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Petitioner: THE STATE VS Respondent: Mohtarama BENAZIR BHUTTO and anothers
Court Name: Lahore High Court Judge(s): Malik Muhammad Qayyum, Syed Najam-ul-Hasan Kazmi Title: THE STATE vs Mohtarama BENAZIR BHUTTO and anothers Case No.: Ehtesab Reference No,30 of 1998 Date of Judgment:1999-04-15 Reported As: PLD 1999 Lahore 535 Result: Order accordingly
JUDGMENT
JUDGMENT ' MALIK MUHAMMAD QAYYUM, J.---The Chief Ehtesab commissioner acting under section 15(1) of the Ehtesab Act, 1997 has sent this Reference against Mohtarama Benazir Bhutto, Ex-Prime Minister of Pakistan, senator Asif Ali Zardari, Mr. A.R. Siddiqui, Ex-Chairman, Central Board of Revenue and Mr. Jens Schlegelmilch, Geneva, praying that the accused persons have committed offences of corruption and corrupt practices within the meaning of section 3 read with-,section 4(2), of the Ehtesab Act, 1997 and they be tried and punished according to law. 2. According to the facts stated in the Reference, Mohtarama Benazir Bhutto, Ex-Prime Minister of Pakistan, Mr. Asif Ali Zardari, Ex-Federal Minister, Mr. A.R. Siddiqui, Ex-Chairman, Central Board of Revenue, as holder of public offices, in collusion with each other and in collaboration with M/s. Societe Geneale De Surveillance S.A. (S.G.S.) awarded contract of reshipment inspection (P.S.I.) to M/s.. S.G.S. In consideration for illegal gratification and undue pecuniary advantage in the form of kickback/commission and bestowed upon that company other favours/concessions resulting in collosal cross to the public exchequer. It is alleged that on 11-3-1995 M/s. S.G.S., a firm earning in pre-shipment inspection of imports/exports, gave a written undertaking to Mr. Jens Schlegelmilch, sole Director/President of Bomer Inc. Duly owned by Mr. Asif Ali Zardari, stating therein, inter alia, that consideration for his active support and assistance in connection with the promotion and negotiation by M/s. S.G.S. Of an import verification programme with the Government of Pakistan, they shall pay him a consultancy "fee responding to 6% of the total amount paid to and received by them from the Government of Pakistan in accordance with the terms of the contract. Jens Schlegelmilch on behalf of Bomer Finance agreed and signed the letter which shows that the
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consultancy fee referred to in the letter was in fact commission/kickback in return for getting the reshipment inspection contract from Government of Pakistan. 3. In September, 1994 in order to make ground for reintroduction of pre-shipment inspection scheme Mr. A.R. Siddiqui, the then Chairman, Central Board of Revenue, arranged a brief presentation highlighting the need, importance and merits of reintroduction of Pre-shipment Inspection Scheme in Pakistan. The presentation was chaired by Ms. Benazir Bhutto, Ex-Prime Minister of Pakistan and attended by high ranking officials. Mr. A.R. Siddiqui emphasised the need for introduction of P.S.I. Scheme in Pakistan concealing the fact that it has already failed in Pakistan to achieve the desired results. The presentation was also silent about the fact that M/s. Cotecna Inspection/S.G.S. Tried to get the contract in 1992 and 1993 but could not succeed due to poor performance under the contract of 1990 awarded to M/s. Cotecna Inspection S.A. Immediately, after the presentation, a draft agreement was sent to the Law Division, Government of Pakistan, for vetting. The Law Division raised various objections. But ignoring the observations of the Law Division and recommendations by the Customs, Mr. A.R. Siddiqui signed the P.S.I. Contract with M/s. S.G.S. Without observing the codal formalities. The other favours which are said to have been bestowed upon M/s. S.G.S. Were as under:-- (i) The State of CRF (Clean Report of Findings) was changed from "Advisory" to "Binding" forbidding the Customs' administration to safeguard the Government's legitimate revenue vide decision of the Econothic Coordination Committee of the Cabinet No,ECC.