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Thursday March 28, 2024

PM says had a titular status in UAE company

By Sohail Khan
July 24, 2017

ISLAMABAD: Prime Minister Nawaz Sharif admitted before the Supreme Court for being the UAE-based Capital FZE’s board chairman but said it was only a ceremonial office, acquired in 2007 when he was in exile and had nothing to do with the running or supervising the entity’s affairs.

The prime minister had declared his chairmanship of FZE Capital as well as his Aqama in the nomination papers submitted for the last general elections, said the 25-page reply submitted to the Supreme Court.

The allegation that the employment with Capital FZE had been concealed by the prime minister was totally false, says the reply.It says the Aqama and employment with Capital FZE were reflected in the copies of his passport annexed with the nomination forms submitted for the general elections 2013.

The prime minister contended that he did not withdraw the salary of AED10,000. Thus, the salary shown in the employment contract in effect never constituted an asset for him.

“Respondent No 1 (PM) was neither a shareholder in nor a director or a secretary of Capital FZE. Nor was he ever an authorised signatory of Capital FZE. There is also not a shred of evidence on the record showing Respondent No 1 as the owner / shareholder/ director /secretary or authorised signatory of Capital FZE at any time during the subsistence of this Company,” says the reply.

“So far as the designation of Respondent No 1 as Chairman of the Board is concerned, this was only a ceremonial office acquired in 2007 when the Respondent No 1 was in exile, and had nothing to do with the running of the Company or supervising its affairs.

“Similarly, I did not draw the salary of AED10,000. Thus, the salary shown in the Employment Contract in effect never constituted an asset for him,” the prime minister added.

“The contents of the payment certificate at Page 137 of Volume IX of the JIT Report are not relatable to the Respondent No 1. In fact, it is emphatically denied that the Respondent No 1 received any salary as purported to be represented by the said certificate. It may be added here that this ceremonial status of the Respondent No 1 came to an end with the dissolution of Capital FZE, the process of which began in July, 2013 and ended in July, 2014. However, before that, in January, 2013, when Respondent No 8 shared his decision to wind up the Company, Respondent No 1 categorically told him that he did not intend to nor would claim any salary from the Company,” says the reply.

“As for the Aqama, it is issued for a period of 3 years, and was last issued in 2012. However, the 2012 Aqama lapsed in 2014 on the dissolution of Capital FZE, for which the Respondent No 8 (Hassan Nawaz) had applied in 2013,” the prime minister’s reply said.

“The JIT had erroneouslyconcluded that he had any nexus with the ownership or affairs of Capital FZE,” Nawaz said, adding that he was never confronted with the above documents by the JIT. Had he been confronted with such documents, he could have explained to the JIT the position noted above, said the prime minister.

The reply also clarified that the premier was not the chief executive officer of Chaudhry Sugar Mills as stated in the JIT report.

“This finding of the JIT is erroneous. It is categorically submitted that the Respondent No 1 is or has never remained the Chief Executive Officer of Chaudhry Sugar Mills Limited (CSML). This is confirmed by Form A of CSML duly filed with SECP. The Respondent No.1 remained a shareholder in CSML till June 2016. It is for this reason that the “business name” is stated to be CSML. This does not, in any way, infer that the Respondent No 1 was the CEO of CSML,” says the reply. Following is the text of the reply:

Imran Ahmed Khan Niazi, Petitioner,

Versus Mian Muhammad Nawaz Sharif & others, Respondents

WRITTEN SUBMISSIONS ON BEHALF OF RESPONDENT NO.1 IN RESPECT OF THE ALLEGATIONS OF ASSETS BEYOND KNOWN SOURCES OF INCOME OF THE RESPONDENT NO.1 CONTAINED IN VOLUME IX OF THE JIT REPORT

Respectfully sheweth:

As requested during the hearing the case, the instant written arguments are being submitted in respect of the specific “findings” given by the JIT in Volume IX of the Report for the gracious consideration of this august Court.

That the introduction given in Paragraphs 1 to 6 of Volume IX of the JIT Report is general and is unsupported by any evidence. It mainly consists of the opinion of the JIT, which admittedly, is neither of any significance nor binding on a Court of law. The contents of Paragraph 1 to 6 are denied.

Para-wise Reply:

1. Paragraph 7 of Volume IX of the JIT Report is reproduction of excerpts from the statement of Respondent No.1, recorded before the JIT, which requires no reply.

