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What a shameless creature , for power she had her brother killed in cold blood on the gate of 70 clifton , Bhutto’s house , and than was assassinated by her own. Comment by PTT Contributor: k.d.
The life and times of the Bhuttos is seen afresh in a passionately partisan but well-constructed memoir. William Dalrymplereviews it in context.
The Bhuttos’ acrimonious family squabbles have long resembled one of the bloody succession disputes that habitually plagued South Asia during the time of the Great Mughals. In the case of the Bhuttos, they date back to the moment when Zulfiqar Ali Bhutto was arrested on July 5, 1977.Unsure how to defend their father and his legacy, his children had reacted in different ways. Benazir believed the struggle should be peaceful and political. Her brothers initially tried the same approach, forming al-Nusrat, the Save Bhutto committee; but after two futile years they decided in 1979 to turn to the armed struggle.
Murtaza was 23 and had just left Harvard where he got a top first, and where he was taught by, among others, Samuel Huntington. Forbidden by his father from returning to Zia’s Pakistan, he flew from the US first to London, then on to Beirut, where he and his younger brother Shahnawaz were adopted by Yasser Arafat. Under his guidance they received the arms and training necessary to form the Pakistan Liberation Army, later renamed Al-Zulfiquar or The Sword.
Just before his daughter Fatima was born, Murtaza and his brother had found shelter in Kabul as guests of the pro-Soviet government. There the boys had married a pair of Afghan sisters, Fauzia and Rehana Fasihudin, the beautiful daughters of a senior Afghan official in the Ministry of Foreign Affairs mother was Fauzia.
For all its PLO training in camps in Syria, Afghanistan and Libya, Al-Zulfiquar achieved little except for two failed assassination attempts on Zia and the hijacking of a Pakistan International Airways flight in 1981. This was diverted from Karachi to Kabul and secured the release of some 55 political prisoners; but it also resulted in the death of an innocent passenger, a young army officer. Zia used the hijacking as a means of cracking down on the Pakistan Peoples Party, and got the two boys placed on the Federal Investigation Agency’s most-wanted list. Benazir was forced to distance herself from her two brothers even though they subsequently denied sanctioning the hijack, and claimed only to have acted as negotiators once the plane landed in Kabul. While much about the details of the hijacking remains mysterious, Murtaza was posthumously acquitted of hijacking in 2003.
I first encountered the family in 1994 when, as a young foreign correspondent on assignment for the Sunday Times, I was sent to Pakistan to write a long magazine piece on the Bhutto dynasty. I met Benazir in the giddy pseudo-Mexican Prime Minister’s House that she had built in the middle of Islamabad.
It was the beginning of Benazir’s second term as Prime Minister, and she was at her most imperial. She both walked and talked in a deliberately measured and regal manner, and frequently used the royal “we”. During my interview, she took a full three minutes to float down the hundred yards of lawns separating the Prime Minister’s House from the chairs where I had been told to wait for her. There followed an interlude when Benazir found the sun was not shining in quite the way she wanted it to: “The sun is in the wrong direction,” she announced. Her hair was arranged in a sort of baroque beehive topped by white gauze dupatta like one of those Roman princesses inCaligula or Rome.
A couple of days later in Karachi, I met Benazir’s brother Murtaza in very different circumstances. Murtaza was on trial in Karachi for his alleged terrorist offences. A one hundred rupee bribe got me through the police cordon, and I soon found Murtaza with his mother — Begum Bhutto — in an annexe beside the courtroom. Murtaza looked strikingly like his father, Zulfiquar Ali Bhutto. He was handsome, very tall — well over six feet — with a deep voice and, like his father, exuded an air of self-confidence, bonhomie and charisma. He invited me to sit down: “Benazir doesn’t care what the local press says about her,” he said, “but she’s very sensitive to what her friends in London and New York get to read about her.”
“Has your sister got in touch with you since you returned to Pakistan?” I asked. “No. Nothing. Not one note.”“Did you expect her to intervene and get you off the hook?” I asked. “What kind of reception did you hope she would lay on for you when you returned from Damascus?”
“I didn’t want any favours,” replied Murtaza. “I just wanted her to let justice take its course, and for her not to interfere in the legal process. As it is, she has instructed the prosecution to use delaying tactics to keep me in confinement as long as possible. This trial has been going on for three months now and they still haven’t finished examining the first witness. She’s become paranoid and is convinced I’m trying to topple her.”
Murtaza went on to describe an incident the previous week when the police had opened fire on Begum Bhutto as she left her house to visit her husband’s grave. When the Begum ordered the gates of the compound to be opened and made ready to set off, the police opened fire. One person was killed immediately and two others succumbed to their injuries after the police refused to let the ambulances through. That night as three family retainers lay bleeding to death, 15 kilometres away in her new farmhouse, Benazir celebrated her father’s birthday with singing and dancing:“After three deaths, she and her husband danced!” said the Begum now near to tears. “They must have known the police were firing at Al-Murtaza. Would all this have happened if she didn’t order it? But the worst crime was that they refused to let the ambulances through. If only they had let the ambulances through those two boys would be alive now: those two boys who used to love Benazir, who used to run in front of her car.”
The Begum was weeping now. “I kept ringing Benazir saying ‘for God sake stop the siege’, but her people just repeated: ‘Madam is not available’. She wouldn’t even take my call. One call from her walkie-talkie would have got the wounded through. Even General Zia…” The sentence trailed away. “What’s that saying in England?” asked the Begum: “Power corrupts, more power corrupts even more. Is that it?”Two years later, to no one’s great surprise, Murtaza was himself shot dead in similar and equally suspicious circumstances.
Murtaza had been campaigning with his bodyguards in a remote suburb of Karachi. As his convoy neared his home at 70 Clifton, the street lights were abruptly turned off.
It was September 20, 1996, and Murtaza’s decision to take on Benazir had put him into direct conflict not only with his sister, but also with her husband Asif Ali Zardari. Murtaza had an animus against Zardari, who he believed was not just a nakedly and riotously corrupt polo-playing playboy, but had pushed Benazir to abandon the PPP’s once-radical agenda — fighting for social justice. Few believed the rivalry was likely to end peacefully. Both men had reputations for being trigger-happy. Murtaza’s bodyguards were notoriously rough, and Murtaza was alleged to have sentenced to death several former associates, including his future biographer, Raja Anwar, author of an unflattering portrait, The Terrorist Prince.Zardari’s reputation was worse still.So insistent had the rumours become that Zardari had ordered the killing of Murtaza at 3 pm that afternoon, that Murtaza had given a press conference saying he had learnt that an assassination attempt on him was being planned, and he named some of the police officers he claimed were involved in the plot. Several of the officers were among those now waiting, guns cocked, outside his house. According to witnesses, when the leading car drew up at the roadblock, there was a single shot from the police, followed by two more shots, one of which hit the foremost of Murtaza’s armed bodyguards. Murtaza immediately got out of his car and urged his men to hold their fire. As he stood there with his hands raised above his head, urging calm, the police opened fire on the whole party with automatic weapons. The firing went on for nearly 10 minutes..
Two hundred yards down the road, inside the compound of 70 Clifton, the house where Benazir Bhutto had spent her childhood, was Murtaza’s wife Ghinwa, his daughter, the 12-year-old Fatima, and the couple’s young son Zulfikar, then aged six. When the first shot rang out, Fatima was in Zulfikar’s bedroom, helping put him to bed. She immediately ran with him into his windowless dressing room, and threw him onto the floor, protecting him by covering his body with her own.
After 45 minutes, Fatima called the Prime Minister’s House and asked to speak to her aunt. Zardari took her call:
Fatima: “I wish to speak to my aunt, please.”
Zardari: “It’s not possible.”
Fatima: “Why?” [At this point, Fatima says, she heard loud, stagy-sounding wailing.]
Zardari: “She’s hysterical, can’t you hear?”
Fatima: “Why?”
Zardari: “Don’t you know? Your father’s been shot.”
Fatima and Ghinwa immediately left the house and demanded to be taken to see Murtaza. By now there were no bodies in the street. It had all been swept and cleaned up: there was no blood, no glass, or indeed any sign of any violence at all. Each of the seven wounded had been taken to a different location, though none was taken to emergency units of any the different Karachi hospitals. The street was completely empty.“They had taken my father to the Mideast, a dispensary,” says Fatima. “It wasn’t an emergency facility and had no facilities for treating a wounded man. We climbed the stairs, and there was my father lying hooked up to a drip. He was covered in blood and unconscious. You could see he had been shot several times. One of those shots had blown away part of his face. I kissed him and moved aside. He never recovered consciousness. We lost him just after midnight.”
The two bereaved women went straight to a police station to register a report, but the police refused to take it down. Benazir Bhutto was then the Prime Minister, and one might have expected the assassins would have faced the most extreme measures of the state for killing the Prime Minister’s brother. Instead, it was the witnesses and survivors who were arrested. They were kept incommunicado and intimidated. Two died soon afterwards in police custody.
