Beyond Rhetoric: The Case Of PTI’s Prohibited Funding

Beyond Rhetoric: The Case Of PTI’s Prohibited Funding
At the root of the case
Akbar S. Babar, the founding party member of the Pakistan Tehreek-e-Insaf (PTI), in January 2015, filed a case against the PTI and its leadership -- that is, Chairman Imran Khan. He alleged:

1. Misuse and mismanagement of the party funds under article 6 of the Political Parties Order (PPO) 2002, that:

a. Legitimacy of source of funding/donations and transfer in party accounts outside Pakistan be examined under article 6(3) of the PPO,

b. Party leadership and the party while violating article 6 of the PPO 2002:

i. Accepted funding from prohibited sources – individual and entities as elaborated under article 6(2),

ii. Overseas funds collection/donation (e.g. by PTI USA or UK, UAE , Europe, Canada, Australia, etc ) are part of prohibited funding as elaborated under article 6(3),

iii. The party failed to maintain details of donors, as required under article 6(2), and the source of funding, especially for those collected overseas, both from individual and entities claimed to be Pakistani as required under article 6(3),

iv. Cash amounts/donations deposited in the party chairman office or to him in Pakistan are not fully documented in fiscal statements between 2009 and 2012 as required under article 6(2),

v. The party funds were deposited in personal bank accounts of the PTI employees and leaders (e.g. Asad Qaiser, Qasim Suri, Mian Mahmood-ur-Rasheed, among others listed on page 48 of the judgement),

vi. The party failed to maintain details of bank accounts and withheld declaration of bank accounts and its details from the Election Commission of Pakistan (ECP), for example the PTI declared 12 accounts whereas the State Bank of Pakistan confirmed existence of 65 accounts -- thus 53 accounts were concealed by the PTI.

2. The PTI failed fiscal mismanagement and were non-transparent, as it submitted incorrect statements of the party accounts (FY 2008 to 2013) to the ECP.

3. The party head continued to falsely certify (Form-I) the concealment and under-reporting of the party’s fiscal details, thus a violation under article 13 of the PPO 2002.

He prayed that the PTI and its leader has not only violated the PPO 2002 but has also violated the fundamental principle enshrined in article 17(3) of the constitution of Pakistan. He pleaded that penalties under article 14 and 15 of the PPO 2002 be invoked against the PTI and its leadership, that is, the chairperson.

The Supreme Court (SC) of Pakistan, in its judgement of December 2017, in Hanif Abbasi vs Imran Khan case, directed the ECP to complete the pending cases and scrutinise the accounts of political parties, including the PTI. A scrutiny committee was constituted by the ECP in March 2018, and its terms of reference (TORs) were formed in April 2018. The PTI, reportedly, took 15 adjournments, filed 11 petitions in different high courts for judgement to not be announced, and changed 9 lawyers during the course of defending the case.

The ECP Ruling

The ECP finally reserved the judgment in June 2022. The judgment that was announced on August 2, 2022, concluded:
1. The PTI has violated article 6(3) of the PPO 2002, therefore, a show cause is issued to the PTI to explain why these prohibited funds may not be confiscated,

2. Initiate necessary action required under the constitution.
The ECP established that it has sufficient documented and validated evidence to reach the conclusion and the following are at its core:

1. The ECP has sufficient evidence to declare that the PTI has “knowingly & willfully” received (ref para 50) following prohibited funds which is in violation of article 6(3) of the PPO 2002:

a. USD $ 5,122,278
b. GBP 792,265
c. PKR 220,058,654

(This includes funds from Wootton Cricket Club, an offshore company in Cayman Islands, owned by Abraaj Group’s Arif Naqvi, who is charged of fiscal fraud and has pleaded guilty as part of plea bargain (page 29 para 15))

2. Non-disclosure and concealment of 16 bank accounts (ref para 50-j) which is violation of article 17(3) of the constitution of Pakistan
(The PTI submitted 13 bank accounts to be under the category of ‘unknown accounts’ whereas the State Bank of Pakistan confirmed 65 accounts opened in the name of PTI and operated by senior PTI management and leadership at central and provincial level.)

3. For five years (2008-2013), the PTI chairman wrongly certified party accounts, sources of funding and bank details as submitted under Form-I to the ECP, which is found to be ‘grossly inaccurate’ on the basis of information obtained from the State Bank of Pakistan and other material on record.

