From shell company to sham settlement

Umar Cheema

ISLAMABAD: A hush-hush deal that National Accountability Bureau sealed in 2000 with an offshore company, Broadsheet LLC, for tracing the assets of Gen Pervez Musharraf’s opponents is costing dearly to the public exchequer.

Although NAB claimed the contracted company failed to provide any substantial evidence against 200 politicians, generals, bureaucrats and businessmen which Broadsheet was tasked with, the accountability watchdog paid a hefty sum of $1.5 million to somebody who acted on behalf of this offshore company after the contract was terminated.

The reality only dawned later that this big amount fell into wrong hands. Jerry James, the man quietly entered into this sham settlement of $1.5 million with NAB, had left the company and was not authorized to negotiate any settlement, let alone receiving this payment.

Meanwhile, the legal representatives of Broadsheet petitioned to the Chartered Institute of Arbitrators London against NAB on the issue of non-payment of 20% commission (which they claim $500m) from the recovery of stolen wealth allegedly traced by them. This legal battle is further bleeding Pakistan as millions of dollars have been spent for paying the legal fee to law firms hired in USA and UK as the case involves multiple law jurisdictions.

The end of this legal battle is still not in sight with the fate hanging in balance in the arbitration court in London. A lawyer dealing with the matter said the dispute might settle in 2018 and the outcome remains uncertain. “It is a big mess, by the way,” he said.

The audit para relating to $1.5 million paid to the unauthorized representative of Broadsheet, through Pakistan High Commission in London hasn’t been settled since 2008, The News has learned reliably.

The process remained murky right from the beginning as the Broadsheet was registered in the Isles of Man less than a month before signing assets recovery agreement with the NAB. In the preamble of agreement signed by both sides, this newborn entity has been introduced as “a company specializing in the recovery of assets/missing funds.”

Discussion with officials who were part of NAB in the early days further reveal that no proper procedure like seeking opinion of the finance and law ministries were obtained before entering into this agreement. That no information will be shared about this agreement was also part of the agreement. It reads:“NAB and Broadsheet agree that they will not divulge or communicate information or details about this agreement…… any person (except to their professional advisers and/or concerned authorities or the courts if legally required to do so) and they also shall use their best efforts to prevent their employees from doing so.”

The NAB terminated this agreement through its solicitor Kendall Freeman in London on October 28, 2003 alleging the Broadsheet had made misrepresentation about its abilities. Two years later, this offshore company “specializing in assets recovery” was liquidated at the age of five.

As a matter of fact, it was made only for the assets recovery for Pakistan. What were the credentials of its founders with respect to asset tracing investigation remains unknown.

Mere reading of the agreement indicates it was clearly rigged in the company’s favor as it noted that NAB would share 20% of the recovery from the target individuals assigned to Broadsheet, no matter the recovery was a result of NAB’s own efforts.

The agreement was signed by the then Chairman NAB and Broadsheet’s representative Dr W F Pepper whereas NAB’s then Prosecutor General, and the Broadsheet representative in Pakistan Tariq Fawad Malik signed it as witnesses.

Dr Pepper was co-founder of Broadsheet along with Jerry James. However, James was not part of the company in May 2008 when the NAB opted for an out-of-court settlement by pocketing him $1.5 million.

James had minted compensation money from NAB faking himself as a shareholder. In reality, he owned two other offshore companies by the same name, Broadsheet, in other jurisdictions whereas Broadsheet LLC engaged for assets tracing was a separate entity registered in the Isle of Man.

It was being run through a couple of other offshore companies based in Panama: Berkshire International Holdings Inc., and Oxford International Holding Inc. The real owners of Broadsheet thus took Pakistan to arbitration. Whether Pakistan manages to win or lose remains to be seen. How much more will it cost is anybody’s guess.

Originally published in The News