-42/3/96, dated 3-3-1996. (ii) Under the agreement the scope of functions of the Company was extended to cover all dutiable imports as well as duty free imports and imports under concessionary regime. (iii) The service fee was agreed as 0.78% of dutiable value with minimum charge of US $ 250, which means that fee was to be calculated on freight, insurance and landing charges as well for which the Company did not provide any services. (iv) Though the previous contract was for a period of 2 years yet the tenure of the contract was increased to five years renewable with another period of five years. (v) The Green Channel was introduced by virtue of which the acceptance of advice of M/s. S.G.S. Was mandatory on Customs Authorities and they were not allowed to intervene in cases of patently wrong valuation and assessment. This led to the misdeclaration of goods imported in containers sealed by the said company. 4. It is further alleged that unprecedented concern was shown by Mr. Asif Ali Zardari regarding the affairs of P.S.I. Companies. He intervened in the matter to secure maximum facilities for them. He also, without any legal authority used to chair meetings to resolve the issues of P.S.I. Companies. 5. According to the Reference the pre-shipment inspection contract was awarded to M/s. S.G.S. In consideration for commissions/kickbacks at the rate of 6% of total amount received by M/s. S.G.S. From Government of Pakistan. The commission/kickback was offered/paid to off-shore company namely Bomer Finance Inc. Owned by Mr. Asif Ali Zardari through his fiduciary agent Mr. Jens Schlegelmilch, sole Director/President of the said company. The ultimate beneficiaries of the commissions/kickbacks were Mr. Asif Ali Zardari and Ms. Benazir Bhutto. 6. It is claimed that the reshipment inspection contract was awarded to M/s. S.G.S. In return for commissions/kickbacks at the rate of 6% of total amount received by M/s.. S.G.S. From the Government of Pakistan on account of pre-shipment inspection. This fact, inter alia, finds support from the following:-- (i) Bomer Finance Inc. Owned by Mr. Asif Ali Zardari opened a dollar Account No,552 and 343 in the Union Bank of Switzerland at Geneva. This account was to be operated by Mr. Jens Schlegelmilch, the sole President/Director of Bomer Finance Inc. And fiduciary agent of Mr. Asif Ali Zardari and Mohtarama Benazir Bhutto.
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(ii) The entire account was meant for depositing the money received by Mr. Asif Ali Zardari and Mohtarama Benazir Bhutto from different sources at the ratio of 50% each. This fact is amply proved by the handwritten ledger account, being maintained by Mr. Jens Schlegelmilch. One of the entries dated 24-5-1995 reveals that an amount of US $ 93872.82 were deposited as commission from S.G.S. 7. Mr. Jens Schlegelmilch worked as fiduciary agent of Mr. Asif An Zardari and Mohtarama Benazir Bhutto in establishing a network for receiving/collecting the kickbacks and commissions in this case offered by M/s. S.G.S. Inspection S.A. Thus, Mr. Jens Schlegelmilch and the accused Directors of M/s. S.G.S. Besides being beneficiaries. Facilitated and aided the commission of the offence of corruption and corrupt practices. 8. Later on 20-8-1998 a supplementary challan was submitted by the Chief Ehtesab Commissioner along with certain documents in which it was alleged that on the request of the Government of Pakistan for mutual assistance in criminal matters it was ordered by the Judge Michel, Canton of Geneva, vide order dated November 27, 1997 that "the whole of the documents in possession of the companies S.G.S.-Societie Generale De Surveillance and Cotecna Inspection S.A., relating to the contracts entered into with the Government of Pakistan and which concern the years 1990 to 1995 included, and in particular the fundamental contracts, the letters of intentions, the brokerage contracts and other contracts, the correspondence, telephone memos., etc. As well as the banking or accounting documents in their possession regarding the following persons/companies, Jens Schlegelmilch, Bomer Finance, Mariston Securities, Nassam Overseas, be transmitted. 