Corruption charges against Benazir Bhutto
Encyclopedia
After the dismissal of Bhutto's first government on August 6, 1990 by President Ghulam Ishaq Khan on grounds of corruption, the government of Pakistan issued directives to its intelligence agencies to investigate the allegations. After the fourth national elections, Nawaz Sharif became the Prime Minister and intensified prosecution proceedings against Bhutto. Pakistani embassies through western Europe, in France, Switzerland, Spain, Poland and Britain were directed to investigate the matter. Bhutto and her husband faced a number of legal proceedings, including a charge of laundering money through Swiss banks
. Though never convicted, her husband, Asif Ali Zardari
, spent eight years in prison on similar corruption charges. After being released on bail in 2004, Zardari suggested that his time in prison involved torture; human rights groups have supported his claim that his rights were violated.
A 1998 New York Times investigative report claims that Pakistani investigators have documents that uncover a network of bank accounts, all linked to the family's lawyer in Switzerland, with Asif Zardari as the principal shareholder. According to the article, documents released by the French authorities indicated that Zardari offered exclusive rights to Dassault, a French aircraft manufacturer, to replace the air force's fighter jets
in exchange for a 5% commission to be paid to a Swiss corporation controlled by Zardari. The article also said a Dubai company received an exclusive license to import gold into Pakistan for which Asif Zardari received payments of more than $10 million into his Dubai-based Citibank
accounts. The owner of the company denied that he had made payments to Zardari and claims the documents were forged.
Bhutto maintained that the charges levelled against her and her husband were purely political. An Auditor General of Pakistan
(AGP) report supports Bhutto's claim. It presents information suggesting that Benazir Bhutto was ousted from power in 1990 as a result of a witch hunt approved by then-president Ghulam Ishaq Khan. The AGP report says Khan illegally paid legal advisers 28 million rupees to file 19 corruption cases against Bhutto and her husband in 1990–92.
Yet the assets held by Bhutto and her husband continue to be scrutinized and speculated about. The prosecutors have alleged that their Swiss bank accounts contain £740 million. Zardari also bought a neo-Tudor
mansion and estate worth over £4 million in Surrey
, England, UK. The Pakistani investigations have tied other overseas properties to Zardari's family. These include a $2.5 million manor in Normandy
owned by Zardari's parents, who had modest assets at the time of his marriage. Bhutto denied holding substantive overseas assets.
by Swiss authorities against Zardari. The Pakistani government had been conducting a wide-ranging inquiry to account for more than $13.7 million frozen by Swiss authorities in 1997 that was allegedly stashed in banks by Bhutto and her husband. The Pakistani government recently filed criminal charges against Bhutto in an effort to track down an estimated $1.5 billion she and her husband are alleged to have received in a variety of criminal enterprises. The documents suggest that the money Zardari was alleged to have laundered was accessible to Benazir Bhutto and had been used to buy a diamond necklace for over $175,000. The PPP has responded by flatly denying the charges, suggesting that Swiss authorities have been misled by false evidence provided by the Government of Pakistan.
On 6 August 2003, Swiss magistrates found Bhutto and her husband guilty of money laundering. They were given six-month suspended jail terms, fined $50,000 each and were ordered to pay $11 million to the Pakistani government. The six-year trial concluded that Bhutto and Zardari deposited in Swiss accounts $10 million given to them by a Swiss company in exchange for a contract in Pakistan. The couple said they would appeal. The Pakistani investigators say Zardari opened a Citibank account in Geneva in 1995 through which they say he passed some $40 million of the $100 million he received in payoffs from foreign companies doing business in Pakistan. In October 2007, Daniel Zappelli, chief prosecutor of the canton of Geneva
, said he received the conclusions of a money laundering investigation against former Pakistani Prime Minister Benazir Bhutto on October 29, but it was unclear whether there would be any further legal action against her in Switzerland.
said. Bhutto and Asif Ali Zardari allegedly received a 7.15% commission on the purchase through their front men, Jens Schlegelmilch and Didier Plantin of Dargal S.A., who received about $1.969 million for supplying 5,900 Ursus
tractors.
, a French military contractor. French authorities indicated in 1998 that Bhutto's husband, Zardari, offered exclusive rights to Dassault to replace the air force's fighter jets in exchange for a five percent commission to be paid to a corporation in Switzerland controlled by Zardari.