“There were never any criminal proceedings,” says Fatima. “Benazir claimed in the West to be the queen of democracy, but at that time there were so many like us who had lost family to premeditated police killings. We were just one among thousands.”Benazir always protested her innocence in the death of Murtaza, and claimed that the killing was an attempt to frame her by the army’s intelligence services: “Kill a Bhutto to get a Bhutto,” as she used to put it. But Murtaza was, after all, clearly a direct threat to Benazir’s future, and she gained the most from the murder. For this reason her complicity was widely suspected well beyond the immediate family: when Benazir and Zardari attempted to attend Murtaza’s funeral, their car was stoned by villagers who believed them responsible.
The judiciary took the same view, and the tribunal set up to investigate the killing concluded that Benazir’s administration was “probably complicit” in the assassination.. Six weeks later, when Benazir fell from power, partly as a result of public outrage at the killings, Zardari was charged with Murtaza’s murder.Fourteen years on, however, the situation is rather different. Benazir is dead, assassinated, maybe by the military, but equally possibly by some splinter group of the Taliban. Fatima is now a strikingly beautiful 28-year-old, fresh from a university education in New York and London. She has a razor-sharp mind and a forceful, determined personality. Meanwhile, the man Fatima Bhutto holds responsible for her father’s death is not only out of prison, but President of the country. The bravery of writing a memoir taking on such a man is self-evident, but Fatima seems remarkably calm about the dangers she has taken on..
As for the book itself, Songs of Blood and Sword is moving, witty and well-written. It is also passionately partisan: this is not, and does not pretend to be, an objective account of Murtaza Bhutto so much as a love letter from a grieving daughter and an act of literary vengeance and account-settling by a niece who believed her aunt had her father murdered.Future historians will decide whether Murtaza really does deserve to be vindicated for the hijacking in Kabul and will weigh up whether or not Murtaza, who even Fatima describes as “impulsive” and “honourable and foolish”, would have made a better leader than his deeply flawed sister; or indeed whether the equally inconsistent Zulfiqar Ali Bhutto deserves the adulation heaped on him by his granddaughter. But where the book is unquestionably important is the reminder it gives the world as to Benazir’s flaws. Since her death, Benazir has come to be regarded, especially in the US, as something of a martyr for democracy. Yet the brutality of Benazir’s untimely end should not blind anyone to her as astonishingly weak record as a politician. Benazir was no Aung San Suu Kyi, and it is misleading as well as simplistic to depict her as having died for freedom; in reality, Benazir’s instincts were not so much democratic as highly autocratic.
Within her own party, she declared herself the lifetime president of the PPP, and refused to let her brother Murtaza challenge her for its leadership; his death was an extreme version of the fate of many who opposed her. Benazir also colluded in wider human rights abuses and extra-judicial killings, and during her tenure government death squads murdered hundreds of her opponents. Amnesty International accused her government of having one of the world’s worst records of custodial deaths, abductions, killings and torture.
Far from reforming herself in exile, Benazir kept a studied distance from the pioneering lawyers’ movement which led the civil protests against President Musharraf’s unconstitutional attempts to manipulate the Supreme Court. She also sidelined those in her party who did support the lawyers. Later she said nothing to stop President Musharraf ordering the US-brokered “rendition” of her rival Nawaz Sharif to Saudi Arabia, so removing from the election her most formidable democratic opponent. Many of her supporters regarded her deal with Musharraf as a betrayal of all that her party stood for. Her final act in her will was to hand the inappropriately named Pakistan People’s Party over to her teenage son as if it were her personal family fiefdom.
Worse still, Benazir was a notably inept administrator. During her first 20-month-long premiership, she failed to pass a single piece of major legislation, and during her two periods in power she did almost nothing to help the liberal causes she espoused so enthusiastically to the Western media. Instead, it was under her watch that Pakistan’s secret service, the Inter-Services Intelligence (ISI), helped install the Taliban in Pakistan, and she did nothing to rein in the agency’s disastrous policy of training up Islamist jihadis from the country’s madrasas to do the ISI’s dirty work in Kashmir and Afghanistan. As a young correspondent covering the conflict in Kashmir in the late 1980s and early 1990s, I saw how during her premiership, Pakistan sidelined the Kashmiris’ own secular resistance movement, the Jammu and Kashmir Liberation Front, and instead gave aid and training to the brutal Islamist outfits it created and controlled, such as Lashkar-e-Toiba and Harkat ul-Mujahedin. Benazir’s administration, in other words, helped train the very assassins who are most likely to have shot her.
Benazir was, above all, a feudal landowner, whose family owned great tracts of Sindh, and with the sense of entitlement this produced. Democracy has never thrived in Pakistan in part because landowning remains the base from which politicians emerge. In this sense, Pakistani democracy in Pakistan is really a form of “elective feudalism”: the Bhuttos’ feudal friends and allies were nominated for seats by Benazir, and these landowners made sure their peasants voted them in.
Behind Pakistan’s swings between military government.
Posted by admin in Pakistanis Spies Working For Foreign Govts, PRISONERS WITHOUT DUE PROCESS, ZARDAR'S CORRUPTION, ZARDARI:Killers Mastermind on June 14th, 2013
Before independence, the security forces of British India were primarily concerned with the maintenance of law and order but were also called on to perform duties in support of the political interests of the government. The duties of the police officer in a formal sense were those of police the world over: executing orders and warrants; collecting and communicating upward intelligence concerning public order; preventing crime; and detecting, apprehending, and arresting criminals. These duties were specified in Article 23 of the Indian Police Act of 1861, which (together with revisions dating from 1888 and the Police Rules of 1934), is still the basic document for police activity in Pakistan.
The overall organization of the police forces remained much the same after partition. Except for centrally administered territories and tribal territories in the north and northwest, basic law and order responsibilities have been carried out by the four provincial governments. The central government has controlled a series of specialized police agencies, including the Federal Investigative Agency, railroad and airport police forces, an anticorruption task force, and various paramilitary organizations such as the Rangers, constabulary forces, and the Frontier Corps.
Benazir Bhutto appointed Rehman Malik as chief of the Federal Investigation Agency which then launched a secret war against the Islamists, which amounted to a direct attack on the ISI. The Pakistani military was equally dismayed by reports of FIA contacts with the Israeli secret service, the MOSSAD, to investigate Islamist terrorists. The FIA leadership under Bhutto also angered Islamist elements because they allowed the extradited Ramzi Yousaf to the US for trial on the New York Trade Centre Bombing. One of the first acts of President Leghari after dismissing Benazir Bhutto on 05 November 1996 was to imprison the Ghulam Asghar, head of FIA, suspended on non specified corruption charges, and Rehman Malik, Addl. Director General FIA, was also arrested.
The Federal Investigation Agency conducts the investigations on receiving reports of corruption, either through the P.M.’s Accountability and Coordination Cell or directly from the public. After the investigations, the cases are referred to the Chief Ehtesab Commissioner for trial by the Ehtesab courts. However, the Chief Ehtesab Commissioner, Mr Mujaddad Ali Mirza, has complained that the Federal Investigation Authority and the Anti-Corruption Police have failed to cooperate with the Commission.
Posted by kulsoom Waheed in Altaf "Bhai Ka Qatil"Hussain, ZARDARI:Killers Mastermind on May 10th, 2013
ZARDARI CORRUPTION:PPP JIAYALA MISBAHUDDIN FARID, resigned on Thursday due to “personal reasons”. Hectic job making $ 43 Million from poor people of Karachi.
The Karachi Water and Sewerage Board managing director, Misbahuddin Farid, resigned on Thursday due to “personal reasons”, leaving behind a utility struggling to meet the city’s water needs amid increasing theft.
The sudden exit of the MD left even his closest of aides wondering what exactly pushed him to take this step as Farid was considered close to the ruling coalition.
“I am tired. There are so many things to look after, such as my health and family,” Farid told The Express Tribune. “It was a hectic job. New issues concerning water and sewerage come up every day.” But he hinted at frustration with the job and bureaucracy, saying, “I was fighting on so many fronts at the same time. How could I tackle illegal hydrants stealing water and mafias involved in encroaching on our land all by myself?”
It was not clear if the Sindh local government department had accepted Farid’s resignation by the time this report was filed late Thursday. There was no word on his replacement either and the water board’s media department refused to issue any official statement.
His exit comes just two days after the water board shut off all the hydrants across the city in a bid to end water theft. Over the past few months, the board has taken action against illegal water connections and hydrants which caused pressure to drop in main pipelines. Tankers fill up from these hydrants to sell in areas not connected to the piped network.
After joining KWSB in November, 1987, Farid was appointed managing director on January15, 2011. As project manager, he played a prominent role in the K-III scheme, which brought an additional supply of 100 million gallons per day (MGD) to the city in 2006.
Farid was known to keep an open relationship with the media and took journalists along on “operations” against water theft. But some people have accused him of turning a blind eye to ‘influential’ culprits and those with political affiliations.
The Karachi Water Tanker Owners Welfare Association alleged that illegal hydrants were still running in Baldia, Manghopir, Banaras and other areas. According to the association, the hydrants, which suck water from large pipelines, can’t be set up without the tacit approval of the water board.
