Saturday, May 19, 2018

British Government Lists Pakistan Among Top 3 Money Laundering Sources

British National Crime Agency (NCA) has identified Pakistan, Nigeria and Russia as the top source countries for money laundering in the United Kingdom, according to British media reports. The NCA report says the UK is a prime destination for foreign corrupt and politically exposed people (politicians and their families) to launder money.

NCA Report Highlights:

In its annual assessment of serious and organized crime, the NCA says: “Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds....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....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.”

Here are some of the key excerpts of the UK NCA report titled "National Strategic Assessment of Serious and Organized Crime 2018":

1. "The UK is a prime destination for foreign corrupt PEPs (politically exposed persons, a euphemism for politicians and their family member) to launder the proceeds of corruption. Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds. The true scale of PEPs investment in the UK is not known, however the source countries that are most commonly seen are Russia, Nigeria and Pakistan".

2. "The overseas jurisdictions that have the most enduring impact on the UK across the majority of the different money laundering threats are: Russia, China, Hong Kong, Pakistan, and the United Arab Emirates (UAE). Some of these jurisdictions have large financial sectors which also make them attractive as destinations or transit points for the proceeds of crime."

Politicians Dominate Panama Papers


Panama Papers Leak:

The NCA report says there are "professional enablers from the banking, accounting and legal world" who  facilitate the legitimization of criminal finances and are perpetuate the problem by refinancing further criminality.

In fact, 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.

Trade Based Money Laundering (TBML):

The report singles out trade as one of the key mechanisms used in money laundering.  It says: "Trade based money laundering (TBML) is a complex global issue and a key method of money laundering impacting on the UK".

It is not just greedy politicians, unscrupulous businessmen and corrupt officials in developing countries who rely on fraudulent manipulation of trade invoices; all kinds of drug traders, terrorists and criminals also use TBML (trade-based money laundering).

John A. Cassara, former US intelligence official with expertise in money laundering, submitted written testimony for a US Congressional hearing on “Trading with the Enemy: Trade-Based Money Laundering is the Growth Industry in Terror Finance” to the Task Force to Investigate Terrorism Financing Of the House Financial Services Committee February 3, 2016. Here's an except from it:

"Not long after the September 11 attacks, I had a conversation with a Pakistani entrepreneur. This businessman could charitably be described as being involved in international grey markets and illicit finance. We discussed many of the subjects addressed in this hearing including trade-based money laundering, terror finance, value transfer, hawala, fictitious invoicing, and counter-valuation. At the end of the discussion, he looked at me and said, “Mr. John, don’t you know that your adversaries are transferring money and value right under your noses? But the West doesn’t see it. Your enemies are laughing at you.”"

Trade Misinvoicing:

Washington-based Global Financial Integrity (GFI) defines trade misinvoicing as "fraudulently manipulating the price, quantity, or quality of a good or service on an invoice submitted to customs" to quickly move substantial sums of money across international borders.



How does trade miscinvoicing work? Here's an example:

Let's say an exporter in Pakistan exports goods worth $1 million to a foreign country and invoices it at $500,000 through an offshore middleman.  The middleman invoices and collects $1 million from the end customer, sends $500,000 to Pakistan and deposits $500,000 in an offshore account. The result: Pakistan is deprived of the $500,000 in foreign exchange.

Similarly, imports of goods worth $1 million to Pakistan are overinvoiced at $1.5 million through an offshore middleman and the difference is kept in an overseas account. The result: Pakistan loses another $500,000 in foreign exchange. Meanwhile, the Pakistani traders and the officials facilitating misinvoicing together pocket $1 million or 50% on the two trades.  Pakistan's trade and current account deficits grow and the foreign exchange reserves are depleted, forcing Pakistan to go back to the International Monetary Fund (IMF) for yet another bailout with tough conditions.

Foreign Residency (Iqama):

Assets held by people in offshore tax havens are tracked by their country of residence, not by their citizenship, under OECD sponsored Agreement On Exchange of Information on Tax Matters. Pakistan is a signatory of this international agreement.  When Pakistan seeks information from another country under this agreement,  the nation's FBR gets only the information on asset holders who have declared Pakistan as their country of residence. Information on those Pakistanis who claim residency (iqama) in another country is not shared with Pakistani government. This loophole allows many Pakistani asset holders with iqamas in other countries to hide their assets. Many of Pakistan's top politicians, bureaucrats and businessmen hold residency visas in the Middle East, Europe and North America.

