Mark Hosenball and Michael Isikoff
Newsweek Web Exclusive
Asif Ali Zardari, the Pakistani politician considered a front runner to become the country's next president, remains under criminal investigation in Switzerland over allegations that he received kickbacks from two Swiss-based companies while his wife, the late Benazir Bhutto, served as the country's prime minister in the 1990s, a Swiss judge and two Swiss lawyers close to the case told NEWSWEEK.
But Zardari, who has always claimed that corruption allegations against him were politically motivated, may be using his growing political clout in Islamabad to pressure Swiss authorities to curtail, or even close, their long-running investigation into his affairs, say Swiss legal sources, who requested anonymity discussing sensitive matters.
Zadari, through a spokeswoman, maintains that the probe is already closed. "Mr. Zardari feels that you have been misinformed and that the case that you are referring to is closed," wrote Farah Ispahani, in response to an e-mail from NEWSWEEK. "Please be careful about reporting something that may have been planted."
Zardari, who co-chairs Bhutto's political movement and was one of her closest advisers when she headed Pakistan's government, has emerged as perhaps the most powerful figure in Pakistani politics following the resignation this week of President Pervez Musharraf. U.S. officials say they already view Zardari as one of most important Pakistani officials the U.S. deals with on sensitive issues such as the hunt for Al Qaeda and Taliban leaders in volatile tribal areas along the country's border with Afghanistan.
But U.S. officials remain wary of Zardari because of corruption allegations that have swirled around him for years. In the 1990s, when Bhutto served two terms as prime minister and her spouse served a stint as investment minister, Zardari earned the nickname of "Mr. Ten Percent" because of allegations that he had received kickbacks on state contracts. He spent more than eight years in jail in Pakistan during corruption investigations, though he was never convicted of any crime.
Zardari, Bhutto and their supporters have always maintained that the corruption allegations against the couple were trumped up by powerful political enemies, including both Musharraf and Nawaz Sharif, a former prime minister who is now Zardari's principal rival for power. Lawyers for Bhutto and Zardari say they always maintained their innocence of any corruption or other criminal accusations. "For most Pakistanis this is a matter that is now closed," said a senior Pakistani government official who spoke on condition of anonymity. "The primary motivation [behind the investigations] was political."
The Swiss investigations were opened years ago, during Sharif's tenure as prime minister. His government requested official legal assistance from Switzerland, where Pakistani authorities suspected that the couple had stashed proceeds from alleged corrupt activities. The Pakistani government hired its own lawyers in Switzerland to gather evidence against Bhutto and Zardari and help Swiss investigators with their inquiries.
In 2003, these investigations resulted in a series of court orders against Bhutto, Zardari and one of their Swiss lawyers, Jens Schlegelmilch. The orders, akin to misdemeanor guilty findings by a U.S. justice of the peace, were issued by Judge Daniel Devaud, an investigating magistrate in Geneva who has handled many high-profile investigations into the alleged laundering of corrupt payments through Switzerland by foreign politicians.
Devaud's orders found Bhutto, Zardari and Schlegelmilch, a Swiss lawyer who had represented them for many years, guilty of minor money-laundering offenses under Switzerland's penal code. Devaud's orders alleged that, via obscure companies in the British Virgin Islands, Bhutto, Zardari and members of their family had received improper payments from two Swiss companies that were seeking contracts with the Pakistani government. (Pakistan wanted to hire the companies, Cotecna and SGS, to inspect cargo shipments before they arrived to ensure that appropriate import duties had been assessed).
In his rulings, Judge Devaud quoted an internal SGS document in which an official of the company—who had visited Pakistan after Bhutto returned to power in 1993—characterized Zardari's standing: "In his view, Asif Zardary [sic], BB's husband, is deputy PM officially with a lot of pwr [sic] ... The influence of Asif Zardary is real and he has in the past always helped and favoured his friends and cronies ..." In 1997, after Zardari had been imprisoned in on suspicion of corruption, Devaud alleged that Bhutto herself had purchased a necklace worth 117,000 British pounds from a London jeweler—using cash and a bank transfer from the account of Bomer Finance, a British Virgin Islands company, which the magistrate said was jointly controlled by Bhutto and Zardari. (Her supporters claimed this allegation was based on trumped-up evidence supplied by her political enemies. Bhutto herself reportedly claimed her husband had bought the necklace but never told her about it).
