KARACHI: When former Attorney General Makhdoom Ali Khan resigned from Gen Musharraf’s cabinet in the wake of the Supreme Court’s reinstatement in July 2007 of ‘suspended’ Chief Justice Iftikhar Chaudhry, the Americans were not exactly regretful at Mr Khan’s departure, according to a ‘confidential’ US diplomatic cable accessed by Dawn through WikiLeaks. However, their reasons for being happy to see the back of him had nothing to do with the disastrous handling of the CJ issue by the Musharraf government’s legal team.

In a cable dated August 6, 2007, then US Ambassador Anne W. Patterson wrote that despite her reservations over Mr Khan’s “controversial” replacement, “We will not be sorry to see Khan go, as he blocked further negotiations on the bilateral investment treaty over concerns about investor-state arbitration and other issues.”

Ms Patterson had been expressing her views on the resignation of Mr Khan and the appointment of Malik Qayyum as the new attorney general by Gen Musharraf. “Both the incoming and outgoing attorneys general can be accused of bungling the case of what admittedly was an ill-conceived idea to suspend the Chief Justice,” wrote the former envoy. But she was very specific about the reasons for American displeasure with Makhdoom Ali Khan.

Dawn contacted Makhdoom Ali Khan to get the context to Ms Patterson’s remarks. Mr Khan told this scribe that prior to the visit of US President George Bush in 2006, the US officials had been pressing Pakistan to sign the bilateral investment treaty (BIT). “They were insisting that the signing of this treaty was a must,” says Mr Khan. The initial pressure, according to Mr. Khan, came from the presidency itself. “Pakistani officials, including myself, had been in negotiations with the US officials to discuss the treaty,” he said, adding that it was a “sensitive matter” and the relevant documents had to be “vetted in the light of international laws and conventions.”

He explained that Pakistan is a signatory to the International Centre for Settlement of Investment Disputes (ICSID), a subsidiary of the World Bank, and has ratified its conventions. According to ICSID, if Pakistan signs an investment treaty and any of the treaty’s clauses is violated, the matter has to be referred for arbitration under the terms of the treaty. “We wanted to protect our side and I had told the Americans that we are ready to negotiate, but I refused to sign on the dotted line,” he said. According to him, there had been many clauses in the treaty which were against the interests of Pakistan.

Mr Khan said that during the meetings he had made it clear that US officials should negotiate with Pakistan keeping in mind the distinction between the protection to foreign investors and the authority of the state to regulate the investor. “They wanted me to go abroad and discuss the issue with them,” he revealed and added that he refused as he thought it was a way of bribing him. “I had told the prime minister and the commerce minister about it,” Mr. Khan said. He said that there had been many video-conferencing negotiations, but all failed.

US officials, according to Mr. Khan, wanted to include a number of problematic clauses in the proposed BIT. They included, among others, the option of arbitration even after a decision of the Supreme Court, as happened in the SGS Cotecna case. In the notorious SGS Cotecna case, even after winning the case in court, Pakistan was forced to accept adjudication of a tribunal in Switzerland under the agreement signed with the Swiss firm. Further, the Americans wanted Pakistan to give a 90 days advance notice in case any law relating to foreign investors were introduced in the country. “This was against the constitution, which empowers the president to issue any ordinance at his discretion,” he said.

The Americans also wanted to ensure against what they termed “denial of justice.” In their view, a delay in any judgement could have amounted to denial of justice. “Now, we have our own system of judicial process,” says Mr Khan, “so I asked them to define denial of justice, which they were unwilling to do. I had also told the Americans that Pakistan was ready to provide as much protection to investors as the Americans provide, but told them please don’t ask from us more than that.”

In particular, Mr Khan said, he wanted to guard Pakistan’s interests with regards to foreign companies. “We were ready to provide protection, keeping our interests in view, to genuine investors but not to shell companies, which have only an office registered in the US and claim to be American.” Mr Khan also claims that he had told the US that, if it wanted such blanket protection for its investors, it should sign a free trade agreement with Pakistan. “To this they did not agree,” Mr Khan says.

In the cable Ms Patterson does note that “by offering to resign, Pakistan’s Attorney General became the only cabinet member to take the blame for the chief justice debacle.” She also wrote that “After the Supreme Court reinstated Chief Justice Iftikhar Chaudhry in July, there have been repeated calls for resignations, including those of Prime Minister Shaukat Aziz, Law Minister Wasi Zafar and Attorney General Khan. He is the only one to have done so.”

About Mr Khan replacement’s who was appointed on August 1, 2007, Ms Patterson pointed out that Malik Qayyum “had a checkered history and is already proving controversial. He was the presiding judge in the 1999 conviction of Benazir Bhutto, represented Shahbaz Sharif in his 2003 petition to return without facing deportation and most recently was the most vocal member of Musharraf’s defence team on the Chief Justice case.” She added in a comment that “Qayyum seems a weak choice to become attorney general at a particularly critical time for executive-judicial relations in Pakistan.”

Cable referenced: WikiLeaks #117904