Tuesday, October 20, 2020

Sharif family embezzled millions of pounds from UK aid money; laundered to Britain: Report

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The Sharif family, already facing charges of corruption and money laundering, had got a serious blow from the United Kingdom with the British investigators believing that Shahbaz Sharif and his family had embezzled millions of pounds from £ 500 million aid given to his government in Punjab.

According to a report published in the Daily Mail, Britain’s Department for International Development (DFID) had poured in £ 500 million of UK taxpayers’ money in form of aid to Punjab during the tenure of Shahbaz Sharif as chief minister.

“Yet, say investigators, all the time that DFID was heaping him and his government with praise and taxpayers’ cash, Shahbaz and his family were embezzling tens of millions of pounds of public money and laundering it in Britain. They are convinced that some of the allegedly stolen money came from DFID-funded aid projects,” the report said.

The British daily claimed to have based its report on the interview of key witnesses held on remand in jail, including a UK citizen Aftab Mehmood consequent to a high-level probe ordered by Prime Minister Imran Khan. The paper had got access to the results of the high level probe.

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In his interview, Aftab Mehmood claimed that he had laundered millions on behalf of Shahbaz’s family from a nondescript office in Birmingham – without attracting suspicion from Britain’s financial regulators, who inspected his books regularly.

The legal documents allege that Shahbaz’s son-in-law received about  £1 million from a fund established to rebuild the lives of earthquake victims – to which DFID gave £ 54 million from UK taxpayers.

Moreover, the investigators have also launched inquiries into alleged thefts from DFID-funded schemes to give poor women cash to lift them out of poverty and to provide healthcare for rural families.

The same British daily had also disclosed last year the case against former prime minister Nawaz Sharif who had built a London property empire worth £32 million.

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Ironically, for years, Shahbaz Sharif was feted as a Third World poster boy by DFID and last year, the head of DFID’s Pakistan office Joanna Rowley and her colleague Richard Montgomery had lauded his ‘dedication’ without knowing where their taxpayers’  money was really going.

The report claimed  that the investigators were convinced that some of the allegedly stolen money came from DFID-funded aid projects.

Read MoreNAB finds ‘proof of massive money laundering’ against Sharif family

Since 2014, DFID had given more aid to Pakistan than any other country – up to £ 463 million a year.

The Mail revealed that the stolen millions were laundered in Birmingham and then allegedly transferred to Shahbaz’s family’s accounts by UK branches of banks including Barclays and HSBC.

It said the self-confessed Birmingham money-launderer Aftab Mehmood said that he had his accounts audited every three months by Her Majesty’s Revenue and Customs – who failed to notice anything was amiss.

Britain’s National Crime Agency is working closely with Pakistani investigators and Home Secretary Sajid Javid is discussing the possible extradition of members of Shahbaz’s family who have taken refuge in London.

The DFID has been running a £1.75 million project designed to ‘reduce the exposure to fraud and corruption’ of UK aid. But although it says it is already vigilant, DFID admits that, to date, it has referred just one individual to the Pakistani authorities for trying to steal UK funds.

The Mail quoted the former International Development Secretary Priti Patel demanding an inquiry and saying, “As someone who has served as Secretary of State at DFID, I find it shocking that British funds may have been abused, especially given the background of poverty in Pakistan which aid is meant to alleviate.” ‘We spend millions on anti-corruption initiatives and yet it seems clear that Britain is still a money-launderers’ paradise.

According to Duncan Hames, policy director of Transparency International, corruption often first comes to light through evidence of money- laundering: ‘First you identify suspicious transactions in the banking system and then you follow the money trail back to discover where they came from.’

Indeed, this is how the investigation into Shahbaz and his family began. After winning election on a pledge to combat corruption, Imran Khan set up a special team to deal with it, the Asset Recovery Unit, headed by a UK-educated barrister. They have examined a series of suspicious transactions running to many millions and shown that Shahbaz’s family’s assets grew enormously during the years he was in power.

