The Associated Press
Monday, August 25, 2008

GENEVA: The Geneva prosecutor said Monday he has dropped money laundering charges against Asif Ali Zardari, widower of the late Pakistani premier Benazir Bhutto and favorite to become the country's next president.

Prosecutor General Daniel Zappelli's move comes eight months after he dropped charges against Bhutto herself the day following her assassination.

Zappelli noted that the Pakistan prosecutor had dropped his corruption case against Zardari partly on grounds the original charges were political motivated.

Pakistani judicial officials had ordered that country's case closed against Zardari after then-President Pervez Musharraf issued a controversial order quashing corruption charges against Bhutto and her husband.

Swiss authorities have investigated since the Pakistan government asked for judicial assistance in 1997, but Zappelli said too little was produced for him to continue in light of the Pakistani prosecutor's conclusion.

Zappelli said he had no choice but to close the case, but he added that he would give 3.9 million Swiss francs (US3.6 million) seized in the case to the Geneva government.

Zardari's Geneva lawyer welcomed the decision to close the case.

"This result confirms what Mr. Zardari has argued since 1997," Saverio Lembo told The Associated Press by telephone from Paris.

Lembo said he no comment about the money being given to the state of Geneva because he said Zardari hadn't deposited it.

Pakistanis who view Zardari as a symbol of the sleaze that tainted the country in the 1990s gave him the nickname "Mr. 10 Percent" for alleged corruption during his wife's turns as prime minister.

Bhutto's Pakistan People's Party last week chose Zardari as its presidential candidate in the Sept. 6 election by lawmakers to fill the post left vacant by Musharraf's resignation.

The Swiss had been investigating allegations that that Bhutto and Zardari used Swiss banks to launder millions of dollars in kickbacks. Bhutto and Zardari denied the allegations.

In 1998, Swiss authorities said they found 20 million Swiss francs (then about US$13.8 million) in Swiss accounts belonging to Bhutto and her family. The accounts were frozen at Pakistan's request.

Swiss and Pakistani investigators alleged much of the money came from the Geneva-based Societe Generale de Surveillance, one of the world's largest customs inspection companies, in exchange for business with the Pakistani government when Bhutto was prime minister in the late 1980s and 1990s.

Societe Generale de Surveillance has denied the claims.

In July 2003, a Geneva magistrate convicted Bhutto and her husband in absentia of money laundering under a Swiss law that empowers high-level investigators to impose penalties without a court hearing. They were handed six-month suspended sentences and ordered to pay US$11 million to the Pakistani government.

The convictions were thrown out automatically when the pair contested the move.

In July 2004, another Swiss magistrate charged them again, reopening the corruption case.

During a 1998 visit to Geneva, Pakistan's anti-corruption investigator Saif-ur Rehman showed reporters documents he gave Swiss authorities, saying they indicated kickbacks flowed to Bhutto and Zardari through companies based in the British Virgin Islands. He said the money came from Pakistani government contracts with Societe Generale de Surveillance and its former subsidiary Cotecna Inspection SA.

Cotecna denied at the time that any of its employees violated national or international laws, and said it was having to "bear the brunt of internal political rivalries in Pakistan."

A company statement at the time accused the Pakistan government of doing nothing about customs fraud totaling more than US$650 million, which Cotecna said it uncovered during a two-year contract in the mid-1990s.

Zappelli's statement also cleared Geneva lawyer Jens Schlegelmilch of any suspicion in handling financial transactions for Bhutto and Zardari.

http://www.iht.com/articles/ap/2008/08/25/europe/EU-Switzerland-Bhutto.p...