Loss of Tax Revenue:

Customs duties in developing countries often make up a huge part of the tax revenue collected by the governments. Trade Misinvoicing not only increases current account deficits but also worsen budget deficits by cutting tax receipts. Raymond Baker, author of Capitalism's Achilles Heel, has written about it as follows:

"The Pakistan government's largest source of revenues is customs duties, and therefore evasion of duties is a national pastime. Isn't there a way to tap into this major income stream, pretending to fight customs corruption and getting rich at he same time? Of course; we can hire a reputable (or disreputable, as the case maybe) inspection company, have the government pay the company about one percent fee to do price checking on imports, and get multi-million dollar bribes paid to us upon award of the contracts. Societe de Generale de Surveillance (SGS), headquartered in Switzerland, and its then subsidiary Cotecna, the biggest group in the inspection business, readily agree to this subterfuge. Letters in 1994 promised "consultancy fees", meaning kickbacks, of 6 percent and 3 percent to British Virgin Island (BVI) companies, Bomer Finance Inc. and Nassam Overseas Inc., controlled by (Benazir) Bhutto and (Asif) Zardari. Payments of $12 million were made to Swiss bank accounts of the BVI companies."

Aid in Reverse:

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.

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.

Summary:

UK's National Crime Agency (NCA) has listed Pakistan among the top three sources of money laundering in the United Kingdom. The report has identified trade misinvoicing as a key mechanism for money laundering. It singles out politicians as the main culprits. Pakistan's exports have declined significantly since former Prime Minister Nawaz Sharif's PMLN party assumed power in 2013. They are down from about $25 billion in 2013-14 to about $20 billion in 2016-17. Overvaluation of the Pakistani currency is often cited as a reason for it. The other, probably more important reason, may be increasing underinvoicing of exports facilitated by the people in power. Trade misinvoicing is the largest component of illicit financial outflows from developing countries as measured by New York- based Global Financial Integrity (GFI) which tracks such flows.

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?

19 comments:

Habibullah said...

Thanks to our shameless ruling elite who got us this ill repute !

Sabahat A. said...

As the 5th largest country in the world, that's not surprising.

Riaz Haq said...

Sabahat: "As the 5th largest country in the world, that's not surprising"

Pakistan may be 5th or 6th in population but ranks much lower in GDP and much higher in corruption

Faisal said...

The Brits encourage to park ill gotten wealth

Riaz Haq said...

Faisal: "The Brits encourage to park ill gotten wealth"

Yes. The west does enable corruption in developing nations like Pakistan

https://www.southasiainvestor.com/2018/05/how-pakistans-corrupt-elite-use-trade.html

Seeme said...

We knew that. One Family doing it more than the rest.

Riaz Haq said...

#Pakistan among 10 countries worst affected by #tax avoidance? | World Economic Forum

https://www.weforum.org/agenda/2017/04/which-countries-are-worst-affected-by-tax-avoidance/

https://www.facebook.com/worldeconomicforum/videos/10154452025011479/




Riaz Haq said...

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

https://www.thenews.com.pk/print/331641-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.


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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...

Penthouse pirates: How the mega-rich former prime minister of #Pakistan #NawazSharif and his sons have plowed millions into #London's swankiest addresses to amass a vast property empire. #MoneyLaundering #PMLN

http://www.dailymail.co.uk/news/article-5878097/Former-prime-minister-Pakistan-sons-ploughed-millions-Londons-swankiest-addresses.html

Avenfield House is where Pakistan's super-rich former PM, Nawaz Sharif, has lived when in London, since 1993
He knocked four luxury flats together to make a single mansion, now worth at least £7million
Sharif shares it with his two sons, his daughter and political heir-apparent Maryam and her husband
For the past four months, all five of them have been on trial in Pakistan accused of money-laundering

The address could not be swankier. Avenfield House lies in the heart of Mayfair, near the top of Park Lane, with a view of Hyde Park.

