Friday, April 13, 2018

How Industrialized West Enables Corruption in Developing World

Some have called London the "Money Laundering Capital of the World" where corrupt leaders from developing nations use wealth looted from their people to buy expensive real estate and other assets. Private individuals and businesses from poor nations also park money in the west and other off-shore tax havens to hide their incomes and assets from the tax authorities in their countries of residence.

The multi-trillion dollar massive net outflow of money from the poor to the rich countries has been documented by the US-based Global Financial Integrity (GFI). This flow of capital has been described as "aid in reverse". It has made big headlines in Pakistan and elsewhere since the release of the Panama Papers and the Paradise Leaks which revealed true owners of offshore assets held by anonymous shell companies. Bloomberg has reported that Pakistanis alone own as much as $150 billion worth of undeclared assets offshore.

Politicians Dominate Off-shore Company Owners in Panama Leaks
Aid in Reverse:

In 2012, the latest year for which data is available, developing countries received $1.3 trillion, including all aid, investments, worker remittances, and other income from abroad. In that same year some $3.3 trillion flowed out of them. In other words, developing countries sent $2 trillion more to the rest of the world than they received, according to the data compiled by the US-based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics and reported by the UK's Guardian newspaper.

Laws in America and Europe allow the creation of anonymous shell companies. An anonymous shell company is a corporate entity that has disguised its ownership in order to operate without scrutiny from law enforcement or the public. These “phantom firms” can open bank accounts and wire money like any other company, making them a favorite tool for money launderers to hide their business and assets from authorities, according to the US-based Global Financial Integrity (GFI).

GFI estimates that developing countries have lost as much as $13.4 trillion through unrecorded capital flight since 1980. Bloomberg reports that Pakistanis own $150 billion worth of undeclared offshore assets, attributing this estimate to Syed Muhammad Shabbar Zaidi, a partner at Karachi-based A.F. Ferguson and Co. -- an affiliate of PricewaterhouseCoopers LLP.

Impact on Economic Growth:

There's a direct relationship between investment and GDP. Flight of capital reduces domestic investment and depresses economic growth in poor countries. Lower tax revenues also impact spending on education, health care and infrastructure, resulting in poor socioeconomic indicators.

In Pakistan, for example, it takes investment of about 4% of GDP to grow the economy by 1%. Lower levels of investments in the country has kept its GDP growth below par relative to the rest of South Asia.  Any reduction in the outflow of capital to offshore tax havens will help boost economic growth in Pakistan to close the gap with its neighbors, particularly Bangladesh and India whose economies are both growing 1-2% faster than Pakistan's.

Panama Papers Leak:

There is an entire industry made up of lawyers and accountants that offers its services to help hide illicit wealth. Mossack Fonseca, the law firm that made headlines with "Panama Leaks", is just one example of companies in this industry.

Mossack Fonseca's 11.5 million leaked internal files contained information on more than 214,000 offshore entities tied to 12 current or former heads of state, 140 politicians, including Pakistan's now ex Prime Minister Nawaz Sharif's family.  Icelandic Prime Minister resigned voluntarily and Pakistani Prime Minister was forced out by the country's Supreme Court.

The Panama list included showbiz and sports celebrities, lawyers, entrepreneurs,  businessmen, journalists and other occupations but it was heavily dominated by politicians.

War on Tax Evasion and Money Laundering: 

Organization of Economic Cooperation and Development (OECD), the club of world's rich industrialized nations, and some of its member states appear to be taking some steps to stem the global rising tide of tax evasion and money laundering.

OECD is promoting  enhanced co-operation between tax authorities through AEOI (Automatic Exchange Of Information) to bring national tax administrations in participating countries in line with the globalized economy.

Several countries, including the United Kingdom, are working on legislation forcing the disclosure of the ultimate beneficial owners of the properties held by anonymous shell companies. The new laws will establish publicly accessible registry of beneficial owners of real estate.

Tax Amnesty Schemes:

Developing countries are offering tax amnesty schemes to bring back the off-shore wealth to help their economies. Argentina and Indonesia did this recently.  Indonesia's tax amnesty in 2017 saw $330 billion worth of assets declared.   Pakistan is in trying to the do the same to help build its dollar reserves and expand its tax base.

Under Pakistan's announced tax amnesty, Pakistani citizens can declare previously undeclared foreign assets and still keep them abroad by paying 5% penalty for liquid assets and 3% penalty for real estate. Alternatively, they can declare and repatriate liquid assets to Pakistan by paying just 2% penalty.

The assets covered by the amnesty include "real estate, mortgaged assets, stock and shares, bank accounts, bullion, cash, jewels, paintings, accounts and loan receivables, beneficial ownership or beneficial interests or contribution in offshore entities and trusts."


