Pakistan’s ‘penniless billionaires’ expose money laundering frenzy

Pakistani auto-rickshaw driver Mohammad Rasheed drives his rickshaw in Qur’angi, a slum area in the eastern district of Karachi. (AFP)
Updated 28 October 2018

Pakistan’s ‘penniless billionaires’ expose money laundering frenzy

  • Bank accounts in poor residents’ names are flooded with cash, then suddenly emptied in a laundering scheme
  • Scale of these schemes is unprecedented, with authorities pointing the finger at some of Karachi’s wealthiest power brokers

KARACHI: It took rickshaw driver Mohammad Rasheed a year to save 300 rupees to buy his daughter a bike, so when he found three billion rupees ($22.5 million) had passed through an unused bank account in his name, he was stunned ... and scared.
“I started sweating and shivering,” said the 43-year-old — just the latest victim of a money laundering scheme that Pakistan’s new prime minister, Imran Khan, has vowed to crush.
When he got a call from the Federal Investigation Agency, Rasheed’s first inclination was to go into hiding, but friends and family members finally convinced him to cooperate with officials.
His case mirrors dozens of similar stories in recent weeks that have filled newspapers in Pakistan and riled a populace long accustomed to extravagant tales of corruption and theft.
The incidents follow a similar arc — bank accounts in poor residents’ names are flooded with cash, then suddenly emptied in a laundering scheme that has likely seen hundreds of millions of dollars moved out of the country.
Rasheed’s name was eventually cleared, but his anxiety remained.
“I stopped driving my rented rickshaw on the roads because of the fear that some other investigating agencies might pick me up,” he said.
“My wife fell sick because of the tension.”
Only weeks before the fiasco he had finally been able to buy a 300-rupee bike with worn tires for his daughter — the fruit of a year’s careful saving.




Pakistani auto-rickshaw driver Mohammad Rasheed plays with his daughter Nabeeha Rasheed in their home in Qur’angi, a slum area in eastern district of Karachi on Oct. 16, 2018. (AFP/File)

The revelation of the laundering frenzy comes as the newly elected Khan has vowed to squash rampant corruption and recover billions siphoned from the country as his government scrambles to shore up Pakistan’s deteriorating finances.
“This is your stolen money,” said the former cricketer during a televised address to the nation Wednesday.
“It was stolen on public contracts... and transferred into these accounts, then laundered abroad.
“I will spare no corrupt man in this country,” he promised.
But for victims like Mohammad Qadir the damage has already been done.
“I have never even seen a bank from the inside,” said the 52-year-old ice cream vendor.
Transactions were nevertheless made in his name for 2.25 billion rupees.
Since news of the incident spread Qadir says he is regularly mocked by his neighbors and also fears being kidnapped by criminal elements who believe he has billions of rupees to spare for hefty ransoms.
“He is a penniless billionaire,” one of Qadir’s acquaintances laughed while driving past his ice cream cart in the Karachi slum of Orangi town.
“People make fun of me, but I ended up with nothing at all from this situation,” said Qadir. “It is such a tragedy.”
Sarwat Zehra, a 56-year-old official, says she has suffered from high-blood pressure after being handed a bill for 13 million rupees in back taxes.
“I was told that a company had illegally passed 14 or 15 billion rupees through my account,” she said.
Pakistan’s poor have long been used as fronts for the elite to dodge taxes and hide assets.
But the scale of the bank account scheme is unprecedented, with authorities pointing the finger at some of Karachi’s wealthiest power brokers including figures with links to former president Asif Zardari.
In September, Pakistan’s Supreme Court established a commission to investigate the scourge, finding that at least 400 million dollars had passed through “thousands of false accounts,” using the names of impoverished people.
Some 600 companies and individuals “are associated with the scandal,” the commission concluded.
It is all the more embarrassing for Khan as his administration scrambles to secure billions of dollars in foreign financial assistance, while also entering talks with the International Monetary Fund for a potential bailout amid a widening balance of payment crisis.
The brazen laundering schemes come as Pakistan was again placed on a watchlist this year by the Financial Action Task Force (FATF) — an anti money-laundering monitor based in Paris — for failing to do enough to combat terror financing.


Diplomats accuse Trump as impeachment hits Americans’ TVs

Updated 44 min 39 sec ago

Diplomats accuse Trump as impeachment hits Americans’ TVs

WASHINGTON: For the first time, the Democrats’ case for President Donald Trump’s impeachment streamed from Americans’ TVs Wednesday, including a new contention that he was overheard asking about political “investigations” that he demanded from Ukraine in trade for military aid.
On Day One of extraordinary public US House hearings — only the fourth formal impeachment effort in US history — career diplomats testified in the open after weeks of closed-door interviews aimed at removing the nation’s 45th president.
The account they delivered was a striking though complicated one that Democrats say reveals a president abusing his office, and the power of American foreign policy, for personal political gain.
“The matter is as simple and as terrible as that,” said Rep. Adam Schiff, the Democratic chairman of the Intelligence Committee, as he opened the daylong hearing. “Our answer to these questions will affect not only the future of this presidency but the future of the presidency itself.”
Career diplomat William Taylor, the charge d’affaires in Kyiv, offered new testimony that Trump was overheard asking on the phone about “the investigations” of Democrats that he wanted Ukraine to pursue that are central to the impeachment inquiry.
Trump said he was too busy to watch on Wednesday and denied having the phone call. “First I’ve heard of it,” he said when asked.
All day, the diplomats testified about how an ambassador was fired, the new Ukraine government was confused and they discovered an “irregular channel” — a shadow US foreign policy orchestrated by the president’s personal lawyer, Rudy Giuliani, that raised alarms in diplomatic and national security circles.
The hearing, playing out on live television and in the partisan silos of social media, provided the nation and the world a close-up look at the investigation.
At its core, the inquiry stems from Trump’s July 25 phone call when he asked Ukraine’s newly elected president, Volodymyr Zelenskiy, for “a favor.”
Trump wanted the Ukraine government to investigate Democrats’ activities in the 2016 election and his potential 2020 rival, Joe Biden — all while the administration was withholding military aid for the Eastern European ally that is confronting an aggressive neighbor, Russia.

