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Zardari ‘pocketed millions’ in French subs deal: report

January 17, 2011 35 comments

Source : http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Politics/15-Jan-2011/Zardari-pocketed-millions-in-French-subs-deal-report/1

Official Pakistani documents detailing how the country’s president, Asif Ali Zardari, benefited from massive, secret payments connected to the sale of French submarines to Pakistan have been seized as evidence by a Paris magistrate investigating a suspected widespread scam surrounding the deal.
The documents, revealed for the first time by Mediapart, show that the payments to Zardari and others took place on the fringes of the sale of three Agosta-class submarines by the French defence contractor the DCN) to Pakistan in the 1990s. The French sale succeeded against rival offers by Swedish and German contractors.
The sale, and the payment of bribes associated with it ­- officially termed as commissions – are at the core of what has become known as the ‘Karachi affair’, currently the subject of two French judicial investigations and which has rocked the French political establishment with its potential far-reaching ramifications within France.
A key allegation in the developing affair is that the cancellation of commissions paid out in the submarine deal was the motive behind a suicide bomb attack in Karachi on May 8th, 2002, that left 11 French engineers dead. They were in Pakistan to help build one of the Agosta submarines.
Increasing evidence suggests that cancellation of the commissions, ordered by former French president Jacques Chirac, was decided after it was discovered they were in part re-routed back to France to fund political activities of Chirac’s principal political rival, Edouard Balladur. For the full background to the story please click here.
The documents now in possession of Paris-based judge Renaud Van Ruymbeke were found during a French police search in June 2010 of the home of Amir Lodhi , one of the intermediaries involved in securing the Agosta contract. Lodhi held a copy of a report by a Pakistani anti-corruption service, the Ehtesab Cell.
Lodhi, 61, the brother of a former Pakistani ambassador to the United Nations, is a close friend of Zardari, who became president of Pakistan in 2008 one year after the assassination of his wife, Benazir Bhutto.
The raid on Lodhi’s home in the French capital was carried out by detectives from the French police national financial investigation division, the DNIF, (Division nationale des investigations financiers). The Ehtesab Cell documents were the object of a formal report by the DNIF, established on June 17th, 2010, and reveals that Zardari received backhanders worth 6,934,296 euros between October and December 1994.
That report is now among the evidence collected by Van Ruymbeke in his investigations launched last autumn into the financial aspect of the Agosta submarine sale, and in particular whether commissions paid abroad were re-routed to fund political activities within France.
Originally written in English, the Pakistani document was translated by the DNIF investigators and now provides the first clear details about the scale of the payments made to Zardari, amounting to several million euros, as well as the channels used, including offshore companies, bank accounts and a British tax haven.
Bank transfers to the Virgin Islands
The Agosta submarine contract was signed between the two countries on September 21st, 1994, just weeks before the first payments began.
At the time, Zardari was a minister in the Pakistani government then led by his wife, Prime Minister Benazir Bhutto. Importantly, Zardari was the key figure for all public contracts signed with foreign countries. That position earned Zardari the unflattering nickname in his own country of “Mister 10%”.

