Pakistani President Ali Zadari on Money Laundering

The International News in Pakistan reports today that President Asif Ali Zardari says he was cleared in a 10-year-old money laundering investigation by the US Congress.

The Presidency has officially claimed that the US Congressional Subcommittee on Money Laundering had cleared Asif Ali Zardari, as it had found no evidence that Citibank or any other private bank knowingly helped Mr Salinas (of Mexico), or any other criminals launder dirty money.

This official statement has been released by the spokesman of the president Farhatullah Babar in response to questions sent to him about the details provided by the Citibank’s top administration to the US Subcommittee on Money Laundering in November 1999.

This comes as a Pakistani anti-corruption agency found that Zardari had accumulated assets of $1.5 billion through illegal means. Zardari, who was known as “Mr. 10 percent,” is the notoriously corrupt widow of the late former Pakistani Prime Minister Benazir Bhutto.

An investigation in 1999 by the U.S. Senate Permanent Subcommittee on Investigations into private banking and money laundering examined that Zardari had three accounts at Citibank Switzerland private bank. Some of the accounts allegedly were used to disguise $10 million in kickbacks for a gold importing contract to Pakistan.

Another of Citibank Switzerland’s high profile clients was Raul Salinas, the infamous brother of former Mexican President Carlos Salinas.

Swiss authorities froze more than  $100 million – allegedly linked to drug trafficking — in Salinas’ accounts. That included  about $27 million Citibank Switzerland private bank.

The Senate subcommittee notes a striking coincidence between the two men: “The Zardari accounts in Switzerland were opened one day before Raul Salinas was arrested.”

Zardari’s accounts were opened February 27, 1995. Salinas was arrested and imprisoned in Mexico on suspicion of murder the following day.

According to the Senate subcommittee report:

On the day following the arrest, a number of telephone conversations took place between private bank personnel in New York, London and Switzerland. The telephone conversations to London were recorded on an automatic taping system. The tape transcripts indicate that the private bank’s initial reaction to the arrest was not to assist law enforcement, but to determine whether the Salinas accounts should be moved to Switzerland to make discovery of the assets and bank records more difficult. This suggestion was made by the head of the private bank at the time, Hubertus Rukavina, and discussed by several employees. It was not acted upon, apparently because it was agreed that London bank records would disclose the funds transfer to Switzerland. Private bank employees also tried to determine whether to require immediate repayment of an outstanding $3 million loan that had been made to Trocca (a Salinas family trust), so that if the funds in the Trocca accounts were frozen by authorities, Citibank funds would not be at risk.

Rukavina also played a role in the Zardari accounts. Specifically, he was involved in the decision to allow a Swiss lawyer to open three accounts on behalf of Zardari.

Rukavina told the Senate subcommittee staff that he did not make the decision to open the accounts but referred the matter to the head of private bank operations in Pakistan, Deepak Sharma.  According to Mr. Rukavina, he never heard whether the accounts were ultimately opened.

A Swiss judge found in 2003 that Zardari was guilty of money laundering, and a Swiss prosecutor closed the investigation last year, saying there wasn’t enough evidence to bring Zardari to trial.

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