Sunday October 17, 2021

PAC document reveals NAB’s stance on Broadsheet scam

February 01, 2021

ISLAMABAD: An official document of a sub-committee of the Public Accounts Committee (PAC) reveals for the first time NAB’s official position on how and on whose recommendation and approval US$ 1.5 million was paid to a person who later turned out to be a fake representative of Broadsheet LLC.

The document, which contains NAB’s response to the PAC over an audit para raised by the Auditor General of Pakistan, reveals that the Bureau claimed that the payment to Broadsheet LLC (Colorado) was made with the approval of the then prime minister Yousaf Raza Gillani. There was also direct liaison between the then minister of law Farooq H Naik, chairman NAB Naveed Ahsan and Ahmer Bilal Soofi, an international law expert, regarding this matter.

“Settlement negotiations with Broadsheet LLC (Colorado) were held by Mr. Jerry James of Broadsheet LLC and Mr. Ahmer Bilal Soofi. The settlement agreement was drawn between NAB and Broadsheet LLC, which was drafted by Mr Ahmed Bilal Soofi,” the document reads. It adds: “Under the approval of the then prime minister, the settlement agreements with Broadsheet LLC and IAR (International Asset Recovery) were executed on 20.05.2008 and on 02.01.2008 respectively, which were signed by the representative of the Government of Pakistan and Mr Jerry James. As stated, the ministry of law and justice had vetted the respective settlement agreements.”

It says, “NAB had paid US$ 1.5 million to Broadsheet LLC (Gibraltar) and Broadsheet LLC (Colorado) and US$ 2.2 million to IAR with the approval of the prime minister and ministry of law & justice.”

This issue came up in September last year before the Riaz Fatiana-led sub-committee of the PAC, which despite the seriousness of the matter had ignored the para now taken up by the main PAC. Interestingly, a few days ago, the NA Speaker conveyed to PAC Chairman Rana Tanvir Hussain that the Broadsheet matter could not be taken up in the Committee.

How matters unfold between the Speaker and PAC chairman will become clear in the coming days but the PAC document provides interesting information about what happened in the past. In its audit for the year 2008-09, the AGP had objected: “The agreement entered with the firm was faulty. This is evident from the remarks of (the) secretary finance given vide para 13 of the summary dated 20.05.2007 which states that ‘This is (a) particularly one-sided agreement. Clause 4.1 mandates NAB to share the proceeds, irrespective of the firm’s involvement’.”

It was also observed that while entering into agreement with foreign firms, the interest of NAB/GOP was not safeguarded which resulted in a large claim by the firms. “Despite the fact that negotiations were made, even then an amount of US$ 3.7 million was paid out of (the) national exchequer without any fruitful results.”

In response to this audit para, NAB replied: “Firms were hired for tracing, locating, recovery and transfer of funds and other assets (accumulated through corruption or corrupt practices) secreted or transferred or removed from Pakistan by such persons or entities. There were several reasons for NAB to enter into an agreement with these firms. First, Government of Pakistan/NAB, at that point in time, had not developed formal linkages with foreign governments to seek cooperation in competition matters. Secondly, corruption at that point in time was not a globally recognised priority issue and hence international cooperation was not so forthwith. Thirdly, the agreement was on a contingency basis and no upfront payment or expenditure was involved. It was because of these reasons that NAB agreed to other provisions of the agreement which were not favorable. NAB held negotiating rounds with these firms who in writing agreed to a final settlement.”

On NAB’s response, the audit report offered the following comment: “Audit holds that due to non-observance of proper procedure, NAB had to face a large claim. Audit was not informed about the actual recovery made by these firms against which they had submitted their claims. This also indicates that no prudent mechanism was in place to evaluate the working and performance of these firms.”