The main document seized by French investigators is a photocopy of an original dated November 9th, 1997, concerning a request by Pakistan to Switzerland for co-operation in a judicial investigation.
The request by the Pakistani authorities to Switzerland aimed, according to the officer, “to obtain all the necessary information to pursue a criminal investigation and to try the former prime minister of Pakistan, Madame Bhutto, her husband, Monsieur Asif Ali Zardari, her mother, Begum Nusrat Bhutto and the other members of the Bhutto government, public servants and civilians implicated in the conspiracy of Madame Bhutto and/or her husband to misappropriate public funds for their own profit.”
The French police report said the document explicitly referred to the Agosta contract: “This request concerns several cases of malpractice including that of the purchase of French submarines.” According to the DNIF investigators “the chronology and the currency [of the sums paid] suggest that these payments are secret commissions paid by the DCN-I [the commercial arm of the submarine builders DCN] to Monsieur Zardari and Monsieur Lodhi for their considerable service in assuring that DCN-I got the contract”.
Huge sums are recorded at the end of 1994 alone, when a company called Marleton Business Inc. was set up through a lawyer in the tax haven of the British Virgin Islands for use by Zardari. A first payment of some of 5.5 million francs (about 838,000 euros) took place in October 1994 “of which 70% goes to Monsieur Zardari (AAZ) and 30% to Monsieur Lodhi (AL),” noted the French police report.
Sarkozy’s ministry ‘approved’ bribe sums
A second transfer took place two months later, in December, for an altogether larger sum of 59.48 million francs, (about 9.06 million euros) “divided into 41.636 million [francs] for Monsieur Zardari and 17.844 million for Monsieur Lodhi”. That represented 6,934,296 euros for the current president of Pakistan, and 2,971,841 euros for his partner.
According to the French investigators, the official Pakistani documents seized in Lohdi’s Paris home also explain that “Messieurs Lodhi and Zardari received their bribes in the bank accounts of a series of offshore companies”.
The report says they are all based in the Virgin Islands and they are identified by the DNIF as: Marvil Associated Inc., Penbury Finance, Oxton Trading, Crimities Holding and Dustan Trading.
The banks involved in the payments were also recorded in the Pakistani documents, as well as the bank accounts used. “The commissions paid into the accounts, notably opened by these companies at the Pasche bank and the bank of Piguet et Cie, in Switzerland, were probably supplied by transfer from the Banque française du Commerce extérieur [French bank of Foreign Trade], account number 2700 0008358 or IV10000083580.”
Several high-profile witnesses questioned in November and December 2010 by judge Van Ruymbeke have insisted that the bribes paid in 1994 were perfectly legal and were approved by France’s then-defence minister, François Leotard, and its budget minister, now France’s president, Nicolas Sarkozy.
In a statement he gave to Van Ruymbeke on November 9th, 2010, former DCN-I finance director, Gérard-Philippe Menayas, said “the total volume of the commissions was validated, contract by contract, by the ministers of the budget and defence.”
In a statement given to judge Van Ruymbeke on December 7th, 2010, Jacques Dewatre, who in 1994 was head of the French foreign intelligence service, now called the DGSE, testified that “The approval for commissions is the responsibility of services which depend upon the Minister of Defence and the Minister of the Budget.”
Mediapart has learnt Van Ruymbeke’s investigation has already established that, in order to convince the Pakistani authorities to choose the French submarines, a very structured network of corruption was established by a French state company dedicated to such activities. This was the Société française de matériels d’armement, the SOFMA, which partnered the designers and builders of the submarines, the DCN.
Van Ruymbeke has evidence that the SOFMA set aside the equivalent in francs of 51.6 million euros for bribes to be paid out in the Pakistan deal.
Influential agents working with the SOFMA used the money to gain the favours of numerous Pakistani dignitaries, in both military and political spheres. While the practice of commission payments was then legal for France, the reception of bribes was illegal in Pakistan.
Asif Ali Zardari was one of the main benefactors of the paid bribes, according to a former SOFMA managing director, Henri Guittet. He evaluated the sum paid to Zardari as being 4% of the total value of the sales contract, which amounts to a value of 33 million euros.”I believe there was one per cent paid upon the signature of the sales contract, which means at the moment when everything can get underway and when notably the deposit and [partial] down payment has been paid, and one per cent later,” he said in a formal statement. “The remaining two per cent was pro rata with the payment of the clients.”
But French judicial investigators are investigating whether the Agosta contract also involved illegal payments in France. It was in the summer of 1994, despite the fact that negotiations with Pakistan over the sale were already successfully concluded, that the government of then-prime minister Edouard Balladour imposed two Lebanese intermediaries in the contract, Ziad Takieddine and Abdulrahman El-Assir.
They were promised supplemantary commission payments worth more than 30 million euros. Both judge Van Ruymbeke and judge Marc Trévedic, who is heading investigations into the murders of the French engineers, have collected evidence suggesting that part of the supplementary commissions was destined for Balladur’s 1995 presidential election campaign.
Trévedic’s investigation has discarded the theory touted by the Pakistani authorities that the engineers were targeted by al-Qaida. He is now centring on suspicions that the bomb attack was directly or indirectly linked to the secret financial arrangements surrounding the Agosta deal. More precisely, that it was in retaliation for the non-payment of commissions promised to Pakistanis after they were all blocked by Balladur’s rival Jacques Chirac, after he won the 1995 elections.(Mediapart)

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Comment : This case is a true example of corrupt alliance between feudal-corporatist politicians and corrupt people in military establishment.

