Is the curtain coming off Pakistan Tehreek-e-ISI?

Brig Ijaz Shah on stage with Imran Khan

PTI has faced accusations of being supported by ISI since long. Imran Khan has always denied these allegations, even offering to quit politics forever if anyone can provide proof that PTI has taken money from the spy agency. Suspicions persist, however, and questions are likely to continue after the appearance of a certain agency figure on stage with Imran Khan.

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Adnan Masih and the sin of Iblis

Christians praying in Pakistan

Few blasphemy cases make headlines. For every Rimsha or Asia Bibi, there are countless accused whose stories are ignored by media. One recent case, however, should be front page headlines to serve as a warning about how out of control the blasphemy laws have become and how they are being abused not to defend any religion, but to promote certain political agendas.

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Pakistani Taliban suppress campaigns with attacks on secular parties

Following is an article published in Foreign Policy Magazine by Jennifer Rowland that new Pakistan team though is worthy of a replug.

Taliban play politics

In Pakistan’s northwest, the secular Awami National Party is coming under sustained fire from the Taliban, with deadly attacks and threats forcing ANP candidates to stage small, tense meetings rather than the large-scale rallies that usually define Pakistani politics (NYT, AP). Even in the southern port city of Karachi, some 40 ANP activists have been killed over the past six months, effectively stifling the party’s campaign there. Asad Munir, a retired Army brigadier who worked for Pakistan’s intelligence agency, says, “The most effective campaign is being run by he Taliban. They are holding the state of Pakistan hostage, and doing their activities as they want.” Bonus read: Daud Khattak, “Pakistani Taliban’s deadly game of politics” (AfPak).

An antiterrorism court in Islamabad on Saturday ordered former president Pervez Musharraf held for another two weeks until May 4, when he will face charges over his detention of the country’s top judges while he was in power in 2007 (NYT, NYT, Post, Reuters, AFP). Pakistani officials said Musharraf would be placed under house arrest at his fortified compound outside the capital, declaring it a “sub-jail,” and no visitors will be allowed. The country’s caretaker government said Monday that it will not file treason charges against the former president, but will leave the decision to do so up to the government elected in national election on May 11 (AP, ET).

Prime Minister hopeful Imran Khan told thousands of supporters at a rally in Dera Ismail Khan on Sunday that he would order a pullout of Pakistani troops from North Waziristan and, “The money that is spent on the war in the tribal areas will be spent on the welfare of the people” (ET). Pakistan “will not be a slave to anyone,” he told the cheering crowd. Pakistan’s Ahmadis say they will not participate in the upcoming elections because they are still forced to identify themselves as non-Muslims on their ballots (ET). The campaign of radical Sunni Muslim cleric Maulana Ahmed Ludhianvi is making Pakistan’s Shi’a Muslims uneasy; they accuse Ludhianvi of rhetoric that has fueled sectarian attacks on Shi’as for decades, and fear that if he wins a seat in parliament he will be able to incite even more of these deadly attacks (Reuters). Ludhianvi’s main opponent in the district of Jhang, in the heart of Punjab Province, has been banned from the race.

The 7.8 magnitude earthquake that struck Iran last week also almost entirely demolished the small Pakistani town of Mashkel near the Iranian border, and aid has been slow to reach the isolated victims (AP, BBC). Four Pakistani soldiers were killed and six injured in a roadside bombing in North Waziristan on Sunday (The News, ET/AFP). Militants in Balochistan launched grenade attacks on the homes of an Election Commission of Pakistan official (injuring his teenaged daughter), and the president of the Baloch National Party on Sunday (ET). And gunmen killed two workers of the Awami National Party in the Pishin district of Balochistan.

Worrying stats

Taliban attacks have increased 47% in the first quarter of 2013 from their level during the same period last year, from1,581 to 2,331, according to the well-respected, independent monitoring group, the Afghanistan NGO Safety Office (NYT). The U.S. military and the Afghan Ministry of Defense have so far refused to release their statistics on attacks this year, but the sharp increase in attacks has been widely documented in the media and by groups like the Afghanistan NGO Safety Office, raising concerns that the Taliban is launching a concerted attempt to test the Afghan security forces as they take the lead on security from NATO troops in the country.

Insurgents killed six police officers at a checkpoint in the eastern province of Ghazni on Sunday, while a suicide bomber killed three civilians at a market in neighboring Paktika Province (AP). And Taliban militants cut off hands and feet of two men they accused of helping escort NATO convoys. Members of the Taliban in eastern Logar Province said they had captured all eight Turks and one Russian who were on board a NATO-contracted helicopter that was forced to make an emergency landing in bad weather late on Sunday (Reuters, Pajhwok).

