Justice begins with those seeking accountability being held accountable first: NAB and the Broadsheet debacle

Justice begins with those seeking accountability being held accountable first: NAB’s incompetence and the Broadsheet debacle.

Pakistan has ended up bearing another hefty liability to an international party, Broadsheet LLC.

We need to understand the genesis of this story. Hitherto little attention has been paid to the serious levels of incompetence on the part of Pakistan’s primary antigraft institution set up to fight white-collar crime and corruption related offences.

A history of NAB incompetence

In 1999 NAB was tasked by Gen. Musharraf to recover ill-gotten gains.

Before engaging Broadsheet NAB were in discussions with one of the owners of a US-based company called Trouvons LLC which appeared to have the relevant experience. Yet despite whatever relevant experience Trouvons and its representatives held themselves out as having NAB proceeded to engage Broadsheet. One of Trouvons owners had been suspended from the Colarado bar for dishonesty.

A failure of due diligence

Broadsheet initiated arbitration proceedings shortly after the agreement with NAB was terminated in 2003. They claimed vast sums.

NAB failed to produce to the London Court of International Arbitration any evidence to demonstrate it had been told that Broadsheet would have the benefit of the experience and expertise that was available to Trouvons. Despite being an investigatory outfit NAB closed its eyes to what were clearly circumstances that demanded further enquiry and answers before engaging the services of a foreign organisation. Such services related to the recovery of potentially billions of dollars, the sharing of sensitive information and high-profile figures at the heart of Pakistan’s political, business and military circles.

No competent level of due diligence was undertaken as a risk management exercise to determine whether services were being procured from a suitable organisation run by credible individuals.

Due diligence was imperative to make an informed decision as to whether or not to engage a shell company incorporated in the Isle of Man in May 2000 in place of Trouvons. NAB failed to properly assess the risks that arose. Any semblance of effective legal, commercial and financial due diligence was absent.

Wrongful termination

On 28 October 2003 NAB (through their British lawyers, Kendall Freeman) wrongly terminated the agreement with Broadsheet claiming that it had been guilty of fundamental breaches. Surprisingly, NAB did not claim damages. Broadsheet ultimately won its substantial claim of around $30 million.

There followed (after October 2003) negotiations with both Broadsheet and IAR. IAR’s representatives were Dr Pepper and Kaveh Moussavi. Mr Moussavi had funded IAR and the LCIA found he was also “willing to fund its claims against NAB”. Mr Moussavi’s credibility as a witness was severely attacked and effectively so in accordance with the findings of two High Court Judges in previous (unrelated) proceedings which resulted in him serving a sentence of imprisonment for contempt of court”.

The Vitol connection and Moussavi’s previous dealings

Dr Pepper and Mr Moussavi featured in an article on 22 July 2001 in the Guardian (view article), a British newspaper. It reported the purchase of oil from a British firm, Vitol, which apparently caused £100 million pounds worth of damage to Pakistan’s main power stations in January 1994.  An investigation into the scandal was “dropped with little explanation” by the Benazir Bhutto government with the prosecutor-general left demanding an explanation for “the illegal suppression” of the investigation.

Dispute with Broadsheet and settlement

On 2 April 2007 Broadsheet was dissolved. However, the company was subsequently restored on 27 November 2009 through a series of legal manoeuvres made by Mr Moussavi in which he and others retained a share.

In May 2008 NAB and their lawyer reached a settlement with a Colorado company also named Broadsheet LLC. This was a different entity from the original contracting party which was incorporated in the Isle of Man – also the claimant in the subsequent arbitration proceedings. NAB did so knowing Broadsheet (Isle of Man) was or had been in liquidation and that no liquidator was involved in the negotiation of the settlement. Another blunder.

The incompetence continues

Despite the existing evidence, serious omissions and the unfolding story of profound incompetence the current Prime Minister and his advisors continued to sleepwalk through the carnage – entertaining discussions and meetings with Mr Moussavi. A judge led inquiry has been set up – which by its nature must be truly independent, impartial and competent. Will it offer, amongst other things, meaningful and practical recommendations? Serious structural reforms of NAB are necessary. NAB’s activities should be overseen by an independent commission to create and maintain public confidence. Its remit should include investigating serious complaints and allegations of misconduct against NAB and handling appeals arising.

By Akhtar Raja
Quist solicitors