It is just the kind of property that Russian oligarchs have pounced upon in recent years.

But while it is owned by a family of foreign plutocrats with powerful political connections, they are no Putin cronies.

For Avenfield is where Pakistan’s super-rich former prime minister, Nawaz Sharif, has lived when in London since 1993, knocking four luxury flats together to make a single mansion, now worth at least £7 million.

He shares it with his sons, Hassan and Hussain, his daughter and political heir-apparent Maryam and her husband Muhammad Safdar.

For the past four months, all five of them have been on trial in Pakistan accused of money-laundering.

The Avenfield flats, the prosecutors say, were bought with dirty money. They form just a fraction of a London property empire owned by Sharif’s family.

And prosecutors believe the money used to bankroll it was dishonestly acquired by Nawaz Sharif during his three terms as prime minister.

Last year, when Sharif was still PM, the courts barred him from holding public office for the rest of his life, on grounds he failed to declare a salary from a Dubai company when he last ran for office in 2013.

The first of three money-laundering verdicts, which relates to the Avenfield flats, is expected this week.

-------------------

It is not illegal to own property through an offshore company.

However, under Pakistan’s national accountability laws – first enacted in 1997 when Nawaz Sharif was prime minister – it is down to the Sharifs to prove their assets were acquired legitimately.

This, the prosecutors claim, they have failed to do. In court last week, Nawaz’s Sharif’s defence counsel claimed the prosecution had failed to establish his client was the beneficial owner of the flats or that he ran the offshore companies.

He said his name did not appear on documents submitted by the prosecutors and that he did not need to call any evidence for the defence because the prosecution had not proved its case.

At the heart of the cases against the family is a ten-volume dossier, which is part of the formal court record.

The work of a Joint Investigation Team (JIT) from six Pakistani law enforcement and intelligence agencies, it is based on hundreds of documents and interviews with the Sharifs and their associates.

As well as claiming that their assets exceed their demonstrable legal income, it also cites nine separate ongoing corruption investigations into Nawaz, in which he is alleged to have ‘misused his authority’ as PM and derived personal benefits.

The defence has challenged its contents, claiming the JIT went beyond its remit with its analysis and conclusions.

Sharif’s two sons, Hassan and Hussain, fled Pakistan just as the charges against them were being drawn up last year, and have taken refuge in London.

There is no extradition treaty between Britain and Pakistan.

Riaz Haq said...

#Pakistan Amnesty pulls in Rs 80 billion #tax amid massive response. One #Karachi billionaire declares $1.5 billion in offshore assets.

https://economictimes.indiatimes.com/news/international/business/pakistans-amnesty-scheme-pulls-in-rs-80-billion-in-tax/articleshow/64805560.cms

Nearly 5,000 people in Pakistan have filed returns declaring their foreign assets and deposited approximately Rs 80 billion in taxes so far, as the government's tax amnesty scheme is set to end today.

The final amount will be much higher as more funds are in the pipeline based on payment slips issued.

A Karachi-based billionaire, Habibullah Khan, has declared liquid assets of USD 1.25 billion outside of Pakistan in the single largest amnesty declaration in the country.

Khan is the Founder and Chairman of Mega Conglomerate - Mega and Forbes Group of Companies (Mega Group - MFG), a diversified conglomerate with business holdings.

Khan made his declaration under the tax amnesty scheme announced through an Ordinance on April 10, 2018.


Riaz Haq said...

Campaign group #TransparencyInternational has urged #UK authorities to seize #Sharifs' property in the country following the #corruption probe. #Pakistan #PMLN http://www.publicfinanceinternational.org/news/2018/07/ex-pakistan-pm-sharif-sentenced-10-years-corruption

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 https://www.geo.tv/latest/206523-pakistanis-hidden-foreign-assets-worth-estimated-around-350bn

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...

Arrest of #Pakistan couple connected to ex #PPP leader exposes money laundering failing. #British #Crime Agency said they "control a #UK property portfolio worth more than £8m for which they appear to have no legitimate source of income." #moneylaundering

https://www.bbc.com/news/uk-45576161#

A married couple from Pakistan amassed UK property worth millions of pounds despite being part of an investigation into corruption, the BBC understands.