A senior water board official, who worked closely with Farid, blamed political interference for the frustration in the organisation. “We shut down illegal hydrants so many times but somehow, they start working again.” He alleged that the police have always been reluctant to help them board control theft.
“The government has been asked so many times to make theft a non-bailable offence but no action has been taken as yet.”
Karachi needs 1,100 MGD but receives around 450 MGD.
Reporting from Karachi, Pakistan — Name a cash cow in this sprawling city of ragged slums and glass-walled office buildings and it’s almost certain there’s an organized crime syndicate behind it.
The illegal operations, routinely referred to as mafias, are everywhere. There’s a land mafia that commandeers prime real estate, a sugar mafia that conspires to control sugar prices, and even a railway mafia that forges train tickets and pilfers locomotive parts.
For those on the city’s bottom rung, however, the underworld entity they revile the most is the water tanker mafia, a network of trucking firms that teams up with corrupt bureaucrats to turn water into liquid gold worth tens of millions of dollars each year.
The water tanker mafia’s prey can be found in slums like Karachi’s Gulshan-Sikanderabad neighborhood, where every morning people buy water from the tankers, lug the plastic jugs back to their homes on wooden carts, then come back three or four more times in the afternoon and evening to buy more.
A family that makes $100 a month can spend as much as a quarter of that on water, which, elsewhere in Pakistan, costs pennies and flows out of household taps.
Water scarcity isn’t the cause. Karachi has a steady water supply, and it has the network of pipes to pump ample water into every neighborhood, rich and poor.
But Karachi is also a city of opportunists forever on the prowl for under-the-table wealth. As municipal officials look the other way, businessmen illegally tap water mains, and use the makeshift hydrants to supply fleets of tankers that then sell water to businesses, factories and neighborhoods at inflated prices. As many as 272 million gallons a day are siphoned off by the trucks.
On a recent sunbaked afternoon, along a dirt lane filled with goats munching on piles of refuse, Momin Khan seethed as he filled another blue jug with water from a cistern replenished every other day by the water tankers.
“We’re poor laborers — we can’t spare this much for water,” said Khan, 27, a glass factory worker. “The water supply lines come right into this neighborhood, but there’s never any water. So I buy the same water that I should be getting through the pipes for free. I’ve got no choice.”
Karachi has nine hydrant locations where water supply companies can legally buy water and fill their tanker trucks. But scattered throughout the city are at least 160 illegal hydrants, said Ashraf Sagar, manager of the Orangi Pilot Project, a private organization that researches water issues in Karachi.
The siphoning takes place around the clock, Sagar said. It’s done in the dead of night, but also in broad daylight.
Along Manghopir Road, a bustling Karachi avenue lined with grease-covered car repair stalls and appliance storefronts, it’s easy to find a pair of tanker drivers standing on top of their trucks, filling up with a large blue hose from an illegal hydrant inside a red-brick building. Armed guards keep outsiders from meddling.
On average, a tanker fills up six times a day, Sagar said, siphoning as much as 41% of the city’s daily water supply, an amount that generates $43 million annually for tanker owners, according to Orangi.
“With this much money involved, it’s clear these are very wealthy people,” Sagar said. “They’re powerful PPP & MQM mafias colluding with corrupt people in the government. So there’s really nothing ordinary Pakistanis can do to stop it.”
Shahnawaz Jadoon, a deputy administrative chief for the Gulshan-Sikanderabad neighborhood, said it was virtually impossible to clamp down on an enterprise that combines the clout of city government and the wealth of Karachi’s powerful business circles.
At times, illegal hydrants are shut down by city officials, only to reopen a week later. Activists said they didn’t know of anyone involved ever being arrested.
“The big reason why people don’t get the water they’re supposed to,” said Jadoon, “is that if they did, this whole system, the tanker mafia and this corrupt network, would shut down.”
alex.rodriguez@
latimes.com
September 7, 2012
Looking for the lost money that belonged to the Pakistani people…
The money is gone: Pakistani people own the loans & Citibank knew where it is:
Saturday August 8, 2009
GEO TV: For the first time in YEARS, on Pakistan mainstream TV network, Dr. Shahid Masood in his “Mere Mutabiq” program reveals the facts that money from Pakistans treasury was taken by Asif Ali Zardari, the CURRENT President of Pakistan, and laundered through the Cayman Islands, finally winding up at Citibank Switzerland. Also named in the charges is former Prime Minister Shaukat Aziz (who now lives in London).
Dr. Shahid Masood reports, “As the Pakistani Army and people fight terrorists in the country, we have financial terrorists attacking in Pakistan, and present a much greater threat to the country.” (Translation).
Oil companies who have recently collected 7 billion rupees in carbon taxes (ordered by Zardari), have yet to pay a single rupee in taxes to the Pakistan treasury.
Nothing yet in print media; but here are two articles from Pakistani online news back in 2007.
Ref
Shaukat Aziz and Citibank’s Laundering of Asif Zardari’s Money
Posted: Nov 22, 2007 Thu 12:00 am
How Citibank Laundered Asif Zardari’s Money, provides a case history excerpted from a US Congress Subcommittee’s investigation of moneylaundering by private banking groups within US banks during the 1990s. The present post reproduces an interesting document, “List of meetings between Mr. Zardari and Citibank personnel, provided by Citibank,” being document “h” of a list of “Documents relating to Asif Ali Zardari” appended to the Report.
As part of its investigation, the subcommittee asked Citibank to provide a written record of meetings held between Citibank officials and four high profile Citibank account holders, including Mr. Asif Ali Zardari. Unlike the other cases, in which the names of relatively low level Citibank private banking group staff emerges in the records provided, the names of Citibank staff involved in the case of Benazir Bhutto and Asif Ali Zardari consists of men who have gone on to play a prominent role in Pakistan:
Shaukat Aziz, Until recently Prime Minister of Pakistan (close ties to CIA
Shaukat Tarin, Chairman, Board of Directors, Karachi Stock Exchange
Sajjad Rizvi
Nadeem Hussain, CEO, Tameer Bank & President, Tameer Foundation
The statement provided by Citibank lists date, participants, location, and summary of contacts between Citibank staff and the Bhuttos. This statement is reproduced below, interspersed with important events in the more detailed Asif Zardari case summary [see here] provided in the House Sub-Committee Report, inserted chronologically:
Senate Permanent Subcommittee on Investigations
Exhibit # 31h.
Meetings, Events, or Functions at which Benazir Bhutto, Asif Ali Zardari, or Both Were Present
Date: Late January/Early February 1994
Participants: William Rhodes, Shaukat Aziz, Benazir Bhutto, Asif Ali Zardari, and others
Location: Davos, Switzerland
Summary: William Rhodes and Shaukat Aziz attend Davos economic conference. During conference, they are guests at a dinner hosted by Benazir Bhutto and attended by approximately 150 others.
Date: February 1994
Participants: John Reed, Paul Collins, Shaukat Tarin, Benazir Bhutto, and Asif Ali Zardari
Location: Islamabad
Summary: Discussion of Pakistani and world affairs
NOTES on the Citibanksters:
William Rhodes: William R. “Bill” Rhodes Rhodes is the Senior Vice Chairman of Citigroup Inc. and the Chairman of Citigroup and Citibank. He is also Chairman of the Board of both the Americas Society and its affiliate, the Council of the Americas, which were originally founded by David Rockefeller in 1965, and is a board member of the Group of Thirty.
Rhodes was educated at Northfield Mount Hermon, a college preparatory school, and Brown University; he joined Citibank in 1957. As the Senior International Officer for Citigroup, Mr. Rhodes has specific responsibilities for client relationships in emerging markets worldwide, relationships with governments and other official institutions and appointments of Citibank’s senior country officers outside the U.S.
John Shepard Reed [/b] (born 1939) is the former Chairman of the New York Stock Exchange. He previously served as Chairman and CEO of Citicorp, Citibank, and post-merger, Citigroup.was asked to be interim CEO of the New York Stock Exchange after the Richard Grasso over-compensation scandal. He accepted the job for a $1 salary and set up new governance rules as the NYSE became a public corporation. Reed is on the board of directors at Altria Group.
Paul J. Collins became a director of the [Enstar Group Ltd.] on January 31, 2007 in connection with the completion of the Merger. Mr. Collins served as a director of The Enstar Group, Inc. from May 2004 through the Merger. Mr. Collins retired as a Vice Chairman and member of the Management Committee of Citigroup Inc. in September 2000. From 1985 to 2000, Mr. Collins served as a director of Citicorp and its principal subsidiary, Citibank; from 1988 to 1998, he also served as Vice Chairman of those entities. Mr. Collins currently serves as chairman of the University of Wisconsin Foundation and a trustee of the Glyndebourne Arts Trust. He is also a member of the Advisory Board of Welsh, Carson, Anderson & Stowe, a private equity firm. He was previously a director of Kimberly Clark Corporation, Nokia Corporation and BG Group and a member of the supervisory board of Actis Capital LLP.
Date: August 1994
Participants: Sajjad Rizvi, Paul Collins, Shaukat Tarin, Benazir Bhutto, and others
Location: Prime Minister’s Residence, Islamabad
Summary: General courtesy call, discussion of Citibank, macroeconomics and socio-political issues.