Devaud ordered suspended prison terms for the defendants and directed them to pay restitution and compensation to the Pakistani government. Under Swiss legal procedure, Bhutto, Zardari and their lawyer were allowed to appeal the judge's convictions to a Geneva police tribunal. They did appeal, resulting in the dismissal of Judge Devaud's guilty findings against them. The case was then referred for further investigation to the office of Geneva's local prosecutor, Daniel Zappelli, who decided to continue the investigation, only this time with a view toward possible charges of "aggravated" money laundering under Swiss law.
Neither the prosecutor nor a spokesman for his office could be reached for comment. But Judge Devaud confirmed to NEWSWEEK that the prosecutor's office was still investigating "aggravated" money-laundering offenses. Likewise, Jacques Python, a Geneva lawyer hired by Pakistan to work with Swiss authorities on the corruption case, said he had every reason to believe that the Geneva prosecutor's investigation was still open. And Alec Reymond, a lawyer who had represented Bhutto in connection with the Swiss investigation, also says the case is still open.
Devaud said that a Pakistani government anti-corruption agency had posted on its Web site what he described as competent English-language translations of the original orders he had issued against Bhutto, Zardari and Schlegelmilch in 2003. Around the time Bhutto and Zardari returned to Pakistan from exile last year, however, the documents outlining the charges against them disappeared from the government Web site, Devaud said. But the document outlining the case against Schlegelmilch, the couple's Swiss lawyer, includes key elements of Devaud's findings against Bhutto and Zardari, and can still be read here.
Python disclosed that several weeks ago, after Zardari and his political archrival Sharif assumed control in Islamabad earlier this summer, the Pakistani government fired Python as its Geneva lawyer, effectively withdrawing its complaint.
Zardari's allies believe the Pakistani government's withdrawal from the Swiss investigation will soon lead to the termination of the probe. Pakistani officials say the amnesty order in effect undermined any continuing Swiss investigation by declaring there was no corruption on the part of Zardari and Bhutto, and therefore no corrupt payments could have been laundered in Switzerland or anywhere else.
Earlier this year, Zappelli, the prosecutor now in charge of the case, was quoted in the French-language press saying: "The future of the case depends on Pakistan, who initiated this investigation ... if it withdraws its complaint, there will no longer be a victim."However, two other Swiss legal sources close to the case, who asked for anonymity when discussing sensitive information, said they believe the Geneva prosecutor could continue to pursue the case, given that the investigation did turn up evidence, which was not exclusively supplied by Pakistan, of violation of Swiss money-laundering laws. Ultimately, said one of the sources, Swiss prosecutors have three possible courses of action: close the case entirely, prosecute it by bringing it into a superior court or arrange the Swiss version of a plea bargain, in which money seized by Swiss authorities during the investigation probably would be confiscated or handed over to charity, but charges would be settled without any prison sentences.
Terror Watch appears weekly on Newsweek.com
By JOHN F. BURNS
Published: January 9, 1998HOUSE OF GRAFT: Tracing the Bhutto Millions -- A special report.; Bhutto Clan Leaves Trail of Corruption
Tariq Ali: Musharraf was rambling and impervious to tormented cries from his people
Tuesday, 19 August 2008
General Pervez Musharraf acted swiftly and ruthlessly when he seized power to become Pakistan's fourth military dictator in October 1999. He proclaimed himself Chief Executive of Pakistan. When he lost the confidence of two key board members – the United States and the Pakistan Army – majority shareholders of Pakistan plc, he realised his time had come. After a rambling, incoherent address to the nation, replete with the most puerile self-justifications, he resigned. He should have done so when his term expired, but afflicted with the power disease, his mind remained impenetrable to the tormented cries from below.
We can only speculate whether he would have lasted nine years had it not been for 9/11 and the "war on terror". A previous dictator, General Zia-ul-Haq (1977-88), had similarly become a vital cog in the imperial war machine during the Soviet occupation of Afghanistan. The monsters spawned then were the perpetrators of the assault on the Pentagon in 2001. Musharraf and his generals had to unravel the only victory the Pakistan army had ever won: the conquest of Kabul via the Taliban. In a complete about turn, Pakistani military bases were made available to the US to occupy Afghanistan.