Laws and practices in the West and other offshore tax havens encourage corruption in developing nations that results in net outflow of trillions from poor countries to the rich industrialized world, according to the US-based Global Financial Integrity (GFI). There are some efforts underway to stem this outflow. Pakistanis hold as much as $150 billion in undeclared assets overseas. The latest tax amnesty in Pakistan is an attempt to bring some of it back to the country, or at least collect 3-5% of it in the form of penalties.

Related Links:

Haq's Musings

South Asia Investor Review

Did Musharraf Steal Pakistani People's Money?

Pakistan Economy Hobbled By Underinvestment

Raymond Baker on Corruption in Pakistan

Nawaz Sharif Disqualified

Culture of Corruption in Pakistan

US Investigating Microsoft Bribery in Pakistan

Zardari's Corruption Probe in Switzerland

Politics of Patronage in Pakistan

Why is PIA Losing Money Amid Pakistan Aviation Boom?


Singh said...

Is it the West fault that much of the developing world is corrupt? Money, even corrupt money, chases returns, wherever it may be, either in the West or elsewhere.

Riaz Haq said...

Singh: "Is it the West fault that much of the developing world is corrupt? Money, even corrupt money, chases returns, wherever it may be, either in the West or elsewhere."

Aiding and abetting criminals from poor nations by helping them hide stolen assets is a crime in itself that the West is guilty of.

Ismael M. said...

This is unsurprising. Those in power will remain so at all cost and have no interest in the well being of the ordinary citizen. As long as the status quo is maintained, which the elites will go to any lengths to exploit and maintain, nothing will change.

It's so easy for Trump to increase the defence budget by a whopping $150 billion per year, but he cringes at programs that feeds pre-K kids for $2 billion per year.

Bush II increased the defence budget from $300 billion to $600 billion and we can see this country falling apart because of that disastrous policy. The same goes for all the dictators and autocrats around the world - they milk every avenue of revenue and then by properties around the world using these shell companies.

Ahmad F. said...

Why blame the West? The East is just as depraved and always was, centuries before the West arrived.

Corruption and exploitation and cruelty are innate to human nature.

You have to wonder why we are endowed with these attributes.

I guess it makes the game of life that much more interesting for someone to watch.

Riaz Haq said...

Ahmad: "Why blame the West?"

Because the West is complicit in the crimes of politicians in the 3rd world.

America and Europe help them in hiding stolen assets which is a crime in itself

Riaz Haq said...

Pakistan Seeks Up to $1 Billion From Expats as Reserves Dwindle
April 15, 2018, 11:48 PM PDT

Pakistan seeks manager for certificate sale due by June
South Asian nation foreign reserves falling fastest in Asia
Pakistan plans to raise as much as $1 billion from its diaspora in its latest effort to boost foreign-exchange reserves that have dropped close to the lowest in three years.

The government plans to launch an overseas certificate in U.S. dollars and rupees by June to raise between $500 million and $1 billion a year, Zafar Masud, director general of National Savings at the finance ministry, said by phone on Monday. Pakistan seeks bids for financial managers by April 30 for the transaction, he said.

“We were among the only few countries which didn’t have this product for expats,” said Masud. The sale will offer returns “better than what they’re getting in their home markets.”

Pakistan’s economy is facing headwinds before elections in July with foreign exchange reserves dropping at the fastest pace in Asia in the past year. The government also announced an amnesty offer this month that allows overseas Pakistanis to repatriate funds after paying a 2 percent cash tax. Islamabad decided not to issue international bonds after global rates spiked.

J. Khan said...

London is not only on top of the list in financial institution corruption but also top of the notch in other kinds of corruption. Since Tory government took over student unions are being suppressed so no one can raise the awareness. Apparently Tory government is trying to sell student loan to private entities. Some professional bodies are failing students in their final exams deliberately to make as much money out of them as possible before they graduate. List is endless in UK or west. No one cares about law or regulatory authorities in UK, why? because since Tory came to power they suspended legal aid for citizens, end result of that is that public and private sector is damn corrupt because they know ordinary citizen will not be able to sue them because of legal cost.

Recently it has been said in public media that in future if investigative bodies find out that any foreigner has any illegal money without proof of its origination. Then money will be taken away from that person to the British exchequer. I think its just a gimmick. Instead of saying that after investigation if money found to be illegal, UK will return the money to exchequer of that country where it belongs. UK wants to keep that money. If its implemented then its a double theft. Original looser's will be foreign countries and corrupts that will deposit that money in UK will only be collection agent for the sake of UK's benefit.

There is much more going on in UK, i think UK itself is corrupt from its very past and is also providing framework to others for the same. Majority of tax safe heavens fall under UK's control and they dont want to get rid of them because its beneficial for their economy.

Z Basha Jr said...

Riaz Sb, Did you manage to find more details of amnesty scheme? Is the risk worth taking in your opinion?

Riaz Haq said...