A text exchange between US Ambassador Bill Taylor (Ukraine) and Gordon Sondland (EU) shows on a screen as Taylor (R) testifies on the Trump impeachment inquiry in Washington on Nov. 13, 2019. (REUTERS/Jonathan Ernst)

Both sides tried to distill it into soundbites.
Democrats said Trump was engaged in “bribery” and “extortion.” Republicans said nothing really happened — the military aid was ultimately released after Congress complained.
Trump restated his aggressive defense with rapid-fire tweets, a video from the Rose Garden and a dismissive retort from the Oval Office as he met with another foreign leader.
“It’s a witch hunt. It’s a hoax,” he said as he appeared with visiting Turkish President Recep Tayyip Erdogan by his side.
Across the country, millions of Americans were tuning in — or, in some cases, deliberately tuning out.
Viewers on the right and left thought the day underscored their feelings. Anthony Harris, cutting hair in Savannah, Georgia, had the hearing on in his shop, but he said, “It’s gotten to the point now where people are even tired of listening.”
The hours of partisan back-and-forth did not appear to leave a singular moment etched in the public consciousness the way the Watergate proceedings or Bill Clinton’s impeachment did generations ago.
“No real surprises, no bombshells,” said committee member Rep. Chris Stewart, R-Utah.
Still, the session unspooled at least partly the way Democrats wanted with the somber tones of career foreign service officers telling what they knew. They sounded credible.
The witnesses, the graying Taylor and Deputy Assistant Secretary of State George Kent in his bow tie, defied White House instructions not to appear. Both received subpoenas.
They are among a dozen current and former officials who already testified behind closed doors. Wednesday was the start of days of public hearings that will stretch into next week.
Taylor, who was asked by Secretary of State Mike Pompeo to return to Ukraine as Trump was firing Ambassador Marie Yovanovitch, introduced new information Wednesday.
He testified that a staff member recently told him of overhearing Trump when they were meeting with another diplomat, Ambassador Gordon Sondland, at a restaurant the day after Trump’s July 25 phone call to the Ukraine president that sparked the impeachment investigation.
The staff member explained that Sondland had called the president and they could hear Trump on the phone asking about “the investigations.” The ambassador told the president the Ukrainians were ready to move forward, Taylor testified.
In the face of Trump’s denial, Schiff expects the person to appear before investigators for a closed-door deposition. He is David Holmes, the political counselor at the embassy in Kyiv, according to an official unauthorized to discuss the matter and granted anonymity.
Republicans argued that even with the diplomats at the witness table the Democrats have only second- or third-hand knowledge of Trump’s alleged transgressions.
A Trump ally on the panel, Rep. Jim Jordan of Ohio, mockingly called Taylor the Democrats’ “star witness” and said he’d “seen church prayer chains that are easier to understand than this.”
Taylor, a West Point graduate and former Army infantry officer in Vietnam, responded: “I don’t consider myself a star witness for anything.”
The top Republican on the panel, Rep. Devin Nunes of California, said Trump had a “perfectly good reason” for wanting to investigate the role of Democrats in 2016 election interference, giving airtime to a theory that runs counter to mainstream US intelligence which found that Russia intervened and favored Trump.
Nunes accused the Democratic majority of conducting a “scorched earth” effort to take down the president after the special counsel’s Russia investigation into the 2016 election failed to spark impeachment proceedings.
The veteran foreign service officers delivered heartfelt history lessons about Ukraine, a young and hopeful democracy, situated next to Russia but reaching out to the West.
Asked about Trump’s withholding military aid from such an ally, Taylor said, “It was illogical. It could not be explained. It was crazy.”
Both men defended Yovanovitch, a career officer who Kent has said was subject to Giuliani’s “campaign of lies.” She is to testify publicly Friday.
Kent, in his opening remarks, directly contradicted a core complaint against Joe Biden being raised by allies of the White House. While he said he himself raised concerns in 2015 about the vice president’s son, Hunter Biden, being on the board of Burisma, a Ukraine gas company, he “did not witness any efforts by any US official to shield Burisma from scrutiny.”
Republicans sought to hear from the anonymous whistleblower by subpoenaing him for a closed-session. The panel voted down the request and Schiff and repeatedly denied the GOP claim that he knows the person.
“We will do everything necessary to protect the whistleblower’s identity,” Schiff declared.
The Constitution sets a dramatic but vague bar for impeachment, There’s no consensus yet that Trump’s actions at the heart of the inquiry meet the threshold of “high crimes and misdemeanors.”
The anonymous whistleblower first alerted officials to concerns about the Trump phone call with Zelenskiy. The White House released a rough transcript of the telephone conversation, with portions deleted.
House Speaker Nancy Pelosi was initially reluctant to launch a formal impeachment inquiry. But she pressed ahead after the whistleblower’s complaint. She said Wednesday it was sad that the country has to undergo the inquiry with Trump, but “he will be held accountable.”