Ever since Zia's time, the soldiers had been inoculated with Islamist ideology. After 9/11, Musharraf was telling the same soldiers the target had been changed. They had to kill "terrorists", i.e., other Muslims. It almost cost him his life (two assassination attempts came close), but he remained loyal to Washington and vice versa. His Western allies saw no contradiction in backing a general when "democracy and human rights" were the virtues preached to the rest of the world. Warring against the jihadis made him unpopular with the soldiery, who began to resign in droves.
It was his clash with a turbulent Chief Justice, Iftikhar Chaudhury, who had begun to issue judgments favouring victims of state brutality and corruption and the disappearances of citizens in the name of the war on terror. The Chief Justice was sacked and angry lawyers began a campaign for his re-instatement. Musharraf backed down, only to impose a state of emergency and sack him and other judges again.
Had this happened in a country not favoured by Nato, all hell would have broken loose. Not in this case. In January, the Chief Justice wrote to Nicolas Sarkozy, Gordon Brown, Condoleezza Rice and the president of the European Parliament.
The letter, which remains unanswered, explained the real reasons for Musharraf's actions: "At the outset you may be wondering why I have used the words 'claiming to be the head of state'. That is quite deliberate. General Musharraf's constitutional term ended on 15 November 2007. His claim to a further term thereafter is the subject of active controversy before the Supreme Court of Pakistan.
"It was while this claim was under adjudication before ... the Supreme Court that the general arrested a majority of those judges in addition to me on 3 November 2007. He thus himself subverted the judicial process, which remains frozen at that point. Besides arresting the Chief Justice and judges (can there have been a greater outrage?) he also purported to suspend the constitution and to purge the entire judiciary of all independent judges.
"Now only his hand-picked and compliant judges remain willing to 'validate' whatever he demands. And all this is also contrary to an express and earlier order passed by the Supreme Court on 3 November 2007."
With Musharraf's fall, the demand to reinstate the Chief Justice will grow: lawyers are threatening a new street campaign.
A survey carried out last May for the New America Foundation revealed that 28 per cent of Pakistanis favour a military role in politic, as compared to 45 per cent in August 2007; that 52 per cent regard the US as responsible for the violence in Pakistan; that 74 per cent oppose the "war against terror" in Afghanistan.
A majority favours a negotiated settlement with the Taliban; 80 per cent hold the government and local businessmen responsible for food scarcity; only 11 per cent see India as the main enemy. None of this appeals to the country's rulers who prefer to live in a bubble of their own.
Post-Musharraf Pakistan will stumble on, its people trapped between the hammer of a military dictatorship and the anvil of political corruption.
There is a way out, but the political and military rulers and their Western backers have always ignored it: serious land reforms, the creation of a proper social infrastructure and the establishment of at least a dozen teacher-training universities to lay the basis for a proper educational system. Malaysia has done so. Why not Pakistan?
Tariq Ali's book 'The Duel: Pakistan on the Flightpath of American Power' will be published in September'Rogue' intelligence agency under fire
By Daniel Dombey in Washington and Farhan Bokhari in,Islamabad
Published: August 20 2008 03:00 Last updated: August 20 2008 03:00Pakistan's new government has failed to prevent the country's intelligence agency from aiding terrorist attacks and supporting the Taliban, a senior US official has told the Financial Times.Speaking under condition of anonymity, the state department official added Pakistan needed to speed up efforts to control the ISI, the intelligence agency, after the resignation of Pervez Musharraf as president."The position of the ISI has always been ambiguous [but] they may have been more directly involved in actions in more recent months because of lack of supervision," he said, referring to "a lot of allegations" that the agency was involved in the July 7 bombing of the Indian embassy in Afghanistan.That attack, together with continuing US intelligence reports that al-Qaeda has entrenched its position in "safe havens" in Pakistan close to the Afghan border, has deepened Washington's doubts about prospects for military-to-military and intelligence co-operation.Western diplomats say the US confronted Pakistani officials last month with what it considered credible evidence documenting the ISI's role in backing extremist Islamist groups, although officials in Islamabad say there is no proof of any involvement in the bombing.Returning from a trip to Pakistan last month, Mike Mullen, chairman of the US joint chiefs of staff, had