He wrote that he entered politics after the experience of building a cancer hospital in his mother’s memory in 1994 left him stunned both by the generosity of ordinary Pakistanis and
the failings of their government: “I discovered how hard it was to achieve anything in Pakistan while also battling bureaucracy and corruption.”
In 1996, Khan founded the
PTI party, vowing to root out corruption, address wealth inequality and break the hold of the country’s two political dynasties – those of the Bhutto and Sharif families – which he claimed ruled Pakistan like a “fiefdom.”
Among the early targets of Khan’s anti-corruption campaign was another powerful family, the Elahi’s, known in Pakistan as the Chaudhrys of Gujrat.
After Musharraf forcibly ousted Prime Minister Sharif in 1999, during his second term, Chaudhry Pervaiz Elahi, a prominent political figure, organized the Pakistan Muslim League-Q to support the coup. The PML-Q, known for backing Pakistan’s
military governments, remains closely aligned with the military.
Over the years Pakistan’s anti-corruption agencies have launched and dropped several investigations into his business
dealings. Around 2002, Khan petitioned the national bank to investigate loans to Elahi’s company which had allegedly been written off. At one point he called him “the biggest dacoit in Punjab,” using an Urdu word for “bandit.”
Despite being a national hero and benefiting from well-funded campaigns powered by the enthusiastic support of Pakistanis abroad, Khan remained a political outsider, in part because he refused
to make alliances with forces he called corrupt.
Middle-class and other reform-minded voters flocked to his 2013 campaign, waving cricket bats. And Khan gained a powerful ally: the military,
then in a power struggle with both mainstream civilian factions. But the PTI gained just 35 of the 342 seats in the National Assembly that year.
Then came the Panama Papers.
The revelations about then-Prime Minister Sharif and his family’s London real estate holdings, followed by the discovery that his oldest daughter forged documents in an attempt to cover up
her ownership, played perfectly to Khan’s anti-corruption message and turbocharged his political fortunes.
“The leaks are God-sent,” Khan said at the time. Taking stock
of the impact on the country’s ruling elite a year later, he declared, “This is a defining moment in the history of Pakistan.”
Pakistan’s Supreme Court soon disqualified
Sharif from office for falling short of constitutional requirements to be “truthful and trustworthy.” The ISI was involved in the investigation of Sharif. He was later sentenced to 10 years in prison on related corruption charges.
In the 2018 elections, Khan’s PTI secured a fourfold increase in National Assembly seats, bringing the party to the brink of power. Throngs of his supporters danced outside the party’s
headquarters in Islamabad.
But Khan hadn’t won the outright majority and needed to form a government. Sharif and Bhutto’s parties, the target of years of his attacks, were
not an option.
That left a coalition of smaller parties, led by the Pakistan Muslim League-Q, the Elahis’ party. Khan made the deal.
A fateful political alliance
Since taking office, Khan has continued to deploy anti-corruption rhetoric and rail against elites who, he has said on Twitter,
“come to power and plunder the country.”
But analysts say Khan has disappointed his reform-minded supporters and has become widely viewed as a figurehead. “He doesn’t
have a problem with the military ruling the country while they pretend that he’s in charge,” Aqil Shah, a visiting academic at the Carnegie Endowment for International Peace, told ICIJ.
Khan’s spokesperson, Shabhaz Gill, told ICIJ that the “PTI believed in the separation of powers,” and the military came under the power of the executive branch of the state.
The Pandora Papers reveal that Khan has surrounded himself with people – cabinet ministers and their families, donors and other political allies – who have holdings hidden offshore.
Shaukat Tarin, Khan’s finance minister, and members of Tarin’s family own four offshore companies. According to Tariq Fawad Malik, a financial consultant who handled the paperwork on the companies, they were set up as part
of the Tarin family’s intended investment in a bank with a Saudi business. He said that “as a mandatory prerequisite by [the] regulator, we engaged with the Central Bank of Pakistan to obtain their ’in-principle approval for the said strategic
investment.” The deal didn’t proceed.
Tarin didn’t respond to ICIJ’s questions. In a statement issued the day of the Pandora Papers’ publication, Tarin
said: “The off-shore companies mentioned were incorporated as part of the fund raising process for my Bank.”