The case highlights major weaknesses in Britain's anti-money laundering system, say anti-corruption campaigners.

National Crime Agency (NCA) officers arrested the couple on Monday, hours after Home Secretary Sajid Javid struck an agreement to cooperate with Pakistan on countering corruption.

They were released under investigation.

UK and Pakistan to step up money laundering action

In a statement, the NCA said they "control a UK property portfolio worth more than £8m for which they appear to have no legitimate source of income."

The investigation relates to "alleged money laundering in the United Kingdom believed to be the result of corruption in Pakistan."

But BBC News - working with Transparency International - has seen papers showing the properties were bought several years after a major international investigation had already been launched against Farhan Junejo.

He and his wife, Binish Qureshi, are British citizens.

Mr Junejo was a civil servant in Pakistan and an officer in the Pakistani Peoples Party. He was placed under investigation in Islamabad in 2013 and accused of involvement in a multi-million pound corruption scandal. His assets were frozen.

Mrs Qureshi was allegedly the beneficiary of funds transferred by her husband via companies in Dubai to a bank account in the UK.

She would not comment on the allegations when contacted by the BBC.

Despite Pakistan's Federal Investigation Agency reportedly contacting its counterpart in the UK, Mr Junejo and his wife were able to subsequently buy a portfolio of property in southern England.

This was despite their status as Politically Exposed Persons (PEPs).

Under UK Anti-Money Laundering Regulations, PEPs are individuals - and their relatives - whose prominent position in public life may make them vulnerable to corruption.

They are expected to be subject to enhanced due diligence by banks, building societies and estate agents.

Big red flag
Solicitors and other professionals have a legal duty to file a suspicious activity report (SAR) when they have grounds to suspect they are being asked to handle the proceeds of crime. The BBC does not know if any SARs were triggered in this case.

"Corruption allegations against politically exposed persons are a big red flag and it's astonishing that these individuals were able to purchase numerous properties, open UK companies and set up multiple bank accounts," said Rachel Davies-Teka, Head of Advocacy at Transparency International.

"It underlines just how lax defences against money laundering in key sectors have been, and why the UK remains a destination of choice for those looking to hide dirty money."

Land Registry papers show that FJ Corporation Limited - owned by Mrs Qureshi - bought three properties worth a total of £3.5m.

FJ Corporation Ltd also paid for two properties in Berkshire for an undisclosed amount. All of them were acquired between 2014 and 2017.

The NCA declined our request for comment. According to their estimates, hundreds of billions of pounds of corrupt money flow through the UK every year.

But for UK investigators to bring either criminal or civil action in the courts here against people accused of corruption or money laundering overseas, they need the full cooperation of their counterparts overseas. This is not always forthcoming.

The signing of an agreement on Monday between the UK and Pakistan is designed to ensure evidence is shared between anti-corruption and money laundering investigators in both countries.

Riaz Haq said...

Pakistani ice-cream seller unaware of £14m in his bank account
‘Penniless billionaire’ Abdul Qadir’s identity believed to have been used by money launderers

https://www.theguardian.com/world/2018/oct/04/pakistani-ice-cream-seller-unaware-of-14m-in-his-bank-account

A Pakistani ice-cream salesman who lives in a slum is facing meltdown after he learned that for more than a year he was the unwitting owner of a bank account containing 2.3bn rupees (£14m).

Officials from the Federal Investigation Agency (FIA) brought Muhammad Abdul Qadir in for questioning about the fortune last month as they investigated a massive money-laundering scam involving dozens of fake bank accounts.

“I am the most unlucky man in the world,” the 52-year-old said in a television interview. “When I came to know about [the huge sum], it was no longer there.”

Outside his tiny home in the Organi slum of the port city of Karachi, Qadir told the Guardian that becoming a “penniless billionaire” had turned his life upside down.


The FIA is probing at least 77 bank accounts – typically created in the names of labourers, security guards and other down-at-heel citizens – thought to be part of a 35bn rupee (£220m) laundromat for dirty money that allegedly reaches up to former president Asif Ali Zardari.

Two years ago the State Bank of Pakistan informed the FIA about a suspicious transaction in Qadir’s supposed account, which was open between 2014 and 2015, when the untouched millions were withdrawn.