declined to comment on whether the ISI could be weaned off its contacts with Islamist and radical groups.Tariq Fatemi, a former Pakistani senior diplomat, said: "There is a lot of pressure building up on Pakistan to take full charge of the ISI. Rightly or wrongly, people from the outside think the ISI is the source of all their problems."The agency was created in 1948, a year after Pakistan's independence, primarily as a counter-intelligence agency with responsibility to gather overseas intelligence. From 1979 it was mainly responsible for training and arming volunteers from Islamic groups willing to go to Afghanistan for the "jihad" against Soviet troops.Senior Pakistani government officials familiar with security issues said Mr Musharraf's departure had created an opportunity to order high-level personnel changes in the agency.However, US officials were dismayed last month by the failure of a bid by Pakistan's interior ministry to put the intelligence agency under its direct control, rather than that of the military.Yesterday, Husain Haq-qani, Pakistan's ambassador to the US, described the Interior Ministry's failure to take control of the ISI as a technical one, adding that it would instead be put under the authority of the prime minister's secretariat."The exercise of civilian authority over Pakistan's various institutions of state is a work in progress," he said. "Pakistan's military and Pakistan's intelligence services have recognised that they would be better able to serve Pakistan if they are under the control of the elected institutions of state."The US state department official added that Mr Musharraf's departure was "an opportunity to focus on serious issues"."There are signs of lining ISI more directly up in terms of going after the terrorist problem and not being so schizophrenic in terms of how they deal with terrorism," he said. "The question is: is it developing fast enough to make a serious inroad on the problem?" He cited recent Pakistani operations in Swat and Bajaur as "signs of more resolute action against terrorism".His comments came as Ashfaq Kiyani, Pakistan's army chief and former head of the ISI, made a rare visit to Kabul yesterday for discussions with US and Afghan commanders.Military-to-military co-operation had suffered after Pakistan accused the US of killing several members of its Frontier Corps militia in a strike in June.The US has continued to attack suspected Taliban targets inside Pakistan, despite protests by Yusuf Raza Gilani, Pakistan's premier.www.ft.com/pakistan
Why Musharraf Failed
Tuesday, Aug. 19, 2008 By TONY KARON
Former Pakistani President Pervez Musharraf, left, arrives with newly appointed army chief General Ashfaq Kayani for the change-of-command ceremony in Rawalpindi
Aamir Qureshi / AFP / Getty"He may be an SOB," President Franklin D. Roosevelt said about then Nicaraguan dictator Anastasio Somoza. "But he's our SOB." That lesser-evil outlook might just as easily have described the U.S. attitude toward Pakistan's General-turned-President Pervez Musharraf, who resigned on Aug. 18 in the face of looming impeachment. Nor was it only the West that saw Musharraf as preferable to the chaos and venality of the political system he overturned to seize power in 1999. He carried the support of the urban middle class, which was desperately looking for the stability and modernity that had eluded a political system dominated by competing feudal baronies.
It was not Musharraf's personality, however, that explained either his rise to power or his demise. His bloodless coup was not the product of some megalomaniac instinct on his own part; Musharraf was acting as the representative of a military institution whose leadership perceived itself to be under attack from a civilian government it viewed as corrupt and inept. That same institution had governed Pakistan for much of its history, and it was as head of that institution, and in consultation with its top echelon, that Musharraf ruled. It was only when the military leadership opted to retreat from running the government that he was forced to resign. Indeed, quite remarkably for a Pakistani leader of recent vintage, Musharraf departs from power with no serious allegations of personal corruption hanging over his head.
The military has opted to retreat from running the government in the face of overwhelming public opposition to Musharraf amid economic turbulence and mounting pressure from the West over Pakistan's role in enabling the Taliban resurgence in Afghanistan. It leaves the job of governance to a cast of political leaders for whom the military brass holds a well-established contempt, but nobody doubts that if the military's red lines are crossed, it always has the option of installing a new man in khaki. The military may have already signaled the limits on acceptable civilian authority last month, when Prime Minister Yousuf Raza Gilani was forced to hastily backpedal from a plan to put the controversial Inter-Services Intelligence (ISI) organization under direct civilian oversight via the Interior Ministry.