Sharif’s legal woes, which the veteran leader says are politically motivated, could further boost Khan in the run up to the elections as an anti-corruption court is due to soon deliver a verdict on another Sharif trial. Khan has predicted Sharif will be jailed before the polls, likely in July.

To dislodge Sharif’s Pakistan Muslim League-Nawaz (PML-N) party, Khan’s PTI will have to make inroads into Pakistan’s biggest province, which is home to 110 million people and a well-oiled PML-N electoral machine built over several decades.

With the red-brick minarets of Lahore’s Mughal-era Badshahi mosque in sight, Khan outlined a populist 11-point plan to usher in a new era of prosperity that he envisages for Pakistan after the general election at which he hopes to become prime minister.

“Today we are at crossroads,” said Khan, a former cricketing hero and founder of the Pakistan Tehreek-e-Insaf (PTI) party.

“It is time to change our destiny and think big.”

Khan told a boisterous crowd of about 100,000 people that Pakistan was “heading towards destruction” but his plan would help forge a fairer society and steer Pakistan towards a path first envisaged by the nation’s father, Muhammad Ali Jinnah.

Khan said that if elected he would build schools and “world class hospitals” across the country, while farmers would get cheap loans. He also pledged to build 5 million homes for the poor, which would create jobs and stimulate the economy.

After spending much of his post-cricket political career on the fringes, Khan has in recent years emerged as a key challenger to Sharif, a three-time prime minister who was ousted by the Supreme Court last year but whose party retains power.

Sharif’s legal woes, which the veteran leader says are politically motivated, could further boost Khan in the run up to the elections as an anti-corruption court is due to soon deliver a verdict on another Sharif trial. Khan has predicted Sharif will be jailed before the polls, likely in July.

Khan, who has sought to shed his playboy image of the past, is betting that his anti-corruption message, coupled with anti-America rhetoric and a projecting image of pious devotion, will propel him into power in the deeply conservative Muslim nation of 208 million people.

In Lahore, Khan’s message resonated with many of the bandana-wearing young men waving PTI’s green and red-color flags.

“Imran Khan has given us the slogan of ‘New Pakistan’ and that’s what we want,” said Shahzad Khan, 17, in reference to the “Naya Pakistan” slogan used by PTI.

Sharif has accused Khan of being a puppet of the powerful military establishment that has a history of meddling in Pakistani politics. Khan denies colluding with the army and the military denies interfering in modern-day politics.

Sharif was the chief minister of Punjab in the 1980s and his younger brother Shahbaz has ruled the province since 2008, entrenching PML-N’s support across the wealthiest of Pakistan’s four provinces.

“We feel they are weakening with every day,” Khan told foreign journalist ahead of the rally.

He added that unlike in 2013, when PML-N swept to power, this time around many of the so-called “electables” - politicians who carry large rural vote banks due to their status as tribal elders, feudal lords and heads of various clans - will switch allegiances away from PML-N to PTI.

“The electables...weigh things up, they want to be on the winning side,” Khan told foreign media.

But at the Lahore rally, Khan shunned talk of electables and focused on promising a new dawn for Pakistan’s poor.

“This system cannot run unless we stand up with the downtrodden,” he said. “I am standing with you, it is time of make new Pakistan.”

Riaz Haq said...

With new order on unexplained wealth, UK can seize assets of corrupt politicians, criminals
Property in London and other major cities in the United Kingdom is said to be the major destination of corrupt cash.

Corrupt foreign politicians and criminals who launder an estimated £90 billion every year through the United Kingdom will need to explain their wealth under a new law called Unexplained Wealth Order (UWO) that came into force this week, or face seizure.

Property in London and other major cities in the United Kingdom is said to be the major destination of corrupt cash. The British news media mention Russian oligarchs in this regard, but the measure applies toindividuals from all countries.

Transparency International UK has identified £4.4 billion worth of property in the UK that may be the target of UWOs. Five properties it suspects had been bought using corrupt wealth includes two by former Pakistan prime minister Nawaz Sharif in London.

Provided under the Criminal Finance Act, the UWO allows authorities to freeze and recover property if individuals are unable to explain how they acquired assets in excess of £50,000. Previously, British authorities had few powers to act unless the individuals had a conviction in the country of origin.

Ben Wallace, security minister, told The Times on Saturday that he wanted the “full force of the government” to bear down on criminals and corrupt politicians using Britain as a playground and haven: “When we get to you we will come for you, for your assets and we will make the environment that you live in difficult”.

“If they are an MP in a country where they don’t receive a big salary but suddenly they have a nice Knightsbridge townhouse worth millions and they can’t prove how they paid for it, we will seize that asset, we will dispose of it and we will use the proceeds to fund our law enforcement,” he added.

Rachel Davies Teka of anti-corruption Transparency International UK, said: “The introduction of UWOs is a significant moment in the fight against dirty money flowing into the UK. They will allow law enforcement to much more easily investigate assets that are highly likely to have been bought using corrupt money, often stolen from populations in some of the poorest parts of the world.”

