Corruption Baromater: Supreme Court Commission fails to trace Loan Sharks

Corruption Barometer: Supreme Court Commission fails to trace Loan Sharks

"Unknown" sharks swallowed over one trillion rupees under 'Write-Off' terms

 ISLAMABAD:

Saeed Minhas

Islamabad: The Supreme Court’s appointed special commission has revealed chilling details of an evil nexuses between successive military and political governments and banking sector of the country from 1971 till 2009 whereby loans worth over a trillion rupees (1.153 trillion) stand eaten up by 22,000 high profile loan sharks which include politician-cum-businessmen, army and civilbureaucrats, industrialists and investors.

Interestingly , the voluminous report reveals all what has been eaten up by our national leaders and their henchmen from both side of the divide  

According to three volumes of report, copy of which is available with The Spokesman, Rs. 438 billion have been written off straight away in 740 documented cases, and over Rs. 215 billion is pending solicitation with banking and High courts of the country. Sources privy to these developments hailing from banking and legal sectors revealed that another Rs. 500 billion stand vanished in the system because banks failed to find any record and commission failed to solicit any information for missing cases.

A steering committee comprising of presidents of National Bank, Habib Bank, United Bank, NIB Bank, and Standard Chartered Bank, formed by State Bank of Pakistan in 2009 on the directions of the Supreme court to help the commission revealed in its findings accepted that load of Rs. 256 billion of bad loans was lessened for banking books between 1971-2009.

banking experts believe that the written off loans could well exceed one trillion rupees and majority of the cases pending for over ten years will ultimately end up in the dark-holes soon. Multiple reasons cited in the report include lackluster approach of banks to get their loans back, collaborative approach of State Bank of Pakistan to check over invoicing of collaterals, procedures and controls besides heavy dependence of regulators and banks on political mood of the ruling elite.

Questioning the multiplicity of judicial system and banking courts, the Commission has revealed that more than eleven thousand cases are pending adjudication involving a whooping amount of over Rs. 215 billion for the past ten years or so. It reveals that about 6800 cases involving over Rs. 75 billion were initiated with the banking and High courts in the country only in 2008-09. “Enabling laws and better empowered banking courts are certainly need of the day,” commented the commission in its report.  Castigating the policies and procedures of banks to divulge into such rip offs, Commission has observed: “it also transpired that accurate and fine-tuned policies and procedures were either not laid down or not efficiently followed.”

Careful reading of the report reveals that loan sharks have swelled in number from a mere 200 families in 1970s to 22,000 in 2009, about whom commission believes many are in politics or sitting in the assemblies. Commission’s report reveals that during 1971-96 (26 years) only 1424 ‘parties’ were facilitated by banks to get their loans worth Rs. 11.225 billion wiped out while during 1997-2009 (13 years) 22021 ‘parties’ managed to get the same facility from banking sector to get their loans worth Rs. 202 billion written off to make sure that they get back in the queue for another deal. 

The amount involved is almost double the development portfolio of federal government while three times that of provincial governments. Yet the Commission has expressed surprise that all the banks have shown huge profits for their shareholders throughout this period for which the commission believes banks are playing with the average countrymen by luring them in deposit schemes without any security for their deposits and hard earned money.

The commission was given details of a total of 792 cases involving 912259 individuals and companies for examination by various national and international banks/DFIs operating with the permission of State bank of Pakistan. Another 1328 cases involving Rs. 157 billion were given merely as information to the commission for which no record was furnished. The commission failed to get access to all those write off loans which were waived off by various public sector and private banks after the privatization started during first tenure of Benazir Bhutto. The commission has revealed in its report that only during the first two years (2008-09) of current Peoples Party government various public sector and privatized banks waived off Rs. 74 billion loans. Incumbent Peoples Party regime is learned to have adjusted over eight thousand ‘big sharks’ to get more than Rs. 38 billion written off from various banks/DFIs while another four lakh small sharks were allowed to go scot free with Rs. 36 billion only in its initial two years in office. Interestingly, 49 per cent of these write-offs came from private sector banks while 40 per cent from the foreign banks operating in Pakistan and only 11 per cent from public sector banks/DFIs during 2008-09.

