Friday December 08, 2023

How not to do anti-corruption

January 22, 2021

In Pakistan, where breaking news has a life of about two and a half days, the Broadsheet story and the company’s CEO Kaveh Moussavi seem to have done quite well in keeping the media, decision-makers and the public rapt for more.

The Broadsheet saga is not simply about breach of contract by the National Accountability Bureau (NAB) in 2003. It is the story of how panic creation of institutions without due diligence and expertise can be dangerous. How command and control behaviour and the self-righteousness of those at the very top can kill reasoning and blind them to grave perils existing right under their nose. More importantly, it’s a sad culmination of the anti-corruption drive in the country that was never intended by any of the major players to go in the right direction.

For those that will focus only on how NAB walked into the Broadsheet trap, the answers lie in the history of the anti-corruption drive during the 1990s. The newly formed Bureau that was born soon after the October 12, 1999 Musharraf takeover was highly influenced by the bias of its predecessor, the Ehtesab Bureau. Headed by Nawaz Sharif’s accountability Tsar, Saifur Rehman, the Ehtesab Cell was turned into a Bureau in 1998 through a presidential ordinance, and was dedicated to tracking the Bhutto-Zardari wealth that allegedly had left the country.

The new accountability infrastructure under General Syed Muhammad Amjad drew upon bureaucrats from various civil services, private bankers, and the intelligence apparatus. I remember meeting some of the officers in late 1999/early 2000 in Islamabad. Brimming with enthusiasm, many of the young officers felt Amjad was the best man for the job. This unfounded myth continues to exist about him. However, the country and its various investigating organs lacked capacity for forensic investigation, especially movement of funds from Pakistan to abroad. White-collar-crime is the hardest to detect and trace.

This is when NAB’s over-dependence on General Amjad’s image got the better of it. The institution was approached by a Pakistani banker, Ghazanfar Sadiq Ali, CEO of GSA Investment, who introduced a Colorado-based company, Trouvons LLC to the chairman of NAB. Besides company brochures, NAB was supplied with an asset recovery plan and an attractive offer of not asking the government for any upfront payment. The work would be done on a profit basis with a small team based in Pakistan represented by Ghazanfar Ali and his colleague at GSA Investment, Tariq Fawad Malik. Trouvons claimed experience in anti-corruption investigation and working in Pakistan. It was during the Sharif government’s earlier anti-corruption drive that Trouvons had done some work with the State Bank.

The selection was made after the visit of the chairman NAB to Denver, Colorado where he went alone in April 2000. A contract was negotiated and signed by June 2000 that agreed to give Trouvons 20 percent share in all recoverable assets. Though General Amjad continues to believe that he signed off on a 20 percent share of all that the foreign firm found and seized outside, the Asset Recovery Agreement states otherwise. Prosecutor-General Farouk Adam Khan was of the view that a distinction could not be made because NAB targets could bring the money back into the country – perhaps, due to fear of being caught abroad.

NAB’s top leadership was very impressed with the CEO Trouvons Edgar Jerome James alias Jerry James, who was never asked questions – even when he set up two shell companies, IAR and Broadsheet LLC, because his original company could not do the work as his main partner Ronald L Rudman was fined and banned for three years by the Colorado bar. IAR was meant to investigate the Bhutto-Zardari case, and Broadsheet a much bigger operation involved the Sharif family and many others.

Surprisingly, no eyebrows were raised nor was due diligence followed when later in 2007 a settlement was negotiated with James to end an arbitration that resulted from the sudden revocation of the contract in 2003. Despite being aware of the fact that Broadsheet was liquidated, NAB’s legal representative handed over $1.5 million of Pakistani taxpayers’ money to Jerry James, who by 2008 had made his own firm with the same name and, thus, was an illegal claimant of the money.

The Isle of Man Broadsheet took the Pakistani mission in London by surprise in 2009 when it served a second arbitration notice. In any case, by 2003 not only was the NAB-Broadsheet contract dead, so was the Bureau as it withdrew from pursuing most targets that were identified in early 2001. Admiral Mansur-ul-Haq was the only case from which $7.5 million were retrieved. Successive governments, starting from early 2001, have kept the organization for political showboating than any real work.

The legal case started in 2012 at the arbitration court in London, and decided in August 2016 in which NAB was found guilty of willfully defrauding Broadsheet, is a scandal of highly paid lawyers foreign trips and failure to prove that NAB had rightfully terminated the contract, especially given the claim that Broadsheet had not done a morsel of work. The legal team was unable to produce evidence of due diligence in holding the company accountable during the period of the contract.

Broadsheet, on the other hand, proved that its lack of performance was caused by NAB’s lack of will to cooperate on catching major targets. Even if Broadsheet is not considered reliable, the fact remains that NAB is a case of stillbirth, a baby that was thrown out of the bathtub and killed within months of its birth. Its main claim to fame going back to the early years is retrieving money through voluntary return or plea bargain but not serious investigation.

Meanwhile, there is an ever-growing narrative regarding politicians hiding looted money abroad that adds to public frustration that can only have terrible sociopolitical consequences. It’s a fact that the Pakistani elite is complicit in stealing and taking out its resources. However, carrying out investigation through a dead organization can generate more pain than relief. If anything, the Broadsheet case must be read carefully as an example of dire consequences of an ill-intended anti-corruption drive.

The writer is author of ‘Military Inc’, and served as former director of naval research.

Twitter: @iamthedrifter