[Oct 1994 Mr. Zardari’s relationship with Citibank begins, with an account opened for Capricorn Trading, S.A. a British Virgin Island company, reportedly “through the services of Kamran Amouzegar, a private banker at Citibank private bank in Switzerland, and Jens Schlegelmilch, a Swiss lawyer who was the Bhutto family’s attorney in Europe and close personal friend for more than 20 years.”]
[5-6 Oct 1994 ARY International Exchange, a Dubai company owned by Abdul Razzak Yakub, alleged to have been given a gold import monopoly by Benazir Bhutto, deposits $5 million into the Capricorn Trading account on 5 Oct 1994; and another $5 million on 6 October 1994.]
Date: December 1994
Participants: Shaukat Aziz, Benazir Bhutto, Asif Ali Zardari, Benazir Bhutto’s economics advisor, Pkistani ambassador to Washington and others
Location: Prime Minister’s Residence, Islamabad
Summary: Discussion of Pakistani economy during a dinner meeting
[25 Feb 1994 A 3rd deposit, this time of $8 million, is made to the Capricorn trading account. Citibank says it does not know the source of this deposit.]
[27 Feb 1995 “Mr. Schlegelmilch, working with Mr. Amouzegar, opened three accounts at the Citibank Switzerland private bank. The accounts were opened in the name of M.S. Capricorn Trading, which already had an account at Citibank’s Dubai branch, aswell as Marvel and Bomer Finance, two other British Virgin Island PICs established by Mr. Schlegelmilch, according to Citibank. Each private bank account listed Mr. Schlegelmilch as the account contact and signatory. Citibank informed the Subcommittee that the Swiss Form A, a government-required beneficial owner identification form, identified Mr. Zardari as the beneficial owner of each PIC.”
[6 March 1995 $8.1 million, routed through Citibank, NY, transferred from Dubai to Swiss account.]
Date: March 7-10, 1995
Participants: Shaukat Aziz, William Rhodes, Benazir Bhutto, Asif Ali Zardari and others
Location: Singapore
Summary: During a state visit to Singapore by Benazir Bhutto, William Rhodes and Shaukat Aziz meet with Benazir Bhutto and her advisors in Benazir Bhutto’s hotel suite to discuss the Pakistani economy. At several official events
during this state visit, Shaukat Aziz exchanges greetings with Benazir Bhutto and Asif Ali Zardari
Date: March 7-10, 1995
Participants: Shaukat Aziz, William Rhodes, Benazir Bhutto, Asif Ali Zardari and others
Location: Singapore, Dinner hosted by the Pakistani Ambassador
Summary: Shaukat Aziz exchanges greetings with Benazir Bhutto and Asif Ali Zardari. Benazir Bhutto’s economic advisor asked Benazir Bhutto if she had ever visited Shaukat Aziz’s home in Singapore. She replied that she has never been invited. Shaukat Aziz stated that the Prime Minister was welcome.
Date: March 7-10, 1995
Participants: Shaukat Aziz, Shaukat Aziz’s wife, Benazir Bhutto, Asif Ali Zardari, protocol chiefs for Pakistan and Singapore, the Pakistani Ambassador, and numerous aides and security officials
Location: Shaukat Aziz’s home in Singapore
Summary: During state visit to Singapore Benazir Bhutto makes a surprise visit to Shaukat Aziz’s home. The Benazir Bhutto party remains for approximately one hour.
5 May 1995 $10.2 million, routed through Citibank, NY, transferred from Dubai to Swiss account. Shortly thereafter, Capricorn Trading’s Dubai account was closed. “Citibank has indicated that significant amounts of other funds were also deposited into the Swiss accounts. As described below, the $40 million cap was reached, and millions of additional dollars also passed through those accounts. However, Swiss bank secrecy law has prevented the Subcommittee from obtaining the details on the transactions in the Zardari accounts.”]
Date: July 1995
Participants: Shaukat Aziz, Benazir Bhutto, Asif Ali Zardari and others
Location: Kuala Lumpur, Malaysia
Summary: Shaukat Aziz exchanges greetings with Asif Ali Zardari and Benazir Bhutto at a lunch given by Malaysian foreign minister in connection with benazir Bhutto’s state visit to Malaysia. Shaukat Aziz may also have exchanged greetings with Benazir Bhutto and Asif Ali Zardari at other events during the visit.
Date: Sometime during Benazir Bhutto’s second term as Prime Minister
Participants: Shaukat Aziz, Shaukat Tarin, Asif Ali Zardari and others
Location: Prime Minister’s Residence, Islamabad
Summary: Shaukat Aziz, Shaukat Tarin meet, perhaps on two different occasions, with Asif Ali Zardari and his aides for informal discussions about the Pakistani economy.
Date: September or October 1995
Participants: Sajjad Rizvi, Paul Collins, Shaukat Tarin, Benazir Bhutto and others
Location: Prime Minister’s Residence, Islamabad
Summary: General courtesy call, discussion of Citibank, macroeconomics and socio-political issues.
Date: December 1995
Participants: Shaukat Aziz, Paul Collins, Asif Ali Zardari and 1,500 others
Location: Karachi
Summary: Asif Ali Zardari is a guest at the wedding of Shaukat Aziz’s daughter
Date: During Benazir Bhutto’s second terms as prime minister
Participants: Shaukat Aziz and representatives of various banks
Location: Karachi
Summary: Asif Ali Zardari arrives at the end of dinner gathering of bank representatives in Karachi
Date: Late in Benazir Bhutto’s second terms as prime minister
Participants: Shaukat Aziz, Benazir Bhutto, Benazir Bhutto’s Finance Secretary and other economic advisors
Location: Prime Minister’s Residence, Islamabad
Summary: Discussion of Pakistani economy
Date: February 1996
Participants: Nadeem Hussain, Shaukat Tarin, Asif Ali Zardari and Javed Pasha
Location: Prime Minister’s Residence, Islamabad
Summary: Courtesy meeting to introduce Hussain as Citibank’s new consumer bank head in Pakistan
Date: March 1996
Participants: Sajjad Rizvi, possibly Shaukat Tarin, Margaret Thatcher, Benazir Bhutto and others
Location: Prime Minister’s Residence, Islamabad
Summary: Courtesy call with Lady Thatcher, whose speaking tour was sponsored by Citibank.
Mar/Apr 1996 “Mr. Amouzegar asked that the overall limit on the Zardari accounts be increased from $40 million to $60 million, apparently because the accounts had reached the previously imposed limit of $40 million. Citibank told the Subcommittee staff that Mr. Holderbeke considered the request, but declined to increase the $40 million limit.
June 1996 UK press reports that Mr. Zardari had purchased real estate in London. Citibank claims that an internal review was done, but Mr. Schlegelmilch allegedly indicated the funds had come from the sale of some sugar mills and were legitimate,” which Citibank accepted.
Date: August 1996
Participants: Paul Collins, Citibank Country Corporate Officer for Pakistan and Benazir Bhutto
Location: Probably Islamabad
Summary: Discussion regarding Citibank, the Pakistani economy, and regional economic and political developments.
Date: Fall 1996
Participants: Shaukat Aziz, Benazir Bhutto, Nusrat Bhutto, Sanam Bhutto, Dr. Bunyad Haider and others
Location: Waldorf Astoria, New York City
Summary: Discussion of Pakistani economy. Shaukat Aziz expressed condolences regarding the death of Benazir Bhutto’s brother. Following this meeting, Shaukat Aziz,
Benazir Bhutto and 20 others have dinner at the hotel.
[Nov 1996 Zardari arrested, for the second time, on charges of corruption.]
[Jan 1997 Citibank closed the Zardari accounts.
8 Sep 1997 Swiss government issued orders freezing the Zardari and Bhutto accounts at Citibank and three other banks in Switzerland, at the request of the Pakistani government.
5 Dec 1997 Citibank prepared a Suspicious Activity Report on the Zardari accounts and filed it with the Financial Crimes Enforcement Network at the U.S. Department of Treasury. Note: So Citibank finally ‘notices’ suspicious activity – what took them so long???
Date: 1998
Participants: Shaukat Aziz, Shaukat Aziz’s wife, Benazir Bhutto, Dr. Bunyad Haider and his wife and several other couples
Location: The Haider’s New Jersey home
Summary: Meeting among Pakistanis in the New York area and Benazir Bhutto
[END]
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Source: PRIVATE BANKING AND MONEY LAUNDERING: A CASE STUDY OF OPPORTUNITIES AND VULNERABILITIES, Hearings before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Sixth Congress, First Session, November 9 and 10, 1999. Pages 474-477.
http://www.gpo.gov/congress/senate/senate12sh106.html
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Logged
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“They who have put out the people’s eyes, reproach them of their blindness.” — –John Milton
Re: Pakistan’s Looted Treasury: Stashed in Swiss Citibank Accounts
« Reply #1 on: August 08, 2009, 05:37:46 PM »
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How Citibank Laundered Asif Zardari’s Money
Posted: Nov 7, 2007 Wed 08:53 am
http://www.chowk.com/ilogs/64054/44106
In addition to Mr. Shaukat Aziz, current Prime Minister of Pakistan, numerous former Citibankers occupy highly influential positions in the government and the private sector in Pakistan.