Interpreting Laws

The linked legal provisions stated in operative para 50 of the judgment are:
1. Article 17, freedom of association, sub-section 3 of the constitution of Pakistan states that “Every political party shall account for the source of its funds in accordance with law.”

2. Political Parties Order 2002:

a. Article 2 – Definitions, sub section ‘C -iii” states: a foreign-aided political party means a political party which receives any aid, financial or otherwise, from any government or political party of a foreign country, or any portion of its funds from foreign nationals;

b. Article 6 - Membership fee and contributions, states that:

i. A member of a political party shall be required to pay a membership fee as provided in the party’s constitution and may, in addition, make voluntary contributions towards the party’s funds,

ii. The contribution made by members or supporters of any party shall be duly recorded by political parties,

iii. Any contribution made, directly or indirectly, by any foreign government, multi-national or domestically incorporated public or private company, firm, trade or professional association shall be prohibited and the parties may accept contributions and donations only from individuals.

iv. Any contribution or donation which is prohibited under this order shall be confiscated in favour of the state in the manner as may be prescribed.
(For the purpose of this section, a “contribution or donation” includes a contribution or donation made in cash, kind, stocks, hospitality, accommodation, transport, fuel and provision of other such facilities.)

c. Article 13 on information about sources of the party’s fund states:

i. Every political party shall, in such manner and in such form as may be prescribed or specified by the Chief Election Commissioner, submit to the ECP, within sixty days from the close of each financial year, a consolidated statement of accounts of the party audited by a chartered accountant containing annual incomes and expenses; sources of funds; and assets and liabilities.

ii. The statement referred to in clause (1), shall be accompanied by a certificate signed by the party leader stating that no funds from any source prohibited under this order were received by the party; and the statement contains an accurate financial position of the party.

Applying Laws To PTI’s Prohibited Funding Case

Is PTI foreign aided? As per Article 2-C-iii of the PPO 2002, any party that received funding from non-Pakistani/foreign national individual and/or entities is defined as a foreign aided party. The law does not place a monetary bar on how much should a party receive to be declared as foreign aided. It states, “receipt of any portion of its fund” is enough for a party to be defined as foreign aided, which must be established by the ECP with documentary evidence.

Did the PTI receive prohibited funding? As per Article 6-iii of the PPO 2002, receipt of party funds from foreign national, entities, government and even national public or private entities and professional association is prohibited. Again, the law does not place any monetary bar on how much is prohibited. It states, “any contribution from these sources is prohibited.” The PTI in its submission to the ECP has accepted receipt of prohibited funds.

Has the PTI concealed financial details and financial sources? Article 17(3) of the constitution and Article 13 of the PPO 2002 elaborates on declaring the source of funding. The PTI has concealed 16 bank accounts, in their submission to the ECP and stated 8 of them to be unknown. The State Bank of Pakistan has confirmed that these were opened in the name of the PTI in compliance with banking regulations and were operated by the party leadership.

Has the head of PTI submitted a false certification to the ECP? As the party head, the chairperson has to certify that submitted fiscal and bank details provided in Form-I are correct. The ECP on the basis of evidence concludes that the party chair has submitted wrong and false certification.

Why is the media highlighting the issue of dissolution of the political party and its symbol? Unfortunately, instead of having fact-based analysis, news anchors and analysts presenting mainstream media and YouTube channels project personal preferences as facts. Most are not even trained or practicing journalist. In this particular case, there are only a few electoral public policy experts that can contextualise the judgment within the applicable parameter of law. But that does not sell in marathon news broadcasts. Therefore, to sell the news, an extreme case scenario, like dissolution of party and/or withdrawal of party symbol, were amply discussed.

In order for a party to be dissolved and its symbol to be withdrawn, the ECP, under Article 15 of the PPO 2002, has to establish beyond reasonable doubt that a foreign government, entity or person funded a political party with the intent to weaken the sovereignty and integrity of Pakistan; and/or as conduit of terrorism. This case of PTI’s prohibited funding is not even close to that moment.

