Zardari, Benazir also faced charges of having offshore businesses

These charges were never proved and courts cleared the

couple in Pakistan as well as Switzerland

LAHORE: Sitting Premier Nawaz Sharif is not the only Pakistani politician who has been accused of operating off-shore firms because 18 years ago in 1998, prestigious American newspaper This charge had already been leveled by "The New York Times" on former Prime Minister Benazir Bhutto and her spouse had published an elaborated investigative account of the shell companies owned by former Prime Minister Benazir Bhutto and her spouse Asif Ali Zardari, research conducted by the "Jang Group and Geo Television Network" shows.

Zardari and Benazir were, however, cleared by the courts of all corruption charges not only in Pakistan but also in Switzerland. 

The Accountability Court here acquitted former President Asif Ali Zardari in SGS Cotecna as well as ARY Gold Cases in 2015. Moreover, the sentence given by a Swiss court was also later suspended.

But the fact remains that the duo faced charges for a long time in national and international courts. But these were never proved on any forum.

"The New York Times" story under review had actually traced its roots back to 1997, when just days before the 1997 general elections, the then caretaker set up headed by late Pakistani President Farooq Leghari and late Premier Malik Meraj Khalid had hired a New York-based investigative agency, Messrs Jules Kroll Associates, to look for evidence pertaining to Bhuttos' corruption in Europe etc.

Resultantly, agents from the British branch of Kroll Associates had started hunting for admissible proofs against the Bhutto family.

In its January 1998 article titled "House of Graft: Tracing the Bhutto millions -- a special report.; Bhutto clan leaves trail of corruption, " the "New York Times" had thus shed a lot of light on the corruption inquiry that Pakistani investigators said had traced more than $100 million to foreign bank accounts and properties controlled by the Benazir Bhutto's family. 

Here follow some excerpts from this lengthy "New York Times" article that explicitly mention about the off-shore companies allegedly then run and managed by late Benazir Bhutto and her husband Asif Zardari:

Starting from a cache of Bhutto family documents bought for $1 million from a shadowy intermediary, the (Pakistani) investigators have detailed a pattern of secret payments by foreign companies that sought favours during Ms. Bhutto's two terms as Prime Minister. 

Officials leading the inquiry in Pakistan say that the $100 million they have identified so far is only a small part of a windfall from corrupt activities. They maintain that an inquiry begun in Islamabad just after Ms. Bhutto's dismissal in 1996 found evidence that her family and associates generated more than $1.5 billion in illicit profits through kickbacks in virtually every sphere of government activity -- from rice deals, to the sell-off of state land, even rake-offs from state welfare schemes. 

The Pakistani officials say their key break came last summer, when an informer offered to sell documents that appeared to have been taken from the Geneva office of Jens Schlegelmilch, whom Ms. Bhutto described as the family's attorney in Europe for more than 20 years, and as a close personal friend. Pakistani investigators have confirmed that the original asking price for the documents was $10 million. Eventually the seller traveled to London and concluded the deal for $1 million in cash. 

The identity of the seller remains a mystery. Mr. Schlegelmilch, 55, developed his relationship with the Bhutto family through links between his Iranian-born wife and Ms. Bhutto's mother, who was also born in Iran. In a series of telephone interviews, he declined to say anything about Mr. Zardari and Ms. Bhutto, other than that he had not sold the documents. ''It wouldn't be worth selling out for $1 million,'' he said. 

The documents included: statements for several accounts in Switzerland, including the Citibank accounts in Dubai and Geneva; letters from executives promising payoffs, with details of the percentage payments to be made; memorandums detailing meetings at which these ''commissions'' and ''remunerations'' were agreed on, and certificates incorporating the offshore companies used as fronts in the deals, many registered in the British Virgin Islands. 

