Panama: Links to daylight Robbery By Brig (R) Samson Simon

Created on Tuesday, 11 July 2017 04:02 | 689 Views
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Panama Links to daylight Robbery By Brig R Samson Simon

Was Protection of Economic Reforms Act 1992 meant to build foreign exchange and kick start development?

I remember the discussions that followed after 1992. Many critics argued that the law would be misused for money laundering through Hawala and remittance cycles. At the heart of these arguments were mega projects with kickbacks. But the government maintained that money laundering and operating offshore businesses by Pakistanis without intimation to authorities under the operating laws remained a criminal offence. However loopholes facilitated laundering and evasion and there was no visible intent or action to stop it.

Another argument given by the government in 1992 was that it would facilitate investments in Pakistan and give a jump start to the economy. It further argued that the law was needed to circumvent shortage of foreign aid constrained by sanctions. So while the majority comprised account holders with overseas deposits through hard earning, a mafia began to thrive through collateral loans, revolving money through the Hawala process. These fake accounts were opened through official patronage and complicity of bank managers. Some of these shady characters were gratified with appointments post 2013. Rather than kick start the economy, the law resulted in Pakistan’s most dismal performance in years. GDP, Inflation and stagflation were at its worst while FCAs worth 11 Billion dollars evaporated in thin air at the cost of rupee-dollar parity. The criminal mind owes its exposure to only one man; the relentless Imran Khan.

Checking the Flight of Capital and Money Laundering

In 1995, the PPP government through State Bank F.E. Circular No. 11 March 15, 1995 placed restrictions on free flow of such accounts. These restrictions were imposed because FIA was investigating trails of some suspicious FCAs leading to offshore companies.

Therefore any transactions of suspicious accounts connected to any form of money laundering post March 1995 can be brought before the law.

In 2001, the Musharraf Government vide State Bank F.E. Circular No. 12 dated September 01, 2001 broadened this law with more restrictions. This again was for reasons. First, the military had asked the central bank to inquire into unprecedented remittances of dollars overseas post 1998 Indian nuclear explosions. Secondly, NAB investigations into Hudaibya case opened a Pandora’s Box.

Post 1995 and 2001, the source of funding can be challenged as criminal. It remains in the jurisdiction of courts and also the JIT appointed by the Supreme Court of Pakistan to probe into fake accounts involved in parking funds in offshore companies or taking loans against such accounts in local currencies leading to trails that connect to offshore businesses. According to latest laws, only those companies owned by residents are permitted that allow to repatriate profits, dividends and capital.

If Nawaz Sharif’s children had Pakistani nationality at the time these companies were owned are liable to violations from 1995 to 2000.

Did FCAs benefit the Economy?

The arguments of the PMLN government proved hallow and the economy plummeted. Economic indices from 1992-1998 indicate no spectacular growth. During PMLN rule, Pakistan registered a GDP of 7.7 in 1992, 1.758 in 1993, 1.014 in 1997, 2.55 in 1998 and 3.66 in 1999. Incidentally, 1992 surge to 7.7 took place before the Act was promulgated. Hence given the GDP indices, foreign currency account had a negative effect. Economy reached new lows; IMF intervened with structural adjustment and even challenged fudged figures. There was resurgence seen from 94-96 when PPP was in power that again plummeted to 1.014 in 1997 after they were dismissed. There was something fishy about PMLN handling of the economy and its growing businesses.

It is strange that when PMLN government froze FCAs in 1998, Pakistan’s growth stood at a dismal 2.55 while inflation stood well above 15. So what was this colossal amount of 11 billion dollars doing? In fact 11 Billion did not exist. Before May 27, the government was borrowing at much higher rates to enable the banks to en-cash foreign currency demands. The entire amount was already consumed on various accounts some related to corruption. Subsequently paper currency had to be issued devaluing the local currency exponentially. This was the darest of all daylight robberries.

Money Laundering and Corruption unfolds

When Benazir Bhutto returned to power in 1994, she launched an inquiry if malpractices in operations of FCAs existed. The interior Minister Major General Naseer Ullah Babar was given the responsibility to make discreet inquiries through Federal Investigation Agency.

In 1994, FIA discovered the first trail. In August 1992 a month after the promulgation of reforms, a trail leading to offshore companies appeared. This trail was a violation on two counts. First, it was a fake account and secondly it was linked to illegal activity. This fake account was maintained by Khalid Kayani in Habib Bank AG Zurich, Davis Road, Lahore and Bank of America, Lahore that led to Shamrock an offshore company established on 15 May 1992. Shamrock is owned by the Sharif Family as per FIA and NAB investigations and reinforced by disclosures of Panama Papers. The fact that transactions from fake accounts were never disowned by owners and operators of Shamrock and also link to Nielson Enterprises Limited and Nescoll Limited makes them complicit.

Further, if owners of these companies are British shed a motive on acquiring a new citizenship.

Another identifiable trail of 350,000 dollars was discovered. It led to Lloyds Bank to Hans Rudolf Wegmuller, a Director of Banque Paribas en Suisse Zurich who is also Director of Ansbacher Switzerland, a fiduciary company that acts on behalf of the Sharifs. The report revealed purchase of four luxury flats at Avenfield House, London through solicitors, namely Dibb Lupton Broomhead in 1993, 1995 and 1996. Wegmuller administered the four luxury flats, owned through two offshore companies called Nielson Enterprises Limited and Nescoll Limited, controlled by Urs Specker of Ansbacher Switzerland.

From a legal point, the transactions of 1995 and 1996 fall under the amended Reforms Act of 1995 and are a violation under law.

Why Hudaibya is the crucial link?

In his confessional statement before a magistrate in 2000, Ishaq Dar volunteered information on opening numerous FCAs in names of real or fake people ably supported by Saeed Ahmed later appointed President NBP. Many of the named witnesses like the Qazi family are alive and ready to testify. Loans against these accounts were siphoned into Hudaibya and through it into offshore acquisitions. Two decisions of British Courts substantiate and link Hudaibya to offshore companies.

First, Nescoll, incorporated on January 27, 1993, purchased flats 17 and 17-A of Avenfield House, Park Lane, London, on June 1, 1993, and July 23, 1996, respectively; and Nielson Holdings, incorporated on April 14, 1994, purchased flats 16 and 16-A of Avenfield House, Park Lane, London, on July 31, 1995.

Secondly, the UK High Court in the Hudaibya loan default case on November 5, 1999 attached the properties of flat 16, flat 16-A, flat 17, flat 17-A of Avenfield House to the UK Bank. Once the loan was paid, the properties were released.

The major beneficiary of the ouster of Benazir Bhutto in 1996 was Nawaz Sharif. As her investigators were closing on Hudaibya, she was removed. The primary reason why Nawaz Sharif made a deal with President Musharraf was to close this case. Though the NAB did try reviving the case in 2007, these were quashed by Chaudary courts honing on the persons of Chairmen NAB, SECP and Governor State Bank. The ECP despite being in possession of information showed no spine in 2012-13.

If the JIT and Supreme Court of Pakistan corroborate these crucial links, the party of broad daylight robbery will be over.