Citibank is one of the largest banks, and operates one of the largest private banks in the US and globally. Of the 40 private banks reviewed by the Federal Reserve during its industry wide examination of private banking in the 1990s, only one — Citibank — was reviewed in detail by Federal Reserve examiners three years in a row. It is a private bank that has struggled with a wide range of anti-money laundering issues. Although Citibank, under Shaukat Aziz’s leadership (from May 1997 to October 1999) and his successors’ has done much to tighten controls, it was beset by numerous scandals during the 1990s.
A 1999 US Congress investigation (exact reference given at end) into Citibank, provides a fascinating inside look at how Citibank helped launder the ill-gotten gains of four high profile corrupt figures: Raul Salinas, brother of the former president of Mexico, Carlos Salinas, Asif Ali Zardari, the husband of Benazir Bhutto, former Prime Minister of Pakistan (reproduced below), El Hadj Omar Bongo, the elected president of Gabon since 1967, and Mohammed, Ibrahim, and Abba Sani Abacha, three sons of General Sani Abacha, who was the military leader of Nigeria from 1993 until his death in 1998.
Of the four case histories provided in the Report, the following is a complete excerpt of the Case History for Asif Zardari. The report also provides photocopies of signed documents, banks records, etc. (listed below, at the end).
[Beginning of Excerpt]
(2) Asif Ali Zardari Case History
The Facts
The second case history involves Asif Ali Zardari, the husband of Benazir Bhutto, former Prime Minister of Pakistan. Ms. Bhutto was elected Prime Minister in 1988, dismissed by the President of Pakistan in August 1990 for alleged corruption and inability to maintain law and order, elected Prime Minister again in October 1993, and dismissed by the President again in November 1996. At various times, Mr. Zardari served as Senator, Environment Minister and Minister for Investment in the Bhutto government. In between the two Bhutto administrations, he was incarcerated in 1990 and 1991 on charges of corruption; the charges were eventually dropped. During Ms. Bhutto’s second term there were increasing allegations of corruption in her government, and a major target of those allegations was Mr. Zardari. It has been reported that the government of Pakistan claims that Ms. Bhutto and Mr. Zardari stole over $1 billion from the country.
During the period 1994 to 1997, Citibank opened and maintained three private bank accounts in Switzerland and a consumer account in Dubai for three corporations under Mr. Zardari’s control. There are allegations that some of these accounts were used to disguise $10 million in kickbacks for a gold importing contract to Pakistan.
Structure of Private Bank Relationship. Mr. Zardari’s relationship with Citibank began in October 1994, through the services of Kamran Amouzegar, a private banker at Citibank private bank in Switzerland, and Jens Schlegelmilch, a Swiss lawyer who was the Bhutto family’s attorney in Europe and close personal friend for more than 20 years. According to Citibank, Mr. Schlegelmilch represented to Mr. Amouzegar that he was working for the Dubai royal family and he wanted to open some accounts at the Citibank branch office in Dubai. Mr. Schlegelmilch had a Dubai residency permit and a visa signed by a member of the Dubai royal family. Mr. Amouzegar agreed to introduce Mr. Schlegelmilch to a banker in the Citibank branch office in Dubai.
According to Citicorp, Mr. Schlegelmilch told the Citibank Dubai banker that he wanted to open an account in the name of M.S. Capricorn Trading, a British Virgin Island PIC. The stated purpose of the account was to receive money and transfer it to Switzerland. The account was opened in early October 1994.
According to Citibank, Mr. Schlegelmilch informed the Dubai banker that he would serve as the representative of the account and the signatory on the account. Under Dubai law, a bank is not required to know an account’s beneficial owner, only the signatory. Citibank told the Subcommittee staff that Mr. Schlegelmilch did not reveal to the Dubai banker that Mr. Zardari was the beneficial owner of the PIC [Private Investment Company: an offshore company often used to launder money], and the account manager never asked him the identity of the beneficial owner of the account. Instead, according to Citibank, she assumed the beneficial owner of the account was the member of the royal family who had signed Mr. Schlegelmilch’s visa. According to Citibank, the account manager actually performed some due diligence on the royal family member whom she believed to be the beneficial owner of the account.
Shortly after opening the account in Dubai, Mr. Schlegelmilch signed a standard referral agreement with Citibank Switzerland private bank guaranteeing him 20% of the first three years of client net revenues earned by the bank from each client he referred to the private bank.
On February 27, 1995, Mr. Schlegelmilch, working with Mr. Amouzegar, opened three accounts at the Citibank Switzerland private bank. The accounts were opened in the name of M.S. Capricorn Trading, which already had an account at Citibank’s Dubai branch, as well as Marvel and Bomer Finance, two other British Virgin Island PICs established by Mr. Schlegelmilch, according to Citibank. Each private bank account listed Mr. Schlegelmilch as the account contact and signatory. Citibank informed the Subcommittee that the Swiss Form A, a government-required beneficial owner identification form, identified Mr. Zardari as the beneficial owner of each PIC.
Lack of Due Diligence. The decision to allow Mr. Schlegelmilch to open the three accounts on behalf of Mr. Zardari, according to Citibank, involved officials at the highest levels of the private bank. The officials were: (a) Mr. Amouzegar, the private banker; (b) Deepak Sharma, then head of private bank operations in Pakistan; (c) Phillipe Holderbeke, then head of private bank operations in Switzerland (who became head of the Europe, Middle East, Africa Division in February 1996); (d) Salim Raza, then head of the EMEA Division of the private bank; and (e) Hubertus Rukavina, then head of the Citibank private bank. Mr. Rukavina told the Subcommittee staff that when he was asked about opening the Zardari accounts, he did not make the decision to open them, but rather directed that the matter be discussed with Mr. Sharma. According to Mr. Rukavina, he never heard whether the accounts were ultimately opened. Mr. Rukavina left the private bank in 1996 and left Citibank in 1999.
Citibank informed the Subcommittee staff that the private bank was aware of the allegations of corruption against Mr. Zardari at the time it opened the accounts in Switzerland. However, Citibank reasoned that if the charges for which Mr. Zardari had been incarcerated for two years had any merit, they would not have been dropped. Bank officials also believed that the family wealth of Ms. Bhutto and Mr. Zardari was large enough to support a large private bank account, even though Citibank was not able to specify what actions were taken to verify the amount and source of their wealth. Citibank said that bank officials were also aware of the M.S. Capricorn Trading account in Dubai, and they were comforted by the fact that there had been no problems with that account. According to Citibank, Mr. Amouzegar informed his superiors that Mr. Zardari was the beneficial owner of the Capricorn account in Dubai when they were considering the request to open the accounts in Switzerland. Inexplicably, however, the Dubai account manager was apparently still operating under the assumption that the beneficial owner of the Dubai Capricorn account was a member of the Dubai royal family. Subcommittee staff have been unable to determine whether Citibank officials were unaware of or inattentive to the serious inconsistency between Citibank Switzerland and Citibank Dubai with respect to the Capricorn Trading account. Citibank also informed the Subcommittee staff that bank officials had some concerns that if they turned down the accounts, their actions may have implications for the corporation’s operations in Pakistan; however, they said they never received any threats on that issue.
Citibank told the Subcommittee staff the private bank decided to allow Mr. Schlegelmilch to open the three accounts for Mr. Zardari on the condition that the private bank would not be the primary accounts for Mr. Zardari’s assets and the accounts would function as passive investment accounts. Citibank told the Subcommittee staff that Mr. Holderbeke signed a memo delineating the restrictions placed on the accounts, including a $40 million aggregate limit on the size of the three accounts, and transaction restrictions requiring the accounts to function as passive, stable investments, without multiple transactions or funding pass-throughs. None of the Citibank personnel interviewed by Subcommittee staff could identify any other private bank account with these types of restrictions. Other private banks interviewed by the Subcommittee staff were asked if they had ever accepted a client on the condition that certain restrictions be imposed on the account. The banks all said they had not. One bank representative explained that if the bank felt that it needed to place restrictions on the client’s account, it didn’t want that type of client. The existence of the restrictions are in themselves proof of the private bank’s awareness of Mr. Zardari’s poor reputation and concerns regarding the sources of his wealth.
Movement of Funds. Citibank told the Subcommittee staff that, once opened, only three deposits were made into the M.S. Capricorn Trading account in Dubai. Two deposits, totaling $10 million were made into the account almost immediately after it was opened. Citibank records show that one $5 million deposit was made on October 5,1994, and another was made on October 6, 1994. The source of both deposits was A.R.Y. International Exchange, a company owned by Abdul Razzak Yaqub [since then, the owner of several ARY television channels that, incidentally, have been providing favorable coverage of Ms. Bhutto’s recent political activities], a Pakistani gold bullion trader living in Dubai.