“From Russia to Nigeria to the Middle East it is no secret that corrupt officials have channelled ill-gotten funds into the UK via the property market”.

Riaz Haq said...

Confessions of an Economic Hitman by John Perkins

The Book in Three Sentences
The United States is engaging in a modern form of slavery by using the World Bank and other international organizations to offer huge loans to developing nations for construction projects and oil production. On the surface this appears to be generous, but the money is only awarded to a country if it agrees to hire US construction firms, which ensures a select few people get rich. Furthermore, the loans are intentionally too big for any developing nation to repay and this debt burden virtually guarantees the developing nation will support the political interests of the United States.

Confessions of an Economic Hitman summary
This is my book summary of Confessions of an Economic Hitman by John Perkins. My notes are informal and often contain quotes from the book as well as my own thoughts. This summary also includes key lessons and important passages from the book.

“Few swim in riches and the majority drown in poverty, pollution, and violence.”
The top 1 percent of third world households account for 70 to 90 percent of all private financial wealth and real estate ownership in their country.
There are (were?) a famous group of pirates in Indonesia known as the Bugi. They so terrorized early European sailors that the sailors came home and told their children, “Behave yourselves or the Bugimen will get you.” Crazy origin of the phrase.
“The beacon shines on a destiny that is not always one we envision.”
The imperialist and capitalist drive is so strong and so pervasive that it has become the primary cause of most wars, pollution, starvation, species extinctions, and genocides.
Life is composed of a series of coincidences over which we have no control. Once we are presented with such coincidences, we gave choices. How we respond, the actions we take in the face of coincidences, makes all the difference.
How many decisions (including ones of great historical significance that impact millions of people) are made by men and women who are driven by personal motives rather than by a desire to do the right thing?
This book offers a startling reminder that debt is the new form of prison. Entire countries are handicapped by their debt to the United States and other major players.
Lesson: avoid debt at all costs of you want to remain free.
We decry slavery, but our global empire enslaves more people than the Romans and all other colonial powers before us.

Riaz Haq said...

#British National #Crime Agency (NCA) warns that #UK remains prime destination for foreign corrupt person and politicians and their families to launder money, with biggest sources of #corrupt investment being #Russia, #Nigeria, #Pakistan. #MoneyLaundering

British businesses are at risk of being drawn into corrupt practices after the UK leaves the European Union in a Brexit-driven surge in crime, law enforcement officials have warned.

UK-based companies looking to increase trade with countries outside the EU are more likely to come into contact with corrupt markets, particularly in the developing world, the National Crime Agency (NCA) said.

Brexit will also provide greater opportunities for criminals to launder money, such as investing dirty cash in British businesses that deal in high-value items such as gems and precious metals, the agency said.

In its annual assessment of serious and organised crime, the NCA said criminals would take advantage of a redesigned customs setup when the UK leaves the EU, as well as any gaps in intelligence-sharing between countries, which could lead to international fugitives evading capture.

“As the UK moves towards exiting the EU in March 2019, UK-based businesses may look to increase the amount of trade they have with non-EU countries,” the report said. “We judge this will increase the likelihood that UK businesses will come into contact with corrupt markets, particularly in the developing world, raising the risk they will be drawn into corrupt practices.”

The NCA said the result of the EU referendum would be “a key driver of uncertainty” in the next five years.

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Nikki Holland, the director of investigations for the National Crime Agency, said: “We know the criminals will adapt to what the arrangements are and exploit any loopholes. We think while there is uncertainty … the criminals will be waiting to see what the opportunities and loopholes are, to get their goods across the border during any confusion.”

As well as the NCA, police forces, MI5, MI6, GCHQ, the Border Force, immigration enforcement and the Prison Service all contributed to the assessment.

Law enforcement agencies, including the NCA, have previously warned of the risks to intelligence sharing posed by the vote to leave the EU.

Lynne Owens, the NCA director general, has , including use of the European arrest warrant and membership of Europol, amid concerns about the impact of leaving the EU.

Membership of the EU gives the NCA and UK police forces access to tools that allow them to share intelligence quickly and efficiently with European counterparts.

Before the referendum, former security chiefs, including the former head of MI5 Eliza Manningham-Buller and the former head of MI6 Sir John Sawers, had said that voting remain was in the best interests of the country’s security.

Elsewhere in the report, the NCA warned that the UK remained a prime destination for foreign corrupt and politically exposed people to launder money, with the biggest sources of corrupt investment being Russia, Nigeria and Pakistan.

“Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds,” the report said.

The NCA said that the scale of money laundering in the UK annually is in the billions of pounds.

The agency also flagged an increase in criminal gunfire on the streets of Britain. The report said the majority of weapons had not been previously used, which suggested an easy flow of illegal weapons into the UK.

Riaz Haq said...