The FIA came to accept that Qadir was not involved after he repeatedly told them that, although the account was set up using a valid copy of his identity card, he had no idea of its existence and could not have signed the 2.3bn rupee transaction for one simple reason: he is unable to write.

Brought in for a second interview on 19 September, the distraught vendor invited sceptical officials to inspect the condition of his home. “Why would I be spending this miserable life if I have billions in my account?” he said.

The affair has only further impoverished Qadir. While he used to make £3 per day selling ice-cream, the father of two has been unable to return to work since his story spread through the neighbourhood.

“People started taunting me by saying, ‘Look a billionaire is selling falooda [an ice-cream topped desert].’” His mother feared rumours of fabulous wealth might incite kidnappers and advised him to stay at home, he added to the Guardian, on the verge of tears.

“I wish my friend had left his cart behind and become a billionaire for real,” said Shaheryar, who sells chickpeas nearby. “Alas it is not the case.”

An official from the FIA could not confirm to the Guardian that Qadir’s account was involved in the money-laundering scam as the agency has been strictly informed not to comment on the investigation. However, he said it was “huge and hinted at something big”.

In August a Pakistani banking court granted ex-president Zardari protective bail. The co-chairman of the liberal Pakistan People’s party (PPP), whose alleged fondness for kickbacks earned him the nickname “Mr 10 Percent” while in office, denies all the allegations.

In a separate case investigated by the FIA, 8bn rupees (£50m) was briefly deposited in the company account of Adnan Javed, a small-time Karachi businessman who never checked his balance while it was there. Javed’s company name was Lucky International.

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 https://www.wsj.com/articles/private-equity-firm-abraaj-raised-billions-pledging-to-do-goodthen-it-fell-apart-1539706575 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...

#Pakistan's 'penniless billionaires' expose #moneylaundering. frenzy. Bank accounts in poor residents' names are flooded with cash, then suddenly emptied & 100s of millions of dollars moved out of the country. #corruption #PPP #PMLN http://po.st/k5u8Q5 via @ChannelNewsAsia

It took rickshaw driver Mohammad Rasheed a year to save 300 rupees to buy his daughter a bike, so when he found three billion rupees (US$22.5 million) had passed through an unused bank account in his name, he was stunned ... and scared.

When he got a call from the Federal Investigation Agency, Rasheed's first inclination was to go into hiding, but friends and family members finally convinced him to cooperate with officials.

His case mirrors dozens of similar stories in recent weeks that have filled newspapers in Pakistan and riled a populace long accustomed to extravagant tales of corruption and theft.

The incidents follow a similar arc - bank accounts in poor residents' names are flooded with cash, then suddenly emptied in a laundering scheme that has likely seen hundreds of millions of dollars moved out of the country.
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Rasheed's name was eventually cleared, but his anxiety remained.

"I stopped driving my rented rickshaw on the roads because of the fear that some other investigating agencies might pick me up," he said.

"My wife fell sick because of the tension."

Only weeks before the fiasco he had finally been able to buy a 300-rupee bike with worn tyres for his daughter - the fruit of a year's careful saving.

'STOLEN MONEY'

The revelation of the laundering frenzy comes as the newly elected Khan has vowed to squash rampant corruption and recover billions siphoned from the country as his government scrambles to shore up Pakistan's deteriorating finances.

Transactions were made in the name of Pakistani ice cream vendor Mohammad Qadir for 2.25 billion

"This is your stolen money," said the former cricketer during a televised address to the nation Wednesday.

"It was stolen on public contracts ... and transferred into these accounts, then laundered abroad.

"I will spare no corrupt man in this country," he promised.

But for victims like Mohammad Qadir the damage has already been done.

"I have never even seen a bank from the inside," said the 52-year-old ice cream vendor.

Transactions were nevertheless made in his name for 2.25 billion rupees.

Since news of the incident spread Qadir says he is regularly mocked by his neighbours and also fears being kidnapped by criminal elements who believe he has billions of rupees to spare for hefty ransoms.

"He is a penniless billionaire," one of Qadir's acquaintances laughed while driving past his ice cream cart in the Karachi slum of Orangi town.

