Lahore -  Now when the Supreme Court is going to take up NAB’s appeal for reopening Hudaibiya Paper Mills case, many still have no fair idea of its origin, scale and implications.

It’s about alleged fraud of over 1,242 million—an amount that makes it bigger in scale than Panama Papers case.

The case started in March 2000 when the NAB authorities moved a reference against Hudaibiya Papers Mills.

Besides his other relatives and associates, ousted prime minister Nawaz Sharif and his two children – Maryam and Hussain – are among the accused.

In contrast with Panama case, Punjab Chief Minister Shehbaz Sharif and his political heir-apparent Hamza Shehbaz is also accused in this case – something that gives a new dimension to the ongoing process of accountability of the ruling family, making it even wider and more troubling for the Sharifs.

Incumbent Finance Minister Ishaq Dar was also nominated in the NAB’s reference for opening fictitious (benami) foreign currency accounts to help the family commit fraud.

Dar turned approver in the case, but later retracted his statement given against the Sharifs claiming it was extracted under duress.

Modus operandi of ‘fraud’

During scrutiny of the record pertaining to the accounts of M/S Hudaibiya Papers Mills Ltd (HPML) for the year 1996-97 and 1997-98, NAB Chief Executive Secretariat Islamabad observed that a sum of Rs30.499 million and Rs612. 273 million in respective years was shown as share deposit money.

Such a huge influx of investments in a company whose share capital prior to this addition was only Rs95.7 million and which was carrying huge accumulated losses to the tune of Rs809.834 million, raised serious doubts about the bona fide of this investment. As a result, the NAB ordered investigation of the matter under NAB Ordinance, 1999.

Through its investigation, the NAB held the management of the Mills – comprising late Mian Muhammad Sharif, Shamim Akhter, Nawaz Sharif, Shahbaz Sharif, Abbas Sharif, Mariam Safdar, Sabiha Abbas, Hussain Nawaz and Hamza Shahbaz Sharif – was in possession of huge illicit proceeds. It held that the accused failed to explain source of the acquisition of the funds.

In order to launder money, under the cover of the provisions of ‘The Protection of Economic Reform Act, 1992,’ they fraudulently opened different fictitious foreign currency accounts and deposited huge amounts in these accounts, according to NAB.

The bureau held that the accused got themselves benefited from these funds all the time, by obtaining Pak Rupees credit lines in the name of M/S HPML and their other group companies from the banks by offering their foreign currency funds in these fictitious/fraudulent accounts as collateral.

When these foreign currency accounts were exposed, they decided to directly inject this money into the accounts of M/S HPML in a way that the legitimacy of these proceeds could not be challenged.

For this purpose, through different money changers, they arranged different Dollar Telegraphic Transfers (TTs) in favour of the Paper Mills from abroad equivalent to their foreign currency funds.

In these TT's under the instructions of the Sharif family, the name of the ordering customer was given as Saddiqa Sayed, Mahfoodh, Hashim, Khadem and the purpose of this dispatch was mentioned as share deposit money from her.

After May 28, 1998, the foreign currency accounts were frozen and subsequently the rest of the foreign currency funds were got encashed and deposited into the accounts of M/S HPML as share deposit money on behalf of the account holders, the investigation held.

According to the NAB, to begin with, in the accounts of HPML for the year ending June 30, 1996, a sum of Rs30.469 million was shown as share deposit money from one of their cousin Sheikh Zakauddin. Whereas, in the accounts of the company for the year ending June 30, 1998, sums of Rs294.364 million, Rs136.511 million, Rs120.609 million and Rs60.788 million (totalling to Rs612.273 million) was shown as share deposit money from Saddiqa Sayed Mahfoodh Hashim Khadim, M/S Talat Masood Qazi, Kashif Masud Qazi and Mrs Sikandra Masood Qazi respectively.

It said that Nawaz Sharif and Shehbaz Sharif engaged Ishaq Dar in fraudulently opening of a number of fictitious accounts and in a number of other illegal activities to achieve their objectives for their own benefit.

All the laundered money was used to pay off the liabilities of HPML and other companies of the Group, it revealed. All money worth Rs642.742 million was injected into the accounts of M/S HPML on the pretext of share deposit money in the name of these persons while an amount of around Rs600.00 million was used for final settlement with Al-Towfeek Company for investment funds – which in fact was owned by late Mian Muhammad Sharif, Shamim Akhter, Nawaz Sharif, Shehbaz Sharif, Abbas Sharif, Sabiha Abbas, Hussain Nawaz, Hamza Shahbaz and Mariam Safdar.

Though Nawaz and Shehbaz were not presently the directors of HPML, they benefited themselves directly from these criminal activities as they held shares in HPML through their minor children, the NAB held.

It said that total amount Rs1,242.732 million which Sharif family was accused of using for their businesses over a period of time and finally to adjust their business liabilities was unexplained and was disproportionate to their known legitimate sources of income.

Yet, the income tax/wealth tax return submitted by the accused members of Sharif family didn’t commensurate with the deposits held in the fraudulent foreign currency accounts by them, the NAB findings held.

Later, the NAB authorities alleged that during this entire operation of money laundering/concealment of ill-gotten wealth, Sharifs defrauded a whole lot of institutions and individuals including a number of banks, tax authorities. Hence, all the accused persons being directors/beneficiaries of this entire proceed as share holders (either directly or through their minor children) were guilty of the offence of corruption and corrupt practices as defined in the NAB Ordinance, 1999 as well as NAB (Amendment) Ordinance 2000.

The retracting approver

Interestingly, on April 25, 2000, Ishaq Dar, in a statement – which he later said was taken from him under pressure – confessed that he had reservations in opening and operation of benami accounts, but was assured by Nawaz Sharif that he would not face any punitive action.

He stated that Nawaz had told him “that Qazis have agreed for use of their names and furthermore, after the promulgation of Protection of Economic Reforms Act, 1992 by his government, all the foreign currency accounts had complete immunity against any enquiry and investigation... Resultantly, I was asked by Mian Nawaz Sharif to open 4 Benamidar foreign accounts”.

Trial details

When the reference was moved to the Accountability Court during Musharraf regime, Nawaz Sharif was already under arrest and later was exiled to Saudi Arabia.

The then NAB’s prosecutor general told the court that some of the accused were out of Pakistan, at which the court adjourned the matter sine die.

In 2008, the case was taken up again but was adjourned because the application moved to reopen it lacked signature of the then NAB chairman.

The trial court did not issue summons to the accused to face trial since the day the matter was moved to it.

The accused family, later, challenged the reference before the Lahore High Court. A two member division bench gave a split verdict. The case was referred to a referee judge, who supported the division bench judge favouring closing the case. Hence, a ‘clean chit’ was granted to the accused and the case was closed in March 2014.