December Issue 2016
Cover Story: Panamagate: Which way will the scales tip?
All eyes are set on the proceedings of the money-laundering case against Prime Minister Nawaz Sharif. The case is being heard by a five-member bench of the Supreme Court, and the apex court’s verdict in what has been dubbed ‘Panamagate’ is likely to have major implications for national politics; it will not only determine the political fate of Nawaz Sharif and his main opponent, Imran Khan, but also the outcome of the accountability process in the country. The judgement of the Supreme Court, having the status of case law, will set a precedent and create a guideline for corruption and money-laundering cases in the future.
The signs of nervousness are already visible in the corridors of power. On November 18, the treasury benches tabled the 24th constitutional amendment bill in the National Assembly, apparently in a bid to drag the case on for as long a period of time as possible. Moreover, also for the same purpose, the government presented in the parliament a new bill for the institution of inquiry commissions, which would replace a 60-year-old law on the subject.
The ruling party’s apprehensions of an adverse ruling from the Supreme Court in Panamagate are not without reason, even though the initial hearings did not go too well for the petitioners. The Pakistan Tehreek-e-Insaf (PTI)’s primary lawyer, Hamid Khan, drew criticism in the local media for being weak and unconvincing in his presentation before the apex court. Subsequently, on November 18, the lawyer pulled out of the case, blaming the media for not abiding by a code of ethics or the principles of journalism. PTI chief Imran Khan swiftly appointed Naeem Bukhari to head his legal team in place of Hamid Khan.
In the hearing on November 17, Hamid Khan quoted at length from three speeches of Prime Minister Nawaz Sharif made in April and May this year, and pointed out contradictions in them as regards the purchase of the disputed property in London. Responding, Justice Azmat Saeed commented that the court could not draw any conclusion on the basis of the Prime Minister’s speeches, and instead of going into mind-numbing rhetoric, the lawyer should tackle the contents of the documents presented by Prime Minister Nawaz Sharif and his family.
The two petitioners, the PTI and their ally, MNA Sheikh Rashid Ahmed, had submitted voluminous documents in the Supreme Court in support of their allegations that Nawaz Sharif was involved in money-laundering to buy four flats in London. The 686-page dossier handed in by the PTI, and the 600-page one by Sheikh Rashid Ahmed obviously did not impress the judge either. He remarked that the hefty tomes had almost nothing to do with the Sharif family’s controversial properties. He went even further, terming the evidence submitted as “tales from the Arabian Nights.”
The Arabian Nights than the petitioners’ case. The main document presented by PM Sharif’s counsel in his defence is a letter from a Qatari prince, Hamad bin Jassin bin Jaber Al Thani, in which the prince says that the four flats under contention in London were bought by Hussain Nawaz in 2006 from the money provided to him by the Thani family, in lieu of the investment by his grandfather, Mian Mohammad Sharif, of 12 billion dirhams in real estate in Qatar in 1980.
In his letter, the prince says that his father had long-standing business relations with Mian Muhammad Sharif, which were coordinated through his eldest brother. He adds, “Our families enjoyed and continue to enjoy personal relations.” The prince has testified in his letter that during his lifetime Mian Muhammad Sharif had expressed the wish that the beneficiary of his investment in Qatar would be his grandson, Hussain Nawaz Sharif.
The story that the Park Lane flats were bought from the funds from Qatar is a new twist in the tale. Until the Qatar connection emerged, Nawaz Sharif had been saying that these properties were bought through funds garnered from the sale of the Azizia Steel Mills in Jeddah.
It is to be noted that the Sharifs had also set up another steel mill, Hill Metals, in Jeddah in 2005, which is considered the largest steel mill in the region.
Now the entire defence of Nawaz Sharif and his children revolves around the Qatari prince’s letter. Eminent lawyers believe this letter has no real substance. “The letter from the Qatari prince carries no legal weight. [At the very least] he will have to submit the required evidence to the apex court, and make himself available to appear before the court,” noted lawyer Salman Akram Raja told the media. He said that the prince would have to be willing to be cross-examined in the dock, and PPP senator, Aitzaz Ahsan, shares this view.
Legal experts believe that there are certain other caveats in the Sharif’s case that need to be examined closely. The four flats under contention (16, 16-A, 17 and 17-A) at Avenfield House, Park Lane, London, were used as collateral in the 1990s for setting up the Hudaibiya Paper Mills, by borrowing millions of dollars from the Investment Fund Ltd operated by the Al-Towfeek Company. At that time, these flats were in the ownership of two offshore companies, Nescoll Ltd and Nielsen Ltd.