Reply to Paragraph 7 a. of Volume IX of the JIT Report:

a. This finding of the JIT is erroneous. It is categorically submitted that the Respondent No.1 is or has never remained the Chief Executive Officer of Chaudhry Sugar Mills Limited (“CSML”). This is confirmed by Form A of CSML duly filed with SECP. The Respondent No.1 remained a shareholder in CSML till June 2016. It is for this reason that the “business name” is stated to be CSML. This does not, in any way, infer that the Respondent No.1 was the CEO of CSML. Furthermore, the banker filling the account opening form for Standard Chartered Bank had mistakenly stated Respondent No.1 as the CEO of CSML. Even otherwise, nothing turns on it. The official record i.e. the SECP returns confirm that the Respondent No.1 has never remained the CEO of CSML.

Reply to Paragraph 7 b. of Volume IX of the JIT Report:

b. That the Respondent No.1 was appointed as an Advisor to the Board of Directors of CSML with effect from 01.10.2009. This appointment was made by a resolution of the Board of Directors dated 18.09.2009. Remuneration received as Advisor from CSML is duly declared in the income tax returns of the Respondent No.1 from 2009 onwards. This fact is also confirmed by the JIT.

Copy of the Board Resolution is attached as ANNEX A

Reply to Paragraph 7 c. of Volume IX of the JIT Report:

c. It is submitted that in Respondent No.1’s absence from Pakistan during 2010, CSML bore his expenses. At the end of the year, the amount was paid back by Respondent No.1 to CSML. The cheque for reimbursement of expenses is Annex F of the JIT Report.

In 2015 it was realized that CSML had mistakenly paid a higher dividend to the Respondent No.1 than was required. This was true with respect to other shareholders as well. The excessive dividend of Rs.18.019 million was, therefore, returned by the Respondent No.1 (as by others) to CSML. This is accordingly declared in the wealth reconciliation statement of Respondent No.1 for the tax year 2016. This, in no way, establishes Respondent No.1’s involvement in the affairs of CMSL.

Details of expenses paid by CSML on behalf of Respondent No.1 are attached as ANNEX B

Reply to Paragraphs 7 d. e. & f. of Volume IX of the JIT Report:

d. to f. Capital FZE was incorporated on 26.05.2001 by Respondent No.8.Share Certificate was issued in favour of Respondent No.8 (as the registered owner of Capital FZE) on 26.05.2001. Capital FZE was an onshore company established in the economic free zone in the Jebel Ali area in Dubai.

As per the documents purportedly issued by Jebel Ali Free Zone Authority (“JAFZA”), Trading License No.3209 (Registration No.561) was issued to Capital FZE on 01.10.2001 (valid until 30.09.2010) for the following activities (See P.134, Volume IX):

Metal Ores Trading

Basic Steel Products Trading

Basic Non Ferrous Metal Products Trading

Fencing and Barbed Wire Trading

Metal Cans & Containers Trading

Metal Alloys Trading

Metal Drums & Barrels Trading

The JIT has attempted to connect Capital FZE with Respondent No.1 (Page 22, Volume VI) in concluding, on the basis of the documents mentioned hereinafter, that “Respondent No.1, Capital FZE and HME are linked and have nexus with each other”.

This conclusion has been based by the JIT on the documents issued by JAFZA, details of which are as under:

Letter dated 04.07.2017 issued by JAFZA titled “To whom it may concern” stating that “Mr. Muhammad Nawaz Sharif…was employed by Capital FZE, as a Chairman of The Board, from 07-AUG-2006 until 20-APR-2014” (Page 133, Volume IX)

Employee Registration Form dated 18.06.2006 purportedly submitted with JAFZA stating the Respondent No.1 to be an employee of Capital FZE, as Manager, Marketing (Page 144, Volume IX)

Employment Contract dated 08.07.2006 between Capital FZE and Respondent No.1 for the latter’s employment as Chairman of the Board from 08.07.2006 to 07.07.2008 at a salary of AED 10,000 (Page 316 – 317, Volume VI)

Employment Contract Amendment dated 04.02.2007, whereby the designation of Muhammad Nawaz Sharif was confirmed as Chairman of the Board of Capital FZE (Page 138 - 139, Volume IX)

Person EIT details dated 05.07.2006 showing the visa status of Respondent No.1 as “Employment Visa” and the employment status of Respondent No.1 as “Terminated” (Page 135, Volume IX)

Person EIT details (undated) purportedly showing the period of entry permit from 05.07.2006 to 20.04.2014, on which date the same stood cancelled (Page 136, Volume IX)

Payment certificate details (undated) from February 2013 to November 2013 (Page.137, Volume IX)

Without prejudice to the objection to the admissibility of the above documents, it is submitted that, as confirmed by JAFZA, in its letter to Standard Chartered Bank dated 30.04.2001 (Page 141, Volume IX), Respondent No.8 was the “owner, Director & Secretary and the authorised signatory” of Capital FZE

Reply to Paragraph 7 g. of Volume IX of the JIT Report:

g. Paragraph 7 g. relates to a transaction purportedly involving Hill Metals, of which the Petitioner has no direct knowledge.

