Behind the Story : A Smoking Gun in a Karachi Bar: The Case Against Benazir Bhutto : The charismatic ousted prime minster denies any wrongdoing, but documents provided to a Times correspondent seem to offer ample evidence of corruption in her administration.

TIMES STAFF WRITER; Fineman covers South Asia, including Pakistan, from The Times bureau in New Delhi. He is currently on assignment in London

The mood had all the makings of a scene from Casablanca. But the meeting at Karachi's century-old Sind Club last May was, in reality, a private glimpse at what the future held for one of Asia's youngest and best-known rulers.

"Here's the smoking gun," the lawyer whispered under the whirling drone of ancient ceiling fans that barely cut Karachi's summer heat.

"Believe me, Benazir is finished. This is what's going to bury her."

The lawyer then handed over to a Times reporter a thick stack of documents that he said would spell the end of Prime Minister Benazir Bhutto's turbulent 20-month reign in power. And now, it would appear, he may well have been right.

The lawyer was a key strategist for opposition leader Ghulam Mustafa Jatoi, who was named caretaker prime minister last week when Bhutto's entire government was fired for corruption and incompetence. And the as-yet undisclosed documents he handed over that day helped build Pakistani President Ghulam Ishaq Khan's case against the 37-year-old prime minister, her party, her government and her family.

In the coming weeks, those documents and hundreds more like them are likely to do even more damage to the woman who became a charismatic symbol of freedom abroad but a symbol of expectations denied and promises broken in her own impoverished country of 107 million.

"All scandals will be looked into," Jatoi's new commerce minister, Elahi Bakhsh Soomro, declared last week in flagging the caretaker government's intention to build a case of corruption against Bhutto's ruling family and friends--a campaign that has the full endorsement of Pakistan's powerful armed forces. "All deals and deeds of the government-controlled corporations will be examined thoroughly."

Analysts in Islamabad now say they expect the interim government to try to build a monolithic case of public corruption against the Bhutto Administration that is so strong it will prevent her from contesting new elections, now scheduled for Oct. 24.

The government started that process on Sunday by arresting at least eight people, including two associates of Bhutto's husband, Asif Ali Zardari.

Last week, Bhutto said she suspected that the government would indeed try to build a case against her. When asked whether she will be given a chance to reclaim her position, she told reporters: "I doubt it. I doubt it. I don't believe that they can face me politically. They couldn't face me politically yesterday, and they can't face me politically today."

She attempted to cast the entire inquiry as a political witch hunt aimed solely at neutralizing her, adding: "We have not done injustice to anyone."

But, just beneath the surface of such rhetoric, there are the documents, which hint at a mountain of corruption, patronage, favoritism and nepotism during Bhutto's 20-month administration. Although no cases of corruption have been filed or even suggested against Bhutto herself, the documents do provide ample evidence that several of her senior Cabinet ministers and ruling party leaders have attempted to use their positions to enrich themselves or the party.

What is more, allegations against Bhutto's husband, Zardari, and his family, have been irrepressible. Commonly referred to in the international press as "Mr. 10%"--a transparent reference to commission-taking--Zardari has in recent months filed a number of libel cases stemming from the allegations against both Pakistani and foreign newspapers. The cases are all unresolved.

All these cases and more are expected to get a full airing in the weeks ahead. But what is already clear from the documents that Jatoi's aide leaked over lunch at the Sind Club that day is that there is a pattern of favor-seeking, patronage and abuse of power that developed during Bhutto's short reign--a pattern that the prime minister at the very least tolerated.

Within days of taking office, Bhutto herself set the tone, appointing her mother, Begum Nusrat Bhutto, to be her senior minister without portfolio--a position functionally so powerful it was Bhutto's mother who actually took the reins of government during her daughter's frequent absences from the capital.

Days after that appointment, Bhutto and her ruling Pakistan Peoples Party gave the prime minister's father-in-law, Hakim Ali Zardari, the chairmanship of the National Assembly's key public accounts committee, a watchdog position traditionally reserved for the opposition. And, in less than two years' time, Bhutto doled out no less than 20,000 political patronage jobs to her party workers--that at a time when unemployment ranked high among Pakistan's most gnawing crises.

But the documents take it a step further.

A typical case was that of the Islamabad Stock Exchange.

There were only two exchanges in Pakistan in December, 1988, when the Bhutto Administration took over--one in Lahore and the other in Karachi, the nation's largest city and financial capital. There was a need, all parties agreed, for another stock market in the nation's political capital, the serene, planned city of Islamabad. But who would establish and control it?