9. In pursuance of the above order of Judge Daniel Davaud, Canton of Geneva, exercising his powers also ruled on 24-6-1998 that:-- "In the present case, having been the elements of the proceedings such as they appear from the Pakistani letter, Rogatory and the investigations led by the undersigned Judge, and taking into considerations Article 28 CP and 25 CPPd, as well as the abovementioned jurisprudential principles related to it, the State of Pakistan definitely appears, 'prima facie' as having been damaged by the acts of Asif Ali Zardari and Mrs. Benazir Bhutto, as well by .Those of Messrs Hens Fisher, Robert Massey and Jens Schlegelmilch. The offences these people are charged with inherently caused a considerable financial damage to the State of Pakistan and the proceeds of said offence has ended up on the accounts of which the members of the Bhutto family are beneficial owners." 10. The Judicial Powers Office of the Examining Magistrate in Switzerland subsequently after having inculpated Mr. Asif Ali Zardari issued an International Rogatory Letter which was handed over to Ehtesab Bureau, Government of Pakistan by the Swiss Embassy in Pakistan through the Ministry of Foreign Affairs. The Rogatory Letters stated that:- "Among the charges considered against Mr. Asif Ali Zardari based on the current file, are using of off-shore companies (Bomer and Nassam) in order to receive commissions in the frame of entering into a Government contract with the company S.G.S./Cotecna, being made clear that, on the one hand that using screen companies to hide the product of crime is considered as an act hindering the justice in its search of links between the property and crime and, on the other hand, that the author of the said crime may be his own launderer according to the Swiss Law." 11. The documents received from Swiss Authorities also revealed that subsequent to issuance of letter of June 29, 1994 by Cotecna, whereby they had promised to pay six per cent. Of invoiced amount paid to them by the Government of Pakistan to Mariston Securities Inc., was replaced on 24-5-1995 with Bomer Finance Inc., thereby meaning that said six per cent. Would not be paid to Mariston Securities Inc., but to Bomer Finance Inc. 12. The investigation also revealed that Jens Schlegelmilch visited Pakistan and stayed as guest of the then Prime Minister, Mrs. Benazir Bhutto on various occasions. This fact establishes the close
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relationship of Jens Schlegelmilch with the then Prime Minister, Ms. Benazir Bhutto and Mr. Asif Ali Zardari. 13. On receipt of Reference accused was summoned. It was, however, found that accused Nos.3 to 6 were not available and could not be served, the trial against them was, therefore, ordered to be separated vide order, dated 28-9-1998. Mohtarma Benazir Bhutto and Mr. Asif Ali Zardari were thereupon on 15-10-1998 charged as under:-- CHARGE ON MR. ASIF ALI ZARDARI "Your are a holder of public office as defined in sub-para. (ii) of section 2 of the Act alongwith your spouse Ms. Benazir Bhutto in exercise of your official functions and by abuse of your position as a holder of public office, with the abetment, assistance and aid of others dishonestly and through corrupt and illegal means secured the award of pre-shipment inspection contract, dated 29-9- 1994 for M/s. Societe Generale De Surveillance S.A. (S.G.S.) in consideration of illegal gratification, pecuniary advantages, commission and kickbacks, earlier agreed upon which were paid by S.G.S. And were obtained and received in bank accounts of off-shore companies operated by Jens Schlegelmilch namely Bomer Finance Inc. Mariston Securities Inc. And Nassam Overseas Inc. Of which you and your spouse and others are beneficiaries. ' Your above acts constitute the offence of corruption and corrupt practices under sections 3(1)(a), 3(1)(d) and 4(2) of the Act which is triable by us, we hereby direct that you be tried on the said charge." CHARGE ON MS. BENAZIR BHUTTO. "You as Prime Minister of Pakistan from 16-11-1993 to 5-11-1996 along with your spouse Asif Ali Zardari in exercise of your official functions and by abuse of your position as a holder of public office as defined in sub-para. (ii) of section 2 of the Act with the abetment, assistance and aid of others co-accused dishonestly and through corrupt and illegal means ordered the grant of