Reply to Paragraph 7 h. of Volume IX of the JIT Report:

h. Paragraph h. of Volume IX of the JIT Report is denied. The JIT has based its finding on an unsigned document dated 20.09.2010 (Annex H of Volume IX) purportedly containing instructions from Respondent No.1 to Al Rajhi Bank for transfer of SAR 750,000 to the bank account of Respondent No.7. Admittedly, this document is a “source document” and has no legal or evidentiary value. In any case, no such transfer took place, as alleged.

Reply to Paragraph 7 i. of Volume IX of the JIT Report:

i. It is submitted that the remittances received by Respondent No.1 from Respondent No.7 and gifts from Respondent No.1 to Respondent No.6 were made through banking channels. All these transactions were duly declared in the wealth reconciliations statements of both Respondents No.1 and6.

Reply to Paragraph 7 j. of Volume IX of the JIT Report:

j. Paragraph 7 j. of Volume IX of the JIT Report is denied. The fact of the matter is that the Respondent No.1 intended to donate Rs.100 million to PML (N) in tax year 2013. However, due to an error the Respondent No.1 ended up paying Rs.145 million in donation through the following cheques:

The above amounts are reflected in the bank statement of the Respondent No.1.The excess amount of Rs.45 million was returned by PML (N) to Respondent No.1 on 10.06.2013. It is for this reason that the amount of Rs.100 million is declared as donation to PML (N) in the wealth reconciliation statement of the Respondent No.1 for the tax year 2013. Rs.45 million having been returned through cheque is appended with the JIT Report.

Extract of Respondent No.1’s bank statement is attached as ANNEX C

Reply to Paragraph 7 k. of Volume IX of the JIT Report:

k. The Respondent No.1 has no personal knowledge of the returns submitted by his parents.

Reply to Paragraph 2 of Volume IX of the JIT Report:

2. Paragraph 2 of Volume IX is a matter of record and requires no reply from Respondent No.1. The Respondent No.1 has declared his shareholding in various companies belonging to the Sharif family in the relevant income tax returns and wealth statements.

Reply to Paragraph 2 a. of Volume IX of the JIT Report:

Paragraph 2 a. is a matter of record and requires no response.

Reply to Paragraph 2 b. of Volume IX of the JIT Report:

Except insofar that there were loan liabilities of Ittefaq Foundries (Private) Limited, Paragraph 2 b. is denied. It is specifically denied that there was any nexus between Respondent No.1’s “rise to the political forefront” and the loan liabilities of Ittefaq Foundries (Private) Limited. This allegation is false and baseless. The JIT has not placed any evidence on record to substantiate this allegation.

The loan liabilities of Ittefaq Foundries were settled through the sale of its land and other assets. All liabilities of Ittefaq Foundries stand cleared. Nothing remains outstanding. This is so confirmed by the letters of clearance from respective banks.

Clearance Letters from Banks are attached as ANNEX D

Reply to Paragraph 2 c. of Volume IX of the JIT Report:

c. Paragraph 2 c. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. It, therefore, requires no response from Respondent No.1.

Reply to Paragraph 2 d. of Volume IX of the JIT Report:

d. Paragraph 2 d. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. It, therefore, requires no response from Respondent No.1.

Reply to Paragraph 2 e. of Volume IX of the JIT Report:

e. Paragraph 2 e. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. It, therefore, requires no response from Respondent No.1.

Reply to Paragraph 2 f. of Volume IX of the JIT Report:

f. Paragraph 2 f. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. It, therefore, requires no response from Respondent No.1.

Reply to Paragraph 2 g. of Volume IX of the JIT Report:

g. Paragraph 2 g. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. It is specifically denied that the loan liability of CSML increased after the Respondent No.1’s “rise to the political forefront of Pakistan”. In any case, the Respondent No.1 has no direct knowledge of the affairs of CSML.

Reply to Paragraph 2 h. of Volume IX of the JIT Report:

h. Paragraph 2 h. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. It, therefore, requires no response from Respondent No.1.

