ISLAMABAD: The Broadsheet award made public on Monday is a sweeping indictment of Pakistan’s legal and prosecutorial performance in the last two decades and lays bare the rank incompetence and political perfidy displayed by officials of the National Accountability Bureau and successive governments.
The award is now being used to turbo charge partisan narratives regardless of the exact findings contained in the document. At the heart of the new offensive from the PTI government is their argument that the Broadsheet award has exposed the extent of the Sharif family corruption by identifying vast properties spread across many countries and totalling a whopping 820 million dollars. In a press conference on Tuesday evening, cabinet ministers Shibli Faraz, Fawad Chaudhry and Dr Shireen Mazari tore into the Sharifs saying the award by the UK arbitrator Sir Anthony Evans had — independent of any Pakistani government or court — identified and valued these properties which is proof enough that the Broadsheet award had exposed them.
This may not be entirely true.
To understand the situation, let us take a quick and simple-to-understand overview of the Broadsheet award. It contains two main documents: (a) Part Final Award (Liability Issues), (b) Part Final Award (Quantum). In the first document, the arbitrator explains the dispute between Broadsheet LLC (Claimant) and The Islamic Republic of Pakistan / The National Accountability Bureau (Respondent), and then lists out the reasons why Broadsheet’s claims are correct. In essence, this document spells out the legal reasoning for why Broadsheet has won the case and Pakistan/NAB have lost. In the second document, the arbitrator explains how he has determined the amount of money that Pakistan/NAB must pay to Broadsheet.
Are PTI ministers, lawyers on the same page?
For the purpose of the Sharif family property valuation and the explanation given by the cabinet ministers on Tuesday, let us turn to the second document. The arbitrator explains that in order to calculate the damages that NAB was required to pay Broadsheet, it had to be determined how much Broadsheet would have earned from its services to NAB had its contract not been terminated. The arbitrator has already established in the first document that NAB’s termination of the contract with Broadsheet in 2003 was illegal.
For purposes of the valuation of the Sharifs family properties, experts were called in. Broadsheet brought two such experts working for a consulting firm called Stroz Friedberg (SF). They produced a report in 2018 that listed the Sharif family properties and valued them at 820m dollars. This is the figure that the three cabinet ministers mentioned in their press conference while saying that the experts had identified these properties. Here’s where the ministers may have not been entirely accurate. The Part Final Award (Quantum) says on page 32:
“Stroz Friedberg was instructed to carry out a ‘forensic audit’ (or ‘inventory’) of the JIT Report. This consisted of identifying potentially recoverable assets of the Sharif Family that were referred to in it and ascribing a valuation to each. This resulted in a list of 76 items of property in three overseas jurisdictions…”
Let’s pause here. Look at the key difference between what the cabinet ministers are saying and what the award has written. The award states clearly that the 76 properties identified and valued at 820m dollars were based not on any independent investigation by these international experts, but on the report of the Joint Investigation Team (JIT) which was prepared for the Supreme Court of Pakistan. In other words, the Broadsheet award on the Sharif family properties is not a new revelation but just a forensic audit of the JIT report.
But the story does not end here.
Pakistan/NAB called in their expert, Mark Bezant, from a firm called FTI Consulting, to go over the report of the other experts and give his comments.
Bezant pointed out some flaws in the report. The award document states: “(H)e contended that there were four further items of double-counting, totalling US$41 million, which Stroz Friedberg had not taken into account…he claimed that SF had failed to take full account of the liabilities of property owning companies, including mortgages owned by them. (T)he list of 76 items of property included funds no longer held by, or no longer recoverable from the Sharif family, affecting 69 of the 76 items in the SF list and as much as 98% of the total value…Mr Bezant estimated that Broadsheet’s ‘Lost Revenue’ was between US$2.9 million (high) and US$2.3 million (low)…”
The difference in figures given by the experts from Broadsheet and from Pakistan/NAB is huge. At this stage the arbitrator was trying to determine how to evaluate the properties of the Sharif family and then establish the figure for Broadsheet that would be 20 per cent of the total value of these properties. This hearing took place in July 2018 which means the caretaker government was in control in Islamabad.