NATO military officials say that Taliban militants were able to blow up a half-dozen U.S. Marine fighter jets and kill two Marines in an attack on Camp Bastion in Helmand Province last fall because the base commanders had scaled back patrols of the perimeter and left watchtowers unmanned (Post).

The pot industry in Pakistan

Politicians are not the only ones suffering at hands of the Taliban in Pakistan’s northwest. The country’s hashish producers in the fertile Tirah Valley report that the Taliban have largely taken control of the area, and with it they have obtained control of the marijuana crops and the lucrative hashish trade (Post).

— Jennifer Rowland

Insight: Pakistan’s booming market no black and white matter

Following is an interesting piece published in Reuters By Katharine Houreld that talks about Pakistan’s booming market.
Jahangir Siddiqui, Chairman of JS Bank Ltd, speaks during an interview with Reuters at his office in Karachi January 30, 2013. REUTERS-Akhtar Soomro
Ashraf Tiwana, a British-educated Pakistani lawyer, leaves the Supreme Court building in Islamabad February 28, 2013. REUTERS-Mian Khursheed
Aqeel Karim Dhedhi, Chairman of AKD Securities Ltd, speaks during an interview with Reuters at his office in Karachi January 31, 2013. REUTERS-Akhtar Soomro


Pakistan’s chaotic financial heart is home to 18 million people, Taliban bombers, contract killers – and one of the world’s most successful stock markets.

With 49 percent returns in 2012, the Karachi Stock Exchange (KSE) was one of the five best performing markets in the world. Now it is seeking a foreign partner to buy a stake and take over management of a market that has risen three-fold over the past four years.

At least some of that performance came on the back of a government amnesty that allowed people holding undeclared assets or “black money” to invest it freely in the market. And the relatively illiquid market has also been vulnerable to manipulation.

But government officials say the market’s success highlights the economic potential of a country better known for spiraling sectarian violence, the war against al Qaeda and the Taliban, crippling power cuts and entrenched corruption.

The market’s benchmark index continues to soar to record highs — up 10.34 percent year to date — fueled in part by expectations May elections will mark Pakistan’s first transfer of power from one democratic government to another. Previous civilian governments were all dismissed by Pakistan’s ultimate power: the military.

Pakistan has a lot to offer investors and this is our chance to show it,” said Nadeem Naqvi, the KSE chairman. He plans to embark on a series of roadshows for potential foreign partners that will take him to London, Frankfurt and Hong Kong in the coming months.

Many of the companies listed on the KSE offer double-digit returns, low stock prices and resilient business models in this frontier market with a population of 180 million. The index still has an attractive price/earnings ratio of $8.50 despite the soaring returns of the past few years.

Pakistan now has a 4 percent weighting in the MSCI Frontiers Market Index and has become somewhat of a discovery for foreign investors chasing new markets and yields.


But the KSE’s spectacular rise last year can at least be partly attributed to another factor entirely – the cleansing of “black money”.

The market took off last year just as a government decree was finalized allowing people to buy stocks with no questions asked about the source of the cash. Average daily volume more than doubled last year to 173 million shares from 79 million in 2011.

Authorities say the measure will bring undocumented funds into the tax net in a country where few pay taxes. But some critics decried it as a gift to corrupt officials and criminals seeking to launder dirty cash.

“Politics and dirty money go hand in hand in Pakistan,” said Dr. Ikramul Haq, a Supreme Court lawyer and a professor on tax law.

“People want to be outside the regulatory framework and outside the tax net.”

The black money amnesty also drew attention to the seamier side of the Karachi stock market. Interviews with regulators, brokers, market officials and analysts showed insider trading and other manipulations are routine. Regulators have been largely ineffectual in controlling the shady practices.

The Securities and Exchange Commission of Pakistan (SECP) said it found 23 violations of securities laws that merited fines in fiscal year 2011-12 (April/March). The market regulator sent warning letters in another 19 cases, it said in its annual report. (

That’s a drop in the bucket, says Ashraf Tiwana, dismissed as head of SECP’s legal department after years of clashes with his bosses over fraud in the market. He has petitioned the Supreme Court to replace the SECP chairman and commissioners.

“There’s a lot of fraud, a lot of market manipulation … but not enough action has been taken, especially not enough criminal action has been taken,” Tiwana told Reuters. “They’re just passing small fines and giving out warning letters.”

Regulators are too close to the market, Tiwana said. The head of the stock exchange is a former broker and the two top members of the SECP are former employees of Aqeel Karim Dhedhi, founder of one of the country’s biggest brokerage houses.