Reply to Paragraph 2 i. (1) to (6) of Volume IX of the JIT Report:

i. Paragraph 2 i. (1) to (6) of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. Matters relating to Hudabiya Paper Mills Limited (“HPML”) constitute past and closed transaction insofar as the allegations made against the directors / shareholders of the Company pursuant to quashment of Reference No.5 of 2000. Furthermore, the money involved in the matter relating to HPML was exclusively utilised in Pakistan and as such has no nexus with purchasing any property or investment abroad. So far as Al-Towfeeq loan liability is concerned, Respondent No.1 has no personal knowledge of the details thereof.

Reply to Paragraph 2 j. of Volume IX of the JIT Report:

j. The Respondent No.1 has no direct knowledge of the affairs of Hudabiya Engineering Company (Private) Limited.

Reply to Paragraph 2 k. of Volume IX of the JIT Report:

k. Paragraph 2 k. of the JIT Report is denied as being vague and baseless. This paragraph is based on presumptions and opinion of the JIT. No documentary evidence has been attached with the Report by the JIT to substantiate the allegations. In any case, the Respondent No.1 has no direct knowledge of the affairs of Brother Steels Mills Limited.

Reply to Paragraph 2 l. of Volume IX of the JIT Report:

l. Paragraph 2 l. of the JIT Report is a matter of record and, therefore, requires no response.

Reply to Paragraph 2 m. of Volume IX of the JIT Report:

m. Paragraph 2 m. of the JIT Report is vehemently denied. The allegations made therein are false and fabricated. The JIT has not produced any evidence to substantiate these allegations.

Reply to Paragraph 2 n. o. and p. of Volume IX of the JIT Report:

n. to p. In 1992, the Ittefaq Group was divided amongst 7 families, including Mr. Mian Muhammad Sharif. After the division, Mian Muhammad Sharif established the Sharif Group of Companies. A number of companies were established under the Group, including CSML, Mehra Ramzan Textile Mills, Muhammad Bakhsh Textile Mills, Hamza Spinning Mills Limited, Hudabiya Papers Mills Limited, Hudabiya Engineering (Private) Limited, Hamza Board Mills Limited, Kulsoom Textile Mills Limited. Share capital for these companies was arranged by Mian Muhammad Sharif who equally divided and apportioned the shares of the companies amongst the 3 sons (i.e. Respondent No.1, Mian Shahbaz Sharif and Mian Abbas Sharif) and their respective families.

From 1992 to 1993, the wealth of Respondent No.1 grew from 8.33 million to 68.027 million because not only did the Respondent No.1 receive shares in the abovesaid companies, which were set up by late Mian Muhammad Sharif, but was holding shares of Ms. Asma Dar and Respondent No.8’s shares in the above companies, since both Ms. Asma Dar and Respondent No.8 were minors at the time.

Memorandum of Understanding dated 25.09.1991 & Settlement Agreement dated 19.03.1992 are attached as ANNEX E & F

Reply to Paragraph 2 q. of Volume IX of the JIT Report:

q. The JIT has given its findings without examining the wealth statements of the Respondent No.1 for the year 1994 – 1995. Had the JIT done so, it would have realized that the difference in amount of wealth tax paid and visible income was made up by the loan obtained from CSML. This is reflected in Respondent No.1’s wealth statement of the same year.

Wealth Statement for the year 1994-95 is attached as ANNEX G

Reply to Paragraph 2 r. of Volume IX of the JIT Report:

r. The gap in the wealth tax paid and that what was assessed was due to litigation initiated by the Respondent No.1 in the Lahore High Court at Lahore, whereby the wealth tax law was challenged which imposed tax on assets which were non-operational. The case was ultimately decided in favour of Respondent No.1. However, as a matter of abundant caution, the disputed tax liability was nevertheless paid by the assessee in the year 2013.

Reply to Paragraph 2 s. of Volume IX of the JIT Report:

s. Paragraph 2 s. is denied. During the family settlement in 1992the shares of Ittefaq Sugar Mills Limited were given to the Shafi family. The Shafi family never had these shares officially transferred. However, Respondent No.1 does not receive any dividends on these shares. It is for this reason, that these shares are not declared in the wealth reconciliation statements of Respondent No.1, as he is not the beneficial owner of these shares.

Reply to Paragraph 2 t. of Volume IX of the JIT Report:

t. The Respondent No.1 was forced in exile from Pakistan in the year 2000. He remained in exile till 2007. He was receiving dividends till 2003-04, and therefore, was filing income tax returns and wealth statements. From 2004-05 to 2007-08, he was did not receive any dividends and for the purpose of the Income Tax Ordinance, 2001 he was a non-resident Pakistani. He was, therefore, under no obligation to submit wealth returns for this period.