Omer Bakhtyar, the brother of Khan’s minister for
industries, Makhdum Khusro Bakhtyar, transferred a $1 million apartment in the Chelsea area of London to his elderly mother through an offshore company in 2018. The state anti-corruption agency has been investigating allegations that his family’s wealth
inexplicably “ballooned” since Bhaktyar first became a minister in Pervez Musharaff’s government in 2004.
In a written statement to ICIJ, Makhdum Bakhtyar said that
the anti-corruption agency’s investigation was founded on baseless allegations which had underestimated his family’s past wealth and that it has so far not resulted in a formal complaint.
The son of Waqar Masood Khan, Khan’s chief adviser for finance and revenue between 2019 and 2020, co-owned a company based in the British Virgin Islands. Masood resigned in August amid a policy dispute. Khan told ICIJ that he did not know what
his son’s company did. He said his son lived a modest life and was not financially dependent.
And Khan’s former minister for water resources, Faisal Vawda, set up an offshore
company in 2012 to invest in U.K. properties, the Pandora Papers show. He resigned in March amid a controversy over his status as a dual U.S.-Pakistan national. Vawda told ICIJ that he has declared all worldwide assets held in his name to Pakistani tax authorities.
Gill, Khan’s spokesperson, said that Khan had passed an executive order requiring unelected members of his cabinet to declare their assets, in addition to the asset disclosures already required
of members of the National Assembly under Pakistani law.
Khan’s financial backers are also prominent in the files.
Naqvi, the financier and major donor to Khan’s 2013 campaign, owned several offshore companies. The files show that in 2017, Naqvi transferred ownership of U.K. holdings – three luxury apartments, his country estate, and a property
in London’s suburbs – into an offshore trust operated by Deutsche Bank. Deutsche Bank declined to respond to ICIJ concerning the beneficiaries of the trust.
The next year,
he presided over the spectacular collapse of his Dubai-based private equity firm, Abraaj Group.
U.S prosecutors charged Naqvi with engineering a $400 million fraud against Abraaj investors
and this year persuaded a court to allow his extradition from the U.K. Naqvi has denied wrongdoing.
Tariq Shafi, a leading businessman, and another PTI donor held $215 million through
offshore companies, the records show.
Neither Shafi nor Naqvi responded to ICIJ’s questions.
offer an unusually detailed look at how a top political figure attempted to hide proceeds from alleged misuse of public funds with the help of an elite offshore service provider.
politician is Moonis Elahi, whose father founded the Pakistan Muslim League-Q, the party holding Khan’s fragile coalition together.
‘Several corrupt land development projects’
Scandals linked to the Elahi family have become a regular feature of Pakistani politics over the years, but have rarely resulted in legal consequences.
In 2007, for instance, authorities found that the Bank of Punjab, owned by the Elahi-led provincial government, had made a reported $608 million in unsecured loans, many to companies owned by the bank’s directors or people with
political connections. When the loans went bad, the provincial government ultimately paid to bail out the bank.
In January 2016, Moonis Elahi, then a member of Punjab’s provincial
legislature, met with officials at Asiaciti Trust, a financial services provider that specializes in offshore wealth management. Records show that Elahi told Asiaciti staff that he wanted to invest money from the 2007 sale of land owned by Phalia Sugar Mills,
an Elahi family business.
The records show that Asiaciti officials asked Elahi about his past legal problems. He provided them with a court document clearing him of fraud charges unrelated
to the Bank of Punjab scandal.
After the meeting, documents show, Asiaciti designated Elahi as a “politically exposed person” or PEP — a legal term denoting a corruption
risk related to a client’s status as a public official.
Singapore’s anti-money-laundering laws require that management at professional firms like Asiaciti approve any business
done with PEPs. The firms also have to establish the source of a PEP’s wealth and of the specific funds to be invested, and they have to take other steps to guard against money laundering.