pre- shipment inspection contract, dated 29-9-1994 to M/s. Societe General De Surveillance S.A. (S.G.S.) in consideration of illegal gratification, pecuniary advantages, commission and kickbacks, earlier agreed upon which were paid by S.G.S. And obtained and received in Bank accounts of off-shore companies operated by Jens Schlegelmilch namely Bomer Finance Inc., ' Mariston Securities Inc. And Nassam Overseas Inc. Of which you and your spouse and others are beneficiaries. Your above acts constitute the offence of corruption and corrupt practices under sections 3(1)(a), 3(1)(d) and 4(2) of the Act which is triable by this Court, we hereby direct that you be tried on the said charges." 14. In order to prove its case, the prosecution examined Saqlain Shah, Inspector Security, Prime Minister House, Islamabad as P.W.1 who produced the visitors' book of the Prime Minister House from 8-5-1995 to 13-6-1995. The statement of Syed Waseem Ahmed Pirzada, Room Reservation Manager, Marriott Hotel, Islamabad was recorded as P.W.2 He stated that, Jens Schlegelmilch had stayed in Marriott Hotel in Room No,152 from 1st of August to 3rd August, 1994 and again from 6th August to 11th August, 1994 and for the third time from 30th September, 1994 to 3rd October, 1994. The two registers were produced by him as Exhs.P.B. And P.C. Mr. Khalid Masood Ahmad, Deputy Secretary Administration, Prime Minister Office, Islamabad appeared as P.W.3 and stated that according to the record, a bill amounting to Rs,6,968 for the stay of Mr. Jens Schlegelmilch at Marriott Hotel, Islamabad was paid by the Prime Minister Secretariat out of its own budget. Mrs. Neelam S. Ali, Deputy Secretary, Ministry of Commerce, appeared as P.W.4 and produced the Office Memorandum as Exh.P.E., Exh.P.F., Exh.P.G. And Exh.P.H. 15. Mr. Ahmed Sadiq, who was the Principal Secretary to the Prime Minister in the year 1995, appeared as P.W.S. He stated that in 1994 there was a presentation regarding P.S.I. Companies made towards the end of August, 1994 which was given by the Chairman, Central Board of Revenue, who was assisted by the Chief Collector of Customs. He further deposed that the post of
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Chief Collector was newly created and Mr. Khalil Ahmad was the first incumbent. The presentation was attended by the Minister of State for Finance, Advisor Finance, Finance Secretary, the Chairman, Central Board of Revenue, Mr. A.R. Siddiqui, Deputy Chairman of the Planning Commission, Qazi Aleem-ud-Din, Mr. Waqar Masood Khan, Additional Secretary. The meeting was chaired by the Prime Minister of Pakistan. According to the witness, it was a short meeting which took place 20 to 30 minutes. From the way the presentation was made by the Chairman, Central Board of Revenue, who was assisted by Mr. Khalil Ahmad. It appeared that the decision to grant contract had already been made and the details relating thereto were to be spelt out in the presentation. There was no serious dissent but it appeared that Mr. V.A. Jafri and Mr. Javed Talaat were not happy. The witness further went on to say that Mr. A.R. Siddiqui and Mr. Khalil Ahmad had been specifically appointed to the posts which they held after retirement on account of re- employment. P.W.6 Mr.S.M. Abdullah brought the summoned record. Mr. Sohail Rehan, P.W.7, Deputy Secretary, Ministry of Finance, proved the minutes of meeting, Exh.P.W.7/A, Exh.7/B and also signatures of Dr. Waqar Masood Khan as Exh.P.W.7/C. P.W.8, Mr. Khalid Mahmood, Additional Collector Customs, appeared and stated that he was working as Secretary Evaluation in the Central Board of Revenue and that as per record, the total payment made to Cotecna and S.G.S. Companies were US $ 137.492 million, in addition to which 13 million US $ were still being claimed by two Companies. 