Reply to Paragraph 2 u. of Volume IX of the JIT Report:

u. The amounts of remittances received from Respondent No.7 are in foreign currency. These are exchanged / converted into rupees in various amount, if and when required. The amounts reflected in the wealth reconciliation statements are amounts calculated on the basis of the exchange rate as on 30th June of each year. The amounts reflected in the bank accounts are on the basis of the exchange rates, if and when exchanged into rupees. Even otherwise, foreign remittances are exempt from income tax. No reason arises for mis-declaring the amounts of remittances received.

Reply to Paragraph 2 v. of Volume IX of the JIT Report:

v. 467,950 shares were received by the Respondent No.1 as part of the family settlement in 2009. These shares are reflected in the wealth reconciliation statements of Respondent No.1 for tax year 2011-2012.

Even if these share are not reflected in the wealth reconciliation statement for the tax year 2010-11, nothing turns on it, as the share value of these shares was nil when received by the Respondent and the share value remains at nil to date. No tax was, in any event, payable on these shares. Without conceding, non-declaration of these shares would be of no consequence.

Family settlement agreement of 2009 is attached as ANNEX H

Reply to Paragraph 2 w. of Volume IX of the JIT Report:

w. This was the period during which NAB had put pressure on Mr. Hamza Sharif to pay up the fine imposed pursuant to the conviction on Respondent No.1 in the hijacking case and it was on account of NAB’s insistence that this money was taken out from the accounts of Ramzan Sugar Mills and paid to NAB. Pursuant to the decision of the Courts, NAB had to reimburse to RSML as well as CSML and this is how these liabilities were settled. In fact the liabilities are reflected in Respondent No.1’s wealth reconciliation statements of 2009, 2010 and 2011 and are finally settled in the wealth reconciliation statements of 2012.

Judgments of the High Court & the Supreme Court are attached as ANNEX I & J

Reply to Paragraph 2 x. of Volume IX of the JIT Report:

x. This property in Changla Gali was purchased from the money paid by the Respondent No.1 and was purchased in the name of wife, Kulsoom Nawaz. As such this property remains in the ownership of Respondent No.1 and, therefore, it is reflected in his wealth statement and not in the wealth reconciliation statement of his wife, Kulsoom Nawaz. This property is still shown in the name of Respondent No.1 in his wealth statement starting from 2013-14 as the property was purchased after 30th June 2012.

Reply to Paragraph 2 y. of Volume IX of the JIT Report:

y. Paragraph 7 j. above is reiterated. Repetition is avoided in the interest of brevity.

Reply to Paragraph 2 z. & aa. of Volume IX of the JIT Report:

z. & aa. It is submitted that all gifts (remittances) received by the Respondent No.1 and gifts by him to Respondent No.6 were made through proper banking channels. All these amounts were also duly declared in by the Respondent No.1 in his wealth reconciliations statements.

The conclusion given the JIT is false, incorrect and based on presumptions and speculation, hence denied. In any event, the JIT was not authorised to render its opinion. The conclusion is, therefore, of no consequence.

It is submitted that no incriminating evidence has been placed on record by the JIT to show that the Respondent No.1 holds assets beyond his known sources of income.

Additional submissions:

It may be added that the Respondent No.1’s case vis-à-vis all the grounds raised by learned counsel for the Petitioner have already been submitted before this Hon’ble Court. The further allegation made by the Petitioner’s counsel that the employment with Capital FZE was concealed by the Respondent No.1 is totally false, as the Aqama and Respondent No.1’s employment with Capital FZE is reflected in the copies of his passport annexed with the nomination forms submitted for general elections 2013, there being no separate column in the nomination forms for any such information to be provided by the candidate contesting the election.

As regards the submissions made by the learned counsel for the Petitioner in support of his plea for disqualification of Respondent No.1 under Article 62(1)(f) of the Constitution of the Islamic Republic of Pakistan, 1973, it is submitted that each of the grounds urged by him in support of his plea gives rise to a question of fact or a mixed question of law and fact, which can only be resolved after recording of evidence in accordance with the recognized principle of due process, as mandated by Articles 4 and 10-A of the Constitution, and not in proceedings initiated under Article 184(3) of the Constitution.

Furthermore, it may graciously be noted that any finding given or observation made by this Hon’ble Court on any question of fact, or mixed question of law and fact in the instant proceedings, may have an adverse impact on the Respondents’ case, or any one of them, in case their matter is to be adjudicated upon by or before any other forum provided by law.

It is, therefore, respectfully prayed that this Hon’ble Court may be pleased to dismiss Const. Petitions No.29 of 2016, 30 of 2016 and 03 of 2017.

Khawaja Haris Ahmed, Sr. ASC

Assisted by: Saad M. Hashmi, Advocate High Court