NAB paid £1.5m, $1.5m and lost its case against Broadsheet

WASHINGTON: Attempting to break away from the two companies it had hired to investigate the Bhutto and Sharif families and many others, the National Accountability Bureau paid 1.5 million pounds and then again 1.5 million dollars under the settlement agreements; except that the latter amount was paid to a sham company and that too knowingly to cheat Broadsheet LLC.

The judgment from the 'Broadsheet vs NAB' arbitration case shows that the NAB made two payments under the Settlement Agreement, totaling 1.5 million dollars to accounts which appear to have been controlled by Jerry James, by then the unauthorized person who had incorporated another Colorado company which he had also named "Broadsheet LLC". The actual company was Broadsheet LLC, an Isle of Man entity. The arbitration court did not find this as a simple mistake but declared it a deliberate move to financially defraud the original Broadsheet LLC.

In October 2003 NAB's solicitors wrote to Broadsheet and IAR Ltd. claiming to rescind or terminate the ARA (and the corresponding Agreement between IAR and NAB) on the grounds of material (precontract) misrepresentation and/or fundamental breaches of both agreements. The IAR, led by Kaveh Moussavi, was investigating the Bhutto family; whereas Broadsheet had been assigned around 200 individuals, including the Sharif family.

According to the court documents, NAB was anxious to negotiate settlements with both IAR and Broadsheet and that NAB's representative Ahmer Bilal Soofi came to London in April 2007 for what he hoped would be a joint meeting for that purpose. In the result, however, separate meetings took place, one on 17 April 2007 with James representing Broadsheet and the other on 19 April 2007 with Dr. Pepper and Moussavi on behalf of IAR. At first, Soofi agreed $1,500,000 as a settlement figure with James, and $2,250,000 as a settlement figure for IAR. Later, a Settlement Agreement between IAR and NAB was signed on 2 January 2008. The IAR was paid 1.5 million pounds and the matter was done with.

Broadsheet, on the other hand, had been in the process of liquidation from 2005. Kaveh Moussavi, after pocketing the penalties out of the IRA contract, offered to rescue Broadsheet monetarily and also help in negotiations with the NAB to settle the matter. Moussavi and Jerry James, who was part of the actual Broadsheet LLC, had discussed a 50/50 share from the settlement.

However, Jerry James went behind Kaveh's back and registered another company under the same name in Colorado, and negotiated alone with the NAB representative Ahmar Bilal Soofi in London in April 2007. The negotiations resulted in the wrongful settlement agreement dated 20 May 2008 on which the NAB relied as a defence to the claim in the arbitration court. However, the court in its judgment determined that the deal was wrongful and deliberate to financially hurt the original Broadsheet LLC, Isle of Man. The court believed that while negotiating with the fraudulent company, NAB's representative Ahmer Bilal Soofi was aware that the original company was in liquidation, so he signed the wrongful deal knowingly.

The so-called settlement agreement was signed in London by the Deputy High Commissioner, Abdul Basit, on behalf of the Government of Pakistan and NAB. Jerry James signed three times - (i). on behalf of "Broadsheet LLC" as chairman; (ii) on behalf of Steeplechase Financial Service LLC as Manager; and personally, as: Shareholder and beneficiary of Broadsheet LLC (under winding up).

"Thereafter $1,500,000 was paid by or on behalf of NAB under the Settlement Agreement, but not to Broadsheet IoM or its liquidator or with its knowledge," the court documents say. A "cheque dated 20 May 2008 for pounds 320,622.55 payable to M/S Broadsheet LLC Gibralter, a misnomer. Cheque reissued to a payee named by Mr James (probably Broadsheet LLC (Colorado) pursuant to an agreement between Mr. [Ahmer Bilal] Soofi and Hasan Saqib and Tariq Malik on behalf of 'BS'); and cheque dated 29 September 2008 for $845,928.00 payable to an account of Broadsheet LLC at Compass Bank (Northglen) Colorado," the document outlined payment details.

Kaveh Moussavi later found out about the deal and challenged Jerry James as well as the NAB. During the arbitration court proceedings, it was agreed that there was no such company as "Broadsheet LLC Gibraltar" and NAB submitted that this was a misnomer for Broadsheet IoM, explaining that International Asset Recovery was a Gibraltar-registered company and the previous IAR/NAB agreement was used as a precedent for this one, hence the mistaken reference to it.

"However that may be, the Recital stands as a clear statement by Mr James that he had incorporated Broadsheet LLC in Colorado as what he described as a re-incorporation of an earlier Broadsheet company." Again, the court declared that the NAB did the signing with a fictitious company deliberately to financially harm Broadsheet LLC-IoM.

Another central and significant dispute between the NAB and Broadsheet LLC was the interpretation of the compensation clause - No. 4 - of the Asset Recovery Agreement (ARA) signed between the two in June 2000. The main differences that emerged during the trial were concerned with (1) Broadsheet's right to compensation under article 4 when NAB made recoveries of assets which were not "outside Pakistan"; (2) the registration and de registration of targets under the ARA; and (3) the scope of Broadsheet's obligation to provide information to NAB. Based on these, the NAB had placed allegations that Broadsheet was in fundamental/repudiatory breach of the ARA in October 2003.