In 1999, the Al-Towfeek Company filed a case before the Queen’s Bench Division of the High Court of Justice in the UK, as the loan was not repaid by Nawaz Sharif and his two brothers, Shahbaz Sharif and Abbas Sharif. On March 16, 1999, the London High Court ordered Hudaibiya Mills and the Sharif brothers to repay the loan. They did not comply. So on November 5, 1999, the court ordered that the four flats be attached, which implied the transfer of these properties to the creditor. Thereafter the Sharifs returned the loan, and these properties were returned to the owner companies. The question arises, if Hussain Nawaz bought the flats in 2006 – as per the letter of the Qatari prince – how did his father and two paternal uncles use the apartments as collateral in the 1990s to procure the hefty loan from Al-Towfeek to set up the Hudaibiya mills?
Over the years, different stories regarding the apartments have continued to surface.
Some years ago a BBC television documentary titled From Pakistan to Park Lane had uncovered the corrupt and shady ways in which millions of dollars were transferred from Pakistan to the United Kingdom during the early 1990s. Incidentally, this was the time when a multi-billion rupee contract for building Pakistan’s first motorway between Islamabad and Lahore was awarded to the Korean company, Daewoo, in a controversial manner, and allegations of receiving kickbacks had surfaced against Prime Minister Nawaz Sharif.
Following the collapse of his father’s second government, Hasan Nawaz was interviewed by Tim Sebastian on BBC’s Hardtalk – the clips of which are available on the internet. In the programme, Sebastian charged that Nescoll and Nielsen Ltd, the two companies which ostensibly owned the Park Lane flats, were registered in the British Virgin Islands and operated from Switzerland. Hasan Nawaz had said that he was living in one of the flats on rent, and was unaware of their ownership.
Given the Sharifs’ visible duplicity regarding the properties and Imran Khan’s relentless pursuit of the case, it has remained front page news. Now fearing that the court’s verdict might go against the Prime Minister and his family, which would result in his expulsion from office, the PML-N government wants to create a provision for the right of appeal against the Supreme Court’s verdict in matters of public importance.
Article 184(3) of the Constitution reads: “Without prejudice to the provisions of Article 199, the Supreme Court shall, if it considers that a question of public importance, with reference to the enforcement of any of the Fundamental Rights conferred by Chapter 1 of Part II, is involved, have the power to make an order of the nature mentioned in the said Article.” Under this Article, the Supreme Court can take up suo moto notices on issues of public importance – a power that former Chief Justice Iftikhar Chaudhary frequently exercised, to the embarrassment of the executive at that time.
At present, the Supreme Court decides a case, and its verdict is final and cannot be challenged through an appeal. But the government wants to create a new provision in the Constitution, under which an appeal can be made against a verdict by the SC, and which will be heard by a larger bench of the apex court. The intention obviously is that if the five-judge bench gives a verdict against the Prime Minister in the money-laundering case arising from the Panama Papers, the Sharifs will be able to go in appeal against this judgment, and thereby would be able to drag the case at the appeal stage for an indefinite period of time. This would give them the opportunity to seek other loopholes through which to exonerate themselves, and it is hoped in the long-drawn out process, the public would lose interest.
Additionally, the government hurriedly presented the amended Pakistan Commission of Inquiry Bill 2016 in the National Assembly on November 25, without taking the main parliamentary opposition party, the PPP, into confidence. So they opposed it, as did the Muttahida Qaumi Movement (MQM), which usually supports the government’s legislation moves, because they too were not taken into confidence on this issue. Eventually, the Bill was passed on November 30, while the opposition boycotted the proceedings. The amended Inquiry Commission Bill replaces the 60-year-old law, under which the Supreme Court had turned down the government’s request to institute a commission of inquiry over the money-laundering allegation against Prime Minister Nawaz Sharif, terming the law “toothless” and “powerless.” According to legal experts, there is no substantial difference between the old and new law. Interestingly, two weeks earlier, the federal law minister, Rana Sanaullah, had opposed the PPP’s Bill in the Senate asking for an inquiry commission on the Panama Papers, arguing that the issue had become redundant after the matter was taken up by the Supreme Court.
Now with the passage of the new Bill, if an inquiry commission over the money-laundering issue were to be set up by the Supreme Court, it would have to rely on the officers from the investigative agencies that work under the administrative supervision of the executive to pursue the investigation.