According to the New York Times, in December 1994, the Bhutto government awarded Mr. Razzak an exclusive gold import license. In an interview with the New York Times, Mr. Razzak acknowledged that he had used the exclusive license to import more than $500 million worth of gold into Pakistan. Mr. Razzak denies, however, making any payments to Mr. Zardari. Citibank could not explain the two $5 million payments. Ms. Bhutto told the Subcommittee staff that since A.R.Y. International Exchange is a foreign exchange business, the payments did not necessarily come from Mr. Razzak, but could have come from a third party who was merely making use of A.R.Y.’s exchange services. The staff invited Ms. Bhutto to provide additional information on the M.S. Capricorn Trading accounts, but she has not yet done so.
On February 25, 1995, a third deposit of $8 million was made into the Dubai M.S. Capricorn Trading account. Records show that the payment was made through American Express, with the originator of the account listed as “Morgan NYC.” Citibank indicated it does not know who Morgan NYC is, nor does it know the source of the $8 million.
All of the funds in the Dubai account of M.S. Capricorn Trading were moved to the Swiss accounts in the Spring of 1995. On March 6, 1995, $8.1 million was transferred; and on May 5, 1995, another $10.2 million was transferred. Both transfers involved U.S. dollars and were routed through Citibank’s New York offices. Citibank informed the Subcommittee staff that M.S. Capricorn Trading closed its Dubai account shortly after the last transfer was completed.
Citibank has indicated that significant amounts of other funds were also deposited into the Swiss accounts. As described below, the $40 million cap was reached, and millions of additional dollars also passed through those accounts. However, Swiss bank secrecy law has prevented the Subcommittee from obtaining the details on the transactions in the Zardari accounts.
Account Monitoring. Citibank told the Subcommittee staff that, in 1996, the Swiss office of the private bank conducted a number of reviews of the Zardari Swiss accounts, finally deciding in October to close them.
The first review was allegedly in early 1996, triggered by increasing publicity about allegations of corruption against Mr. Zardari. Citibank told the Subcommittee staff that Messrs. Holderbeke, [Salim] Raza, Sharma and Amouzegar participated in the review, and apparently concluded that the allegations were politically motivated and that the accounts should remain open. The Subcommittee staff was told that the review did not include looking at the accounts’ transaction activity.
In March or April, 1996, Mr. Amouzegar asked that the overall limit on the Zardari accounts be increased from $40 million to $60 million, apparently because the accounts had reached the previously imposed limit of $40 million. Citibank told the Subcommittee staff that Mr. Holderbeke considered the request, but declined to increase the $40 million limit.
In June, press reports in the United Kingdom that Mr. Zardari had purchased real estate in London triggered still another review of the Zardari accounts. Citibank private bank told the Subcommittee staff that its Swiss office internally discussed the source of the funds for the property purchase. Mr. Amouzegar and Mr. [Salim] Raza then met with Mr. Schlegelmilch, who allegedly informed them that funds had been deposited into the Citibank accounts, transferred to another PIC account outside of Citibank and used to purchase the property. Mr. Schlegelmilch allegedly indicated the funds had come from the sale of some sugar mills and were legitimate. Citibank told the Subcommittee staff it is not sure if anyone at the private bank attempted to validate the information about the sale of the sugar mills. In addition, even though this account activity violated the condition imposed by Citibank that the accounts were not to be used as a pass through for funds, the accounts were kept open.
Closing the Accounts. In July 1996, after Mr. Amouzegar left the private bank to open his own company, another private banker, Cedric Grant, took over management of the Zardari accounts. Citibank told the Subcommittee staff that Mr. Grant began to review the Zardari accounts about one month later to familiarize himself with them. He also reviewed the transactions that had taken place within the accounts.
In September and October 1996, press accounts in Pakistan repeatedly raised questions about corruption by Mr. Zardari and Ms. Bhutto, as Ms. Bhutto’s re-election campaign increased its activities prior to a February election date. In September, Ms. Bhutto’s only surviving brother, Murtaza Bhutto, was assassinated, and Ms. Bhutto’s mother accused Ms. Bhutto and Mr. Zardari of masterminding the murder, because the brother had been leading opposition to Ms. Bhutto.
In October, Mr. Grant completed his review of the Zardari accounts and provided a written analysis to Messrs. Holderbeke, Sharma and [Salim] Raza, according to Citibank. Mr. Grant had found numerous violations of the account restrictions imposed by Citibank, including multiple transactions and funding pass-throughs. Citibank told the Subcommittee staff that the accounts had functioned more as checking accounts than passive investment accounts, directly contrary to the private bank’s restrictions. Apparently, well over $40 million had flowed through the accounts, though Subcommittee staff were unable to ascertain the actual amount because Swiss bank secrecy law prohibits Citibank from sharing that information with the Subcommittee. Citibank indicated that Mr. Amouzegar had either ignored or did not pay attention to the account activity. Mr. Grant recommended closing the accounts, and they were closed by January 1997.
[Note: In May 1997, Mr. Shaukat Aziz was transferred at Citibank’s New York headquarters, from his position as head of credit card operations to head of private banking. In November 1996, Mr. Farooq Laghari had dismissed the government of Ms. Benazir Bhutto-Zardari; and in February 1997, Mr. Nawaz Sharif became Prime Minister.]
Legal Proceedings. On September 8, 1997, the Swiss government issued orders freezing the Zardari and Bhutto accounts at Citibank and three other banks in Switzerland at the request of the Pakistani government. Since Citibank had closed its Zardari accounts in January 1997, it took no action nor did it make any effort to inform U.S. authorities of the accounts until late November 1997. Citibank contacted the Federal Reserve and OCC [Office of the Comptroller of the Currency, the banking supervision arm of the US Department of Treasury] about the Zardari accounts in late November, in anticipation of a New York Times article that eventually ran in January 1998, alleging that Mr. Zardari had accepted bribes, and that he held Citibank accounts in Dubai and Switzerland. On December 8 and 11, 1997, Citibank briefed the OCC and the Federal Reserve, respectively, about the accounts and the steps it had taken as a result of the Zardari matter. These steps included: closing all of the accounts that had been referred by Mr. Schlegelmilch to the private bank and terminating his referral agreement; reviewing all of the accounts opened in the Dubai office; and tightening up account opening procedures in Dubai, including requiring the Dubai office to identify the beneficial owner of all Dubai accounts. Citibank did not identify any changes made or planned for the Swiss office, even though the majority of the activity with respect to the Zardari accounts had taken place in Switzerland.
On December 5, 1997, Citibank prepared a Suspicious Activity Report on the Zardari accounts and filed it with the Financial Crimes Enforcement Network at the U.S. Department of Treasury. The filing was made fourteen months after its decision to close the Zardari accounts; thirteen months after Mr. Zardari was arrested a second time for corruption in November 1996; and nearly two months after the Swiss government had ordered four Swiss banks (including Citibank Switzerland) to freeze all Zardari accounts.
In June 1998, Switzerland indicted Mr. Schlegelmilch and two Swiss businessmen, the former senior executive vice president of SGS and the managing director of Cotecna, for money laundering in connection with kickbacks paid by the Swiss companies for the award of a government contract by Pakistan. In July 1998, Mr. Zardari was indicted for violation of Swiss money laundering law in connection with the same incident. Ms. Bhutto was indicted in Switzerland for the same offense in August 1998. A trial on the charges is expected.
In October 1998, Pakistan indicted Mr. Zardari and Ms. Bhutto for accepting kickbacks from the two Swiss companies in exchange for the award of a government contract. On April 15, 1999, after an 18-month trial, Pakistan’s Lahore High Court convicted Ms. Bhutto and Mr. Zardari of accepting the kickbacks and sentenced them to 5 years in prison, fined them $8.6 million and disqualified them from holding public office. Ms. Bhutto, who now lives in London, denounced the decision. Mr. Zardari remains in jail. Additional criminal charges are pending against both in Pakistani courts.
On December 11, 1997, Citicorp’s Chairman John Reed wrote the following to the Board of Directors:
“We have another issue with the husband of Ex-Prime Minister Bhutto of Pakistan. I do not yet understand the facts but I am inclined to think that we made a mistake. More reason than ever to rework our Private Bank.”
Mr. Reed told the Subcommittee staff that it was the combination of the Salinas and Zardari accounts that made him charge Mr. [Shaukat] Aziz [currently, Prime Minister of Pakistan], the new private bank head, with taking a hard look at the bank’s public figure policy and public figure accounts.
The Issues
The Zardari case history raises issues involving due diligence, secrecy and public figure accounts. The Zardari case history begins with the Citibank Dubai branch’s failure to identify the true beneficial owner of the M.S. Capricorn Trading account. As a result, the account officer in Dubai performed due diligence on an individual who had no relationship to the account being opened. In Switzerland, Citibank officials opened three private bank accounts despite evidence of impropriety on the part of Mr. Zardari. In an interview with Subcommittee staff, Citigroup Co-Chair John Reed informed the Subcommittee staff that he had been advised by Citibank officials in preparation for a trip to Pakistan in February 1994, that there were troubling accusations concerning corruption surrounding Mr. Zardari, that he should stay away from him, and that he was not a man with whom the bank wanted to be associated. Yet one year later, the private bank opened three accounts for Mr. Zardari in Switzerland. Mr. Reed told the Subcommittee staff that when he learned of the Zardari accounts he thought the account officer must have been “an idiot.”