The commission in its detailed report has raised harrowing questions about the functioning and responsibilities of State bank of Pakistan by giving the dates that how SBP facilitated with various regimes starting from Zulfiqar Ali Bhutto, to ZiaulHaq and from Benazir Bhutto to Nawaz Sharif and from Musharraf till now to let the loan bonanza flow unchecked. More importantly, experts believe that the commission has triggered a debate about the sovereignty of the State Bank of Pakistan and the privatization process through which various profitable banks and some sick industrial units were sold out in connivance with the banks.

The banks which tops of the list of benevolent for loan sharks include Habib Bank (218 cases for Rs. 31 Billion), National Bank of Pakistan (214 for Rs. 28 billion), IDBP (98Rs. 7 billion), ZTBL (45 for Rs. 7 billion), NIB (49 for Rs. 6.5 billion), UBL (31 for Rs. 3.2 billion), Pak Libya (14 for Rs. 1.15 billion), SME (9 for Rs. 0.32 billion), Saudi Pak (6 for Rs. 0.33 billion), Pak Kuwait (6 for Rs. 0.14 billion), Bank of Khyber (5 for Rs. 1.34 billion), Bank of Punjab (2 for Rs. 0.43 billion).

The Corporate and Industrial Restructuring Corporation (CIRC) created in 2000 was supposed to revive the sick industrial units under SBP instructions but instead started working as a debt discounting agency facilitating the influential borrowers to have bargain deals. During its six years of operations out of 248 cases where Rs. 57 billion was outstanding against the borrowers, it ended up writing off Rs 53 billion of it showing a recovery of just three billion in six years.

Ironically having done all the spade work, the commission seems to have backed the recommendations of technocrats and bankers by stating that “all the written off loans be treated as past and closed transactions and instead of looking backwards, better laws should be put in place to process the write-offs through courts. (page 92)”

ISIS emerges from ashes of buried Ottoman Empire? 

Ottoman empire collapsed around 1918, though it took another turbulent six years and young-turks revolution under Mustafa Kemal Pasha to formally pronounce the demise of caliphate (3rd March, 1924). But isn't it strange that almost century later, British-French orchestrated division of the empire resonates across the region of Gulf. Americans seem to have opened a Pandora Box which French and British tried to close with the help of Hashmities and Sauds towards the end of first world war. 

Brief History of Ottoman Empire

Have Americans opened it just to redraw the geographical boundaries of Arabian peninsula or to push their arms sales (out of top 15 arms sales dealers in the world 10 are American, one British, one Italian, one Russian and a couple French with total arms sale touching US $ 395 billion in 2012) http://www.sipri.org/media/pressreleases/2014/top100_january2014?  Another point of view is that are Americans doing this to ensure that the Europeans remain under their influence of power instead of slipping towards the rising Putin-Xi camp?

There are even more questions arising out of the ashes of history which Americans have sprung flying around all of us culminating in interesting scenarios and even more questions than answers. 

From a Muslim stand point the question to watch out for is that Will Americans be able to contain this debris of history or let Saud family (the custodians of two holy places) face the torrent (also known as Arab Spring) which actually started from Lebanon in 1978 or as some say in 1947 when Israel was placed in the heart of Arab peninsula as a nation-state? Will these dictators and kings of un-naturally divided Ottoman empire be able to hop from super power to another to ensure their grip over the resources and general Arab populations (ruled supremely by tribes and clans and not by the British-French coined notion of nation-state)?  

In this context the rise of Islamic Sultanate of Iraq and Syria (ISIS) is an interesting phenomenon. On the face of it, rise of such an extremist force is claiming what once has been part of Ottoman Empire till first world war. But in reality, the notion has always been in the hearts and mind of general Arab population throughout these past decades. It also resembles in some ways with Afghan conundrum where artificially stalled and foreign supported puppet governments could not address the genuine needs and demands of the locals and eventually the gap between the rulers and ruled was filled by a lower-middle class power group by using the name and force of a religion (hence they were called Taliban). 
No doubt these are Volatile, vulnerable and chaotic times, but like every rise has a fall we should consider finding some solace from Confucius who puts it  this way (perhaps for the entire human race and not only for rulers): "our greatest glory is not in never falling, but in rising every time we fall." 
Below is an interesting read in this regard to understand the background of Syria, Iraq and rest of the region and to some extent it also gives you an idea about the rise of ISIS. Happy reading

Iraq and Syria Follow Lebanon's Precedent

Geopolitical Weekly

Tuesday, August 26, 2014 -

By George Friedman

Lebanon was created out of the Sykes-Picot Agreement. This agreement between Britain and France reshaped the collapsed Ottoman Empire south of Turkey into the states we know today -- Lebanon, Syria and Iraq, and to some extent the Arabian Peninsula as well. For nearly 100 years, Sykes-Picot defined the region. A strong case can be made that the nation-states Sykes-Picot created are now defunct, and that what is occurring in Syria and Iraq represents the emergence of post-British/French maps that will replace those the United States has been trying to maintain since the collapse of Franco-British power.