While the Bill is now a fait accompli, the Pakistan Tehreek-e-Insaaf (PTI) has vehemently opposed the government’s proposal of a constitutional amendment, claiming it is malafide in intent. For a constitutional amendment to be passed by both houses of Parliament, the ruling PML-N and its allies, including the JUI-F led by Maulana Fazlur Rehman, do not have the required two-thirds majority; they need support from the Pakistan People’s Party (PPP). The PPP (2008-2013) had originally floated the idea of a similar constitutional amendment when it was under fire from Chief Justice Iftikhar Chaudhary, but could not get it through because it too did not have the strength in Parliament. Ironically, at that time, the PML-N had opposed the move. Now the roles have been reversed.
The PPP has maintained a rather ambiguous position on the proposed constitutional amendment. While the party’s top leadership has not supported or opposed the proposal, second-tier leaders have sent mixed signals. PPP senior leader Naveed Qamar told the media that his party would fully support the government in the passage of the Bill, as the right of appeal in suo moto cases was also a demand of his party. Other PPP leaders like Aitzaz Ahsan, who is considered a hawk vis-à-vis the PML-N, has opposed the proposed amendment.
However, the PPP joining forces with Nawaz Sharif cannot be ruled out, seeing the party’s flip-flop behaviour during the past three-and-a-half years on the opposition benches. The party has come to Nawaz Sharif’s rescue many a time, most importantly when the latter’s government was paralysed by Imran Khan and Tahirul Qadri’s dharnas in 2014. And last year, thanks to the federal government, the PPP received relief from action by federal investigative agencies – including the Federal Investigation Agency (FIA) and the National Accountability Bureau (NAB) – when they cracked down on corruption by leaders of the party in the Sindh government. The anti-corruption campaign of the agencies came to a sudden halt, courtesy some background negotiations between the PPP and the PML-N. This, against the backdrop of over a dozen high-profile cases of massive corruption pending against the PPP leaders.
As matters stand, the two main demands of the PPP – which could be the chips that bring the party to the negotiating table, or otherwise – allegedly pertain to the release of Asif Zardari’s close aide and confidant, Dr Asim Hussain, who has been in jail for more than a year, and permission to leave the country for model Ayyan Ali, who is accused of money-laundering and is thought to be close to Asif Zardari. In case the PPP gets its demands met, the possibility of the party supporting the proposed 24th constitutional amendment on the plea of ‘greater national interest’ cannot be ruled out. And if the government yields to the PPP’s core demands, it would be, legally speaking, a win-win situation for both Nawaz Sharif and Asif Ali Zardari, even though the price could be high in political terms, as both would have to dispel the impression among the public that they were protecting each other’s corruption.
The hearing of the money-laundering case by the Supreme Court has significant symbolic value given the sorry history of accountability of politicians, the top military brass, and civil bureaucrats in our country. The entire legal system, in collusion with the executive and the judiciary, favours the corrupt. High-profile cases involving corruption of millions and billions of rupees stay pending in the courts for long periods of time, with investigative agencies, including the Federal Investigative Agency (FIA) and the National Accountability Bureau (NAB), corrupting the evidence, facilitating top lawyers to manipulate the cases against their clients, and getting them off the hook. A small number of prominent lawyers can be seen fighting almost all the corruption cases involving huge amounts of money.
A technique often employed in mega-corruption cases is to prolong the court proceedings on one or other pretext. Officers in investigative agencies, judges, top lawyers and politicians constitute the same governing elite with sympathies with each other and facilitate each other, when in trouble. Time and again, helpless ordinary people have seen thieves in senior official positions receiving clean chits from the courts for lack of adequate evidence against them, or because the state comes to their rescue, as it did by the promulgation of the National Reconciliation Ordinance (NRO). Under the NRO, more than 10,000 criminal and corruption cases were scrapped.
A prime example: in March 2000, NAB had filed a reference against the Sharif brothers for accumulating wealth and assets beyond their declared means of income by misusing their authority. The Sharif brothers were accused in a 3.48 billion rupee loan default case concerning the Hudaibiya Paper Mills. However, on Sept 19, 2014, an accountability court in Rawalpindi acquitted Prime Minister Nawaz Sharif, Punjab Chief Minister Shahbaz Sharif and other members of the Sharif family of all charges of money-laundering and possessing illegal assets and termed the charges “politically motivated.”
