As far back as 1989 it was clear Hubco would be an albatross around Pakistan’s neck but we are a glutton for punishment and we persisted with this scam. When eventually confronted, Hubco countered with an extremely effective propaganda campaign, holding the country’s financial liquidity hostage and virtually putting all future investment in Pakistan under jeopardy. In this no-win situation we should be thankful we managed to cut our losses and accept, however unpalatable, Hubco’s terms for surrender. With a Trojan Horse or two as a trump card up their sleeve, Hubco’s investors can be excused for laughing all the way to their private banks. Someone someday will do an exhaustive case study to include those who, viz (1) conceived this monstrosity both in (a) Pakistan and (b) abroad, to include government and non-government functionaries, international financial technocrats, consultants, etc (3) nurtured the project, engineers of all kind, bureaucrats, politicians etc (4) were the investors, Japanese (later replaced by Saudis), British, Singaporean, US, etc (5) built it, mainly construction companies, equipment manufacturers, etc (6) then profited by it, mainly almost all of the aforementioned (7) took part in the cover-up and sustaining of the scam, including WAPDA personnel (8) acted as accessories to a combination of media and diplomatic blackmail designed to force us to swallow the bitter pill and (9) lastly, whose children’s grandchildren will continue paying through their nose for the next millennium, long after Hubco is a pile of rubble and rusted scrap?
The macabre part of it is that the people of Pakistan, physical and financial misery notwithstanding, are expected to applaud the third selling of the Eiffel Tower (and this one not by Henry Wilson). Most of the intelligentsia have a fair knowledge of who did what and for whom and at what price to Pakistan. Most did not have the courage to protest, few being beneficiaries directly or indirectly of the scam, are hardly expected to the most expensive oil-fired power plant ever in the world was erected at more than 150% of the standard international cost, now we have to pay exorbitant installments interests thereof besides an inflated tariff. No matter who is in power, where there is money to be made only the means to siphon the money off change, those who pocket the change and create the means to bank that change, always remain the same. Hubco was conceived during the days of Gen Ziaul Haq, continued with Junejo and survived Ms Benazir and Mian Nawaz Sharif alternately twice. Banks demand infidelity insurance from private security companies against infidelity of their guards. We seriously need to take out infidelity insurance on our negotiators and given their abysmal track record, indemnity insurance on the country’s financial future as well. Whatever the good intentions of the present military regime, any future government is going to conclude what this government concluded in the beginning, someone gave away the farm in the country’s name. As Augustus Ceaser commented about Marc Antony on his giving away half the Roman Empire to Cleopatra, “he gave away to his mistress what was not his to give”.
Western nations do not condone money-laundering but their laws are contradictory. One can understand their need to protect the rights of their own citizens (confidentiality in this case) but why should they protect those non-citizens who have transferred large amounts of capital into accounts as well as assets without being able to prove the origin of income? Being serious about “corrupt practices”, it is in their interest to enquire into the means of such “corrupt practices”, particularly to ascertain if any of their corporate entities or citizens were involved in any manner. Moreover, if the individual has not paid taxes in his own country of origin or host country, then why are the laws of the land of his host country, not being applied? When Moinuddin Khan was Chairman CBR, the British Income Tax Authorities requested confirmation whether a person had paid money over to individuals in Pakistan equivalent to about Rs 100 million that was so declared in a particular company’s Corporate Tax return in UK. One of the individuals paid, a senior officer serving on contract after retirement, approached Mr Moinuddin Khan and remonstrated about his pursuing the matter. Did the British authorities ever raise the question again or did they also give way to “discretion”? A lot of the looted money goes to Switzerland, Liechtenstein, Cayman Islands, the Channel Islands, etc and other such money havens. Yet because the money has to be spent somewhere, a good amount goes to the USA and UK, whether in acquiring real estate, businesses, making investment or just living the good life of a gentleman squire. In this high-tech world, it requires little effort to electronically trace out the “smoking trail”. Those who matter in the country know who was involved in the money being spirited away from Pakistan.
Money can hardly be carried away in large suitcases, however large the suitcases. The money has to travel along electronic money transfer route through various financial institutions. Such transactions cannot take place without management and intricate control by senior bankers. During the mid-80s Chase Manhattan in Pakistan employed a very prominent person who was not really into banking but was quite influential in government, political and business circles. For want of a better name he was called “a private banker”. And he had clout and why not, he was the private banker to politicians, bureaucrats, servicemen, businessmen, waderas, saint-landlords, etc? When the head of Citibank, was questioned in front of a Committee investigating money-laundering by US banks, the answers he gave very intelligently circumvented the truth. He called one of Citibank executives an “idiot” for opening a particular account knowing it to be tainted but conveniently forgot to name the “idiot”. And that “idiot” almost became head of a bank in Pakistan recently! Let me quote from the Committee’s report, “to open an account in a private bank, prospective clients usually must deposit a substantial sum, often $1 million or more. In return for this deposit, the private bank assigns a “private banker” or “relationship manager” to act as a liaison between the client and the bank, and to facilitate the client’s use of a wide range of financial services and products. These products and services often span the globe, enabling a client to make use of a variety of corporate, investment and trust vehicles, estate and tax planning, and other financial services. In essence, private banks seek to provide global wealth management for the wealthy. Private banks typically charge fees based upon the amount of client “assets under management,” and the particular products and services used by the client. These fees can exceed $1 million per client each year” Unquote. Rumours are that “the idiot” managed 65 individual accounts from Pakistan alone. It would be nice if someone who is already under oath and knows the names discloses them.
Why not list the bankers who have been close to the men and women in power in Pakistan since Gen Ziaul Haq partially restored democracy in 1985? This exercise should not take more than a day. And if we do not find at least half a dozen bankers common to all, present one included, I will apply for a change of name. What is shocking is that those in power know this and still choose to look the other way. Maj Gen (Retd) Naseerullah Khan Babar, former Governor NWFP and PPP’s Federal Interior Minister, is a man whose credibility is unmatched at any level, not many more blunt, honest and forthright men have been born in Pakistan. He openly names two bankers he was about to arrest but was prevented from doing so. Both are thriving today, albeit in different stations in life, with all due respects this is at the expense of the poor, miserable people of Pakistan, condemned to virtual servitude for the next millenium by their “facilitation” to the corrupt provided by these bankers.
Among those successfully charged with financial misdemeanor and jailed by NAB, how many are bankers? Like the river those who facilitated financial crimes go on forever? If history is a good witness, they will always remain in and around the rulers of the country. The common thread to our debt burden for the coming millennium is the lack of morals and conscience of the private bankers of the world. Do we have the moral courage to confront such Trojan horses?
Mr. Ikram Sehgal is Publisher and Managing Editor of Defence Journal (Pakistan). He was Chairman APSAA for the year 2000, now acting in adhoc capacity pending elections for the year 2001.