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A three-judge bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Anwar Zaheer Jamali and Justice Khilji Arif Hussain, which had taken up the bail petition of Syed Lakht-i-Hasnain, observed that punishment for foreign exchange fraud, imprisonment for only two years, was too light.
Earlier, the Lahore High Court had taken suo motu notice of complaints that the scam involved a number of people. FIA personnel had raided and sealed 727 outlets of Zarco Exchange Company across the country on money laundering allegations.
Advocate Azam Nazir Tarar, the counsel for FIA, argued before the apex court that he had already stressed the need for revisiting the Foreign Exchange Regulations Act to help strengthen reserves.
At this, Justice Jamali observed that the court already faced allegations of meddling in executive's affairs. “We know our limitations,” the CJ observed.
Advocate Tarar said that offices of Zarco Exchange had been raided on the directives of the State Bank and the federal government because forensic reports suggested that the company was transferring huge amounts of money through hundi and hawala, particularly through a special medium called 'Chamak'.
The inward remittance of the company was much less than the money moved out, he said, adding that requests had also been made to Interpol, FBI and the US government for details of accounts and transactions of the company and its chief executive.
Advocate Tarar said that 16 cases had been registered in Lahore also against some small companies, adding that because of the measures taken by the government $5 billion had come through legal channels this year.
He said that Zarco Exchange's main computer server, seized by the FIA, suggested that the company had made transactions of Rs67.89 billion between 2003 and 2009. Attempts had also been made by the company to tamper with records, he added.
Advocate S.M. Zafar, the counsel for Lakht-i-Hasnain, said that Zarco Exchange was a respected financial institution which had provided dependable exchange and transfer services to people across the country.
He said that exchange companies were regulated under the legal framework set by the State Bank which had designated Zarco Exchange as the country's premier “role model company”.
Advocate Zafar argued that his client had committed no fraud, rather invested Rs200 million in 2003 after getting a licence from the SBP that allowed him to deal in foreign currency.
He said that FIA officials had seized the main server which connected it with 126 countries. The closure of the company's business caused a delay in making payment to people, he added.