At the time, French corruption laws forbade bribery of French officials but permitted payoffs to foreign officials, and even made the payoffs tax-deductible
in France
. However, France changed this law in 2000.
and two other members, namely Faridullah Jamali and Jamshaid Ali Shah. During this investigation the committee Chairman Barjees Tahir summoned both the former President Farooq Leghari and former Prime Minister Benazir Bhutto along with others, and they were investigated. The case received extensive media coverage both inside and outside Pakistan. The recommendations of the committee, obtained from the file, are as follows:
6.1: That FIR be lodged against (1) Malik Allah Yar Khan of Kalabagh, (2) Zia Pervez Hussain, (3) and Dr M.A. Khan, and that criminal proceedings be instituted against them for defrauding the government.
6.2: That the amount of $2.168 million be recovered from Malik Allah Yar Khan, Zia Pervez Hussain and Dr M.A. Khan by attaching their properties etc. in Pakistan or abroad for this purpose. FIA may be directed to take steps to recover this money through Interpol, if necessary. Any banker or foreign national involved in this fraud may also be taken to task by the Federal Investigation Agency
.
6.3: That since Benazir Bhutto is clearly responsible for this loss to the exchequer as major decisions in respect of this contract were taken with her approval or direction and passed on to Cabinet Division through former PS PM (Ahmad Sadiq), FIR may be registered against her for causing loss to state by misuse of her authority as PM, and criminal proceedings be initiated.
6.4: That since Farooq Leghari
knows that his name has visibly come up in this case, and he has tried to plead innocent; and since it is unimaginable that those operating in this scandal could have easy access to the top bureaucrats like Cabinet Secretary, Principal Secretary to the Prime Minister
and even to the Prime Minister herself without the backing and active support of the President, FIR against him must also be registered and criminal proceedings initiated.
6.5: That as for the senior civil servants involved in the case, Ahmad Sadiq former PS PM, Humayun Faiz Rasul, and Sahibzada Imtiaz former Cabinet Secretary, no action can be taken against them at this stage as they already stand retired/superannuated.
The case was further referred to the National Accountability Bureau
in 2000-02 but no action was taken.
dealer in Western Asia was alleged to have deposited at least $10 million into one of Zardari's accounts after the Bhutto government gave him a monopoly
on gold
imports that sustained Pakistan's jewellery industry. The money was allegedly deposited into Zardari's Citibank
account in Dubai
. Pakistan's Arabian Sea
coast, stretching from Karachi
to the border with Iran
, has long been a gold smugglers' haven. Until the beginning of Bhutto's second term, the trade, running into hundreds of millions of dollars a year, was unregulated, with slivers of gold called biscuits, and larger weights in bullion, carried on planes and boats that travel between the Persian Gulf
and the largely unguarded Pakistani coast.
Shortly after Bhutto returned as prime minister in 1993, a Pakistani bullion trader in Dubai, Abdul Razzak Yaqub, proposed a deal: in return for the exclusive right to import gold, Razzak would help the government regularize the trade. In November 1994, Pakistan's Commerce Ministry wrote to Razzak informing him that he had been granted a license that made him, for at least the next two years, Pakistan's sole authorized gold importer. In an interview in his office in Dubai, Razzak acknowledged that he had used the license to import more than $500 million in gold into Pakistan, and that he had travelled to Islamabad
several times to meet with Bhutto and Zardari. But he denied that there had been any corruption or secret deals. "I have not paid a single cent to Zardari," he said. Razzak claims that someone in Pakistan who wished to destroy his reputation had contrived to have his company wrongly identified as the depositor. "Somebody in the bank has cooperated with my enemies to make false documents," he said.
Bhutto's niece and others have publicly accused Bhutto of complicity in the killing of her brother Murtaza Bhutto in 1996 by uniformed police officers while she was Prime Minister.
Despite numerous cases and charges of corruption registered against Bhutto by Nawaz Sharif between 1996 and 1999 and Pervez Musharraf
from 1999 till 2008, she was yet to be convicted in any case after a lapse of twelve years since their commencement. The cases were withdrawn by the government of Pakistan after the return to power of Pakistan Peoples Party
in 2008.
Banking in Switzerland
All banks in Switzerland are regulated by Swiss Financial Market Supervisory Authority , which derives its authority from a series of federal statutes...
. Though never convicted, her husband, Asif Ali Zardari
Asif Ali Zardari
Asif Ali Zardari is the 11th and current President of Pakistan and the Co-Chairman of the ruling Pakistan Peoples Party . He is also the widower of Benazir Bhutto, who served two nonconsecutive terms as Prime Minister....
, spent eight years in prison on similar corruption charges. After being released on bail in 2004, Zardari suggested that his time in prison involved torture; human rights groups have supported his claim that his rights were violated.
