, textiles and other products, and grew to one of the biggest private conglomerates in Pakistan, with revenues in excess of US$ 400 million.
  • The Ittefaq Group then went bankrupt in 1993. By then only 3 units were operational and the remaining companies defaulted on loans that amounted to total of Rs 5.7 billion.
  • The flagship project that PML-N never ceases to boast about is the Lahore – Islamabad motorway. The contract for this project was awarded to the Daewoo corporation of Korea at an estimated budget of Rs 8.5 billion. When the project was finally delivered, costs had risen to over Rs 20 billion.
  • Another flagship scheme, the yellow cabs project, cost the government US$ 700 million in lost import duties & US$ 500 million in unpaid loans, as 60% of borrowers who had obtained concessional bank loans under the project defaulted almost immediately.
  • When Nawaz Sharif lost power, the government published a list of Pakistan’s 322 largest loan defaulters, which shows Nawaz Sharif and hisfamily owing US$ 60 million to various banks and financial institutions.
  • Offshore companies that have been linked to Nawaz Sharif include three in the British Virgin Islands (Nescoll, Nielson & Shamrock) & one in the Channel Islands.
  • According to an FIA report released in 1998, which was based on government documents, affidavits from government official, records obtained from banks and property records, the Sharif family and their political associates made at least US$ 160 million from the contract to build the Lahore – Islamabad motorway.
  • These documents also show the Sharif family and their associates benefitted from US$ 140 million in unsecured loans from government banks and that Nawaz Sharif made at least US$ 60 million from government rebates on sugar exported by mills controlled by him and his family.
  • In a deal to import wheat from the US and Canada, the government of Pakistan paid prices far in excess of market value to a company owned by an associate of Nawaz Sharif in Washington.
About Nawaz Sharif personally, Baker describes him as someone who craves dictatorial powers, as evidenced by his 1997 bill requiring parliamentarians to cast their votes on legislation and other parliamentary business as per the direction of their party leader, and his 1998 bill to impose Sharia law with himself empowered to issue unilateral directives.
Of course, I have no way of knowing how much of what has been documented about the corrupt activities of these leaders is true. Given the history of accusation and counter accusation, with the sole goal of confusing the public, I am not sure we will ever find out the whole truth. But I do know this: there is no doubt in my mind that the senior leaders of all mainstream parties, whether it be PPP, PML-N, MQM or any of the alternatives, offer Pakistan only corruption, mismanagement, ineptitude, nepotism, cronyism, economic ruin, inflation, unemployment, an energy crisis, global isolation and, ultimately, a failed state.
I don’t understand how continuing to support these forces of status-quo in the name of preserving democracy and saving the system helps. They may profess to uphold an ideology, they may claim a history of struggle for the cause of democracy, but the truth about their track record is clear for all to see. The time for change has arrived, and the responsibility is now on us, as citizens of Pakistan, to reject those whose track record we know full well, and to vote for change.

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