Behind the Broadsheet blunder

The entire case was built on two poorly drafted legal documents

Hasaan Khawar April 06, 2021
The writer is a public policy expert and an honorary Fellow of Consortium for Development Policy Research. He tweets @hasaankhawar

The Broadsheet Commission report is not merely an inquiry into what went wrong with one particular contract but is instead a sneak peek into how bureaucracy works.

The scandal is about two asset recovery firms: Broadsheet LLC (Isle of Man) and International Asset Recovery LLC (IAR), which never ended up providing any significant services, yet caused a huge loss to the national exchequer. Broadsheet eventually transferred its right of settlement to Steeplechase, which became the beneficiary of the final arbitration award.

The overall cost to the exchequer was much more than the $28.7 million arbitration award and $1.5 million wrongful payment. It also included the 20% share (approximately $1.5-2 million) paid to Broadsheet from the amount recovered from Admiral Mansurul Haq, without any services rendered, and the settlement cost of $2.2 million paid to IAR. In addition, the government also incurred huge legal fees and other costs.

The entire case was built on two poorly drafted legal documents. First were the original asset recovery agreements (ARA). These ARA were so damaging that when reviewed by Barrister Shahida Jamil, Justice (retd) Shafiur Rahman and Fakhruddin G Ebrahim in 2001, they all termed them financially disadvantageous to the government and highlighted the possibility of “painful international arbitration” that the government could face.

Second was the settlement agreement. Although, as per the ARA, the rights of Broadsheet LLC (Isle of Man) could not be assigned to another party without the prior consent of the National Accountability Bureau (NAB), the settlement agreement, which formed the basis of the arbitration award, not only indirectly conceded this right but also acknowledged extension of a period of limitation for the claim, which had become time barred.

The scandal also reeks of convoluted relationships and interests, as Farouq Adam Khan, the former prosecutor general NAB, and Sharifuddin Pirzada, the ambassador-at-large, were both on the payroll of Broadsheet.

The entire process was marred with serious lapses, some of which could be construed as criminal negligence, such as validating the final settlement agreement with conspicuous blanks, which ultimately led to the fraudulent payment of $1.5 million in 2008. The sum was approved by the then prime minister to be made to Broadsheet (Isle of Man), but the actual payment was made in two parts, to Broadsheet (Colorado) and Broadsheet (Gibraltar).

And then came the ignominious public functionaries who willingly or unwillingly followed the external legal counsel like the ignorant children led by the Pied Piper.

In short, Broadsheet is a story of changing goalposts, bungling bureaucracy, antiquated systems, perverse incentives and missing forest for the trees — patterns so endemic to the government that they could potentially be brewing many Broadsheets, which have not yet surfaced.

Our political history is fraught with countless examples of ever-changing goalposts. One government starts something new and the bureaucracy greases the wheel. But soon, the political realities change and everyone forgets and starts running in a new direction, leaving the mess behind. The same happened with these asset recovery hunts.

Our bungling bureaucracy is still living in the past but is expected to confront the challenges of the 21st century. Those who cannot smoothly and transparently execute a tender of civil works are expected to manage complex international commercial transactions. The result is blunders like Reko Diq, Karkey and many others.

Important pieces of record (evidence) were made to vanish into thin air with impunity, because of the antiquated systems. Unfortunately, the government still chooses to work through paper files, which are subsequently dumped into dusty, insecure record rooms without any traceability whatsoever and frequent ‘accidental’ fires.

Many public functionaries run parallel businesses or have future interests at stake, such as post-retirement employment prospects, which often cloud their decision-making. But such conflict of interest hardly captures anyone’s imagination.

Important legal documents are vetted for grammatical mistakes but not for the direct or contingent liabilities that they create. Our entire due diligence process is based on the philosophy of missing forest for the trees.

No wonder what we get is a headless chicken model of public sector governance, where files keep on floating from one ministry to another without getting anything done. In occasional cases, when political ownership is unignorable, the bureaucracy often hustles through the process, leaving behind a trail of incompetence, negligence and expensive mistakes. The model is likely to continue unabated, unless we fundamentally change how the government works.

Published in The Express Tribune, April 6th, 2021.

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