DG Naval Intelligence ready to spill the beans

November 27, 2010 3 comments

By Ansar Abbasi

Source : http://www.thenews.com.pk/20-11-2010/Top-Story/2161.htm

ISLAMABAD: As public pressure in France mounts on President Nicolas Sarkozi to testify over alleged corruption in the sale of French submarines to Pakistan in the mid-90s, the then Director General Naval Intelligence (DGNI) of Pakistan Navy has offered help to Islamabad and Paris to book the corrupt and bring back the looted money to Pakistan.
Talking to The News, former DGNI Commodore Shahid Ashraf, who by his own account was tortured, harassed and put under illegal custody by the sleuths he once commanded and prematurely retired from the service “for knowing too much about the commission mafia in defence forces”, said that he was willing to cooperate with the Pakistani as well as French authorities. “I have a lot to share with them about the kickbacks in the Agosta submarine deal,” he insisted.
Ashraf, in a recent interview with this newspaper, disclosed certain details of the Agosta submarine deal and revealed while the deal had led to the removal of the then Chief of Naval Staff (CNS) Admiral Mansurul Haq and the framing of a corruption reference against Benazir Bhutto and Asif Ali Zardari but those mighty and powerful in the navy, who made millions of dollars from the deal, were never held accountable. The cover-up in the submarine deal, according to the former DGNI, was meant to save the skin of many in the Pakistan Navy.
To force his silence, he said, he was maliciously charged for getting Rs1.5 million from a naval officer, who was alleged to have got illegal gratification and kickbacks from foreign suppliers of the naval vessels, etc., but was ‘interestingly’ made an approver against the DGNI. On the contrary, a list of naval officers, who were alleged to have received kickbacks, were never touched. Instead, they were promoted as rear admirals.
It is pertinent to point out that a Feb 17, 1995 letter, issued by SOFMA (the French company that was involved in the Agosta deal), talked of making payment of $40,000 to each of the four naval officers whose names were mentioned in the same letter. Instead of probing the four officers, however, each one of them was later elevated as a rear admiral while the DGNI was taken to task for alleged corruption of Rs1.5 million. Interestingly, he was alleged to have received this money from a naval officer, who was getting money from foreign suppliers of the defence deals. As being the DGNI, he had even sought permission of his high command to catch an agent, who was giving bribe money to naval officers but was not allowed to do so.
Besides the then DGNI, the former naval chief Admiral Abdul Aziz Mirza has recently also given credence to the French investigative report that talked of almost $49 million kickbacks in the Agosta-submarine deal allegedly received by President Asif Ali Zardari and others, including the naval officers.
Recently, in an interview with The News, Aziz Mirza had also disclosed that the then Benazir government had urged the Pakistan Navy to go for the French subs. Mirza, while quoting the then Naval Chief Admiral Saeed Khan, had revealed that Benazir Bhutto’s Defence Minister Aftab Shabaan Mirani had clearly indicated to the Pakistan Navy’s high command the Benazir’s government’s preference for the induction of the French submarines.
Despite these clear verbal directions from the defence minister, the naval top command, according to Mirza, had again met and deliberated upon the subject and decided to recommend two options to the government namely the British Upholder and the French Agosta. The government later approved the induction of Agosta. Mirza, who led the Pakistan Navy from Oct 1999 to Oct 2002, said that the Navy first formally came to know about the kickbacks in the Agosta deal in 1998 following which it had proceeded against three officials of the ranks of captain and commodore for taking bribes and they were removed from service.
“My hunch is that besides the politicians, some top ranking naval officers even above the rank of commodore might have also received kickbacks as reflected in the recent French media reports, however, they (the top Naval officials) remained undetected for want of proof or witnesses,” Mirza was quoted to have said, claiming that even the condemned former naval chief Masoor Ul Haq was not convicted of Agosta kickbacks but for the bribes that he had pocketed in the other defence deals.
In Paris, the families of French engineers killed in a 2002 bombing attack in Karachi are pressing President Nicolas Sarkozy to testify over alleged corruption linked to the deaths. A lawyer for the families said they had lodged a demand with investigating magistrate Renaud Van Ruymbeke to question Sarkozy, former president Jacques Chirac and former Prime Minister Dominique de Villepin in the case.
Van Ruymbeke is investigating parts of a complex case that has spawned allegations of illegal political funding implicating former prime minister Edouard Balladur, for whom Sarkozy served as campaign spokesman in 1995.
The families suspect that the bombing in Karachi in 2002, which killed 11 French engineers and three others, was prompted by the cancellation of commission payments on sales of French submarines with Pakistan.
French investigative news website Mediapart in June quoted Luxembourg police as saying that a company set up with Sarkozy’s approval had channeled money from arms deal commissions to fund political activities in France.Sarkozy and Balladur have repeatedly dismissed the allegations of illegal party funding and so does President Asif Ali Zardari in Pakistan.

Ex-Navy chief confirms French kickbacks–> The News

January 13, 2010 1 comment

Source: http://www.thenews.com.pk/top_story_detail.asp?Id=26619

By Ansar Abbasi

ISLAMABAD: Former Naval chief Admiral Abdul Aziz Mirza gives credence to the recent French investigative report that talked of almost $49 million kickbacks in the Agosta-submarine deal allegedly received by President Asif Ali Zardari and others, including Naval officers, disclosing that the then Benazir government had urged the Pakistan Navy to go for the French subs.

