KARACHI: The Supreme Court (SC) will resume hearing of the mega-money laundering and fake accounts case a week after the Joint Investigation Team (JIT) submitted its report.
The report names several high profile individuals, including former president Asif Ali Zardari, his sister Faryal Talpur, and Pakistan People's Party Chairperson Bilawal Bhutto-Zardari.
According to the report, the JIT identified 11,500 bank accounts and 924 account holders at the start of their investigation.
Its experts generated 59 Suspected Transaction Reports (STR) and 24,500 Cash Transaction Reports. That means the transactions were flagged as suspicious.
Due to the high quantum of transactions, the JIT decided on a threshold of Rs10million "to track, follow and minutely investigate the flow of funds beyond the immediate counterparties and determine the source of funds and ultimate beneficiaries."
It questioned 767 individuals, including Zardari and Talpur, while Bilawal submitted written responses.
It has since had the names of 147 individuals placed on the Provisional National Identification List, which would allow authorities to identify if those individuals try to enter or exit the country through an airport. After the report was submitted to the SC, the names of 172 individuals have been placed on the no-fly list by the interior ministry on the JIT's request.
Fake accounts case: Bilawal, Zardari placed on ECL
The investigations have focused on 32 accounts of 11 fake entities. The first account, belonging to M/S Lucky Enterprises, opened in January 2010 and remained active till January 2017. It was used for 13,809 transactions.
The investigation uncovered that the 11 sole proprietorship entities were registered in the names of low-level employees of the Omni Group, as well as random individuals including a deceased person. All the accounts were operated by Omni Group executives.
A thorough review of the JIT report shows that representatives of State Bank and Securities and Exchange Commission of Pakistan (SECP) played a vital role in the investigation and preparation of the final report and recommendations.
The report explains how fake accounts were operated, breaking down their actions in light of classical stages of money laundering. It starts with the placement, where funds from unlawful sources are placed in unrelated accounts. The second stage is called layering, where 'the amounts are split, withdrawn, re-deposited and merged back into the financial system. The final stage is integration, where the laundered money is shown as profits fraudulently.
According to the report, the transaction activities of the identified accounts fit the textbook description of the crime. Faqeer Muhammad, who was a senior investigator with the Federal Investigation Agency and the National Accountability Bureau (NAB), lauded the investigators for its timely review and analysis of data to make connections to identify the criminal nexus involved.
Muhammad says that while some of the cases require further investigation, the report presents substantial evidence to back up its allegations, including the contents of the confidential part of the report.
He cited the case of Summit Bank, against which the report seeks action for 'illegal creation from crime proceeds and expansion of Summit Bank from crime proceeds."
Fake accounts case: Omni Group rejects JIT allegations
The report states that Summit Bank was acquired for the explicit purpose of money laundering, a well-known and common technique used by launderers around the globe. In 'Bank Capture', as it is known, launderers buy a controlling interest in a bank to circumvent prudential regulations without risk of scrutiny.
In another case, the National Bank, Sindh Bank and Summit Bank gave loans to Omni Group to the tune of Rs53 billion, which were then rescheduled over thirty times. Moreover, the value of the collaterals was not only inflated but the same assets were used repeatedly for that purpose with fraudulent intent.
Furthermore, the loan given by Sindh Bank was Rs8 billion more than its total equity of around Rs16 billion. Murad Ali Shah, who is Sindh's chief minister, was the finance minister at the time when the loans were approved despite the opposition of the then top bureaucrat of the provincial finance department.
Another case that incriminates the PPP co-chairperson is when fake accounts were used to pay the duties and taxes of vehicles. They included vehicles he received from foreign governments during his time as President of Pakistan.
Moreover, the rules for the acceptance and disposal of such gifts require them to be deposited in the central pool of the Cabinet Division. However, Zardari was allowed to keep the vehicles on the payment of 15% of their value.
The identified fake bank accounts were used to make the payments of these vehicles as well as other bullet-proof vehicles that are also part of his declaration to the Election Commission of Pakistan.
The JIT also discovered that fake accounts were used to pay personal expenses of key members of Sindh's ruling party, including Bilawal Bhutto Zardari.
In today's hearing, the accused are likely to submit their responses to the allegations made in the report. The court will then review the JIT's recommendation of initiating 16 references against the Zardari and Omni Groups as well as current and former chief ministers of the province, along with senior government officials and bureaucrats.