Pakistan Targets Elite in Corruption Crackdown

The country’s new military leaders launched a sweeping attack Wednesday on rampant corruption, arresting more than 20 of Pakistan’s wealthiest and most powerful people and vowing to round up hundreds more.

Soldiers raided the palatial homes of business and political elites across Pakistan, carried off suspected offenders in broad daylight and named two former prime ministers--Nawaz Sharif and Benazir Bhutto--as suspects. Those detained are suspected of evading taxes, defaulting on millions of dollars in unpaid loans and, in many cases, engaging in corrupt acts while holding office.

Military officials said many more will be arrested in the coming days.

“No one will be spared,” said a senior government official who spoke on the condition of anonymity. “This is as much about recovery of money as about driving the fear of law in the hearts of the mighty of Pakistan.”

Army sources said Wednesday evening that they had arrested 21 people and were looking for a dozen more--some of whom may have already fled the country. Seven of the nation’s top former leaders--including Sharif, who was toppled last month in an army takeover--are already being held on suspicion of corruption and other charges.

Among those arrested Wednesday were people who only weeks ago were considered above the law: Manzoor Wattoo, the former chief minister of Punjab province; Waqar Azim, the former chief of the national airline; and Nasim and Asif Sehgal, members of one of Pakistan’s most prominent business families. There were unconfirmed reports that as many as 450 people were arrested in Punjab province Wednesday, some for outstanding loans and others on various charges of corruption.

“They have committed crimes against this nation,” Interior Minister Moinuddin Haider said on state-owned Pakistan Television. “Obviously, we have to be tough on them.”

The drastic measures came a month after Gen. Pervez Musharraf took power in a coup that was applauded throughout the country for overthrowing a government that, despite being democratically elected, was widely condemned as corrupt and authoritarian. Musharraf has vowed to force Pakistan’s rich and powerful to answer to the law. He has promised to return Pakistan to democratic rule but has refused to set a timetable.

The arrests Wednesday came after a deadline for hundreds of Pakistanis to repay billions of dollars in defaulted loans and back taxes. The loans, estimated to total more than $4 billion, are suspected to have been made by state-owned banks to political cronies and family members of Pakistan’s former leaders.

Sharif and his family are suspected of defaulting on almost $1 billion in loans, and Bhutto’s family is also on the list. A roster of about 300 loan defaulters was published in Pakistani newspapers this week.

As he promised when he seized power Oct. 12, Musharraf didn’t play political favorites. Those arrested Wednesday included top officials of both of Pakistan’s major political parties.

Sharif, arrested by the army during the coup, was turned over to police Wednesday. He was expected to appear in court to hear charges that he tried to murder Musharraf during the coup. If convicted, Sharif could face execution. Bhutto, already convicted on an array of corruption charges, is living in exile in London and claims that the previous charges against her were cooked up by Sharif.

Musharraf acted under the authority of a law drawn up at 2 a.m. Wednesday that gives his government the right to prosecute any former official for suspected corruption dating to 1985. The law establishes special courts to hear the corruption cases and provides for 14-year prison terms and a 21-year disqualification from public office for anyone convicted.

With a per capita income of less than $500 a year, Pakistan is one of the world’s poorest and most illiterate countries. It is routinely ranked in international surveys as one of the most corrupt as well.

In the days leading to Wednesday’s arrests, many people inside and outside of Pakistan wondered whether Musharraf would make good on his promise to take on the country’s elites. By midweek, less than 2% of the estimated $4 billion in defaulted loans had been recovered. Bankers in Pakistan speculated that the cash simply was no longer in the country--or that it wasn’t in any form that could be repaid.

“The corrupt don’t keep the money with them--they buy land or buy foreign exchange and send it abroad,” said Masood Ahmad, deputy manager of the United Bank in Islamabad, the capital.

With the deadline looming this week, Sharif’s family deposited $5 million as repayment for a defaulted loan taken out on behalf of Ramazan Sugar Mill, a family enterprise. Another former legislator, Azizur Rehman Chun, paid $300,000 in a bid to avoid arrest.

*

Times staff writer Filkins reported from New Delhi and special correspondent Hussain from Islamabad.