The benami account saga

“Depositing money and taking it out – what kind of a crime is this?” This question was posed to the Federal Investigation Agency’s (FIA) official counsel Farooq Bajwa by Judge Bakht Fakhar Bahzad at the Lahore Special Court (Central) on Monday during the hearing of a money laundering case registered against the prime minister’s son, Suleman Shehbaz.

This is a question which perhaps many Pakistanis have thought to themselves when they read about such scandals and perhaps the sensationalization of such a topic in the mainstream media entirely prevents this question from being answered. Profit has decided to dig deep and explain what this really means.

In the case of Suleman Shehbaz and his father Shehbaz Sharif, this is a long and intertwined story. 

On 28 October 2019 Suleman Shehbaz was declared a proclaimed offender by the National Accountability Bureau (NAB) against failing to respond to multiple summons seeking his attendance in an official inquiry into two charges against him – money laundering and an assets-beyond-means reference. Earlier that year in April, the NAB had alleged that Shehbaz Sharif and his two sons were involved in money laundering worth 85 arab rupees.

It was also noted that the prime minister’s son had refused to face another inquiry following the groundbreaking sugar inquiry commission’s report published in 2020. This is the same report which enabled FIA to launch an inquiry against Jahangir Tareen. 

Later in 2020, the three were booked by the FIA in a money laundering case and the premiere investigation agency detected 28 benami accounts of the family while scrutinizing a money trail of 17,000 credit transactions.

As these developments were surfacing, Suleman Shehbaz fled to London, only to return after 4 years in December 2022 to a warm welcome as the Islamabad High Court restricted the FIA and NAB from arresting him, ahead of his arrival. However, earlier in the same year David Rose of the UK’s Daily Mail published an article alleging corruption and misappropriation of funds by the prime minister and his son.

This article was a scathing narrative connecting Shehbaz Sharif, his sons and son-in-law Imran Ali Yousaf to the embezzlement of more than 500 British pounds given to Pakistan in the form of DFID-funded aid projects. Rose claimed that he had interviewed jailed UK citizen Aftab Mehmood who was imprisoned for allegedly laundering money for the Sharif family. The article also stated that Rose had seen a confidential report written by the Pakistani authorities who tracked 13 payments of 12 lac pounds in total which were apparently sent by a “small home-based tuck shop owner” in a village, to Sharif’s family members. 

A prior version of the same article was published in 2019, following which Sharif filed a defamation lawsuit and won. Subsequently, the newspaper was forced to publish a clarification saying “We accept Mr Sharif has never been accused by the National Accountability Bureau of any wrongdoing in relation to British public money or DFID grant aid.” 

On 23 December 2022 Suleman Shehbaz was granted bail. At the special court (central) he and Tahir Naqvi, formerly accused in the case together, were found “not guilty”. This case was originally booked under the Anti Money Laundering Act and the Prevention of Corruption Act in November 2020.

In January 2023, he was again granted absolution by the FIA in a 16 billion rupee sugar scam case. This case had been opened after NAB nominated him in an assets-beyond-means reference with regards to the Ramzan Sugar Mills. 

But what are benami accounts? And how do they work? 

The word benami has a Persian origin and means “without a name”, it is used to refer to a transaction where a person uses the name of another person to carry out a transaction which results in no benefit to the person whose name was used. To keep it simple, when FBR discovered 28 benami accounts in relation to the Sharif family, this means that all the 28 owners of these accounts were not informed and were not benefiting from any of the transactions which the Sharifs allegedly made from these accounts. 

Benami transactions are transfers of property or wealth (ranging from plots and housing schemes to jewelry and intangible assets) made by a party on behalf of another, rather obscure or untraceable party. A successful evidence of a benami transaction can land a man in jail for up to 7 years. But this situation is so severe that a false accusation can also put you behind bars for up to 5 years. Benami Transactions (Prohibition) Rules were enforced with immediate effect on 11 March 2019, after having been legislated in 2017. However, interestingly this law does not apply retrospectively.

For obvious reasons of the intrusion this law can cause into the banking system’s records and databases, the Pakistani banks challenged these laws as this puts customer data at risk. The government had passed a different law in 2007 to stop money laundering in banks’ Anti-Money Laundering Ordinance 2007. The law required banks to report any transactions that looked suspicious.

The law had many problems and was changed several times until it was replaced by a new law in 2010, the Anti Money Laundering Act. But even with these laws, there have been several cases of money laundering using fake or hidden bank accounts. The premise of a case filed against the allegation of benami transactions stipulates that the prosecution proves in court what were the reasons due to which the defendant engaged in a benami transaction or basically used someone else as a proxy of the transaction(s) in question. 

In September 2022 FIA discovered 42 benami bank accounts associated with Moonis Elahi in Alliance Sugar Mills. The fake owners of these fake accounts are called benamidars. 

In May 2020, Profit covered the Federal Board of Revenue’s reference against S.A.S, a benami company which owned billions of benami assets in different cities of Pakistan. This was a case of one company hiding behind the mask of a benamidar company. In June 2021, the Peshawar police arrested a gang of criminals who used to manufacture and sell rubber thumbs of fingerprints which could be used to get fake sim cards which were later used for extortion and fraudulent phone calls. 

In either case, this is an organized criminal activity motivated towards hiding the real beneficiary of a particular transaction. This criminal tactic has come in handy for several politicians. In August 2022, 13 such accounts came to light, which were opened by PTI members but all of these accounts were disowned by the party. 

In 2020, the NAB issued warrants against Asif Ali Zardari for allegedly being responsible for benami transactions worth up to 8 billion rupees. This was a part of a larger case initiated in 2019, in which he and his sister, Faryal Talpur were indicted for money-laundering through 29 benami accounts, transactions worth 35 arab rupees in total.