There were two proposals, one from an experienced consortium affiliated with the Karachi Stock Exchange and the other from a group whose main credentials were their family relationship with Bhutto's Cabinet minister in charge of finance, Ehsanul Haq Piracha. In the end, it was Piracha who made the decision. And he selected his own family corporation, in which Piracha himself held a financial and management interest, to set up the new exchange.

In an order subsequently overturning that decision, Lahore High Court Judge Abdul Majeed Tiwana pulled no punches.

Calling Piracha's action a "mala fide (bad faith) exercise of power" and "a fraud on the state," Judge Tiwana ruled that the minister's decision to steer the new exchange to a company run by his brother-in-law "was a clear act of favoritism and nepotism . . . an action taken in bad faith."

And yet, Bhutto permitted Piracha to retain his post, to present her 1990 budget to the nation and to continue in office until last week, when he was dismissed by the President, along with the rest of the government and Bhutto herself.

In the words of one prominent Lahore businessman, referring to widespread allegations that similar corruption exists at the top levels of the majority of her ministries: "How could Benazir have sacked Piracha? She would have had to sack all of her ministers. Instead, she chose to defend them all."

But the allegations against her government were hardly confined to simple nepotism. In at least one case, which publicly touched on Bhutto's husband, there were charges of torture, extortion and outright theft--allegations that ultimately were brought directly to President Ishaq Khan's attention.

It happened a year ago, in late August, 1989, soon after London-based Pakistani businessmH. Bokhari arrived in Karachi to start a charitable institution for Pakistan's mentally handicapped. His first contact was with a local ruling party official named Gulham Husein Khan Unar. According to Bokhari's official statement, Unar took him to see the prime minister's husband, who agreed to allot a parcel of government land for the project.

Several days later, though, while being escorted to a second meeting with Asif Zardari by some of the same Peoples Party functionaries, Bokhari was kidnaped.

Here's how Bokhari described the ensuing 11-day ordeal in a desperate letter to the man he saw as his final court of appeal, President Ishaq Khan: "Instead of taking me to Bilal House (the prime minister's Karachi residence), they took me to an empty house on 17 September and kept me until 28 September. I was beaten and tortured. On 20 September 1990, I was taken to the Bank of Credit and Commerce in Karachi with a remote-control bomb wrapped to my leg and the money was withdrawn by pay order."

Bokhari stated that Bhutto's party colleagues used torture and the bomb to force him to withdraw and hand over a total of 400,000 British pounds, the equivalent of nearly $800,000, before they drove him directly to the Karachi airport and, using the security clearances they got through their party affiliation, put Bokhari on the next plane back to London.

Later, Bokhari sent several letters and made several international telephone calls to Bhutto in an effort to report the incident and recover his money. After several months without any satisfaction, he began his personal letter to President Ishaq Khan with these words: "I most humbly and respectfully beg to bring to your kind attention a complaint against your prime minister . . . . "

As yet, Bokhari has not received his money, although sources in Karachi said they believed the investigation into the incident will now be reopened.

Those two cases are typical of the many outlined in court documents, letters of intent, prime ministerial briefing papers and other files that Jatoi's men supplied to Ishaq Khan before the President stunned the nation with his dismissal of Bhutto and her government last week.

Jatoi's aides confirmed that the opposition leader was in frequent contact with the President and that the documents they made available to The Times last May were also given to Ishaq Khan, who reportedly began building his case against Bhutto at about the same time.

In her defense, Bhutto, who has flatly denied the corruption allegations on dozens of occasions, asserted last week that the corruption issue is now being used merely as a foil in a thinly veiled conspiracy against her by her own army, which she still blames for the execution of her father during Pakistan's recent decade of military rule.

And she alleged that her political opponents are acting out army dictates merely to take revenge against her.

Jatoi's response was that he plans "no revenge against our enemies, but we will not allow them to go scot-free if they have looted the treasury. We will make them accountable."

Special "speedy trial" courts have already been set up to investigate and prosecute cases of corruption under Bhutto. And the opposition's intent has long been clear. One of the deposed prime minister's most bitter foes, Abida Husein, used a Philippine analogy to make the point in an interview with The Times before last week's action: "Benazir Bhutto may have come to power like a Cory Aquino, but she will leave it like a Ferdinand Marcos."

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