Former Inter-Services Intelligence chief Asad Durrani on admitted in Supreme Court that he had distributed millions of rupees among Pakistani politicians in 1990 on the instructions of then army chief Gen Mirza Aslam Beg and late president Ghulam Ishaq Khan.
Durrani's testimony confirmed banker Yunus Habib's contention in the apex court that about Rs 400 million was distributed among politicians linked to the army-backed Islami Jamhoori Ittehad to influence the outcome of the 1990 general election.
The IJI was created with the backing of the security establishment to prevent the Pakistan People's Party from coming to power.
During his appearance before a three-judge bench led by Chief Justice Iftikhar Chaudhry, Durrani admitted the operation was mounted on the instructions of army chief Beg and late president Khan.
Durrrani said after he got an order from the army chief, he had put several army officers on the duty to complete the task of distributing the funds.
Durrani, who headed the ISI during 1990-92, said Beg had told him that the business community in Karachi had put together the funds to be handed over to politicians.
The funds were provided from an "election cell" in the presidency, he said. The former ISI chief said the spy agency did not have a political cell though some persons did political work.
After hearing Durrani's testimony, the bench directed him to submit a detailed statement and also sought the government's views regarding the ISI's "political cell".
In his testimony in the court on Thursday, banker Yunus Habib had said he had arranged Rs 1.48 billion on the directions of army chief Beg and late President Khan.
Out of this, Rs 340 million to Rs 400 million was distributed among politicians like Pakistan Muslim League-N leaders Shahbaz Sharif and Nawaz Sharif, Pakistan Tehrik-e-Insaf leader Javed Hashmi and military ruler Zia-ul-Haq's son Ejaz-ul-Haq, Habib said in remarks in court and to the media.
The remaining funds were invested in "fictitious bank accounts" by Military Intelligence and army officers, Habib had said.
Habib, the former head of Mehran Bank, recorded his testimony as the apex court began hearing a 16-year-old petition against the funding of politicians by the ISI.
The petition was filed by former air force chief Asghar Khan and the court recently took up the case after a gap of 12 years.
Several persons linked to the case, like former president Khan and Maj Gen Naseerullah Babar, have died.
Former army chief Beg too submitted a statement in court on Friday, in which he denied the charges levelled by Habib. Beg said Habib was trying to "scandalise" the court proceedings and was trying to malign his and late President Khan's name.
Beg was forced to apologise to the bench after the chief justice remarked that a paragraph in his statement was "contemptuous".
Beg came to the rostrum, apologised to the bench and sought permission to remove the paragraph and his request was accepted by the judges.
In the particular paragraph, Beg had said he was grateful that the Supreme Court had allowed him to complete a "hat trick" of appearances in court.
Noting that he had appeared in court twice earlier, Beg said it would not be possible for any other army chief to break his record.
The judges took offense to the paragraph and the chief justice asked Beg if he had come "to play golf" and make "a joke of the court".
The chief justice observed that there were conflicting statements from all the respondents and it was necessary to launch an inquiry into the case.
Asghar Khan's lawyer Salman Akram Raja read out a letter from his client which indicated that the then director general of Military Intelligence too was involved in the scandal.
All the persons involved in the matter had violated their oath of office and their actions should be equated with sabotaging the constitution, Raja said.
The apex court directed Attorney General Anwar-ul-Haq to look into previous investigation reports on the scandal before adjourning the case till March 14.
The money provided by banker Habib was reportedly distributed among anti-PPP politicians, political parties and journalists.
The case could cause embarrassment for the military and politicians like Nawaz Sharif, who was allegedly among the recipients of funds.