Today's civilian leaders will also be mindful of the military's belief that then Prime Minister Nawaz Sharif provoked his own ouster by moving, under U.S. pressure, to rein in the military after its offensive against Indian forces in the Kargil region of Kashmir had brought the two countries to the brink of war. Still, so dismal had Pakistan's outlook been after a decade of the self-serving political duopoly of Benazir Bhutto's Pakistan People's Party and Sharif's Pakistan Muslim League, that many in the West and in Pakistan's urban middle classes saw Musharraf as a harbinger of stability and progress. But 9/11 and what followed ushered in a crisis from which the general never fully recovered.
The 9/11 attacks put the Pakistani military's long-standing role in Afghanistan into conflict with its most vital strategic alliance. Pakistan had used Afghan jihadists to wage proxy warfare against the Soviet Union on behalf of the U.S. And after the Red Army withdrew and the U.S. had no interest in the outcome of Afghanistan's civil war, Pakistani security services nurtured the Taliban and shoehorned it into power, ensuring that Afghanistan was ruled by a client of Islamabad. After al-Qaeda struck the U.S., Pakistan's key ally demanded support for a military campaign to oust the Taliban, the hosts of Osama bin Laden. Musharraf tried to bridge the gap by urging the Taliban to give up bin Laden and his organization. When that failed, Pakistan was forced to support the U.S. — or at least, not stand in the way of its assault on Afghanistan.
The urban middle class was happy to back Musharraf against domestic extremists, and they applauded his initiatives to challenge the influence of conservative Islam in education as well as the liberalization of the Pakistani media that had occurred on his watch. But the U.S. campaign in Afghanistan quickly became highly unpopular at home, and the buildup to the war in Iraq increased the alienation of broad sections of Pakistani society from Musharraf's alliance with Washington.
Musharraf found himself juggling political allies in search of a patina of legitimacy and manipulating elections as popular opinion turned against him, largely on the basis of his alliance with Washington. Moreover, the new reality in Afghanistan prompted the Pakistani security forces to begin playing what was essentially a double game. Despite its alliance with Washington, the Pakistani strategic establishment was not willing to accept the anti-Taliban Northern Alliance, which was closely allied with India, as an established power in Kabul. So, despite professing support for the NATO effort in Afghanistan, Pakistan continued to serve as the Taliban's key sanctuary, and it is alleged by Washington that the ISI continues to directly aid its longtime Taliban proxy. While Pakistan arrested some of the most important al-Qaeda captives currently in U.S. hands, it is generally assumed that Pakistan's tribal wilds are where bin Laden and al-Qaeda's No. 2 leader, Ayman al-Zawahiri, continue to operate. Even if the Pakistani security forces were playing both sides, the NATO campaign next door rallied the tribesmen of the Pakistani west behind local jihadist radicals, who are a growing threat not only in their home provinces, but also in some of Pakistan's key cities.
As he confronted widening opposition at home, Musharraf faced a key challenge emanating from overseas when his term ended last November. Washington appeared to have negotiated a compromise political deal in which Musharraf would share power with Benazir Bhutto, in an alliance that the U.S. hoped would stave off domestic opposition and strengthen Musharraf's ability to confront radicalism. But the deal floundered even before Bhutto's assassination last December. The general, once a symbol of the power of the military, had begun to believe that he was indispensable, and had moved to ride roughshod over all constitutional and legal challenges by declaring a state of emergency and dismissing the supreme court. The middle class had also turned decisively against Musharraf. By declaring a state of emergency, he provoked a confrontation that he was never likely to win, and in February the electorate handed down a stunning rebuke by denying his party a parliamentary majority. Amid a mounting domestic crisis, the military could not afford to remain tied to a leadership as unpopular as Musharraf's had become.
Despite the cathartic effect of Musharraf's ouster, it's unlikely to bring progress on the issues that matter most to the West. A civilian President and government is unlikely to be any more effective than Musharraf in response to rising militancy or in curbing the Taliban — indeed, the government has made clear that it favors a less confrontational attitude to the Islamists than Musharraf had taken. And, as frustrating as Musharraf had been to the U.S. on issues ranging from jihadist militancy to nuclear proliferation by Pakistani scientist A.Q. Khan, as long as he was in power, there was a single address for complaints and demands. Musharraf leaves behind something of a power vacuum, in which authority is necessarily more diffuse. Indeed, General Pervez Musharraf's journey from military command to the presidency was a symptom of Pakistan's malaise, not its cause. He may depart from the scene, but the conflicts and contradictions that elevated him and then brought him down remain far from resolved.--
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