The writer is a lawyer based in Islamabad.
The ‘prohibited funding’ case against the PTI arose from a complaint filed by Akbar Sher Babar before the Election Commission of Pakistan on December 14, 2014. Nearly eight years on, the ECP has finally rendered an elaborate judgment on the matter with significant potential consequences for the political and legal landscape of Pakistan. But what were the facts and issues in dispute and what has the ECP really held?
In simple terms, funding of political parties is regulated through laws all over the world to ensure that the stream of democracy is not polluted. It is not uncommon for such regulation to prohibit or restrict funding from unwanted sources to curtail their influence in politics. In Pakistan, Article 17(3) provides that “Every political party shall account for the source of its funds in accordance with the law”.
The question of the manner in which such funding is to be accounted for was previously dealt with under a number of laws including Articles 6(3) and 13 of the Political Parties Order, 2002 (PPO) and Rules 4 and 5 of the Political Parties Rules, 2002 (PPR) and is now dealt with by the Election Act, 2017. Article 6(3) of the PPO in particular provides that “Any contribution made directly or indirectly by any foreign government, multi-national or domestically incorporated public or private company, firm, trade or professional association shall be prohibited and the parties may accept contributions and donations only from individuals”.
With respect to the distinction between prohibited funding and foreign funding, Article 2(iii)(c) defines the term ‘foreign aided political party’ as a political party which “receives….any portion of its funds from foreign nationals”.
Akbar S Babar filed a complaint before the ECP alleging internal mismanagement and misuse of party funds by the PTI. He contended that the party was not keeping proper accounts of its funds and was not providing access to funding records to members. He alleged that the statements filed before the ECP from 2008-2013 by the PTI were incomplete and inaccurate and concealed prohibited funding and accordingly, the accompanying certifications of compliance submitted by Chairman PTI Imran Khan were false. Most importantly, he asserted that funding had been received from corporations as well as foreign nationals. These contentions were of course resisted by the PTI through its counsel.
The ECP formed a scrutiny committee (committee) to undertake a fact-finding exercise concerning the assets and liabilities of the PTI in March, 2018. In particular, the committee was tasked with identifying the prohibited funds. After the scrutiny report eventually submitted its findings, both parties presented their arguments to the ECP. Babar argued that the committee report evidenced that the PTI had indeed obtained funding from corporations, both foreign and local, and from persons who were not Pakistani nationals. Further, the PTI had not declared all its bank accounts to the ECP in its annual statements from 2008-2013. Accordingly, it was argued that the certificate signed by Imran Khan and submitted along with such annual statements, certifying compliance with relevant laws, was false.
The PTI argued that Article 6(3) of PPO must be read literally as meaning that funding was only prohibited from ‘multi-nationals’ and that a foreign corporation was not necessarily a ‘multi-national’. The PTI also argued that the committee did not have the expertise or sufficient information before it to determine whether the funds were in fact received from foreign nationals or corporations. It was also contended that the data obtained by the committee through the SBP from local banks was beyond the mandate of the committee and 13 of the accounts disclosed through such means were disowned by the PTI.
The ECP has now in its judgment given the following findings on facts and law: first, the argument that Article 6(3) does not prohibit funding from foreign corporations was rejected. The ECP categorically held that funding could only be received from individuals by political parties in Pakistan.
Accordingly, it was held that $2,121,500 transferred to the PTI Bank Account in Pakistan through M/s Wootton Cricket Limited, as admitted in Arif Naqvi’s affidavit submitted by the PTI, amounted to prohibited funding. The PTI failed to disclose the details of these transactions and committed acts of willful concealment, misstatement and misrepresentation of facts.
Similarly funding amounting to $49,965 transferred by Bristol Engineering Services LLC, a UAE-based company, to PTI accounts, as admitted by the owner of the company through affidavit was also found as being prohibited.
And $100,000 from a Zurich-based entity E Planet Trustees PTC and $1741 from SS Marketing were also found to be prohibited for the same reasons.
With respect to funding collected by USA LLC’s of the PTI, the ECP found that LLC 6160 collected $70960 from 21 foreign nationals and 120 companies while LLC 5975 collected funds from 13 foreign nationals and 231 companies. The PTI knowingly received and accepted donations collected by its US-based agents through conduit companies which were also contributed by foreign companies and foreign nationals. The ECP found that the committee was justified in relying upon ‘nomenclature-based identity check’ and that the PTI had failed to be vigilant with respect to contravention of Pakistan laws by its agents. The aforesaid funding was found to be prohibited.
In total funding PTI US LLC’s were found to have received funds from 351 companies amounting to $162,632, in addition to Rs504,250 from Dunpec Pty Ltd, an Australia-based Private Limited company. Funding was also received from three Pakistani companies to the tune of Rs185,000 – all classified as prohibited sources of funding.
After verification of data by NADRA, donations received from Ms Romita Shetty, a US based businesswoman of Indian origin were prohibited.
With respect to 13 accounts disclosed by information obtained through SBP and disowned by PTI, the contention of PTI was found without merit as inter-bank transfers were found to have been made by PTI in their declared accounts from the accounts which they disowned. Receipts of PKR 215,787,718 and withdrawals of PKR 197,957,814 were found to have been conducted from the said accounts which were opened and operated by senior PTI management and Leadership. The ECP held that Non-disclosure and concealment of 16 bank accounts by PTO was a serious reporting lapse and in violation of Article 17(3)
To the extent of the Form 1 certificate signed by Imran Khan it was held that he failed to discharge his obligations as mandated under the Pakistani statutes as the signed certificate was not consistent with accounting information available before the ECP gathered on the basis of information obtained from banks through SBP. The certificates were held to be grossly inaccurate and wrong.
Beyond the findings of prohibited funding having been received and confiscation thereof, two other serious issues arise now for the PTI. First, the finding that the certifications filed by Imran Khan were grossly inaccurate opens the door towards his disqualification under Article 62(1)(f) of the constitution. This matter was previously agitated in the case of Muhammad Hanif Abbasi vs. Imran Khan Niazi (PLD 2018 SC 189) wherein the majority judgment held that “The alleged falsity of the certificates issued by the Respondent under Article 13(2) of the PPO is a secondary fact ascertainable by a competent Court of law after the ECP gives its findings whether any prohibited funding has been received and collected by the PTI in terms of Article 6(3) of the PPO”.
Second, and far more significantly, the finding that funds have been received from foreign nationals may sound the death knell for the PTI as a whole. The reason for that is that this puts the PTI squarely within the definition of ‘foreign-aided political party’. Section 212 of the Elections Act, 2017 empowers the federal government to make a declaration for the dissolution of a political party, on the basis of a reference from the ECP of information from any other source. In this regard, it was also held in the case of Hanif Abbasi vs Imran Khan Niazi that “The allegation that the PTI is a foreign aided political party can under Article 15 of the PPO be leveled only by the Federal Government for its validation on a reference made to this Court.”
Accordingly, the ECP has not only directed for the issuance of a show-cause notice to the PTI for confiscation of funds but has also directed forwarding of the case to the federal government, alluding to the exercise of powers under Section 212 of Elections Act, 2017. This, however, is not the end of the matter. If the federal government passes any such declaration, the same will have to be referred to the Supreme Court. Only if such declaration is upheld, can the dissolution of the PTI be confirmed.
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