Pakistan is facing complex post-truth – social media influenced era where narratives are curated to suit certain ‘vested interests’, disconnected from reality and fake. Using social media platforms to propagate certain points of view is becoming a norm. A majority does not even question the authenticity of the information. There can be several reasons for it but in the context of this case it is due to strong political like and dislikes. The PTI has ably created a narrative of high moral ground, through social media, where the party leader can declare anyone non-Muslim, unpatriotic or corrupt. It has become a classic case of either ‘you are with us’ or ‘else’.

What will be the political impact of this judgment? The ECP has established with evidence in its judgment that the PTI received prohibited funding from foreign sources. This defines the PTI as a ‘foreign aided party’. The amount collected from prohibited sources (as elaborated in para 50 of the judgment) in pursuance of article 6(4) may be confiscated by the state. However, the PTI has been given another chance by the ECP, even after 8 years, through a show cause, to explain why the prohibited funding should not be confiscated. This case is likely to linger on, as the PTI is not expected to respond within a time certain time period, and has rather filed a judicial reference against the removal of the chief election commissioner.

PTI’s uncertain future

The issue of false certification is being twisted by referring to it in English and Urdu. The PTI claims that ‘certification’, even if incorrect, is inconsequential as it is not an ‘affidavit’. The argument is that certification is ‘tasdeeq’ whereas affidavit is ‘musadika beyan halfi’. Simply, this certification in Form-I is not only an attestation (tasdeeq) but also an undertaking by a person of authority – in this case the PTI party head – that the submitted information is correct. Similar certification/attestation is a part of the candidate’s nomination form filed to contest elections. The same is required in the application of CNIC and driving license, which holds binding value despite not being submitted under oath on a stamp paper. It qualifies as ‘musadika beyan halfi’.

Of course, the extent of legal liability/burden of this certification will be established by the Supreme Court but it remains undeniable that it was/is false. The ECP stated that the respondent was in full knowledge and its stance of denying the account cannot be entertained.

In order for the confirmed prohibited amount to be confiscated by the state and to pursue the false fiscal certification by the PTI leadership, the federal government has to prepare a judicial reference and submit with the Supreme Court. The personal implication of this for the PTI party head Imran Khan is to be evaluated against the criteria of ‘becoming/unbecoming the member of parliament’ as elaborated under the Article 62(f) of the constitution of Pakistan. Unfortunately, the previous SC judgments in cases of ex-prime ministers -- Nawaz Sharif and Yousaf Raza Gillani -- used article 62(f) in an orthodox manner -- that an individual holding the office of the prime minister of Pakistan has to be accountable and transparent and does not enjoy the luxury of being ignorant. When the case of Imran Khan is simply juxtaposed against this reasoning one can predict turbulent times for him.

The reputational damage for Khan as a person and the PTI as a party are grave. The ECP judgement (after deliberation of 8 long years) released after The Financial Times’ story (fact checked for 4 years) is not inconsequential. The State Bank has confirmed that the core PTI leadership is linked with the opening and managing of concealed bank accounts. This can mean disqualification as a maximum punishment when tried against article 62(f).

This also carries reputational damage for the party’s audit firm. It is a Quality Control Reviewed (QCR) auditing firm. However, the fact remains that any audit firm only undertakes the audit of the fiscal details as shared by the client and does not have the mandate to go beyond it. However, even if it had delving into 30 percent of the fiscal entries in five years, it could have identified something troublesome.

The case has negatively impacted the persona of Mr Clean Khan. In developed countries, the laws on ethics, transparency and accountability make or break personalities and entities. Khan has complicated matters for himself by stating that Arif Naqvi is a personal friend, and pleading his case on the basis of punishment for his religion than fraud. Naqvi, reportedly, under a plea bargain has accepted all fiscal wrong doings and may face up to 300 years of jail under the US law. This will have implication for charities being collected in the name of Shaukat Khanum Cancer Research Hospital (SKCMH). In Pakistan the philanthropic nature of our society may continue to support SKCMH. But for overseas donation, it will raise questions on its ethical use and legal transfer to the charity than to the suspect political party’s account.

The judgment has established that the ECP must undergo institutional upgrade to build capacity to undertake annual fiscal evaluations of political parties and campaign financing. The delay of eight years however does not fare well on the scale of justice -- as justice delayed is justice denied. Hopefully, the case of other parties will not take that long.