Zardari on the Hot Seat

Devaud's orders found Bhutto, Zardari and Schlegelmilch, a Swiss lawyer who had represented them for many years, guilty of minor money-laundering offenses under Switzerland's penal code. Devaud's orders alleged that, via obscure companies in the British Virgin Islands, Bhutto, Zardari and members of their family had received improper payments from two Swiss companies that were seeking contracts with the Pakistani government. (Pakistan wanted to hire the companies, Cotecna and SGS, to inspect cargo shipments before they arrived to ensure that appropriate import duties had been assessed).

In his rulings, Judge Devaud quoted an internal SGS document in which an official of the company—who had visited Pakistan after Bhutto returned to power in 1993—characterized Zardari's standing: "In his view, Asif Zardary [sic], BB's husband, is deputy PM officially with a lot of pwr [sic] ... The influence of Asif Zardary is real and he has in the past always helped and favoured his friends and cronies ..." In 1997, after Zardari had been imprisoned in on suspicion of corruption, Devaud alleged that Bhutto herself had purchased a necklace worth 117,000 British pounds from a London jeweler—using cash and a bank transfer from the account of Bomer Finance, a British Virgin Islands company, which the magistrate said was jointly controlled by Bhutto and Zardari. (Her supporters claimed this allegation was based on trumped-up evidence supplied by her political enemies. Bhutto herself reportedly claimed her husband had bought the necklace but never told her about it).

Devaud ordered suspended prison terms for the defendants and directed them to pay restitution and compensation to the Pakistani government. Under Swiss legal procedure, Bhutto, Zardari and their lawyer were allowed to appeal the judge's convictions to a Geneva police tribunal. They did appeal, resulting in the dismissal of Judge Devaud's guilty findings against them. The case was then referred for further investigation to the office of Geneva's local prosecutor, Daniel Zappelli, who decided to continue the investigation, only this time with a view toward possible charges of "aggravated" money laundering under Swiss law.

Neither the prosecutor nor a spokesman for his office could be reached for comment. But Judge Devaud confirmed to NEWSWEEK that the prosecutor's office was still investigating "aggravated" money-laundering offenses. Likewise, Jacques Python, a Geneva lawyer hired by Pakistan to work with Swiss authorities on the corruption case, said he had every reason to believe that the Geneva prosecutor's investigation was still open. And Alec Reymond, a lawyer who had represented Bhutto in connection with the Swiss investigation, also says the case is still open.

Devaud said that a Pakistani government anti-corruption agency had posted on its Web site what he described as competent English-language translations of the original orders he had issued against Bhutto, Zardari and Schlegelmilch in 2003. Around the time Bhutto and Zardari returned to Pakistan from exile last year, however, the documents outlining the charges against them disappeared from the government Web site, Devaud said. But the document outlining the case against Schlegelmilch, the couple's Swiss lawyer, includes key elements of Devaud's findings against Bhutto and Zardari, and can still be read here.

Python disclosed that several weeks ago, after Zardari and his political archrival Sharif assumed control in Islamabad earlier this summer, the Pakistani government fired Python as its Geneva lawyer, effectively withdrawing its complaint.

Zardari's allies believe the Pakistani government's withdrawal from the Swiss investigation will soon lead to the termination of the probe. Pakistani officials say the amnesty order in effect undermined any continuing Swiss investigation by declaring there was no corruption on the part of Zardari and Bhutto, and therefore no corrupt payments could have been laundered in Switzerland or anywhere else.

Earlier this year, Zappelli, the prosecutor now in charge of the case, was quoted in the French-language press saying: "The future of the case depends on Pakistan, who initiated this investigation ... if it withdraws its complaint, there will no longer be a victim."

However, two other Swiss legal sources close to the case, who asked for anonymity when discussing sensitive information, said they believe the Geneva prosecutor could continue to pursue the case, given that the investigation did turn up evidence, which was not exclusively supplied by Pakistan, of violation of Swiss money-laundering laws. Ultimately, said one of the sources, Swiss prosecutors have three possible courses of action: close the case entirely, prosecute it by bringing it into a superior court or arrange the Swiss version of a plea bargain, in which money seized by Swiss authorities during the investigation probably would be confiscated or handed over to charity, but charges would be settled without any prison sentences.

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