The Invention of Middle East Nation-States

Sykes-Picot, named for French diplomat Francois Georges-Picot and his British counterpart, Sir Mark Sykes, did two things. First, it created a British-dominated Iraq. Second, it divided the Ottoman province of Syria on a line from the Mediterranean Sea east through Mount Hermon. Everything north of this line was French. Everything south of this line was British. The French, who had been involved in the Levant since the 19th century, had allies among the region's Christians. They carved out part of Syria and created a country for them. Lacking a better name, they called it Lebanon, after the nearby mountain of the same name.
The British named the area to the west of the Jordan River after the Ottoman administrative district of Filistina, which turned into Palestine on the English tongue. However, the British had a problem. During World War I, while the British were fighting the Ottoman Turks, they had allied with a number of Arabian tribes seeking to expel the Turks. Two major tribes, hostile to each other, were the major British allies. The British had promised postwar power to both. It gave the victorious Sauds the right to rule Arabia -- hence Saudi Arabia. The other tribe, the Hashemites, had already been given the newly invented Iraqi monarchy and, outside of Arabia, a narrow strip of arable ground to the east of the Jordan River. For lack of a better name, it was called Trans-Jordan, or the other side of the Jordan. In due course the "trans" was dropped and it became Jordan.
And thus, along with Syria, five entities were created between the Mediterranean and Tigris, and between Turkey and the new nation of Saudi Arabia. This five became six after the United Nations voted to create Israel in 1947. The Sykes-Picot agreement suited European models and gave the Europeans a framework for managing the region that conformed to European administrative principles. The most important interest, the oil in Iraq and the Arabian Peninsula, was protected from the upheaval in their periphery as Turkey and Persia were undergoing upheaval. This gave the Europeans what they wanted.
What it did not do was create a framework that made a great deal of sense to the Arabs living in this region. The European model of individual rights expressed to the nation-states did not fit their cultural model. For the Arabs, the family -- not the individual -- was the fundamental unit of society. Families belonged to clans and clans to tribes, not nations. The Europeans used the concept of the nation-state to express divisions between "us" and "them." To the Arabs, this was an alien framework, which to this day still competes with religious and tribal identities.
The states the Europeans created were arbitrary, the inhabitants did not give their primary loyalty to them, and the tensions within states always went over the border to neighboring states. The British and French imposed ruling structures before the war, and then a wave of coups overthrew them after World War II. Syria and Iraq became pro-Soviet states while Israel, Jordan and the Arabians became pro-American, and monarchies and dictatorships ruled over most of the Arab countries. These authoritarian regimes held the countries together.