In 1994, executives of the two Swiss companies wrote promising to pay ''commissions'' totaling 9 percent to three offshore companies controlled by Mr. Zardari and Nusrat Bhutto. A Cotecna letter in June 1994 was direct: ''Should we receive, within six months of today, a contract for inspection and price verification of goods imported into Pakistan,'' it read, ''we will pay you 6 percent of the total amount invoiced and paid to the Government of Pakistan for such a contract and during the whole duration of that contract and its renewal.'' 

Similar letters, dated March and June 1994, were sent by Societe Generale de Surveillance promising ''consultancy fees'' of 6 percent and 3 percent to two other offshore companies controlled by the Bhutto family. According to Pakistani investigators, the two Swiss companies inspected more than $15.4 billion in imports into Pakistan from January 1995 to March 1997, making more than $131 million. The investigators estimated that the Bhutto family companies made $11.8 million from the deals, at least a third of which showed up in banking documents taken from the Swiss lawyer. 

For Societe Generale de Surveillance, with 35,000 employees and more than $2 billion a year in earnings, the relationship with the Bhutto family has been painful. In addition to doing customs inspections, the company awards certificates of technical quality. In effect, its business is integrity. 

In the years Ms. Bhutto was in office, Pakistan received billions of dollars in new loans, mostly to enable it to pay interest on its debt. By 1996, interest on the accumulated public debt, including $32 billion in foreign loans, was absorbing nearly 70 percent of state revenues. With Pakistan's defense costs absorbing the remaining 30 percent, scarcely anything was left for the social programmes that Ms. Bhutto had promised. 

While the Times inquiry confirmed some of the allegations made by the Pakistani investigators, other matters remained unresolved. For example, none of the documents for the foreign bank accounts or offshore companies uncovered thus far, bear Ms. Bhutto's name, nor do any of the letters promising payoffs make any mention of her. 

Shortly after Ms. Bhutto returned as Prime Minister in 1993, a Pakistani bullion trader in Dubai, Abdul Razzak Yaqub, proposed a deal: in return for a licence to import gold, Mr. Razzak would help the Government regularise the trade. 

In January 1994, weeks after Ms. Bhutto began her second term, Mr. Schlegelmilch established a British Virgin Island company known as Capricorn Trading, S.A., with Mr. Zardari as its principal owner. Nine months later, on Oct. 5, 1994, an account was opened at the Dubai offices of Citibank in the name of Capricorn Trading. The same day, a Citibank deposit slip for the account shows a deposit of $5 million by Mr. Razzak's company, ARY Traders. Two weeks later, another Citibank deposit slip showed that ARY had paid a further $5 million. 

In November 1994, Pakistan's Commerce Ministry wrote to Mr. Razzak informing him that he had been granted a licence that made him, for at least the next two years, Pakistan's sole authorised gold importer. In an interview in his office in Dubai, Mr. Razzak acknowledged that he had used the licence to import more than $500 million in gold into Pakistan, and that he had traveled to Islamabad several times to meet with Ms. Bhutto and Mr. Zardari. But he denied that there had been any secret deal. ''I have not paid a single cent to Zardari,'' he said. 

Mr. Razzak offered an unusual explanation for the Citibank documents that showed his company paying the $10 million to Mr. Zardari, suggesting that someone in Pakistan who wished to destroy his reputation had contrived to have his company wrongly identified as the depositor of the money. ''Somebody in the bank has cooperated with my enemies to make false documents,'' he said. 

The only document that refers to Ms. Bhutto is a handwritten ledger for an account at the Union Bank of Switzerland in Geneva. In Mr. Schlegelmilch's handwriting, the ledger contains the notation ''50% AAZ 50 % BB.'' This account showed deposits of $1.8 million for one 90-day period in 1994 and received at least $860,000 in payments by the two Swiss customs-inspection companies. 

The tax returns filed by Ms. Bhutto and her husband in her years in office give no hint of the wealth uncovered by the Pakistani inquiry. Ms. Bhutto, Mr. Zardari and Nusrat Bhutto declared assets totaling $1.2 million in 1996 and never told authorities of any foreign accounts or properties, as required by law. Mr. Zardari declared no net assets at all in 1990, the year Ms. Bhutto's first term ended, and only $402,000 in 1996. 