Nicknamed “Big Dhedhi” for his ability to move markets, Aqeel Karim Dhedhi heads one of Pakistan’s largest domestic conglomerates, the AKD Group.

Lately, the well-known philanthropist and leading member of Pakistan’s business establishment has been trying to fend off arrest over allegations of insider trading.

An SECP investigator accused traders, including Dhedhi’s brokerage, of buying shares in a state-run Sui Southern Gas Co before an official announcement allowing the company to raise its prices. In the weeks before Sui Southern’s announcement, the stock price jumped from 13.5 rupees to 20 rupees, its biggest hike in five years.

The National Accountability Bureau, the state-run anti-corruption agency, called it a case of insider trading. But the SECP said its own confidential investigation showed no evidence of fraud. The SECP whistleblower in the case has been suspended from her job for disclosing “confidential information”.

Dhedhi strongly denied any wrongdoing and said he purchased his gas stocks years before the announcement.

“There is nothing there. The (SECP) report totally cleared us,” said Dhedhi, a burly man wearing a traditional long cotton shirt and baggy pants. “I’m proud to say that in more than 40 years of operating, we’ve never paid a penny in fines.”

Dhedhi says he often offers advice to government officials on financial policy. His business empire includes two equity funds that were among the best performing in Asia in 2012.

“The SECP has really started listening to the market,” Dhedhi said, a suited executive acting as translator.


Dhedhi remains under investigation. But even if regulators were to find him guilty of insider trading, past practice shows he would likely get a slap on the wrist. The SECP’s fines are almost always a fraction above the amount of money made in the stock manipulation, and sometimes even less.

In December, a broker was fined half the amount he made from trades that manipulated the share price of tobacco giant Philip Morris. In February, the SECP fined Pakistani brokerage BMA Capital $500,000 – after it made $460,000 by misleading a foreign client. BMA Capital has appealed.

Imtiaz Haider, the SECP commissioner in charge of market regulation, acknowledged fines were largely symbolic. If they were too high, he said, brokers might not be willing to pay them. Contesting fines in the congested court system could take years.

“The purpose is more to name and shame,” Haider said in an interview. “It causes them reputational damage.”

Like KSE Chairman Nadeem Naqvi, Haider is a former employee of Dhedhi’s. Both men denied any conflict of interest.

“It’s important to have people in charge who know the way markets work,” Haider said. “I’ve had lots of other jobs than just working for Dhedhi.”

The SECP can revoke licenses, impose hefty fines, or open criminal cases against offenders. But it almost never does. It has launched only 10 criminal cases in the past five years – all still held up in the judicial backlog. It has issued dozens of small fines.

“We have great laws and regulations but they are not properly enforced,” said Khalid Mirza, a former SECP chief. “The SECP is just catching the small fish as far as I can see.”

Naqvi, the KSE head, acknowledged his priority has been to boost the market, not to crack down on it.

“My management style isn’t confrontational because I want to build confidence in the market,” he said.

Separating the commercial and the regulatory functions of the market is one of the main reasons the KSE is looking for a foreign partner. It has appointed Deutsche Bank as its advisor on its quest to demutualise – a process that will separate those two functions.

“Demutualization is another step on the road to reform,” Naqvi said. “Right now we have a fairly robust system. But I’m not saying its foolproof.”


The Karachi market’s small size and lack of liquidity make it vulnerable to manipulation. Market capitalization is only $41.5 billion – the Bombay stock market’s capitalization is more than 10 times higher at $578 billion.

Only a quarter of the shares are freely floated – about 30 percent of that is held by foreign funds and investors, including Franklin Templeton, Invesco Ltd, Goldman Sachs Asset Management and Mackenzie Financial Corporation.

Since only 60 of KSE’s 600 listed companies trade regularly, small trades can rapidly make a big difference in a company’s share price.

Boosting volumes on the exchange was one of the intentions behind Pakistani President Asif Ali Zardari’s decree last April turning black money into white.

It said no questions could be asked by the Federal Board of Revenue about the source of funds invested in stocks till July 2014. The investments become legally legitimate.

The pool of such funds is potentially huge. A report by the United Nations Office on Drug and Crime projected the size of Pakistan’s informal or “black” economy at $34 billion in 2010-11, one-fifth of the formal economy.

The Paris-based Financial Action Task Force, which monitors money laundering, said the decree did not contravene Pakistan’s existing anti-money laundering legislation. But anecdotal evidence suggests controls are lax.

In one case shown to Reuters by a lawyer, a man invested $10 million buying stocks in a single transaction. His address: a Karachi slum notorious for Taliban infiltration.

(Additional reporting by Abhishek Vishnoi in Mumbai, India; Editing by Bill Tarrant)