A 1998 New York Times investigative report claims that Pakistani investigators have documents that uncover a network of bank accounts, all linked to the family's lawyer in Switzerland, with Asif Zardari as the principal shareholder. According to the article, documents released by the French authorities indicated that Zardari offered exclusive rights to Dassault, a French aircraft manufacturer, to replace the air force's fighter jets
Fighter aircraft
A fighter aircraft is a military aircraft designed primarily for air-to-air combat with other aircraft, as opposed to a bomber, which is designed primarily to attack ground targets...
in exchange for a 5% commission to be paid to a Swiss corporation controlled by Zardari. The article also said a Dubai company received an exclusive license to import gold into Pakistan for which Asif Zardari received payments of more than $10 million into his Dubai-based Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
accounts. The owner of the company denied that he had made payments to Zardari and claims the documents were forged.
Bhutto maintained that the charges levelled against her and her husband were purely political. An Auditor General of Pakistan
Auditor General of Pakistan
The Auditor General of Pakistan or Auditor General is an government organization and the prime institution in the country for ensuring public accountability and fiscal transparency in governmental operations...
(AGP) report supports Bhutto's claim. It presents information suggesting that Benazir Bhutto was ousted from power in 1990 as a result of a witch hunt approved by then-president Ghulam Ishaq Khan. The AGP report says Khan illegally paid legal advisers 28 million rupees to file 19 corruption cases against Bhutto and her husband in 1990–92.
Yet the assets held by Bhutto and her husband continue to be scrutinized and speculated about. The prosecutors have alleged that their Swiss bank accounts contain £740 million. Zardari also bought a neo-Tudor
Tudor style architecture
The Tudor architectural style is the final development of medieval architecture during the Tudor period and even beyond, for conservative college patrons...
mansion and estate worth over £4 million in Surrey
Surrey
Surrey is a county in the South East of England and is one of the Home Counties. The county borders Greater London, Kent, East Sussex, West Sussex, Hampshire and Berkshire. The historic county town is Guildford. Surrey County Council sits at Kingston upon Thames, although this has been part of...
, England, UK. The Pakistani investigations have tied other overseas properties to Zardari's family. These include a $2.5 million manor in Normandy
Normandy
Normandy is a geographical region corresponding to the former Duchy of Normandy. It is in France.The continental territory covers 30,627 km² and forms the preponderant part of Normandy and roughly 5% of the territory of France. It is divided for administrative purposes into two régions:...
owned by Zardari's parents, who had modest assets at the time of his marriage. Bhutto denied holding substantive overseas assets.
Switzerland
On 23 July 1998, the Swiss Government handed over documents to the government of Pakistan which relate to corruption allegations against Benazir Bhutto and her husband. The documents included a formal charge of money launderingMoney laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
by Swiss authorities against Zardari. The Pakistani government had been conducting a wide-ranging inquiry to account for more than $13.7 million frozen by Swiss authorities in 1997 that was allegedly stashed in banks by Bhutto and her husband. The Pakistani government recently filed criminal charges against Bhutto in an effort to track down an estimated $1.5 billion she and her husband are alleged to have received in a variety of criminal enterprises. The documents suggest that the money Zardari was alleged to have laundered was accessible to Benazir Bhutto and had been used to buy a diamond necklace for over $175,000. The PPP has responded by flatly denying the charges, suggesting that Swiss authorities have been misled by false evidence provided by the Government of Pakistan.
On 6 August 2003, Swiss magistrates found Bhutto and her husband guilty of money laundering. They were given six-month suspended jail terms, fined $50,000 each and were ordered to pay $11 million to the Pakistani government. The six-year trial concluded that Bhutto and Zardari deposited in Swiss accounts $10 million given to them by a Swiss company in exchange for a contract in Pakistan. The couple said they would appeal. The Pakistani investigators say Zardari opened a Citibank account in Geneva in 1995 through which they say he passed some $40 million of the $100 million he received in payoffs from foreign companies doing business in Pakistan. In October 2007, Daniel Zappelli, chief prosecutor of the canton of Geneva
Geneva
Geneva In the national languages of Switzerland the city is known as Genf , Ginevra and Genevra is the second-most-populous city in Switzerland and is the most populous city of Romandie, the French-speaking part of Switzerland...
, said he received the conclusions of a money laundering investigation against former Pakistani Prime Minister Benazir Bhutto on October 29, but it was unclear whether there would be any further legal action against her in Switzerland.