Asiaciti commissioned Thomson Reuters Risk Management Solutions, a unit of the financial information giant, to conduct an “enhanced due diligence” check.
produced a 19-page report detailing allegations of Elahi’s involvement in “several corrupt land development projects,” including that he set up a fake company, fraudulently obtained loans, and sold land at inflated prices to the government
The report noted that the Bank of Punjab had filed a complaint with Pakistan’s anti-corruption agency against the Elahi family, alleging that under the “influence”
of Moonis Elahi’s father, the bank had made an illegal loan to the buyer of the family’s Phalia Sugar Mills property.
On Feb. 15, 2016, records show, Asiaciti accepted Moonis
Elahi as a client, despite the report’s findings.
Elahi provided Asiaciti with the contract from the $33.7 million Phalia Sugar Mills sale as the source of the funds he wanted
to invest, records show. In other words, Elahi asked Asiaciti to invest the proceeds of an allegedly corrupt loan obtained from a state-owned bank.
The records don’t say whether
Asiaciti asked about the Bank of Punjab’s allegations. The bank did not respond to questions from ICIJ’s partner, The Guardian, about the loan, including what became of its complaint, citing client confidentiality.
A spokesperson for Asiaciti said that the firm maintained a strong compliance program and that their offices have all passed audits for anti-money laundering and counter-terrorism financing practices.
“However, no compliance program is infallible – and when an issue is identified, we take necessary steps with regard to the client engagement and make the appropriate notifications to
regulatory agencies,” the spokesperson said.
They said that ICIJ’s reporting was based on incomplete information but declined to elaborate.
Asiaciti registered trust in low-tax Singapore and proposed to use part of the proceeds of the Phalia Sugar deal to invest in another Punjab sugar company, RYK Mills, in which Elahi already held a stake.
The plan called for a trust to hold an investment vehicle, funded by the “sale of a sugar mill,” that would own two properties in the U.K.
But, records show, when Asiaciti advised Elahi of its legal obligation to share his “financial information with the relevant tax authorities” – in this case, Pakistan’s Federal Board of Revenue – he
Records show that Asiaciti received a phone call from Elahi. He wanted to scrap the trust.
an Asiaciti manager wrote in a memo, “has concerns about the … reporting requirements.”
According to the memo, Elahi preferred to hold the investments in a U.K.-registered
trust in his wife’s name; as a U.K. tax resident, she would not be subject to the same disclosure requirements.
“It appears that Moonis has no connection” to that trust,
the memo says.
Less than a month after the phone call, Asiaciti prepared the paperwork to terminate Elahi’s
trust. The following year, public records show, Elahi’s wife used a U.K. shell company to transfer an $8.2 million London apartment overlooking the River Thames to a woman named Mahrukh Jahangir, who then filed a U.K. Land Registry document generally
used by joint owners and trustees. The transfer was not for “money or anything of monetary value,” according to public records.
A woman with the same name as Jahangir appears as a 9.4% shareholder
in the RYK Mills – the business targeted as an investment in Elahi’s talks with Asiaciti. ICIJ tried to contact Jahangir for comment but did not receive a response.
Neither Elahi nor his wife
disclosed ownership of the apartment or RYK assets in their official declaration of interests from 2017 as part of his candidacy to become a member of the National Assembly.
The Elahi family has ignored multiple
attempts to seek comment concerning the allegations concerning the Phalia Mills sale, Moonis Elahi’s dealings with Asiaciti, or the U.K.-based trust he intended to set up.
A new minister
In April, Pakistan’s Federal Investigations Agency announced a criminal probe into price-fixing in the powerful sugar industry, naming RYK Sugar Mills among the companies allegedly involved.
The industry dominates the valuable agricultural land of Punjab and is one of the biggest water users in one of the most water-stressed countries in the world. It is also among the world’s largest producers of sugarcane and uses enough water each
year to fill Australia’s Sydney Harbour more than 45 times.
On Twitter, Elahi acknowledged that he “indirectly” held shares in RYK Mills, though he wasn’t involved in the company’s
Responding to news of the criminal probe, Khan, in a speech, called out the “sugar mafia,” which he characterized as a “powerful elite” that set itself above the rule of law and
frequently sought to “blackmail the government.”
In June, Khan announced a new appointment to his cabinet: He named Moonis Elahi minister for water resources.
04 Oct 21/Monday Source: icij.org