Money Laundering Probe Names Ex-Pakistani President Zardari

(Bloomberg) -- Pakistan’s ex-president and leader of one of the country’s main political parties, Asif Ali Zardari, was named in a money-laundering investigation weeks before national elections.

The Supreme Court in a statement sent to Bloomberg and dated July 8, listed Zardari and his sister Faryal Talpur along with 12 others as beneficiaries in an alleged scam “running into billions of rupees” that led to the arrest of Hussain Lawai, the chairman of the Pakistan Stock Exchange on Friday. Lawai has denied any wrong doing and remained under investigation on a four-day remand. Executives from local lenders Sindh Bank Ltd., Summit Bank Ltd. and United Bank Ltd. were summoned to appear before the top court on Thursday to testify over alleged fake account transactions, according to the statement.

The opening of the investigation ahead of the July 25 ballot will be seen as fortuitously timed for Imran Khan’s Movement for Justice party, or PTI, which has led a hard-charging anti-corruption campaign and is weeks away from its best shot at power. Khan’s main political rival, former premier Nawaz Sharif, was handed a 10-year jail sentence last week by an anti-graft court. The allegations against Zardari may dent support for the Pakistan Peoples Party, which he co-heads with his 29-year-old son Bilawal Bhutto Zardari.

The recent court rulings and probe “appear to have tipped momentum heading to the election in favor of Imran Khan’s PTI,” Exotix Capital analysts Christopher Dielmann and Hasnain Malik wrote in a report on Monday. A Gallup Pakistan poll published last week showed Khan’s party had closed the gap on Sharif’s Pakistan Muslim League-Nawaz, with the PPP trailing third.

Zardari, 62, rose to prominence in the 1990s as the husband of former Prime Minister Benazir Bhutto. During that period he developed a reputation for corruption and is widely known across the country as “Mr. 10 percent.” Zardari has repeatedly protested his innocence and his only criminal conviction was overturned. However, he spent 11 years in prison under a previous Sharif administration and during the rule of General Pervez Musharraf, who came to power in a 1999 coup.

Zardari then became president months after his wife’s murder during a campaign rally in December 2007. The PPP was voted out of office in 2013, when Sharif’s party won a parliamentary majority. A spokesman for Zardari didn’t respond to multiple messages or calls seeking comment.

A spokesman for UBL acknowledged the summons and said Chief Executive Officer Sima Kamil would attend. Officials at Sindh and Summit Bank didn’t respond to calls, though Summit Bank released a statement on Monday that said “despite these unverified news items, the bank continues with its resolve to provide uninterrupted and seamless banking services,” without referring to the court statement. Pakistan’s central bank later that day said in a statement that all “rumors circulating” about Summit Bank “are baseless and misleading.”

The run-up to the election has been marred by allegations of widespread army-led media censorship and intimidation, which the armed forces deny. Sharif and other observers have accused the judiciary and Khan of being puppets to the military, which has ruled Pakistan for much of its post-independence history. Many believe the army supports Khan because it wants a pliant government it can control after turbulent relations with the two main dynastic parties. Khan has repeatedly denied the allegations.

At campaign rallies Zardari’s son Bilawal has implied that Pakistan’s election is at risk of military-led interference. In recent days, Bilawal has been stopped by security forces from speaking at some towns and cities in the crucial and most populous province of Punjab.

To contact the reporters on this story: Kamran Haider in Islamabad at khaider2@bloomberg.net;Ismail Dilawar in Karachi at mdilawar@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Chris Kay, Khalid Qayum

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