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Graft cases dog Bhutto's widower

European cases keep alive concerns about the dealings of Asif Ali Zardari, whom critics in Pakistan call 'Mr. 10%.'

January 04, 2008|Sebastian Rotella | Times Staff Writer

LONDON — During the stormy years Benazir Bhutto ruled Pakistan, her husband was a top power broker and a prime target of corruption allegations that toppled her.

The assassination of the former prime minister has pushed her husband, Asif Ali Zardari, back into the heart of the storm. Their political party this week named Zardari to run its day-to-day affairs while appointing the couple's 19-year-old son to the ceremonial role of chairman.

Even though Zardari has said he will not run for parliament in upcoming elections, attention has focused once again on the corruption cases that have swirled around him at home and abroad and made him a polarizing figure even within the Pakistan People's Party.

The political strife of the moment makes it especially difficult to assess the allegations against Zardari in Pakistan. But several cases in Europe offer insight into the longtime suspicions that have haunted him and, to some extent, his late wife. The cases raise questions about the sources of the family's vast wealth and the elaborate, secretive way in which the couple allegedly moved money around the world.

The accusations center on the dapper Zardari, 51, a former polo player whose critics nicknamed him "Mr. 10%" because of his alleged taste for bribes. After Bhutto's second government fell in 1996, authorities imprisoned Zardari on charges of graft. Pakistan's anti-corruption agency pursued investigations overseas, and authorities in several countries opened their own inquiries.

Zardari was released in 2004 and went into exile. His defenders say Pakistani authorities framed him with fabricated evidence and abused him while in custody, an experience that inflicted lasting damage on his health.

Some of Bhutto's supporters have said the investigations were politically driven attempts to destroy her. In October, President Pervez Musharraf approved an amnesty for Bhutto, allowing her to return home and launch her ill-fated campaign.

The most significant European cases are a Swiss money-laundering inquiry and a British civil case. They remain open, but prospects were uncertain even before the assassination. Lawyers for the couple had won court skirmishes and, in interviews before Bhutto's death, predicted that the amnesty in Pakistan would cause the accusations to be shelved. Spanish prosecutors recently closed a three-year investigation of Bhutto, citing lack of evidence.

But in 2003, a Swiss investigative magistrate decided he had the goods on Zardari and Bhutto after pursuing a money trail from offshore companies in the Caribbean to banks in Geneva to a jewelry shop here.

Judge Daniel Devaud took advantage of a Swiss law allowing investigative magistrates to issue a summary verdict if they think the evidence is strong, and convicted Zardari and Bhutto of money laundering. The judge ruled that Swiss firms had bribed the couple in return for a Pakistani government contract. He froze about $12 million in suspected kickbacks.

But a Swiss appeals court promptly set aside the verdict. A new magistrate reopened the investigation on charges of aggravated money laundering, a more serious offense based on the suspicion of systematic criminal activity.

Zardari's Swiss lawyer declined to comment on the specifics of the case. But he said his client, who served as a legislator and environment minister for Bhutto, had done nothing wrong.

"Mr. Zardari denies having committed any crime whatsoever," the lawyer, Saverio Lembo, said in an interview before Bhutto's assassination.

In his 2003 verdict, the Swiss judge connected Zardari to a chain of corruption that began with two Swiss companies, Cotecna and SGS. Starting in 1994, company executives courted Zardari in hopes of landing a contract to provide container inspection equipment and expertise to the Pakistani customs agency, according to Swiss court records.

A Swiss advisor of the Bhutto family, lawyer Jens Schlegelmilch, acted as an intermediary for executives who, according to internal SGS memos, saw Zardari as Pakistan's unofficial "deputy prime minister."

After talks with Zardari, the two companies won the contract in 1995 "upon the decision of Benazir Bhutto" and "despite the opposition of the customs service," the judge found.

As part of a secret deal, the judge found, the Swiss contractors funneled $11.9 million in bribes into three offshore firms in the British Virgin Islands and ultimately into bank accounts in Geneva. The nominal owners of two companies were Bhutto's mother and brother-in-law, according to the records.

The judge found that Zardari owned the third company, Bomer Finance, which received about $8 million, and that "Bhutto shares with her husband the assets" and "has power of disposition" over the company, according to the documents.

Bhutto denied in testimony that she had anything to do with Bomer, according to her lawyer in Geneva, Alec Reymond.

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