The family's income tax declarations were similarly modest. The highest income Ms. Bhutto declared was $42,200 in 1996, with $5,110 in tax. In two of her years as Prime Minister, 1993 and 1994, she paid no income tax at all. Mr. Zardari's highest declared income was $13,100, also in 1996, when interest on bank deposits he controlled in Switzerland exceeded that much every week. 

Pakistan's inquiry is in its early phases, but it has already prompted international action. Swiss officials have frozen 17 bank accounts belonging to the Bhutto family, and authorities in Britain and France are searching for other accounts and properties. 

A peek into newspaper archives shows that the Swiss Examining Magistrate, Daniel Devaud, who had convicted the late Benazir and Asif Zardari of money-laundering in August 2003, had also specifically mentioned the off-shore firms owned by the affluent Pakistani couple. 

While sentencing Benazir and Zardari to six months imprisonment and imposing a fine of $50,000 each, the Swiss judge had also ordered the couple to return $11.997 million to the Pakistani government and to forfeit to the Pakistani government a diamond necklace worth £117,000 purchased by Ms Bhutto in August 1997.

The Swiss judge had cited letters showing that 6 per cent of the amount paid by the Pakistani government under the inspection contract would be paid as commission to companies registered in the British Virgin Islands.

One of these, Messrs Bomer Finances Incorporated, had received $8.2million and another, Messrs Nassam Overseas Incorporated, had received $3.8m, the Swiss judge had found.

The judge had said that the beneficial owner of Messrs Bomer Finance was Asif Zardari, but in reality Benazir shared the assets with him and had the power of disposition.

In his order, the Swiss Examining Magistrate, Daniel Devaud, had viewed: "The beneficial owner of Messrs Nassam Overseas is Nasir Hussain, who at the time was Benazir Bhutto’s brother-in-law." 

Benazir Bhutto had strongly denied having had access to the accounts.

The couple’s lawyer, Farooq Naek, had described the order as “illogical, unreasonable, inconsistent with law, based on mala fide and … politically motivated.”

News agency AFP had reported: "A Swiss judge has found former Pakistani Prime Minister Benazir Bhutto, her husband Asif Zardari and a Swiss lawyer guilty of money laundering and receiving bribes from two Swiss firms nine years ago. Ms Bhutto, Mr Zardari and Jens Schlegelmilch were guilty of arranging an illegal six percent commission or "bribe" worth almost $12 million for awarding a pre-shipment customs inspection contract to Swiss firms Societe Generale de Surveillance (SGS) and Cotecna, according a copy of the judgment. Swiss Investigating Magistrate Daniel Devaud said his inquiry had established that the couple was paid by SGS and Cotecna "as a result of their unfair management of the public interests of Pakistan."

The globally-acclaimed news agency had maintained: "With Schlegelmilch, they had laundered $11,997,423 in two Swiss bank accounts, Mr. Devaud wrote in the judgement dated July 30. He gave Ms Bhutto and Mr Zardari a suspended six months prison sentence and fined them $50,000 each. The couple was also ordered to repay the Pakistani government the full $11,997,423 and to forfeit to the Pakistani government a diamond necklace worth £117,000 purchased by Ms Bhutto in August 1997."

Interestingly, an October 29, 2007 story of the BBC News had also mentioned about another off-shore company, Messrs Petroline FZC, which was reportedly owned by her. 

The BBC News had written: "Ms Bhutto also faces allegations concerning the United Nations oil-for-food scandal. In 2005, the Independent Inquiry Commission led by former US Federal Reserve head Paul Volcker found that more than 2,000 companies breached UN sanctions by making illegal payments to Saddam Hussein's government in Iraq before 2003. Among them was a company called Petroline FZC, based in the United Arab Emirates. Mr Volcker's inquiry found it traded $144m of Iraqi oil, and made $2m of illegal payments to Saddam Hussein's regime."