The NAB had accused Broadsheet of non-performance and under-performance in a notice to rescind the ARA from inception for material misrepresentations made during pre-contractual negotiations, and in the alternative that Broadsheet had committed repudiatory breaches which NAB was entitled to and did accept as terminating the ARA with effect from that date.

The termination letter was answered on 11 Dec 2003. Broadsheet contended that the termination letter in itself was a repudiatory breach of the ARA during the period of its own alleged non-performance or under-performance, and it claims damages and/or sums due in respect of those breaches, as well as damages for the alleged repudiation by NAB.

"Both parties allege that during the currency of the ARA, the other party committed breaches of its terms, though with this difference between them," the court documents say adding that "the Respondents [NAB] allege that by 28 October 2003 Broadsheet's breaches were fundamental i.e. repudiatory, so that they were entitled to accept the breaches and terminate the ARA with immediate effect, but they do not claim damages from Broadsheet for the alleged repudiation or for individual alleged breaches." In return, Broadsheet contended that any shortfall in its own performance of the ARA was caused by NAB's breaches of its own obligations, and it claims damages in respect of those. Other relevant documents reveal that the NAB had provided a target list to Broadsheet by July 2000 asking the company to investigate individuals and entities, but by June 2001 the NAB had amended the target list and had taken off names of individuals like Sultan Lakhani, Saddrudin Hashwani and even of the entire Sharif family.

This issue between the NAB and Broadsheet first arose in relation to the former prime minister Nawaz Sharif, when it was reported that he or his family had made substantial reparations to the government, whether as fines or in some other form, and it was unclear whether there was any recovery by NAB.

The Nawaz Sharif family were registered targets from an early date after the ARA was signed. Lt. Gen. Khalid Maqbool, then chairman of NAB, initially was not unsympathetic to Broadsheet's request for a share of these proceeds, whatever they were, but he asked for the matter to be deferred. Broadsheet claimed that Gen Maqbool had undertaken to make (or indicated that NAB might pay) a 'token payment' of some $500,000. But when Gen. Hafeez became chairman in October 2001, and Latif Ghuman was Director of the Overseas Wing, they refused to contemplate any payment.

During the trial, the evidence regarding the alleged contractual breaches included references to individual transactions and targets were considered but the judge did not extend the scope of the proceedings. The two exceptions were Aftab Sherpao and Jamil Ansari. Broadsheet had provided details of the two individuals to NAB which had declined to process them. "The issue in both cases is whether he should be regarded as a target registered under the ARA. Neither was in fact recorded in Schedule 1, as required by the ARA," the court said.

Broadsheet did not make any submissions on the NAB's causation of and responsibility for any alleged missed opportunity as a result of the termination of ARA or the scope of that opportunity. "Basic principles of procedural fairness dictate that such vague allegations at this late stage of the proceedings not be entertained," the court determined.

According to the court documents, Lt-Gen Munir Hafeez, NAB's former chairman, gave explanations for the failure, in effect the refusal to agree to register Ansari as a target under the ARA. First, that there was insufficient evidence against him; but that was difficult to understand when there was a signed confession of corrupt practices, given in connection with the proceedings against Admiral Haq. Second, that Ansari was promised an indemnity in return for agreeing to give evidence in those proceedings, but then it appeared that the proceedings were over and the indemnity had expired. Thirdly, Gen Hafeez had said in January 2003: "You see, Broadsheet was insisting, of course, but there were so many other targets on the list of Broadsheet and we were asking them to come back and give us progress on those targets."

Gen Hafeez later confirmed that, "that was a conscious decision that we were not giving any more targets until we get something on the existing targets as well," the court documents say adding that when asked whether Broadsheet was told about this decision, he replied "I do not recollect circumstances, but I don't think we told them in so many words." Broadsheet raised the matter with Ghuman (Talat Ghuman, one of NAB DGs) again and it was one of the items listed in his letter dated April 18, 2003, which concluded "We look forward to a mutually beneficent relationship". But approval never happened.

"Broadsheet's contractual claims, therefore, are all concerned with recoveries that allegedly NAB has made from registered 'targets' either before or after termination of the ARA," the court declared and then proposed to make the Award as a Declaration of liability and asked Broadsheet to formulate its damages claim with reference to such cases as it considered appropriate, with or without the benefit of further disclosure of documents.

The Arbitration case had started in 2012 and the judgment was announced in August 2016, which entitled Broadsheet to recover damages from the NAB for their wrongful repudiation of the ARA dated 20 June 2000 by their solicitors' letter dated 28 October 2003. It further said that Broadsheet was entitled to recover sums due as compensation under Article 4 of the ARA dated 20 June 2000 interpreted as stated in Section (A) above and/or damages in lieu {if permitted in law) except when the relevant cause(s) of action arose before 23 October 2003. Furthermore, Broadsheet was entitled to recover damages from the NAB for the "tort of conspiring to cause unlawful economic loss to the Claimant by entering into the Settlement Agreement dated 20 May 2008 with Mr. James and companies controlled by him and/or in making payments to him or them thereunder," the arbitration court ruled.