Reality Overcomes Cartography

It was Lebanon that came apart first. Lebanon was a pure invention carved out of Syria. As long as the Christians for whom Paris created Lebanon remained the dominant group, it worked, although the Christians themselves were divided into warring clans. But after World War II, the demographics changed, and the Shiite population increased. Compounding this was the movement of Palestinians into Lebanon in 1948. Lebanon thus became a container for competing clans. Although the clans were of different religions, this did not define the situation. Multiple clans in many of these religious groupings fought each other and allied with other religions.
Moreover, Lebanon's issues were not confined to Lebanon. The line dividing Lebanon from Syria was an arbitrary boundary drawn by the French. Syria and Lebanon were not one country, but the newly created Lebanon was not one country, either. In 1976 Syria -- or more precisely, the Alawite dictatorship in Damascus -- invaded Lebanon. Its intent was to destroy the Palestinians, and their main ally was a Christian clan. The Syrian invasion set off a civil war that was already flaring up and that lasted until 1990.
Lebanon was divided into various areas controlled by various clans. The clans evolved. The dominant Shiite clan was built around Nabi Berri. Later, Iran sponsored another faction, Hezbollah. Each religious faction had multiple clans, and within the clans there were multiple competitors for power. From the outside it appeared to be strictly a religious war, but that was an incomplete view. It was a competition among clans for money, security, revenge and power. And religion played a role, but alliances crossed religious lines frequently.
The state became far less powerful than the clans. Beirut, the capital, became a battleground for the clans. The Israelis invaded in order to crush the Palestinian Liberation Organization, with Syria's blessing, and at one point the United States intervened, partly to block the Israelis. When Hezbollah blew up the Marine barracks in Beirut in 1983, killing hundreds of Marines, U.S. President Ronald Reagan, realizing the amount of power it would take to even try to stabilize Lebanon, withdrew all troops. He determined that the fate of Lebanon was not a fundamental U.S. interest, even if there was a Cold War under way.
The complexity of Lebanon goes far beyond this description, and the external meddling from Israel, Syria, Iran and the United States is even more complicated. The point is that the clans became the reality of Lebanon, and the Lebanese government became irrelevant. An agreement was reached between the factions and their patrons in 1989 that ended the internal fighting -- for the most part -- and strengthened the state. But in the end, the state existed at the forbearance of the clans. The map may show a nation, but it is really a country of microscopic clans engaged in a microscopic geopolitical struggle for security and power. Lebanon remains a country in which the warlords have become national politicians, but there is little doubt that their power comes from being warlords and that, under pressure, the clans will reassert themselves.

Syria's Geographic Challenge

Repeats in Syria and Iraq

A similar process has taken place in Syria. The arbitrary nation-state has become a region of competing clans. The Alawite clan, led by Bashar al Assad (who has played the roles of warlord and president), had ruled the country. An uprising supported by various countries threw the Alawites into retreat. The insurgents were also divided along multiple lines. Now, Syria resembles Lebanon. There is one large clan, but it cannot destroy the smaller ones, and the smaller ones cannot destroy the large clan. There is a permanent stalemate, and even if the Alawites are destroyed, their enemies are so divided that it is difficult to see how Syria can go back to being a country, except as a historical curiosity. Countries like Turkey, Saudi Arabia, Israel and the United States might support various clans, but in the end, the clans survive.
Something very similar happened in Iraq. As the Americans departed, the government that was created was dominated by Shia, who were fragmented. To a great degree, the government excluded the Sunnis, who saw themselves in danger of marginalization. The Sunnis consisted of various tribes and clans (some containing Shiites) and politico-religious movements like the Islamic State. They rose up in alliance and have now left Baghdad floundering, the Iraqi army seeking balance and the Kurds scrambling to secure their territory.
It is a three-way war, but in some ways it is a three-way war with more than 20 clans involved in temporary alliances. No one group is strong enough to destroy the others on the broader level. Sunni, Shiite and Kurd have their own territories. On the level of the tribes and clans, some could be destroyed, but the most likely outcome is what happened in Lebanon: the permanent power of the sub-national groups, with perhaps some agreement later on that creates a state in which power stays with the smaller groups, because that is where loyalty lies.
The boundary between Lebanon and Syria was always uncertain. The border between Syria and Iraq is now equally uncertain. But then these borders were never native to the region. The Europeans imposed them for European reasons. Therefore, the idea of maintaining a united Iraq misses the point. There was never a united Iraq -- only the illusion of one created by invented kings and self-appointed dictators. The war does not have to continue, but as in Lebanon, it will take the exhaustion of the clans and factions to negotiate an end.
The idea that Shia, Sunnis and Kurds can live together is not a fantasy. The fantasy is that the United States has the power or interest to re-create a Franco-British invention crafted out of the debris of the Ottoman Empire. Moreover, even if it had an interest, it is doubtful that the United States has the power to pacify Iraq and Syria. It could not impose calm in Lebanon. The triumph of the Islamic State would represent a serious problem for the United States, but no more than it would for the Shia, Kurds and other Sunnis. As in Lebanon, the multiplicity of factions creates a countervailing force that cripples those who reach too far.
There are two issues here. The first is how far the disintegration of nation-states will go in the Arab world. It seems to be under way in Libya, but it has not yet taken root elsewhere. It may be a political formation in the Sykes-Picot areas. Watching the Saudi peninsula will be most interesting. But the second issue is what regional powers will do about this process. Turkey, Iran, Israel and the Saudis cannot be comfortable with either this degree of fragmentation or the spread of more exotic groups. The rise of a Kurdish clan in Iraq would send tremors to the Turks and Iranians.
The historical precedent, of course, would be the rise of a new Ottoman attitude in Turkey that would inspire the Turks to move south and impose an acceptable order on the region. It is hard to see how Turkey would have the power to do this, plus if it created unity among the Arabs it would likely be because the memories of Turkish occupation still sting the Arab mind.
All of this aside, the point is that it is time to stop thinking about stabilizing Syria and Iraq and start thinking of a new dynamic outside of the artificial states that no longer function. To do this, we need to go back to Lebanon, the first state that disintegrated and the first place where clans took control of their own destiny because they had to. We are seeing the Lebanese model spread eastward. It will be interesting to see where else its spreads.