"People make fun of me, but I ended up with nothing at all from this situation," said Qadir. "It is such a tragedy."

Sarwat Zehra, a 56-year-old official, says she has suffered from high-blood pressure after being handed a bill for 13 million rupees in back taxes.

Sarwat Zehra, a 56-year-old official, says she has suffered from high-blood pressure after being
Sarwat Zehra, a 56-year-old official, says she has suffered from high-blood pressure after being handed a bill for 13 million rupees in back taxes. AFP/ASIF HASSAN

"I was told that a company had illegally passed 14 or 15 billion rupees through my account," she said.

Pakistan's poor have long been used as fronts for the elite to dodge taxes and hide assets.

But the scale of the bank account scheme is unprecedented, with authorities pointing the finger at some of Karachi's wealthiest power brokers including figures with links to former president Asif Zardari.

Riaz Haq said...

Sharifs used paper mill to whiten money, Dar told court in 2000

https://www.dawn.com/news/848873

The Musharraf government prepared a money laundering reference against PML-N leaders Mian Nawaz Sharif and Mian Shahbaz Sharif in 2000 on the basis of a statement recorded by one of their trusted lieutenants, Senator Ishaq Dar, according to a court document seen by Dawn here on Thursday.

Senator Dar's handwritten statement, given before a magistrate back on April 25, 2000, had alleged that Sharif brothers used the Hudaibya Paper Mills as cover for money laundering during the late 1990s.

The reference was prepared on the orders of then president Pervez Musharraf, but it was shelved after the Sharif brothers went into exile in December of the same year.

The Musharraf government tried to reopen the reference in 2007 after Nawaz Sharif announced his return to the country.

The confessional statement of Senator Ishaq Dar was recorded before a district magistrate in Lahore. He was brought to the court from a jail by Basharat Shahzad, who was then serving as assistant director in the Federal Investigation Agency (FIA).

According to legal experts, the senator's deposition was an 'irrevocable statement' as had been recorded under section 164 of the Criminal Procedure Code (CrPC).

Senator Ishaq Dar has always been regarded as one of the closest aides of the Sharif family, and is now also a relative as his son is married to Nawaz Sharif's younger daughter.

However, the NAB record clearly shows that back in 2000 he had agreed to give a written statement against the Sharifs about their alleged involvement in money laundering.

The top PML-N leaders had hit a rough patch by then as some of their lieutenants were busy developing a new political system for Gen Pervez Musharraf after his Oct 1999 military coup.

In the statement, Ishaq Dar accused Nawaz and Shahbaz Sharif of money laundering in the Hudaibiya Paper Mills case. At one point in the 43-page statement, Mr Dar said that on the instructions of Mian Nawaz Sharif and Shahbaz Sharif, “I opened two foreign currency accounts in the name of Sikandara Masood Qazi and Talat Masood Qazi with the foreign currency funds provided by the Sharif family in the Bank of America by signing as Sikandara Masood Qazi and Talat Masood Qazi”.

He said that all instructions to the bank in the name of these two persons were signed by him under the orders of “original depositors”, namely Mian Nawaz Sharif and Mian Shahbaz Sharif.

“The foreign currency accounts of Nuzhat Gohar and Kashif Masood Qazi were opened in Bank of America by Naeem Mehmood under my instructions (based on instructions of Sharifs) by signing the same as Nuzhat Gohar and Kashif Masood Qazi.”

The document shows Dar stated that besides these foreign currency accounts, a previously opened foreign currency account of Saeed Ahmed, a former director of First Hajvari Modaraba Co and close friend of Dar, and of Mussa Ghani, the nephew of Dar's wife, were also used to deposit huge foreign currency funds provided by “the Sharif family” to offer them as collateral to obtain different direct and indirect credit lines.

Senator Dar had disclosed that the Bank of America, Citibank, Atlas Investment Bank, Al Barka Bank and Al Towfeeq Investment Bank were used under the instructions of the Sharif family.

Interestingly enough, Ishaq Dar also implicated himself by confessing in court that he — along with his friends Kamal Qureshi and Naeem Mehmood — had opened fake foreign currency accounts in different international banks.