Citibank has been unable to confirm that bank employees verified that Mr. Zardari had a level of wealth sufficient to support the size of the accounts that he was opening. In addition, the Swiss private banker took no action to validate the legitimacy of the source of the funds that were deposited into the account. For example, there was no effort made to verify the claims that some of the funds derived from the sale of sugar mills.
Citibank also performed no due diligence on the client owned and managed PICs that were the named accountholders. Because the PICs were client-created, the bank’s failure to perform due diligence on the PICs meant that it had no knowledge of the activities, assets or entities involved with the corporations. One of the PICs, Bomer Finance, has been determined to have been a repository for kickbacks paid to Mr. Zardari, and those kickbacks tainted funds deposited at the Geneva branch of Union Bank of Switzerland. Documentation has not been made available to determine whether Bomer Finance also used its Citibank account for illicit funds.
Another due diligence lapse was the private bank’s failure to monitor the Zardari accounts to ensure that the account restrictions imposed on them were being followed. When officials were presented with evidence in 1996 that the restrictions were being violated, they nevertheless allowed the accounts to continue.
The Zardari accounts in Switzerland were opened one day before Raul Salinas was arrested. The account was repeatedly reviewed in 1996, after the Salinas scandal became public. Yet there is no evidence that anyone in the private bank had been sensitized to the problems associated with handling an account of a person suspected of corruption.
The Zardari example also demonstrates the practical consequences of secrecy in private banking. Citibank claims that its decisionmaking in the Zardari matter cannot be fully explained or documented, since all Citibank officials are subject to Swiss secrecy laws prohibiting discussion of client-specific information. In light of the fact that U.S. banks are supposed to oversee their foreign branches and enforce U.S. law, including anti-money laundering requirements, this inability to produce documentation related to a troubling case again highlights the problems with U.S. banks choosing to operate in secrecy jurisdictions.
Pattern of Poor Account Management. The Zardari case history took place during a series of critical internal and federal audits between 1992 and 1997 of the Swiss office which, during most of that time, served as the headquarters of the private bank. The shortcomings identified in the audits included policies, procedures, and problems that affected the management of the Zardari accounts. They included:
* failure of the “corporate culture” in the Swiss office to foster ” ‘a climate of integrity, ethical conduct and prudent risk taking’ by U.S. standards”;
* inadequate due diligence;
* “less than acceptable internal controls”;
* lack of oversight and control of third party referral agents such as Schlegelmilch; and
* inadequate monitoring of accounts;
all of which resulted in “unacceptable” internal audit ratings. In December 1995, the Swiss office received the lowest audit score received by any office in the private bank during the 1990s. These audit scores indicate the office’s poor handling of the Zardari accounts was part of an ongoing pattern of poor account management.
[End of excerpt]
======
Source: MINORITY STAFF REPORT FOR PERMANENT SUBCOMMITTEE ON INVESTIGATIONS HEARING ON PRIVATE BANKING AND MONEY LAUNDERING: A CASE STUDY OF OPPORTUNITIES AND VULNERABILITIES, November 9, 1999
http://www.senate.gov/~gov_affairs/110999_report.htm
The Report features as an annex to
S. Hrg. 106-248
PRIVATE BANKING AND MONEY LAUNDERING: A CASE STUDY OF OPPORTUNITIES AND VULNERABILITIES, Hearings before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Sixth Congress, First Session, November 9 and 10, 1999.
This xiv+1114 pages report is available at:
http://www.gpo.gov/congress/senate/senate12sh106.html
as TEXT [424KB] and as PDF [30MB] files
It provides (on page numbers indicated) the following:
Documents relating to Asif Ali Zardari:
a. Swiss Form A identifying Asif Ali Zardari as the
beneficial owner of the Capricorn Trading S.A.
account in the Citibank Private Bank in Switzerland
[600]…………………………………. 445
[Signed by “Asif Ali Zardari, Bilawal House, Karachi
(Pak)”]
b. Wire transfer records documenting transfers of $18
million into Mr. Zardari’s Capricorn Trading S.A.
account in Dubai and transfers of $18.3 million out
of the Dubai account into the Capricorn Trading S.A.
account in Citibank Private Bank in Switzerland
……………………………………… 446
10/5/94 transfer of $5 million from A.R.Y. International
Exchange into the Capricorn Trading S.A. account in
Citibank in Dubai [X6903-4];
10/6/94 transfer of $5 million from A.R.Y. International
Exchange into the Capricorn Trading S.A. account in
Citibank in Dubai [X6900-2];
2/24/95 transfer of $8 million from Morgan NYC into the
Capricorn Trading S.A. account in Citibank in Dubai;
3/6/95 transfer of $8.1 million from the Capricorn
Trading S.A. account in Citibank in Dubai into the
Capricorn Trading S.A. account in Citibank Private Bank
in Switzerland;
5/3/95 transfer of $10.2 million from the Capricorn
Trading S.A. account in Citibank in Dubai into the
Capricorn Trading S.A. account in Citibank Private Bank
in Switzerland;
5/4/94 record of Citibank Private Bank in Switzerland
credit of $10.2 million to account of Capricorn Trading
S.A.
c. Mandate Agreement between Asif Ali Zardari and Jens
Schlegelmilch concerning Bomer Finance, Inc.
[601-2]………………………………… 466
d. Mandate Agreement between Begum Nusrat Bhutto and Jens
Schlegelmilch concerning Mariston Securities, Inc.
[603-4]………………………………… 468
e. British Virgin Islands Certificate of Incorporation
for Capricorn Trading S.A.
[605]………………………………….. 470
f. 6/29/94 letter from Cotecna Inspection S.A., stating
that if it receives a contract from the government of
Pakistan for the inspection and price verification of
imported goods, it will pay Mariston Securities, Inc.,
6 percent of the payments made under the contract
[597]………………………………….. 471
g. 12/11/97 communication from John Reed to Citibank Board,
including a discussion of the Zardari matter.. 472
h. List of meetings between Mr. Zardari and Citibank
personnel, provided by Citibank ………….. 474
US Bank Money Laundering –
Enormous By Any Measure
By James Petras
Professor of Sociology, Binghamton University
9-1-2
There is a consensus among U.S. Congressional Investigators, former bankers and international banking experts that U.S. and European banks launder between $500 billion and $1 trillion of dirty money each year, half of which is laundered by U.S. banks alone. As Senator Carl Levin summarizes the record: “Estimates are that $500 billion to $1 trillion of international criminal proceeds are moved internationally and deposited into bank accounts annually. It is estimated that half of that money comes to the United States”.
Over a decade then, between $2.5 and $5 trillion criminal proceeds have been laundered by U.S. banks and circulated in the U.S. financial circuits. Senator Levin’s statement however, only covers criminal proceeds, according to U.S. laws. It does not include illegal transfers and capital flows from corrupt political leaders, or tax evasion by overseas businesses. A leading U.S. scholar who is an expert on international finance associated with the prestigious Brookings Institute estimates “the flow of corrupt money out of developing (Third World) and transitional (ex-Communist) economies into Western coffers at $20 to $40 billion a year and the flow stemming from mis-priced trade at $80 billion a year or more. My lowest estimate is $100 billion per year by these two means by which we facilitated a trillion dollars in the decade, at least half to the United States. Including the other elements of illegal flight capital would produce much higher figures. The Brookings expert also did not include illegal shifts of real estate and securities titles, wire fraud, etc.
In other words, an incomplete figure of dirty money (laundered criminal and corrupt money) flowing into U.S. coffers during the 1990s amounted to $3-$5.5 trillion. This is not the complete picture but it gives us a basis to estimate the significance of the “dirty money factor” in evaluating the U.S. economy. In the first place, it is clear that the combined laundered and dirty money flows cover part of the U.S. deficit in its balance of merchandise trade which ranges in the hundreds of billions annually. As it stands, the U.S. trade deficit is close to $300 billion. Without the “dirty money” the U.S. economy external accounts would be totally unsustainable, living standards would plummet, the dollar would weaken, the available investment and loan capital would shrink and Washington would not be able to sustain its global empire. And the importance of laundered money is forecast to increase. Former private banker Antonio Geraldi, in testimony before the Senate Subcommittee projects significant growth in U.S. bank laundering. “The forecasters also predict the amounts laundered in the trillions of dollars and growing disproportionately to legitimate funds.” The $500 billion of criminal and dirty money flowing into and through the major U.S. banks far exceeds the net revenues of all the IT companies in the U.S., not to speak of their profits. These yearly inflows surpass all the net transfers by the major U.S. oil producers, military industries and airplane manufacturers. The biggest U.S. banks, particularly Citibank, derive a high percentage of their banking profits from serving these criminal and dirty money accounts. The big U.S. banks and key institutions sustain U.S. global power via their money laundering and managing of illegally obtained overseas funds.