A confidential investigation report, seen by the newspaper, says the family was worth just £150,000 in 2003 but by 2018 their total assets had grown to about £ 200 million. Among other properties, Shahbaz owns a 53,000 sq ft palace in Lahore, which has its own large security force.

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According to the report, the family’s legitimate income sources could not account for their riches.

The money, the report says, was channelled from abroad – via several elaborate money-laundering schemes, in which Britain played a central role. The laundered payments were made to Shahbaz’s children, his wife and his son-in-law Ali Imran.

But it adds that Shahbaz ‘was the principal beneficiary of this money-laundering enterprise, by way of spending, acquisition of properties and their expansion into palatial houses where he lived.’

One of the most audacious schemes was said to be focused on Birmingham. The report lists 202 ‘personal remittances’ from the UK and the United Arab Emirates into the bank accounts of Shahbaz’s wife, two sons and two daughters.

Read MoreUN anti-money laundering department launches investigation against Nawaz Sharif

Under Pakistani law, before the recipients could accept these payments into their accounts, they had to sign ‘due diligence’ forms saying they had been sent as ‘investments’ by people they knew personally. Samples – signed by Shahbaz’s family – have been seen by this newspaper. But investigators claim the reality was different.

‘We noticed that someone called Manzoor Ahmed had sent a series of 13 payments from Birmingham worth £1.2 million to Shahbaz’s wife Nusrat and his sons Hamza and Suleman,’ said one investigator, who asked not to be named. ‘But who was he?’

He was traced through his identity card, whose number was on the forms. In the words of the report, he turned out to be ‘a small home-based tuck shop owner’ in a remote village, who scraped a living selling poppadoms. Needless to say, he had never had £1.2 million, nor travelled to England.

Another man who was said to have sent about £850,000 to Shahbaz’s family from Birmingham via HSBC was Mehboob Ali, a Lahore ‘street hawker’, who lived from taking tiny commissions from collecting old banknotes and changing them into new ones.

`When I met him in Lahore, he was visibly terrified’ he said, adding, ‘When I discovered my identity had been stolen, my life overturned. I never met any of these people. But my old clients think I must have done something wrong, because the investigators interviewed me.

‘Now I try to live by selling glasses of lime juice and it’s hard to feed my family.’

Sending the money to Shahbaz’s family apparently from these and other poverty-stricken ‘investors’ was Briton Aftab Mehmood, the proprietor of Usman International, a money-changing firm in the Sparkbrook area of Birmingham.

Arrested during a visit to Pakistan in April, he agreed to meet me in a hot, airless room at Lahore’s city jail.

He explained how the money-laundering worked. ‘I would just receive a fax from Pakistan with the names of the people I was to wire money to. I knew who they were: they were famous. It wasn’t my business to ask where the money came from. I simply transferred it, and I did it through the proper channels.

‘I was audited by HMRC every three months. They wanted to make sure I wasn’t money-laundering. I always passed with flying colours. That meant I had no problem with the banks.’

So where had this money come from? In fact, say investigators, it had been taken as kickbacks and ‘commissions’ from government-run projects and delivered by ‘cash boys’ in bulging sacks to the office of Mehmood’s Lahore contact, Shahed Rafiq. In jail, Rafiq confirmed this, adding: ‘I don’t know where the cash came from. It was just business.’

The last part of the scheme was ingenious. How did Rafiq ensure that when Mehmood wired money to the accounts in Pakistan, he was not out of pocket? The answer is that Mehmood’s company in Birmingham also did legitimate money transfers and had thousands of clients who wanted to send money to relatives in Pakistan.

If he was asked to send £100,000 to one of Shahbaz’s sons, he would simply wait until he had funds from UK customers who wanted to send equivalent sums to Pakistan.

Then, instead of wiring the money to his customers’ relatives, it is claimed that he would send it under the names of fake investors to Shahbaz’s family’s bank accounts. In Lahore, Rafiq would give the relatives the stolen money which had been brought by the cash boys. The investigators say payments made by this method totalled £ 21 million – but were merely the tip of the iceberg.

They said that they have traced a further £ 9.1 million from ‘ghost’ investors who did not exist, and fake loans and investments in family companies. Their value, they claim, amounts to a further £160 million.

