Convictions in the ‘Karachi affair’
IT has taken nearly a quarter of a century of a complex, stop-start investigation to shed some light on the epic cloak-and-dagger saga that became known over time as the ‘Karachi affair’. On Monday, a Paris court sentenced six men to prison for their role in a scandal involving kickbacks on an arms deal between France and Pakistan in 1994. A car bombing on May 8, 2002, outside what was then Karachi’s Sheraton hotel turned out to be a seminal moment in this tale, pitching it from being about financial misconduct to a possible act of revenge for unpaid commissions. Fifteen people were killed and several injured in the attack. Of the dead, 11 were French naval engineers working on a submarine project for the Pakistan Navy; they were leaving the hotel on their way to the dockyard when the explosives-laden vehicle rammed into their bus.
Given this happened the year following 9/11, at a time of burgeoning militancy in this country — and barely three months after Daniel Pearl’s murder — the attack was suspected of having been carried out by religious extremists. That may well have been so, considering the Musharraf government’s recent crackdown against several extremist organisations. However, French intelligence agencies later said their investigations turned up evidence of unpaid kickbacks in the Agosta deal by their government to figures in Pakistan’s corridors of power. That, they believed, was the motive behind the bombing. The deal for the sale by France of three Agosta military submarines to Pakistan was worth around €1bn; of this, some €50m were to grease the palms of some individuals in the top tier of the Pakistani military and political elite. In the 1990s, the giving of such ‘gifts’ was legal in France (the practice was criminalised in 2000, and president Chirac stopped the remaining payments to Pakistan). The illegality lay in the fact that some €2m were re-routed to France in ‘retro commissions’, allegedly to finance then prime minister Edouard Balladour’s presidential campaign. The court in Paris this week convicted three former French government officials, a defence contractor and two Lebanese businessmen for the crime. Mr Balladour and his then defence minister are soon to stand trial.
Meanwhile, the investigation at the Pakistan end into the financial corruption behind the Agosta deal exposed the then naval chief Adm Mansurul Haq as one of the principal intermediaries in the racket. As part of a plea bargain, he was compelled by NAB to return the ill-gotten gains he had thus far received, and forced into early retirement. While some other naval officials were also apprehended, there remain suspicions that a cover-up by Gen Musharraf’s military government prevented all those culpable from being brought to book. Unfortunately, however, that is how most high-level investigations in Pakistan are conducted, skimming the surface, allowing the muck to fester and murderers to go scot-free.
ITS resource constraints notwithstanding, Sindh’s budget of Rs1,241bn for the fiscal year 2020-21 indicates the seriousness of Chief Minister Murad Ali Shah’s administration in fighting Covid-19 and its negative economic impact on the poor and small businesses. It is commendable that Sindh has made sensible choices at a time when the country is faced with not only the virus contagion but also the threat of an unprecedented locust plague. The new budget, for example, sets aside a substantial sum of Rs20bn to put cash into the pockets of those affected by Covid-19. Similarly, health expenditure for the next year has been enhanced by 15.5pc. Even the 7pc increase in Sindh’s current expenditure comes from higher Covid-19-related spending. Education is the only other sector — apart from health — where the cash-strapped government has raised allocations instead of reducing it. Additionally, the budget proposes interventions to stimulate small businesses in urban areas through soft loans, alleviate poverty, subsidise wheat flour and support farmers hit by locust swarms.
However, the sustainability of the provincial Covid-19 initiatives largely depends on the federal government’s ability to collect its targeted taxes and transfer the province’s projected share to it. Like other provinces, Sindh also depends heavily on federal transfers for almost 70pc of its revenue receipts. The FBR’s failure to meet its target has caused a hefty shortfall of Rs227bn in Sindh’s projected share, hurting its efforts to implement its development schemes. The reduced federal tax pool has compelled the province to not only slash its development spending next year by over 18pc but to also cut different current expenditures to make room for Covid-19 investments, and subsidise fertilisers, rice seeds and pesticides for smallholder farmers. In his budget speech, the chief minister also spoke about the ongoing attacks on provincial autonomy extended by the 18th Amendment and the efforts being made to somehow force the provinces to give up part of their share from the divisible tax pool to benefit the centre. He rightly called for a unified stand against the once-in-a-century kind of challenges instead of sowing divisions. With Covid-19 and locust plagues threatening to kill people, pull apart the economy and cause widespread hunger, provinces must be made financially more independent than ever before. But they also need to work towards devolving powers to the local level for a better response to pandemics and locust plagues.