U.S. Banks and The Dirty Money Empire
Washington and the mass media have portrayed the U.S. as being in the forefront of the struggle against narco trafficking, drug laundering and political corruption: the image is of clean white hands fighting dirty money. The truth is exactly the opposite. U.S. banks have developed a highly elaborate set of policies for transferring illicit funds to the U.S., investing those funds in legitimate businesses or U.S. government bonds and legitimating them. The U.S. Congress has held numerous hearings, provided detailed exposés of the illicit practices of the banks, passed several laws and called for stiffer enforcement by any number of public regulators and private bankers. Yet the biggest banks continue their practices, the sum of dirty money grows exponentially, because both the State and the banks have neither the will nor the interest to put an end to the practices that provide high profits and buttress an otherwise fragile empire.
First thing to note about the money laundering business, whether criminal or corrupt, is that it is carried out by the most important banks in the USA. Secondly, the practices of bank officials involved in money laundering have the backing and encouragement of the highest levels of the banking institutions – these are not isolated cases by loose cannons. This is clear in the case of Citibank’s laundering of Raul Salinas (brother of Mexico’s ex-President) $200 million account. When Salinas was arrested and his large scale theft of government funds was exposed, his private bank manager at Citibank, Amy Elliott told her colleagues that “this goes in the very, very top of the corporation, this was known…on the very top. We are little pawns in this whole thing” (p.35).
Citibank, the biggest money launderer, is the biggest bank in the U.S., with 180,000 employees world-wide operating in 100 countries, with $700 billion in known assets and over $100 billion in client assets in private bank (secret accounts) operating private banking offices in 30 countries, which is the largest global presence of any U.S. private bank. It is important to clarify what is meant by “private bank.”
Private Banking is a sector of a bank which caters to extremely wealthy clients ($1 million deposits and up). The big banks charge customers a fee for managing their assets and for providing the specialized services of the private banks. Private Bank services go beyond the routine banking services and include investment guidance, estate planning, tax assistance, off-shore accounts, and complicated schemes designed to secure the confidentiality of financial transactions. The attractiveness of the “Private Banks” (PB) for money laundering is that they sell secrecy to the dirty money clients. There are two methods that big Banks use to launder money: via private banks and via correspondent banking. PB routinely use code names for accounts, concentration accounts (concentration accounts co-mingles bank funds with client funds which cut off paper trails for billions of dollars of wire transfers) that disguise the movement of client funds, and offshore private investment corporations (PIC) located in countries with strict secrecy laws (Cayman Island, Bahamas, etc.)
For example, in the case of Raul Salinas, PB personnel at Citibank helped Salinas transfer $90 to $100 million out of Mexico in a manner that effectively disguised the funds’ sources and destination thus breaking the funds’ paper trail. In routine fashion, Citibank set up a dummy offshore corporation, provided Salinas with a secret code name, provided an alias for a third party intermediary who deposited the money in a Citibank account in Mexico and transferred the money in a concentration account to New York where it was then moved to Switzerland and London. The PICs are designed by the big banks for the purpose of holding and hiding a person’s assets. The nominal officers, trustees and shareholder of these shell corporations are themselves shell corporations controlled by the PB. The PIC then becomes the holder of the various bank and investment accounts and the ownership of the private bank clients is buried in the records of so-called jurisdiction such as the Cayman Islands. Private bankers of the big banks like Citibank keep pre-packaged PICs on the shelf awaiting activation when a private bank client wants one. The system works like Russian Matryoshka dolls, shells within shells within shells, which in the end can be impenetrable to a legal process.
The complicity of the state in big bank money laundering is evident when one reviews the historic record. Big bank money laundering has been investigated, audited, criticized and subject to legislation; the banks have written procedures to comply. Yet banks like Citibank and the other big ten banks ignore the procedures and laws and the government ignores the non-compliance. Over the last 20 years, big bank laundering of criminal funds and looted funds has increased geometrically, dwarfing in size and rates of profit the activities in the formal economy. Estimates by experts place the rate of return in the PB market between 20-25% annually. Congressional investigations revealed that Citibank provided “services” for 4 political swindlers moving $380 million: Raul Salinas – $80-$100 million, Asif Ali Zardari (husband of former Prime Minister of Pakistan) in excess of $40 million, El Hadj Omar Bongo (dictator of Gabon since 1967) in excess of $130 million, the Abacha sons of General Abacha ex-dictator of Nigeria – in excess of $110 million. In all cases Citibank violated all of its own procedures and government guidelines: there was no client profile (review of client background), determination of the source of the funds, nor of any violations of country laws from which the money accrued. On the contrary, the bank facilitated the outflow in its prepackaged format: shell corporations were established, code names were provided, funds were moved through concentration accounts, the funds were invested in legitimate businesses or in U.S. bonds, etc. In none of these cases – or thousands of others – was due diligence practiced by the banks (under due diligence a private bank is obligated by law to take steps to ensure that it does not facilitate money laundering). In none of these cases were the top banking officials brought to court and tried. Even after arrest of their clients, Citibank continued to provide services, including the movement of funds to secret accounts and the provision of loans.
Correspondent Banks: The Second Track
The second and related route which the big banks use to launder hundreds of billions of dirty money is through “correspondent banking” (CB). CB is the provision of banking services by one bank to another bank. It is a highly profitable and significant sector of big banking. It enables overseas banks to conduct business and provide services for their customers – including drug dealers and others engaged in criminal activity – in jurisdictions like the U.S. where the banks have no physical presence. A bank that is licensed in a foreign country and has no office in the United States for its customers attracts and retains wealthy criminal clients interested in laundering money in the U.S. Instead of exposing itself to U.S. controls and incurring the high costs of locating in the U.S., the bank will open a correspondent account with an existing U.S. bank. By establishing such a relationship, the foreign bank (called a respondent) and through it, its criminal customers, receive many or all of the services offered by the U.S. big banks called the correspondent.
Today, all the big U.S. banks have established multiple correspondent relationships throughout the world so they may engage in international financial transactions for themselves and their clients in places where they do have a physical presence. Many of the largest U.S. and European banks located in the financial centers of the world serve as correspondents for thousands of other banks. Most of the offshore banks laundering billions for criminal clients have accounts in the U.S. All the big banks specializing in international fund transfer are called money center banks, some of the biggest process up to $1 trillion in wire transfers a day. For the billionaire criminals an important feature of correspondent relationships is that they provide access to international transfer systems – that facilitate the rapid transfer of funds across international boundaries and within countries. The most recent estimates (1998) are that 60 offshore jurisdictions around the world licensed about 4,000 offshore banks which control approximately $5 trillion in assets.
One of the major sources of impoverishment and crises in Africa, Asia, Latin America, Russia and the other countries of the ex-U.S.S.R. and Eastern Europe, is the pillage of the economy and the hundreds of billions of dollars which are transferred out of the country via the corresponding banking system and the Private Banking system linked to the biggest banks in the U.S. and Europe. Russia alone has seen over $200 billion illegally transferred in the course of the 1990s. The massive shift of capital from these countries to the U.S. and European banks has generated mass impoverishment and economic instability and crises. This in turn has created increased vulnerability to pressure from the IMF and World Bank to liberalize their banking and financial systems leading to further flight and deregulation which spawns greater corruption and overseas transfers via private banks as the Senate reports demonstrate.
The increasing polarization of the world is embedded in this organized system of criminal and corrupt financial transactions. While speculation and foreign debt payments play a role in undermining living standards in the crisis regions, the multi-trillion dollar money laundering and bank servicing of corrupt officials is a much more significant factor, sustaining Western prosperity, U.S. empire building and financial stability. The scale, scope and time frame of transfers and money laundering, the centrality of the biggest banking enterprises and the complicity of the governments, strongly suggests that the dynamics of growth and stagnation, empire and re-colonization are intimately related to a new form of capitalism built around pillage, criminality, corruption and complicity.
James Petras is a Professor of Sociology at Binghamton University in Binghamton, New York. He is the author of 57 books. His latest, Globalization Unmasked: Imperialism in the New Millenium
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Therefore, if we want to save Pakistan, we will have to take ownership of our country and step into the world of hunger, squalor, disease, despair and death and share their grief and sorrow and try to fulfill their broken promises. If we fail to establish a just and honest system of governance, then neither the drones, nor the mightiest army nor our nukes will stop the March of the Taliban.
And to achieve this, we need an honest and sincere leader and a government that is free from corruption and dishonest parlimantarians. And this can only be achieved if the corrupt parliamentarians are disqualified by ECP and prevented from participating in the coming election.
Unfortunately, Fakhru Bhai and his four-member team are being put under tremendous pressure from those in government, who are trying to sabotage the workings of ECP, by accusing its shameless members of ‘witch hunting’ and defaming the politicians. But then, as the late Ardeshir Cowasgee, God bless his soul, had asked,‘How do you shame the shameless’?
As such, if we wish to save Pakistan, we, who have the most to lose, must stand up and be counted and come to the aid of the Election Commission of Pakistan. In this connection, Citizens For Fair Election are organizing a series of peaceful demonstrations in front of the ECP office, (opposite the passport office in Saddar), on Monday 25th at 12pm and request all citizens to participate in the demonstrations.
And if we fail to do so, then as Shakespeare had written: ‘The fault is not in our stars, but in ourselves, that we are underlings’ and the bells that tool, will be for us.
Hamid Maker. (Email: trust@helplinetrust.org).
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