Panama Papers: New leak shows Pak clients struggling to avoid trouble

A fresh batch of leaked documents of Panamanian law firm, Mossack Fonseca, reveals how panic triggered after the release of Panama Papers among the firm and its clients; several of them were Pakistanis who had to change their plans of hiding wealth abroad amid fear of yet another leak.

A person (Zaka Ashraf) nominated by PPP for interim PM, who had also been chairman of the Pakistan Cricket Board (PCB), abandoned the process of opening two accounts in Swiss banks after the Panama Papers through his two benami shell companies which came to surface earlier but their ownership was unknown.

Former attorney general Justice (R) Malik Qayyum disassociated himself from a benami company. Its Swiss bank account had Qayyum and his wife as signatories. Samina Durrani, the mother of Tehmina Durrani, “gifted” one offshore company holding property in the UK, to Asimullah Durrani, her son, a few months after the release of Panama Papers.

Meanwhile, a Pakistani banker in the Middle East, Saleem Sheikh, was found seeking explanation from the law firm about the steps taken to prevent any embarrassment in future through yet another leak.

Instead of replying to this concern, Mossack Fonseca served him notice in April 2017 together with other Pakistani passport holders having companies in British Virgin Islands to change their registered agent as “an administrative decision has been taken to resign as registered agent/office for companies with links to high risk countries.” Pakistan is among those 21 countries declared prohibited for business by BVI in April 2017. Nielsen and Nescoll, the offshore companies owned by Sharif family had changed their agent in 2014 hence no detail was found in the latest leak.


Although Mossack Fonseca announced its closure in March this year, it started resigning in April as registered agent of clients from Pakistan which is “on our current prohibited list of countries.” “Kindly however advise the client that an administrative decision was made after conducting a risk assessment to cease acting as agent for companies associated with Pakistan currently, due to the elevated country risk. “Accordingly, we suggest that they make arrangements to change the registered agent/office of the company soonest,” read an email.

There are another 20 countries which have been declared ‘High Risk’ due to money laundering and terror financing. Pakistan has been flagged due to terror financing. Other high risk countries are Afghanistan, Belarus, Bosnia, Central African Republic, Cuba, Congo, Eretria, Iran, Iraq, Lebanon, Libya, North Korea, Serbia, Sierra Leone, Somalia, South Sudan, Sudan, Syria, Yemen and Zimbabwe.

Riaz Haq said...

By the close of #Pakistan's latest #Tax #Amnesty Scheme on 31st July 2018, declarations from 5,363 entities disclosed #foreign assets worth US$ 8.1 billion. Pakistanis' total hidden foreign assets worth estimated around $350 billion. #MoneyLaundering

Authorities probing illegal foreign accounts and properties of thousands of Pakistanis made shocking revelations on Tuesday that the volume of these assets hidden in different tax havens abroad reached up to US$350 (Rs43 trillion).

Interestingly, the authorities also revealed for the first time that only accounts and properties worth Rs1,003 billion (US$8.1 billion) have been declared by over 5, 300 entities or individuals, under the Tax Amnesty Scheme 2018 over the past three months.

“By the close of Amnesty Scheme 2018, on 31st July 2018, declarations from 5,363 entities (individuals/companies) had disclosed foreign assets worth Rs1,003 billion (US$ 8.1 billion), with major share of declared assets located in UAE. Properties/accounts holders in other tax-haven countries benefited only marginally from this scheme,” revealed the confidential details submitted with the Supreme Court.

The declared amount of US$8.1 billion is around 2.3% of overall illegal accounts worth US$350 by thousands of Pakistanis who allegedly violated national laws while establishing their assets abroad.

“Total volume of Dubai properties is over Rs4,240 billion with annual investment and growth of Rs220 billion where Pakistani property agents/investors were counting them as more than 5,000 individuals/entities,” suggested the details Geo News exclusively collected from the Federal Investigation Agency, State Bank of Pakistan, Federal Board of Revenue, Securities and Exchange Commission of Pakistan, Finance Division & other financial institutions.

The shocking details also revealed that British government has listed Pakistan among top 3 money laundering source countries, after Nigeria and Russia. Institutions have also cited reference of British National Crime Agency's 2018 report.

About top tax haven, the concerned institutions have also claimed that Pakistani citizens have stashed US$100 billion in United Kingdom and United States of America, with additional amount of millions of dollars parked in real estate sectors. They have quoted findings of Mr. Shabbar Zaidi of AF Ferguson, Pakistan in this report. An estimated over US$200 billion were stashed by Pakistanis in Switzerland, the report revealed, quoting statement of Micheline Calmy-Rey/Swiss Foreign Minister in 2014.

The shocking details continued to reveal that millions of dollars have also been stashed by hundreds of Pakistanis in Hong Kong, British Virgin Islands, Bahamas Channel Island Seychelles and other tax havens for corporate vehicles involved in money laundering.