16. P.W.9, Mr. Mumtaz Ali, Member National Tariffs Commission, Islamabad appeared and stated that on 31-7-1994 he was posted as Member Customs in the Central Board of Revenue which at that time was headed by Mr.A.R. Siddiqui as its Chairman. Mr. A.R. Siddiqui was a retired person. He stated that few days after his appointment as Member Customs, he was called by Mr. A.R. Siddiqui and was informed that Executives of S.G.S. And M/s.., Cotecna would be in Islamabad and that he should hold meeting with them. Mr. Siddiqui asked him to find out as to when the representatives of the two companies would be arriving. This information he was required to get from Mr.Khalil Ahmad, Chief Collector of Customs, Karachi. The post of Chief Collector Customs was created for the first time those days and did not exist prior thereto. The witnesses found out that the representatives of S.G.S. And Cotecna would come within a day or two with a view to revive the bid already made. The witnesses stated that he went to the Chairman and informed him that Pre- shipment Inspection Scheme had been tested and discarded because it did not result in revenue improvement and after that another attempt was also made to revive the Scheme which too failed. The Scheme was discarded for the first time in 1991 but he was informed by Mr. A.R. Siddiqui that the decision to award contract to P.S.I. Companies had already been taken. The witness stated that he was asked by the Chairman to discuss with the Companies certain rates of fee which they were demanding also settle terms relating to duration of contract. The witness deposed that he attended the presentation made to the Prime Minister of Pakistan which was prepared by Mr. A.R. Siddiqui, the then Chairman, Central Board of Revenue, who was assisted by Mr. Khalil Ahmad. No much discussion took place on any of the item. The presentation lasted for about half an hour. At the end, the Prime Minister asked Mr. Siddiqui to implement the Scheme as soon as possible. The presentation has been made on the basis of draft agreement between the Government of Pakistan and P.S.I. Companies. After the presentation, the agreement was formalised. He signed the agreement as a witness which is Exh.P.W.9/A and Exh.P.W.9/A/a. 17. P.W.10, Mr. Ramzan Bhatti was a Secretary in the Central Board of Revenue in 1994. He was involved in the discussion on the terms and conditions of the contract between the representatives of the P.S.I. Companies and others. Mr. Khalil Ahmad wrote a letter to the Central Board of Revenue pointing out reservations which the Team constituted on behalf of the Government had on the contract. The P.S.I. Companies did not cooperate and their attitude was rude. The witnesses deposed that his Collect orate was declared as focal point for supervising the P.S.I. Companies and
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each month report was sent to the Central Board of Revenue indicating short-comings in the performance of P.S.I. Companies. No action was taken by the Central Board of Revenue on the reports. Later on, he was appointed as Chairman Steering Company and he issued show-cause notice as to why penal action should not be taken against the Companies. The P.S.I. Companies made a lot of hue and cry and managed to have him removed from the post. 18. P.W.11, Mr. Riaz Hussain Naqvi, was a Member Customs in the Central Board of Revenue in 1994. He stated that he attended meeting in May, 1995 in the Prime Minister House, Islamabad which was chaired by Mr. Asif Ali Zardari. The representatives of P.S.I. Companies were present who made their presentation. In the end of the meeting he was asked by Mr. Asif Ali Zardari whether he had any problem with P.S.I. Companies. The witness replied that he had lot of problems. Mr. Javed Talaat intervened to say that formal report from P.S.I. Companies will be due in few weeks' time and Central Board of Revenue will make formal presentation on receipt of that report. 19. Mr. Muhammad Jamil Awaisi, Secretary, Central Board of Revenue, Islamabad appeared as P. W.12. He was appointed as Investigation Officer in this case on 1-12-1997. He prepared his report which was signed by him and was produced as Exh.P.W.12/A. As a result of the investigation he came to the conclusion that contract in question was not awarded in a transparent manner and from some foreign documents made available to him it was clear that some kickbacks had passed hands. 