Mirza, while quoting the then Naval chief Admiral Saeed Khan, also revealed that Benazir Bhutto’s defence minister Aftab Shaban Mirani had clearly indicated to the Pakistan Navy’s high command the government’s preference for the induction of the French submarines.

Despite these clear indications by the defence minister, the top naval command again met and deliberated on the subject and decided to recommend two options to the government — the British Upholder and the French Agosta. The government later approved the induction of the Agosta.

Mirza, who led the Pakistan Navy from Oct 1999 to Oct 2002, said the Navy first formally came to know about the kickbacks in the Agosta deal in 1998 following which it proceeded against three officials of the rank of captain and commodore for getting bribe. They were eventually removed from service. “My hunch is that besides the politicians, some top ranking naval officers, even above the rank of commodore, might also have received kickbacks as reflected in the recent French media reports. They, however, (the top Naval officials) remained undetected for want of proof or witnesses,” Mirza said.

He claimed that even the condemned formal Naval chief, Masoorul Haq, was not convicted of the Agosta kickbacks but for the bribes that he had pocketed in other defence deals. According to a recent report in a leading French newspaper, investigations have revealed that Zardari received $4.3 million in kickbacks from the sale of three Agosta 90 submarines for Eu825 million. These reports also suggest that Naval officials might have received kickbacks out of this $49 million.

This deal was struck during Benazir Bhutto’s second tenure in 1994. According to former DG Naval Intelligence Commodore Shahid Ashraf, he had informed in early 1995 the then Naval chief Mansoorul Haq and his vice chief vice admiral AU Khan of the cash pay off to Capt ZU Alvi and Col (retd) Ejaz as bribe for further distribution amongst Naval officers.

Ashraf, who was dismissed from service, claimed in his statement in 1998 that he had informed the Naval chief and the vice chief in early 1995 of the Agosta kickbacks issue but was asked by them to keep quiet. Ashraf insisted that he was innocent and victimised by the Pakistan Navy in 1998 to save the skin of several other allegedly corrupt Naval officers, who had received kickbacks in the Agosta deal.

Admiral Mirza admitted the facts that Ashraf did make the same claim in his statement in 1998 and that retired vice admiral AU Khan too had confirmed the same fact when questioned in 1998 by the fact-finding inquiry.

But Admiral Mirza still insisted the ex-DG Naval Intelligence did receive kickbacks in the Agosta deal as was confirmed by the other two officers, Capt ZU Alvi and Capt Liaqat Ali Malik, who were blamed to have received bribes directly from the French. For the same reason, he said, the ex-DGNI was penalised.

He said that Capt ZU Alvi and Col (retd) Ejaz were the two main witnesses with the former having agreed to become approver on the condition of revealing all the details of kickbacks and corruption. Mirza though conceded that Ashraf was Admiral Mansurul Haq’s right-hand man, he did never carry the reputation of being corrupt before he was convicted to have received Rs 1.5 million from Alvi, who was the direct recipient of the kickbacks.

Mirza, who has also served as the country’s ambassador to Riyadh, said that one Zafar Iqbal, a middle man of the French company, was also interrogated and had admitted to have received $160,000 to be paid to four commodores. He, however, said that both Iqbal and Ejaz never paid this amount to anyone of them. The former Naval chief said that the four commodores were never charge sheeted or confronted by a board of inquiry as a fact-finding inquiry had already found them innocent, which led to their promotion as rear admiral.

Zafar Iqbal claimed during interrogation to have been assigned by the French company to bribe the Naval officials up to the rank of commodore. For top ranking Naval officers and for political bosses, Mirza quoted Zafar Iqbal to have claimed that some other middle men, including Aamir Lodhi, were responsible for the kickbacks and commissions of persons with higher status both in Navy and in the government.

Since these middle men were never caught and probed so it still remains a secret as to who amongst the senior most Naval officers of that time received how much money, he said. But he believed that there were some top men, who must have received the kickbacks but remained free.

Referring to the latest French media reports about the Agosta kickbacks, he said he gives such reports due credence also for the reason that the French, Germans, Italians and other manufacturers of defence equipment do have a recognised provision of allocating about 10 pc of the contract value as kickbacks, entertainment, gifts etc as a matter of policy.

When asked whether the kickbacks and commissions in defence deals in Pakistan could be curbed, he stated that with a little bit of sincere effort the kickbacks in defence procurements could be considerably reduced if not altogether eliminated.

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