Mr Dar said an amount of $3.725 million in Emirates Bank, $ 8.539 million in Al Faysal Bank and $2.622 million were later transferred in the accounts of the accounts Hudaibya Paper Mills.

He said that the entire amount in these banks finally landed in the accounts of the paper mills.

The Hudaibiya Paper Mills case is still pending in the National Accountability Bureau.

If it is opened again, the Sharif brothers may be in for a rude shock a confidant is to blame for the albatross around their necks.

Riaz Haq said...

Over 2,200 cars registered in name of former Pakistan judge

https://www.dawn.com/news/1441809

In an unusual development, more than 2,200 cars have been found registered in the name of a former judge.

Sikandar Hayat, an 82-year-old former judge, owns just one car, his lawyer Mian Zafar informed the Supreme Court on Saturday.

"[But] 2,224 cars were registered in the name of my client," the counsel said.

According to Zafar, his client had received a challan [fine] a few days ago for a car which he did not own.

Upon contacting the Punjab Excise and Taxation Department, it emerged that an eye-watering 2,224 vehicles had been registered in Hayat's name.

After hearing the lawyer, the top court sought a reply from the secretary and director of the Punjab excise department.

The department has been directed to submit a report on the matter within a week.

Riaz Haq said...

#UK’s Role in #Pakistan’s Fight Against #Corruption: Pakistan is among the top 3 sources of money laundering in UK, mainly in form of high-end properties purchased with illicit funds. #MoneyLaundering https://rusi.org/commentary/high-expectations-uk%E2%80%99s-role-pakistan%E2%80%99s-fight-against-corruption#.XAP84t5T3cM.twitter

Whilst corruption, tax evasion and weaknesses in national financial crime controls are issues that Pakistan itself must address, other countries – none more so than the UK – have an important role to play in helping Mr Khan achieve his objectives.

Historically, the UK’s illicit finance engagement with Pakistan has focused on the flow of money leaving the UK for Pakistan. These funds mostly represent the proceeds of drugs and earnings from other forms of organised crime flowing to Pakistan. In 2015, the UK’s first National Risk Assessment (NRA) of Money Laundering and Terrorist Financing noted that Pakistan is one of the top two outbound destinations from the UK for undeclared cash detected at the UK border, a large element of which is adjudged to be linked to criminality.

This NRA was followed by a more refined second edition in 2017. The politically unpopular ranking and accusatory tone was not repeated, and a more shared picture of risk was painted, noting the combined exposure the UK and Pakistan had to money laundering, given the considerable remittance and business links that exist between the two countries. Nevertheless, the focus of the UK’s engagement with Pakistan on criminal finances remained predicated on the threat posed by Pakistan-based organised crime groups to the UK.

In contrast, the role the UK – and London in particular as revealed by the Panama Papers – plays in attracting and hiding illicit finance (primarily the proceeds of corruption and tax evasion) from Pakistan is only sparingly addressed in UK risk assessments. In 2018, the UK’s National Strategic Assessment of Serious and Organised Crime has, for the first time, listed Pakistan as one of the top three source countries of politically exposed persons (PEPs) investing in the UK. The Assessment also acknowledges the uncomfortable truth that ‘[t]he UK is a prime destination for foreign corrupt PEPs to launder the proceeds of corruption’.

Many in Pakistan would agree. It is this flow of funds from Pakistan to the UK that Mr Khan is targeting. And as a recent field trip to Pakistan by the authors of this analysis indicated, it is this flow of funds that looms large in the view of many Pakistanis, from bankers to serving and retired government and military officials. London – and in particular its property market – has been the subject of extensive reporting in the Pakistani media and is seen as an irresponsible facilitator of the looting of the state’s assets by the corrupt elite. Inevitably, the role Pakistan plays as a destination for criminal finances from the UK is barely acknowledged.

Expectations of how the UK will assist the Khan government’s anti-corruption mission are high, and the UK authorities encourage these hopes. A visit to Islamabad by British Home Secretary Sajid Javid in September included the announcement of ‘a new UK-Pakistan partnership on accountability to tackle illicit finance’ including the provision of £500,000 to support Pakistan’s ability ‘to pursue money launderers and to recover assets’.