About reasons for poor control over money laundering and difficulties in investigation, the institutions have told the apex court that the weak legislative instruments remain a stumbling block in the way to take action against these individuals, who violate national laws while stashing billions of rupees abroad illegally.

The FIA says that Foreign Assets Declaration Regulation, 1972 is a non-declaration and not defined as a predicate offence, and the authority was not authorised to investigate.

Foreign Exchange Regulation ACT, 1947, Income Tax Ordinance 2001, Section 111-(4) protect sources if unexplained income from foreign remittance and Pakistan Economic Reforms ACT, 1992 Section-4 and 5 also protect sources of unexplained income from foreign remittance, the FIA drew attention of top court toward this matter.

Riaz Haq said...

Abraaj's Naqvi gave $20 million to #NawazSharif via middleman Navaid Malik for approval to sell #KElectric to #Shanghai Electric. “This document is explosive in the wrong hands. Abraaj and K-Electric shouldn’t be named in the document" #Pakistan via @WSJ

Around the same time, Abraaj was looking to sell its stake in K-Electric Ltd., the electricity provider to Karachi. Mr. Naqvi tried to secure the cooperation of Pakistan’s then-prime minister, Nawaz Sharif, and his brother Shehbaz, offering a $20 million payment to businessman Navaid Malik for his help in getting it, according to company emails and people familiar with the situation. The government owns a stake in K-Electric and its approval would be required for the sale to go through.

Shehbaz was “willing to give a strong endorsement” of the deal to Chinese bidders, Mr. Malik said, according to an October 2015 email to Mr. Naqvi from Abraaj partner Omar Lodhi. Mr. Malik said it was “important for him to share every detail with the brothers and get their blessings as well as their instructions as to how this money should be distributed,” such as “a portion to charity” or “a portion to the election fund kitty,” Mr. Lodhi wrote in the email.

When Mr. Naqvi emailed Mr. Lodhi about the $20 million contract for Mr. Malik in June 2016, he wrote, “This document is explosive in the wrong hands.” Abraaj and K-Electric shouldn’t be named in the document, he wrote: “Keep it generic.”

“Noted,” Mr. Lodhi responded. Mr. Malik didn’t respond to requests for comment.

Riaz Haq said...

The Make or Break Battle of #Pakistan Between #Islamabad and #Sind by @SSEHBAI1. #Zardari's free-for-all party, nay an orgy, on state account and all were enjoying as if they would never be caught. #PPP #Corruption #fakeaccounts #MoneyLaundering Feeling confident, though politically cut to a
fraction of what BB’s PPP once looked like,
Zardari went on a spree in the spheres that
he still controlled --- Sindh Government,
some banks and industrial units he had
created as part of the master plan of his
money laundering scheme, many front men,
even rickshaw drivers and ice cream
The JIT has detailed the flow of money
from one end to the other, with bank
accounts, vouchers, subsidies to his own
industrial units and so on. The scheme
expanded in 4 to 5 years to a global network
that had successfully stolen government
funds, hijacked projects and recycled them
into mega showpieces like the 64-storey
Bahria skyscraper in Karachi, vast lands
spreading on thousands of acres given to
Malik Riaz, free palaces gifted to him in
return and on and on. Even birthday cakes
were brought from fake accounts, as were
lunches and dinners for Bilawal House

It was a free-for-all party, nay an orgy, on
state account and all were enjoying as if they
would never be caught.
Luckily or unluckily for PPP, Panama
happened and the so far frustrated and
almost defeated establishment that always
wanted to pounce on Nawaz and Zardari,
found a platform they could put their toes on.
Blunders and mistakes by Nawaz led to
his government and family sinking into the
Panama whirlpool day by day until his
government went down and his political
fortunes drowned with the Imran Khan
Nawaz was becoming history but Zardari
was rejoicing as if he would have a free
hand. Not so. Planners were waiting for the
first big fish to be netted so that they could
then go for the next one.
With Nawaz gone, Zardari was next and
the tons of evidence that had already been
gathered in years were waiting to be used.
Zardari’s luck and tricks had eluded the
sinkhole for way too long. No more.
As soon as the Supreme Court found that
the fake account cases could rope in Zardari,
they decided to expand the probe and bring

in ISI and others. That was the moment
many had been waiting for years.
The data that they had to collect was
already with them, in raw shape, which
Zardari had never allowed to be presented in
any court.
Quickly the JIT jumped on all the records,
sent delegations abroad to confirm and tie up
loose ends, grab those who had been used
as front men, many of whom were already in
their custody and had deposed like Lyari’s
Uzair Baloch, Anwar Majid and his family, Dr
Asim Hussain, Hussain Lawai and others.
Tons of facts existed and had simply to be
collated, confirmed and dots connected, T’s
needed to be crossed. Much of what the JIT
needed was achieved quickly.
When the report was sent in to SC in 26-
volumes, it was a miraculous job.
Zardari was expecting something nasty but
not a nuclear bomb like this.
He went ballistic and was assured by paid
and unpaid loyal attorneys that he should not
panic, as he will get time, like Nawaz.
The PPP leadership was then called in and
asked to stand up. Shamelessly and almost
helplessly the leadership had no option but to
buckle in and start speaking for the criminals

Riaz Haq said...