The British media house had added: "Documents from Pakistan's National Accountability Bureau appear to show that Ms Bhutto was Petroline FZC's chairperson. If these documents are genuine, and the oil-for-food allegations are proven, this would be especially damaging for the former prime minister. The Spanish authorities are investigating financial transactions thought to be linked to Petroline FZC. In addition, President Musharraf's amnesty dropping corruption charges against public officials only covers the period 1986-1999. The Petroline FZC transactions came after that, which means that in theory a charge is possible."

Earlier, in March 2006, the National Accountability Bureau (NAB) had unearthed two Sharjah-based offshore companies, operating accounts and properties of former Prime Minister Benazir Bhutto in Spain.

The Spanish judicial authorities, according to the NAB, had frozen Benazir's four bank accounts, two off-shore companies and had confiscated her villa in Marbella, Spain. 

According to details provided by NAB to Pakistani media houses about 10 years ago, the judicial authorities of Spain had frozen two off-shore companies Messrs Petroline FZC and Messrs Tempo Global Gains FZC, their accounts and a villa owned by Benazir Bhutto and her family. 

According to NAB, the bank accounts were maintained in Spanish bank Bancaja and a villa in Marbella (Spain) was bought from the funds in Petroline FZC accounts for Euros 0.5 million. 

NAB spokesman had maintained that the high court of Valencia in Spain had further entrusted the office of the public prosecutor with the responsibility of prosecuting Benazir Bhutto and her cronies. 

Reacting to the NAB revelations, the Pakistan People’s Party had dismissed the claim regarding Benazir Bhutto's off-shore companies. 

Senator Farhatullah Babar had then said that the latest charade was a desperate bid by a desperate regime, which had to eat a humble pie after the stunning verdict by the Isle of Man High Court in February 2006.

He had asserted: "Only those who know no end in bending over backwards to pursue the political agenda of their masters can make such an audacious allegation."

It is imperative to note that some 11 years before the Panama Papers have come out alleging that the incumbent Pakistani Premier Nawaz Sharif's children were the owners or had the right to authorise transactions for two British Virgin Islands-based shell companies Messrs Nielsen Enterprises Limited and Messrs Nescoll Limited, a renowned American businessman and authority on financial crime, Raymond Baker, was probably the first to accuse the Sharifs of owning four such firms.

According to the 80-year old Raymond Baker, the founder and President of an internationally acknowledged Washington DC-based research and advocacy organization called the "Global Financial Integrity," the Sharif family had owned three off-shore firms in British Virgin Islands and one in the Channel Islands, off the French coast of Normandy.

In his globally-acclaimed January 2005 book "Capitalism's Achilles Heel: Dirty money and how to renew the free-market system," Raymond Baker, had stated: "Like Bhutto, offshore companies have been linked to Sharif, three in the British Virgin Islands by the names of Nescoll, Nielson, and Shamrock and another in the Channel Islands known as Chandron Jersey Pvt. Ltd. Some of these entities allegedly were used to facilitate purchase of four rather grand flats on Park Lane in London, at various times occupied by Sharif family members. Reportedly, payment transfers were made to Banque Paribas en Suisse, which then instructed Sharif’s offshore companies Nescoll and Nielson to purchase the four luxury suites."

Pages 82 to 85 of this book under review cover the section on Nawaz Sharif and his family. 

Raymond Baker, who had witnessed the free-market system operating illicitly and corruptly with devastating consequences for over 40 years in more than 60 countries, had gone on to write: "In her second term, Benazir Bhutto had Pakistan’s Federal Investigating Agency begin a probe into the financial affairs of Nawaz Sharif and his family. The probe was headed by Rehman Malik, deputy director general of the agency. Malik had fortified his reputation earlier by aiding in the arrest of Ramzi Yousef, mastermind of the 1993 World Trade Center bombing. During Sharif’s second term, the draft report of the investigation was suppressed, Malik was jailed for a year, and later reportedly survived an assassination attempt, after which he had fled to London."