Interestingly, late last year the Sharif government signed a 16-billion dollar Liquefied Natural Gas (LNG) import deal with the ruling family of Qatar – a member of which is the prince who is seeking to come to the Sharifs rescue in the Panamagate case. While LNG is available for three to four dollars per million btu in the open market (called spot buying), Pakistan has made a deal in which it would pay around six dollars for the same quantity. Given the special relationship between Qatar’s ruling family and Nawaz Sharif’s family, this pricey deal can be easily understood.
There is a long list of controversial, shady deals and projects in which circumstantial evidence speaks volumes of massive financial bungling. In fact, there is hardly any deal involving huge amounts from the public exchequer that is beyond suspicion of malfeasance. But the state institutions lack the capacity and the will to judicially probe these scams and bring the wrong-doers to justice.
When Nawaz Sharif became Prime Minister in June 2013, his government immediately released 480 billion rupees to Independent Power Producers (IPPs) directly from the State Bank of Pakistan without the mandatory pre-audit and approval of the Accountant General (AG) of Pakistan. Afterwards, the AG office reported irregularities to the tune of 190 billion rupees in the disbursement of funds from the total amount. Those who received payments were big industrialists, some of whom were close to the Sharif family. Despite a hue and cry in the media, NAB did not initiate any probe into the matter.
Last year, the Ministry of Petroleum imported LNG ferried in on nine ships and sold the gas to power companies of its choice at low rates without consulting OGRA, the regulatory authority, and thus allegedly causing a loss of billions of rupees to the national exchequer. Fingers have been pointed at Federal Minister for Petroleum, Shahid Khaqan Abbasi, but the matter has, as usual, been hushed up.
Then there is the Nandipur Power Project in Gujranwala. It was initiated at an estimated cost of 23 billion rupees, but by the time it was completed, the cost had escalated to more than 80 billion rupees. This fact was kept hidden from the public by not including certain ancillary projects to the cost. In January 2016, NEPRA approved a cost of 42 billion rupees for determining the tariff that should accrue from this project. The government demanded that the cost be assessed at 65 billion rupees, and a higher tariff should be approved. The government is still fighting this case. For the last six months, the Nandipur plant is lying closed. The cost of producing electricity from this power station is so huge that the government has opted to keep it shut. The power station’s tariff was fixed at 11.30 rupees per unit, while old thermal plants (gencos) of WAPDA produce electricity at a cost of eight rupees per unit. Who is responsible for the loss of more than 80 billion rupees from the national kitty on this failed project?
Meanwhile, Prime Minister Nawaz Sharif awarded national medals to the officers who oversaw the execution of the project.
Similarly, the Sharifs installed the 100-megawatt Quaid-e-Azam Solar Power Project at a cost of 13 billion rupees and touted it as a big achievement. However, it is producing only 17 megawatts of solar energy. No probe was ever launched to determine why such a massive amount was spent on so inefficient a project.
But perhaps one epitome of corruption is the Neelum Jhelum Power project, the cost of which has risen several times from the originally estimated 84.5 billion rupees since it began in 2001, to 440 billion rupees and counting, because financial closure of the project has still not been done.
Work started on the new Benazir International Airport in Islamabad in 2007, at a project cost of 30 billion rupees. Outlay for the project has jumped to over 100 billion rupees – and it is still under construction. And another example of corruption is the Kachhi Canal project in Balochistan, which has been under construction for the last 10 years, with costs shooting up from the estimated 30 billion rupees to 102 billion rupees so far.
Allegations of irregularities and corruption were also made in the launching of the Metro Bus Project in Lahore, but all records of this project were burnt in a fire that mysteriously erupted in the Lahore Development Authority (LDA) premises in 2013. The Metro Bus Project in Rawalpindi was completed, but at an exorbitant cost, and one that was much higher than the cost of similar projects in other countries in the region. No inquiry was ever held.
These are just a few examples of the corruption Pakistan is being consumed by. A plethora of cases exist in which allegations of misuse of official authority for personal gains and plunder of state resources have been levelled against Nawaz Sharif and other leaders, including the bigwigs of the Pakistan People’s Party (PPP), but no agency has seriously and properly investigated these cases.
Given this track record, it might be too optimistic to expect that something meaningful will come out of the Supreme Court’s hearing of Panamagate. But with all the uncertainly, one thing is for sure: the court’s ruling will either change the way politicians and the government do business – or embolden them to loot and plunder state resources even more.