Will Judiciary proceed against Holy Cows of Pakistan?

Will Judiciary Proceed  against Holy Cows of Pakistan?

Court to probe 61 Pakistani Politicians including Nawaz, Shahbaz, Zardari, Imran for transferring wealth abroad

Saeed Minhas

Islamabad: Developments and twists are not unknown to Pakistani politics. The latest one in line is a simmering case under review at Lahore High Court to probe the alleged flight of money from Pakistan by none other than the top notch politicians of the country by industrialist turned politician and sitting prime minister, Nawaz Sharif, his younger brother and chief minister Punjab , Shahbaz Sharif, former President of Pakistan and co-chairperson of Peoples Party, Asif Zardari and chief of Pakistan Tehrik Insaaf (PTI), Imran Khan. 

Will a judiciary known for having a history of siding with the powerful (to allow itself to be overlooked for its internal weaknesses and corruption), be able to rise above its dirty past? More importantly the politically infested institutes like Federal Investigation Agency (FIA), Auditor General of Pakistan, Federal Board of Revenue and other such institutes be allowed to extend the details to the court or continue to play in tandem with corrupt political bosses (to help themselves to promotions and corruption)? 

Interestingly, this is first attempt at asking such high profile politicians to disclose their foreign assets but till to date no such attempts have been made to force the powerful and politically aligned federal and provincial bureaucracy (babucracy) of this country or for that matter the serving or retired Generals of Pakistan's army or serving and retired judges of the lower and higher judiciary of the country to disclose their foreign assets or foreign (dual) nationalities. 

But if this case against politicians is proceeded further by the judiciary, lets hope that one day other holy cows will be challenged as well. But mind you with this judiciary reeling under its own heaps of corruption and nepotism, the chances are slim but enough for patriots like us to hang on to and wish for the proceedings to go on.    (Saeed Minhas)

LAHORE: The Lahore High Court (LHC) on Friday decided to start ex parte proceedings against 61 politicians in relation to a case against alleged illegal transfer of assets to foreign countries.

Justice Ameenuddin made the call during the hearing of a petition filed by Advocate Javed Iqbal Jafree which said that prominent politicians including Prime Minister Nawaz Sharif, Punjab Chief Minister Shahbaz Sharif, PTI chairman Imran Khan and former president Asif Ali Zardari had transferred their assets to foreign countries via illegal means.

The petition had requested the court to issue orders to bring the allegedly illegally transferred assets back to Pakistan.

The order disables the politicians who failed to submit their affidavits in response to the court's directive to declare their assets from defending themselves and will affect high profile politicians including the premier, the Punjab chief minister, Imran as well as PPP’s co-chairperson Zardari.

Earlier on September 2, only three out of the 64 initially directed had filed affidavits in this regard. These included Senator Aitzaz Ahsan, his wife Bushra Aitzaz and former chairman National Accountability Bureau (NAB) Qamar Zaman Chaudhry.

Know more: Foreign assets case: LHC issues notices to politicians

However, during today’s hearing, Advocate Jafree pointed out that Mr and Mrs Ahsan and the former NAB chairman had not submitted any details on the foreign assets they had in possession, following which the court ordered the three to file details of their foreign assets by the next hearing.

The court decided to begin ex parte proceedings against the politicians who had not submitted their assets' details and ordered Director General Federal Investigative Agency (FIA) Ghalib Ali Bandesha, Punjab Advocate General Hanif Khatana and Attorney General Salman Aslam Butt to submit an affidavit declaring details of the investigation that has taken place into the case so far.

The case was subsequently adjourned to September 29.

Earlier in June, the LHC had issued notices to politicians, including the prime minister, on a petition seeking directions for the politicians to bring their foreign assets back to Pakistan.