While Benazir Bhutto hated the
generals for executing her father, Nawaz Sharif early on figured out that they
held the real power in Pakistan. His father had established a foundry in 1939
and, together with six brothers, had struggled for years only to see their
business nationalized by Ali Bhutto’s regime in 1972. This sealed decades of
enmity between the Bhuttos and the Sharifs. Following the military coup and
General Zia’s assumption of power, the business—Ittefaq—was returned to family
hands in 1980.Nawaz Sharif became a director and cultivated relations with
senior military officers. This led to his appointment as finance minister of
Punjab and then election as chief minister of this most populous province in
1985. During the 1980s and early 1990s, given Sharif ’s political control of
Punjab and eventual prime ministership of the country, Ittefaq Industries grew
from its original single foundry into 30 businesses producing steel, sugar,
paper, and textiles, with combined revenues of $400 million, making it one of
the biggest private conglomerates in the nation. As in many other countries,
when you control the political realm, you can get anything you want in the
economic realm.
With Lahore, the capital of Punjab, serving as the seat of the family’s power,
one of the first things Sharif did upon becoming prime minister in 1990 was
build his long-dreamed-of superhighway from there to the capital,Islamabad.
Estimated to cost 8.5 billion rupees, the project went through two biddings.
Daewoo of Korea, strengthening its proposals with midnight meetings, was the
highest bidder both times, so obviously it won the contract and delivered the
job at well over 20 billion rupees.
A new highway needs new cars. Sharif authorized importation of 50,000 vehicles
duty free, reportedly costing the government $700 million in lost customs
duties. Banks were forced to make loans for vehicle purchases to would-be taxi
cab drivers upon receipt of a 10 percent deposit.Borrowers got their “Nawaz
Sharif cabs,” and some 60 percent of them promptly defaulted. This left the
banks with $500 million or so in unpaid loans. Vehicle dealers reportedly made a
killing and expressed their appreciation in expected ways. Under Sharif, unpaid
bank loans and massive tax evasion remained the favorite ways to get rich. Upon
his loss of power the usurping government published a list of 322 of the largest
loan defaulters, representing almost $3 billion out of $4 billion owed to banks.
Sharif and his family were tagged for $60 million. The Ittefaq Group went
bankrupt in 1993 when Sharif lost his premiership the first time. By then only
three units in the group were operational, and loan defaults of the remaining
companies totaled some 5.7 billion rupees, more than $100 million.
Like Bhutto, offshore companies have been linked to Sharif, three in the British
Virgin Islands by the names of Nescoll, Nielson, and Shamrock and another in the
Channel Islands known as Chandron Jersey Pvt. Ltd. Some of these entities
allegedly were used to facilitate purchase of four rather grand flats on Park
Lane in London, at various times occupied by Sharif family members. Reportedly,
payment transfers were made to Banque Paribas en Suisse, which then instructed
Sharif ’s offshore companies Nescoll and Nielson to purchase the four luxury
suites.
In her second term, Benazir Bhutto had Pakistan’s Federal Investigating Agency
begin a probe into the financial affairs of Nawaz Sharif and his family. The
probe was headed by Rehman Malik, deputy director general of the agency. Malik
had fortified his reputation earlier by aiding in the arrest of Ramzi Yousef,
mastermind of the 1993 World Trade Center bombing. During Sharif ’s second term,
the draft report of the investigation was suppressed, Malik was jailed for a
year, and later reportedly survived an assassination attempt, after which he
fled to London. The Malik report, five years in the making, was released in
1998, with explosive revelations:
The records, including government documents, signed affidavits from Pakistani
officials, bank files and property records, detail deals that Mr. Malik says
benefited Mr. Sharif, his family and his political associates:
At least $160 million pocketed from a contract to build a highway from Lahore,
his home town, to Islamabad, the nation’s capital.
At least $140 million in unsecured loans from Pakistan’s state banks.
More than $60 million generated from government rebates on sugar exported by
millscontrolled by Mr. Sharif and his business associates.
At least $58 million skimmed from inflated prices paid for imported wheat from
the United States and Canada. In the wheat deal, Mr. Sharif ’s government paid
prices far above market value to a private company owned by a close associate of
his in Washington, the records show. Falsely inflated invoices for the wheat
generated tens of millions of dollars in cash.
The report went on to state that “The extent and magnitude of this corruption is
so staggering that it has put the very integrity of the country at stake.” In an
interview, Malik added: “No other leader of Pakistan has taken that much money
from the banks. There is no rule of law in Pakistan. It doesn’t exist.”
What brought Sharif down in his second term was his attempt to acquire virtually
dictatorial powers. In 1997 he rammed a bill through his compliant parliament
requiring legislators to vote as their party leaders directed. In 1998 he
introduced a bill to impose Sharia law (Muslim religious law) across Pakistan,
with himself empowered to issue unilateral directives in the name of Islam. In
1999 he sought to sideline the army by replacing Chief of Staff Pervez Musharraf
with a more pliable crony. He forgot the lessons he had learned in the 1980s:
The army controls Pakistan and politicians are a nuisance. As Musharraf was
returning from Sri Lanka, Sharif tried to sack him in midair and deny the
Pakistan International Airways flight with 200 civilians on board landing rights
in Karachi. Musharraf radioed from the aircraft through Dubai to his commander
in Karachi, ordering him to seize the airport control tower, accomplished as the
plane descended almost out of fuel. Musharraf turned the tables and completed
his coup, and Sharif was jailed.
But Sharif had little to fear. This, after all, is Pakistan. Musharraf needed to
consolidate his power with the generals, and Sharif knew details about the
corruption of most of the brass. Obviously, it is better to tread lightly around
the edges of your peer group’s own thievery. So Musharraf had Sharif probed,
tried, convicted, and sentenced to life in prison, but then in 2000 exiled him
to Saudi Arabia.Twenty-two containers of carpets and furniture followed, and, of
course, his foreign accounts remained mostly intact. Ensconced in a glittering
palace in Jeddah, he is described as looking “corpulent” amidst “opulent”
surroundings. Reportedly, he and Benazir Bhutto even have an occasional
telephone conversation, perhaps together lamenting how unfair life has become.