Following the audit objections and NAB’s view, the DAC meeting held on April 22, 2009 agreed to place the para before the PAC. When the issue was taken up by the PAC, NAB submitted its reply. The relevant parts of NAB’s reply are reproduced here:

“Since the performance of (Broadsheet LLC and IAR) were not satisfactory, resultantly, after lapse of three years NAB decided to terminate the contract through its United Kingdom-based lawyers, Kendal Freeman on October 28, 2003. However, before termination of agreement, above said assets tracing companies provided the information with regard to cases pertaining to Mian Nawaz Sharif, Sultan Lakhani, the Schon Group, Admiral Mansoor-ul-Haq, Amir Lodhi, Fauzi Ali Kazmi, Aftab Ahmed Sherpao, Jamil Ansari, the Swiss accounts of Asif Ali Zardari and others.

“Mr Jerry James, the purported Chairman, Broadsheet LLC (Isle of Man), sent notices of arbitration to NAB, claiming Broadsheet’s LLC share and damages before the Chartered Institute of Arbitrators. NAB had already received notice of arbitration from IAR through its lawyers in May 2006.

“Based on the opinion of Ahmed Bilal Soofi and other senior lawyers of the government in 2007-08 – who had argued that some clauses of the Assets Recovery Agreement (June 2000) were likely to favour Broadsheet — it was decided to settle the matter out of court to avoid greater costs. Since no prosecutor general accountability (PGA) had been appointed at that time, there was a direct liaison between Farooq H Naik), Naveed Ahsan) and Ahmed Bilal Soofi with regard to this matter.”

Another para states: “Settlement negotiations with Broadsheet (Colorado) were held between Jerry James of Broadsheet LLC and Ahmed Bilal Soofi. The settlement agreement drawn between NAB and Broadsheet LLC was drafted by Ahmed Bilal Soofi. The ministry of law & justice had vetted the settlement agreement.

“Under the approval of the then prime minister, the settlement agreements with Broadsheet LLC and IAR were executed on May 20, 2008 and on January 2, 2008 respectively, which were signed by the representative of the Government of Pakistan and Jerry James.

As stated earlier, the ministry of law and justice had vetted the respective settlement agreements. The GoP/NAB had paid US$ 1.5 million to Broadsheet LLC (Gibraltar) and Broadsheet LLC (Colorado) and US $2.2 million to IAR with the approval of the prime minister and ministry of law & justice.

“The GoP/NAB had paid US$ 2.2 million to IAR, and the matter has been settled permanently. The payment was made to Jerry James who purportedly presented himself as the legitimate owner of Broadsheet LLC. However, Jerry James died in 2011. The debtor of Broadsheet (Isle of Man) tried to revive the company, a move accepted by the High Court of Justice, Isle of Man.

The said company sued the Government of Pakistan/NAB on the grounds that the equitable transfer of shares were never made, thus Broadsheet LLC started arbitration proceedings against the Government of Pakistan/NAB.

“At the time of payment, the purported owner of Broadsheet LLC (Colorado) Jerry James and country representative of Broadsheet in Pakistan, Mr Tariq Fawad Malik, gave personal indemnity to the Government of Pakistan regarding all claims and liabilities and assuring that there would be no further claim against the Government of Pakistan. The Government of Pakistan/NAB is pursuing the indemnity of Jerry James against his estate in the District Court, Colorado, USA and Mr Tariq Fawad Malik in the UAE.”

After NAB’s reply, the DAC, which met on September 28, 2020, noted: “The DAC was provided the record pertaining to payment and approval of US$ 3.7 million after a settlement agreement with the approval of the President of Pakistan on recommendation of a committee comprising the secretary finance, principal secretary to the prime minister, secretary interior, secretary law and attorney general of Pakistan. However, Clause 4.2 of the agreement was faulty and led to payment by NAB on termination of the contract. Para is placed before the PAC.”

The Fatiana-led sub-committee of the PAC met on September 30, 2020 and decided: “The committee settled the para.” According to a source, this means that the government does not want to discuss the Broadsheet issue in the PAC. The NA Speaker’s latest direction to the PAC Chairman on the matter also endorsed this view.