#WorldBank payouts to 22 developing nations during 1990-2010 were followed by a jump in their rulers' deposits in overseas heaven. #Oil price increases are followed by a spike in deposits held by rulers in financial havens. #corruption #MoneyLaundering

When autocratic, oil-rich nations enjoy a windfall from higher crude prices, where does the money go? One place to look is Swiss bank accounts. Sure enough, an increase in oil prices is followed by a spike in deposits held by these countries in financial havens, according to a 2017 paper by Jorgen Juel Andersen of bi Norwegian Business School, Niels Johannesen of the University of Copenhagen and their co-authors.

When Mr Johannesen presented this result at the World Bank in 2015, the audience included Bob Rijkers, a member of the bank’s research group. The two of them joined forces with Mr Andersen to investigate if something similar happened after another kind of windfall: infusions of aid from foreign donors. Their conclusion was dispiriting. World Bank payouts to 22 aid-dependent countries during 1990-2010 were followed by a jump in their deposits in foreign financial havens. The leaks averaged about 5% of the bank’s aid to these countries.

Riaz Haq said...

Income #tax collection from return filers in #Karachi was Rs 573 billion for the tax year 2018 followed by Rs 204 billion from #Islamabad, Rs 200 billion from #Lahore, Rs 35 billion from Rawalpindi, and Rs 16 billion from #Faisalabad. #Pakistan #revenue

The income tax collection from return filers in Karachi remained the highest during Tax Year 2018, followed by Islamabad, Lahore, Faisalabad and Rawalpindi. The Federal Board of Revenue (FBR) has conducted a city-wise tax analysis of the Tax Directory 2018 having data of income tax return filers, and tax deposited in each city for the year ended June 30th, 2018.

The FBR has shared tax details of all major cities, small cities and areas adjacent to border areas of Pakistan including tribal areas.

The FBR analysis, "Tax Collection from Major Cities" revealed that the income tax collection from return filers in Karachi was Rs572,594,396,386 for the tax year 2018 followed by Rs204,148,673,059 from Islamabad, Rs200,717,435,894 from Lahore, Rs35,170,187,615 from Rawalpindi, and Rs16,264,148,003 from Faisalabad. The city-wise data of Karachi disclosed that administratively, the FBR had divided the coastal city into five areas.

Total collection from Karachi stood at Rs572,594,396,386.

Breakup of collection from the commercial hub of the country revealed that the tax from Karachi was Rs209,107,138,348; Karachi Central Rs9,059,371,508; Karachi East Rs34,092,500,901; Karachi South Rs114,229,955,253, and Karachi West Rs28,891,487,111.

City-wise income tax data revealed that filers from Lahore deposited Rs200,717,435,894 in tax.

Breakup of collection from the provincial capital of Punjab reveals that the collection from Lahore was Rs180,580,693,868; Lahore Cantt Rs5,270,469,564, and Lahore City Rs14,866,272,462, during this period.

The income tax collection from return filers in Rawalpindi amounted to Rs35,170,187,615 for the tax year 2018. Malir contributed Rs29,374,153,827 as tax from the income tax return filers falling within the jurisdiction of that area.

Multan city contributed Rs12,772,888,239, and Sahiwal contributed Rs1,770,291,678 as taxes from the return filers in the area. The income tax collection from Gujranwala city was Rs7,926,264,130, during the tax year 2018.

The FBR collected Rs4,499,262,113 from income tax return filers of Sialkot.

Tax collection from Abbottabad stood at Rs1,610,871,493, and the FBR collected Rs2,481,243,943 in tax from Bahawalpur.

The FBR collected Rs6,357,384,959 tax from Dera Ghazi Khan.

From Kohat, the FBR collected Rs1,640,625,913 as tax from the income tax return filers during tax year 2018.

Tax collection from North Waziristan Agency was Rs1,119,980, and tax collection from Okara Rs1,081,818,348.

The FBR has collected Rs13,643,621,461 from Peshawar during tax year 2018.

Collection of tax from Quetta stood at Rs10,052,581,291.

As per the FBR data, the tax collection from Sargodha was Rs2,210,683,221, and Rs2,611,985,052 from Sheikhupura.

The income tax return filers in Sukkur contributed income tax of Rs3,574,079,338.

The city of Haripur contributed Rs1,706,260,030 from the income tax return filers.

Total income tax collection from the return filers of Hyderabad amounted to Rs4,065,622,573.