20. P.W.13. Iftikhar Qutab, Additional Collector of Sales Tax, appeared and stated that in 1994 he was posted as Deputy Collector with Chief Collector Customs, Karachi. A team was constituted by Central Board of Revenue to examine P.S.I. Companies with Chief Collector as its Head. The witness was also associated with it. He explained that Cotecna had been engaged by the Government in 1990 and remained as P.S.I. Company. The Pre-shipment Inspection Scheme was for the first time introduced in the budget for the year 1990-91. When the contract was awarded for the first time, P.P.P. Government was in power. The suggestion of P.S.I. Companies was to charge fee on dutiable value basis while the Customs was insisting that the Companies should charge on F.O.B. Basis and all exempt goods should be excluded from P.S.I. Coverage. 21. The statement of Mr. Hassan Wasim Afzal was recorded as P.W.14. He stated that he was Joint Secretary in the Ehtesab Bureau and was Member of the Ehtesab Cell, Islamabad. He was appointed in Ehtesab Bureau on 9-4-1997. During his course of duties various matters relating to corruption and corrupt practices came to him hlicluding matters relating to Mohtarama Benazir Bhutto and Mr. Asif Ali Zardari and quite of Bureaucrats and tax-evaders. Reference was sent by the Chief Ehtesab Commissioner to the Ehtesab Bureau and it was on account of that Reference that he was involved in cases against Mohtarama Benazir Bhutto and Mr. Asif Ali Zardari. He was asked to co-ordinate and assist the prosecution in the preparation of these cases particularly the overseas aspects. In September, 1997, the Attorney-General for Pakistan made a request under International Mutual Legal Assistance to Mr. Beat Frey, the Chief of Swiss Police, seeking assistance relating to corruption and corrupt practices and he had obtained certified copies of the documents from Swiss Authorities, the original of which had been produced before the Ehtesab Bench comprising of Mr. Justice Ihsanul Haq Chaudhry and Mr. Justice Raja Muhammad Khrushid in E.R. 26 of 1998. The Attorney-General for Pakistan presented another application along with docurnents to the Chief of Swiss Police to investigate the matter and thereafter he obtained certified copies from his office which are available. The witness stated that he appeared before the Ehtesab Bench comprising of Mr. Justice Ihsanul Haq Chaudhry and Mr. Justice Raja Muhammad Khurshid and submitted the documents to the Bench, The Copies obtained from the Lahore High Court were produced as Exh.P.W.14/1 to Exh.P.W.14/152. He stated that he went to Geneva as Coordinator of affairs of Ehtesab Bureau and met my lawyers in Geneva. The Swiss Court ordered raids on the offices of Mr. Jens Schlegelmilch and Didier Plantim, After this the Judge ordered the
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search of offices of S.G.S. And Cotecna and he summoned various Bank Managers and recorded their statements and took the record into possession. After carrying on these proceedings, the Judge permanently blocked the account. 'He thereafter, froze the account and also pronounced indictment orders of the President of S.G,S., Mr. Hens Fisher, President of Cotecna, Mr. Jens Schlegelmilch, Mr. Asif Ali Zardari and Ms. Benazir Bhutto. These documents are Exh.P.W.14/l53 and Exh.P.W.14/154. The rogatory letter was received through diplomatic official channel. Certified copies of these documents are Exh.P.W.14/155 to Exh.P.W.14/319. The witness deposed that he learnt that 19 off-shoie companies have been established by the respondents-accused. He obtained original documents which were submitted in the Court of Mr. Justice Ihsanul Haq Chaudhry and Mr. Justice Raja Muhammad Khurshid. Certified copies of these documents were produced as P.W.14/320 to Exh.P.W.14/338. 22. Mr. Muhammad Tariq Pervez, an officer of the Ehtesab Bureau appeared as P.W.15. He deposed that he was asked by the Chairman, Ehtesab Bureau to prepare Supplementary Reference in the second week of August, 1998 for which he was appointed as Investigation Officer. He stated that after receiving the documents from Mr. Hassan Wasim Afzal, he scrutinised the case and found that illegal gratification in the form of commission and kickbacks was taken by Mr. Asif Ali Zardari and Mohtarama Benazir…
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