Poland
The Polish Government has given Pakistan 500 pages of documentation relating to corruption allegations against Benazir Bhutto and her husband. These charges are in regard to the purchase of 8,000 tractors in a 1997 deal. According to Pakistani officials, the Polish papers contain details of illegal commissions paid by the tractor company in return for agreeing to their contract. It was alleged that the arrangement "skimmed" Rs 103 mn rupees ($2 million) in kickbacks. "The documentary evidence received from Poland confirms the scheme of kickbacks laid out by Asif Zardari and Benazir Bhutto in the name of (the) launching of Awami tractor scheme", APPAssociated Press of Pakistan
Associated Press of Pakistan is a government-operated national news agency of Pakistan. It is not associated with the Associated Press agency .-Lack of financial resources:...
said. Bhutto and Asif Ali Zardari allegedly received a 7.15% commission on the purchase through their front men, Jens Schlegelmilch and Didier Plantin of Dargal S.A., who received about $1.969 million for supplying 5,900 Ursus
Ursus Tractor Factory
The Ursus Factory is a Polish producer of agricultural machinery located in Warsaw.- Early History :The Ursus Factory was founded in Poland in 1893 on 15 Siennej Street, Warsaw, by three engineers and four businessmen...
tractors.
France
Potentially the most lucrative deal alleged in the documents involved the effort by Dassault AviationDassault Aviation
Dassault Aviation is a French aircraft manufacturer of military, regional and business jets, a subsidiary of Dassault Group.It was founded in 1930 by Marcel Bloch as Société des Avions Marcel Bloch or "MB". After World War II, Marcel Bloch changed his name to Marcel Dassault, and the name of the...
, a French military contractor. French authorities indicated in 1998 that Bhutto's husband, Zardari, offered exclusive rights to Dassault to replace the air force's fighter jets in exchange for a five percent commission to be paid to a corporation in Switzerland controlled by Zardari.
At the time, French corruption laws forbade bribery of French officials but permitted payoffs to foreign officials, and even made the payoffs tax-deductible
Tax deduction
Income tax systems generally allow a tax deduction, i.e., a reduction of the income subject to tax, for various items, especially expenses incurred to produce income. Often these deductions are subject to limitations or conditions...
in France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
. However, France changed this law in 2000.
Helicopter scandal
In 1998-1999, an enquiry was conducted by the Public Accounts Committee (PAC) of the Parliament to investigate the matter regarding the purchase of the helicopter. The case involves defrauding substantive sum of $2.168 million and $1.1 million public money. The record shows that the case was not pursued properly nor diligently. FIR No 1 of 1998 was registered with Federal Investigation Agency State Bank Circle Rawalpindi on the complaint of Cabinet Division. Thorough investigation was conducted by the committee headed by Chaudhry Muhammad Barjees TahirChaudhry Muhammad Barjees Tahir
Ch. Muhammad Barjees Tahir is a prominent national politician and a parliamentarian from Pakistan Muslim League...
and two other members, namely Faridullah Jamali and Jamshaid Ali Shah. During this investigation the committee Chairman Barjees Tahir summoned both the former President Farooq Leghari and former Prime Minister Benazir Bhutto along with others, and they were investigated. The case received extensive media coverage both inside and outside Pakistan. The recommendations of the committee, obtained from the file, are as follows:
6.1: That FIR be lodged against (1) Malik Allah Yar Khan of Kalabagh, (2) Zia Pervez Hussain, (3) and Dr M.A. Khan, and that criminal proceedings be instituted against them for defrauding the government.
6.2: That the amount of $2.168 million be recovered from Malik Allah Yar Khan, Zia Pervez Hussain and Dr M.A. Khan by attaching their properties etc. in Pakistan or abroad for this purpose. FIA may be directed to take steps to recover this money through Interpol, if necessary. Any banker or foreign national involved in this fraud may also be taken to task by the Federal Investigation Agency
Federal Investigation Agency
The Federal Investigation Agency is an agency of Pakistan, under the Ministry of Interior, that serves as a federal criminal investigative body with one of the Directorate dealing as Pakistani body of Interpol. It has a wide role in anti-terrorism, anti-fascism, anti-corruption, human smuggling...
.
6.3: That since Benazir Bhutto is clearly responsible for this loss to the exchequer as major decisions in respect of this contract were taken with her approval or direction and passed on to Cabinet Division through former PS PM (Ahmad Sadiq), FIR may be registered against her for causing loss to state by misuse of her authority as PM, and criminal proceedings be initiated.