Breakup of Hyderabad, as per the FBR data, revealed that Hyderabad contributed Rs2,502,654,699, and Hyderabad City contributed Rs1,562,967,874.

The income tax return filers in Taxila contributed Rs1,251,185,013 as income tax during tax year 2018, and return filers in Thatta deposited tax of Rs1,014,821,378 during the period.

Riaz Haq said...

A sample of 29 transactions in #FinCENFiles that shows how suspicious transfers (#moneylaundering) to and from #Pakistan
$ 1,942,560
$ 452,000
Follow the Money
* Data represents a fraction of the total transactions found in the FinCEN files.

The data in the FinCEN Files transactions map contains information on more than $35 billion in transactions dated from 2000-2017 that were flagged by financial institutions as suspicious to United States authorities. The map only displays cases where sufficient details about both the originator and beneficiary banks were available, and is designed to illustrate how potentially dirty money flows from country to country around the world, via U.S.-based banks. The data in this map represents a fraction of the more than $2 trillion worth of transactions found in the FinCEN Files.

This map also provides information about the U.S.-based “correspondent” banks that allow financial institutions in more than 150 countries and territories to process payments in U.S. dollars.

The FinCEN Files is a cache of financial intelligence reports that reveals the role of global banks in industrial-scale money laundering – and the bloodshed and suffering that flow in its wake.

The records include more than 2,100 suspicious activity reports filed by nearly 90 financial institutions to the United States’ Financial Crimes Enforcement Network, known as FinCEN. The documents were shared by BuzzFeed News with ICIJ and 108 media partners in 88 countries and include information on more than $2 trillion in transactions dated from 1999-2017 that had been flagged by the banks as suspicious.

The reports reflect the private concerns of global bank money-laundering compliance officers. The SARs include a narrative along with attached spreadsheets of sometimes hundreds of lines of raw transaction data.

Riaz Haq said...

#TransparencyInternational #UK Head : “Foreign politicians with convictions relating to corruption should not enjoy impunity in Britain. Nor should their unexplained wealth, stashed in luxury London properties, fall out of the reach of law enforcement"

Mr Sharif “has been responsible for pillaging the state and I trust that you will be supportive of our efforts to bring those responsible for corruption to account”, Mr Khan’s adviser, Mirza Shahzad Akbar, wrote to Ms Patel on October 5.

After the Panama Papers revealed hidden assets belonging to Mr Sharif’s family, he resigned as prime minister in 2017. The following year a Pakistan court sentenced him to seven years’ imprisonment for corruption. He has claimed that this and other corruption cases against him are politically motivated.

In November 2019 he flew to London after the Pakistan authorities granted him leave to travel abroad for eight weeks to seek treatment for various conditions. He sought an extension of his temporary release but the Pakistan authorities refused on the grounds that he had offered inadequate medical evidence and ordered Mr Sharif to return home.

According to records submitted to the Pakistan authorities, he has given as his London address the very flat on London’s opulent Park Lane that led to his downfall. His family’s ownership of the flat was exposed by the leak of secret files from the Panama law firm Mossack Fonseca.

The letter to Ms Patel urges her to use her “extensive powers” to deport Mr Sharif, arguing she is “duty bound” to do so. It cites immigration rules that criminals sentenced to four years or more must be refused leave to remain in the UK. A Pakistan court has issued a warrant for Mr Sharif’s arrest, the letter adds.

A Pakistan official said the UK had not yet formally responded. The Home Office declined to comment.

“Foreign politicians with convictions relating to corruption should not enjoy impunity in Britain. Nor should their unexplained wealth, stashed in luxury London properties, fall out of the reach of law enforcement,” said Daniel Bruce, head of Transparency International UK.

“The UK government should work constructively with democratic countries such as Pakistan to uphold the rule of law. Action should also be taken to seize and return illicit assets held here in Britain in order to deliver justice for the victims of corruption. Failure to act on cases such as this, earns the UK an unwelcome reputation as a safe haven for dirty money.”

Ahmed said...


I haven’t heard of America being involved in the cases of money laundering ? It is either the banks of England and Europe where the politicians of developing countries keep their money

Riaz Haq said...

HOUSE OF GRAFT: Tracing the Bhutto Millions -- A special report.; Bhutto Clan Leaves Trail of Corruption

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.

The documents also revealed the crucial role played by Western institutions. Apart from the companies that made payoffs, and the network of banks that handled the money -- which included Barclay's Bank and Union Bank of Switzerland as well as Citibank -- the arrangements made by the Bhutto family for their wealth relied on Western property companies, Western lawyers and a network of Western friends.

As striking as some of the payoff deals was the clinical way in which top Western executives concluded them. The documents showed painstaking negotiations over the payoffs, followed by secret contracts. In one case, involving Dassault, the contract specified elaborate arrangements intended to hide the proposed payoff for the fighter plane deal, and to prevent it from triggering French corruption laws.