According to the report, after having established the scale of the money-laundering, the investigation is now moving into phase two – finding out where and how the laundered funds were stolen.

One case has already come to court – a guilty plea by Ikram Naveed, the former finance director of ERRA, Pakistan’s Earthquake Relief and Reconstruction Authority, set up after the devastating quake of 2005, which received £54 million from DFID between then and 2012, both for immediate relief and long-term schemes to rebuild victims’ lives.

Naveed is described in Pakistan as the ‘right hand man’ of Ali Imran – Shahbaz’s son-in-law who is married to his daughter Rabia. Naveed pleaded guilty and confessed last November to embezzling about £1.5 million from ERRA during the period DFID was funding it, of which he passed on almost £1 million to Ali Imran.

Naveed said half of this was transferred directly from ERRA’s accounts – a claim confirmed by banking records. Ali Imran has been summoned to answer questions from investigators, but has failed to appear – because he is in London, and refuses to speak to them. He did not respond to a request for comment from the Mail on Sunday. Other family members, who documents suggest, received laundered millions, have also sought refuge in Britain, including Shahbaz’s son, Suleman.

An internal DFID report, drawn up in 2008, warned that ERRA ‘had yet to develop effective and transparent accountability systems’. Nevertheless, DFID continued pumping millions into ERRA. The report stated that DFID aid to ERRA was not ‘earmarked’, but paid into its general budget.

On Saturday, a DFID spokesman said: ‘The UK’s financial support to ERRA over this period was for payment by results – which means we only gave money once the agreed work, which was primarily focused on building schools, was completed, and the work audited and verified.

‘The UK taxpayer got exactly what it paid for and helped the vulnerable victims of a devastating earthquake. We are confident our robust systems protected UK taxpayers from fraud.’

The investigators are now examining evidence that other DFID-funded schemes were embezzled.

One is the Pakistan National Cash Transfers programme, for which DFID has provided nearly £300 million since 2012, giving payments of £100 a month to mothers in poor families.

Before Imran Khan coming to power, inquiries had begun into payments to ‘ghost’ claimants which were being siphoned off – but the investigation was shut down while Shahbaz’s party was in power. It has now been reopened, and investigators are conducting a fresh survey of how the money was spent, and whether women who got the stipend actually exist.

A further investigation is under way into alleged thefts from maternal and child health programmes.

Meanwhile, Shahbaz has already been summoned numerous times to answer investigators’ questions, while his son, Hamza, is being held for questioning in custody.

Talking to the newspaper, Shahbaz’s son, Suleman claimed , “This is a witch-hunt against my family. It is similar to what happened at Guantanamo Bay, and under apartheid in South Africa.” He alleged the government of trying to shut out the opposition and was picking out his family members in order to harass them.

Asked about the payments he allegedly received from the poppadom seller and other questionable sources, he said: ‘The law allows foreign remittances and each and every penny I received came through proper banking channels, cleared by the State Bank of Pakistan. [The investigators] are just releasing funny stories in the media. I deny their version. I have done everything according to the law.’

The government’s Asset Recovery Unit chief Shahzad Akbar said on Saturday, “Our investigations have already uncovered evidence of money-laundering on a vast scale, much of it conducted via the UK.

‘The international community needs to get much more serious about this: despite concern expressed by world leaders, money can still be plundered from developing countries such as Pakistan and washed in the global banking system with only minimal checks. Our investigations into the sources of the money which was laundered are ongoing, but it already appears that some of it – perhaps very large sums – may have been stolen from aid and development projects financed by British taxpayers.

He said there had been claims that the current government was doing all this for political reasons but noting could be further from the truth.

He said the people of Pakistan had suffered from organised criminal activity on a colossal scale and this had damaged the country’s economy. If we did not pursue these investigations, we would be negligent in our duty, he added.

“We are working closely with the National Crime Agency and the Home Office. We are grateful for this assistance and we hope it will ensure that theft and money-laundering of this magnitude will never happen again,” Shahzad Akbar said.

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