6.4: That since Farooq Leghari
Farooq Leghari
Sardar Farooq Ahmad Khan Leghari was the eighth President of Pakistan from November 14, 1993 until December 2, 1997...
knows that his name has visibly come up in this case, and he has tried to plead innocent; and since it is unimaginable that those operating in this scandal could have easy access to the top bureaucrats like Cabinet Secretary, Principal Secretary to the Prime Minister
Prime minister
A prime minister is the most senior minister of cabinet in the executive branch of government in a parliamentary system. In many systems, the prime minister selects and may dismiss other members of the cabinet, and allocates posts to members within the government. In most systems, the prime...
and even to the Prime Minister herself without the backing and active support of the President, FIR against him must also be registered and criminal proceedings initiated.
6.5: That as for the senior civil servants involved in the case, Ahmad Sadiq former PS PM, Humayun Faiz Rasul, and Sahibzada Imtiaz former Cabinet Secretary, no action can be taken against them at this stage as they already stand retired/superannuated.
The case was further referred to the National Accountability Bureau
National Accountability Bureau
The National Accountability Bureau is a federal executive agency of the Government of Pakistan, responsible and mandated for dealing with anti-corruption scandals, and also tasked with the gathering and managing the economic intelligence, and making efforts against the economic terrorism...
in 2000-02 but no action was taken.
Western Asia
In the largest single payment investigators have uncovered, a gold bullionGold as an investment
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
dealer in Western Asia was alleged to have deposited at least $10 million into one of Zardari's accounts after the Bhutto government gave him a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
on gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
imports that sustained Pakistan's jewellery industry. The money was allegedly deposited into Zardari's Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
account in Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
. Pakistan's Arabian Sea
Arabian Sea
The Arabian Sea is a region of the Indian Ocean bounded on the east by India, on the north by Pakistan and Iran, on the west by the Arabian Peninsula, on the south, approximately, by a line between Cape Guardafui in northeastern Somalia and Kanyakumari in India...
coast, stretching from Karachi
Karachi
Karachi is the largest city, main seaport and the main financial centre of Pakistan, as well as the capital of the province of Sindh. The city has an estimated population of 13 to 15 million, while the total metropolitan area has a population of over 18 million...
to the border with Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
, has long been a gold smugglers' haven. Until the beginning of Bhutto's second term, the trade, running into hundreds of millions of dollars a year, was unregulated, with slivers of gold called biscuits, and larger weights in bullion, carried on planes and boats that travel between the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
and the largely unguarded Pakistani coast.
Shortly after Bhutto returned as prime minister in 1993, a Pakistani bullion trader in Dubai, Abdul Razzak Yaqub, proposed a deal: in return for the exclusive right to import gold, Razzak would help the government regularize the trade. In November 1994, Pakistan's Commerce Ministry wrote to Razzak informing him that he had been granted a license that made him, for at least the next two years, Pakistan's sole authorized gold importer. In an interview in his office in Dubai, Razzak acknowledged that he had used the license to import more than $500 million in gold into Pakistan, and that he had travelled to Islamabad
Islamabad
Islamabad is the capital of Pakistan and the tenth largest city in the country. Located within the Islamabad Capital Territory , the population of the city has grown from 100,000 in 1951 to 1.7 million in 2011...
several times to meet with Bhutto and Zardari. But he denied that there had been any corruption or secret deals. "I have not paid a single cent to Zardari," he said. Razzak claims that someone in Pakistan who wished to destroy his reputation had contrived to have his company wrongly identified as the depositor. "Somebody in the bank has cooperated with my enemies to make false documents," he said.
Bhutto's niece and others have publicly accused Bhutto of complicity in the killing of her brother Murtaza Bhutto in 1996 by uniformed police officers while she was Prime Minister.
Despite numerous cases and charges of corruption registered against Bhutto by Nawaz Sharif between 1996 and 1999 and Pervez Musharraf
Pervez Musharraf
Pervez Musharraf , is a retired four-star general who served as the 13th Chief of Army Staff and tenth President of Pakistan as well as tenth Chairman of the Joint Chiefs of Staff Committee. Musharraf headed and led an administrative military government from October 1999 till August 2007. He ruled...
from 1999 till 2008, she was yet to be convicted in any case after a lapse of twelve years since their commencement. The cases were withdrawn by the government of Pakistan after the return to power of Pakistan Peoples Party
Pakistan Peoples Party
The Pakistan Peoples Party , is a democratic socialist political party in Pakistan affiliated with Socialist International. Pakistan People's Party is the largest political party of Pakistan...
in 2008.