Having seen the assessment of experts from both sides (SF from Broadsheet and FTI from Pakistan/NAB), the arbitrator gives his own comments on page 34:
“(T)he SF does not purport to identify assets currently held by members of the Sharif Family; rather, it lists items of property which have been held by or attributed to them over a period of twenty years, or more. One result of this is that, as Respondents’ expert witnesses have pointed out, the list may include both the funds used to purchase a property asset, and the property asset itself; or the value of shares in a property owning company as well as the property it owns; or the value of a property that has been sold together with the value of other property bought with the proceeds…”
As an example, the arbitrator cites the example of an item in the Broadsheet experts report described as ‘the Lahore-Islamabad highway kickback’ valued at US$160 million. Broadsheet had claimed this was a figure quoted in a constitutional petition against Nawaz Sharif. The accusation was that he or his associates had received this payment from the contractors of the Lahore-Islamabad motorway, and therefore Broadsheet was entitled to a commission from this amount.
The arbitrator wrote on page 35 of the award: “This evidence, in my view, does not support a claim that there is, or was, an asset worth US$160 million in his possession which NAB could have recovered from him, or could recover now, without further evidence linking that sum to cash or property assets which can or could have been seized…”
The arbitrator then assesses the valuations from both parties and makes his decision (page 54): “Having regard to all evidence I FIND that the appropriate valuation of the potential recovery from the Sharif family is US$100 million to be realised at some future date. Deducting 5% to take account of likely delay in eventual recovery, the net figure therefore is US$95 million and the Claimant’s share at 20% is US$19 million.”
This 19 million dollars forms the bulk of the total amount (including interest) of approximately 28 million dollars that the government of Pakistan paid to Broadsheet in December 2020 from the account of the Pakistani High Commission in the UK.
However, some relevant questions need to be addressed by the government through the committee formed by Prime Minister Imran Khan which includes cabinet ministers Shibli Faraz, Fawad Chaudhry and Dr Shireen Mazari.
First, it is clear from this award that the arbitrator or the experts have not conducted any fresh investigation and discovered any new properties of the Sharif family as being claimed by government ministers today. The award given to Broadsheet, as far as the Sharif family is concerned, is based on the JIT report and its listing of all Sharif family properties.
Second, it is not clear how the valuation of properties in the award includes the ones that are declared properties. Legal experts consulted by Dawn say that NAB recoveries are supposed to be based on undeclared properties or ones that are proven to have been bought through funds acquired through corruption.
Declared and undisputed properties cannot become part of claimed recoveries.
However Broadsheet has benefited from the amount linked to all properties owned and declared by the Sharif family and Pakistan/NAB has had to pay this amount to Broadsheet.
Third is the most interesting. The arbitrator started from the figure of 820m dollars claimed as the total value of Sharif family property by the Broadsheet experts, and finally concluded a figure of 100m dollars. How did he come up with this figure? Legal experts say arbitrators have the authority to do so.
Cabinet ministers are claiming 820m dollar figure to fuel their narrative.
That’s the figure that Broadsheet presented, and not the government of Pakistan. So in essence the government of today is saying that the government in 2018 was wrong and Broadsheet was right. This becomes even stranger when you look at the appeal.
The government of Pakistan appealed this award of 100m dollars, as it should have. The appeal hearing was conducted on June 28, 2019 between the Government of Pakistan/NAB versus Broadsheet. On this date, PTI was the government of Pakistan. The lawyers of the PTI government said this in the appeal hearing: “There is…no explanation in the Quantum Award as to the “discount” that has been applied, or the method by which this was reached, or what net figure it was applied to. The Tribunal has therefore failed to give any reason…as to how, or why, it reached its award of US$19 million in relation to the Sharif Family Other Assets.”
“The Tribunal has given no explanation at all as to how it reached the “overall assessment”…There is no way the parties can understand how the decision was reached or on the basis of what evidence.”
In other words, the ministers of the PTI government are today citing the figure of 820m dollars as evidence of Sharif family corruption whereas the lawyers of the PTI government were arguing two years ago that the final figure cited — 100m dollars— was too much. The PTI government might want to reconcile these two contradictory positions, if that is possible.
Published in Dawn, January 20th, 2021