While concluding his arguments, the counsel for Chairman Tehreek-e-Insaf (PTI), Imran Khan, alleged that Prime Minister Nawaz Sharif "has not been honest". He said that Prime Minister did not mention the Qatari connection in his two addresses to the nation and speech on the floor of the Parliament on May 16, 2016. He questioned that even if the Qatari connection was there, how an amount as huge as $8 million was paid in London to Al-Towfeek Bank and millions were given to Hussain Nawaz and Hassan Nawaz without involving a banking channel. PTI is seeking disqualification of incumbent Prime Minister.
In the history of Pakistan, the day of April 26, 2012 was controversial (memorable for many but very sad for PPP) as Supreme Court disqualified an elected Prime Minister after he was convicted in contempt proceedings till the rising of court (thirty two seconds sentence). Immediately after the short order, Nawaz Sharif in person made a demand for stepping down of Yousuf Raza Gilani which infuriated the leaders of PPP. They asked Nawaz Sharif et al to wait till detailed judgement and notification of disqualification by Election Commission of Pakistan. But he insisted for immediate resignation of elected Premier. Now he is faced with the same demand from PTI in the wake of the Panama Leaks.
In a fierce political crossfire in 2012, the then interior minister, Rehman Malik, opened direct artillery attack on top leadership of Pakistan Muslim League (Nawaz) [PML-N] by levelling allegations against the Sharifs of embezzling billions of rupees and their unlawful transmission abroad. As political heat started intensifying on a daily basis, the nation witnessed more and more evidence directly from the horse's mouth regarding assets of ruling elite worth billions of dollars lying abroad. This was a good beginning in our polity as political leaders of PPP and PML-N started exposing each other's corruption. Had it continued, the people could have become wiser to reject in 2013 elections all those self-acclaimed political giants "who ostensibly pledge to serve (sic) the nation" but shamelessly keep their financial interests outside Pakistan. But PPP under Zardari and PML-N under Nawaz followed what they called the "spirit of Charter of Democracy" for providing a cover to each other's corruption. In 2017, both the parties are again at draggers drawn, though Zardari is still not talking about corruption of the Sharifs knowing it can easily be boomeranged!
In the wake of judgement of disqualification against Yousuf Raza Gilani, with every passing day, courtesy Rehman Malik and Sharifs' ardent defenders, the people were getting to know about the huge illegal and untaxed money belonging to "leaders" of two major political parties. This money power has been a lethal weapon in the hands of "political mafias" that control the State apparatus. If this lethal weapon remains with them, in the next elections, as in the past, they will spend billions to ensure continuity of their control over electoral constituencies.
Rehman Malik, in a press conference on April 28, 2012, while alleging that "Nawaz Sharif and Shahbaz Sharif were involved in $32 million money laundering and bank default of Rs 6 million billion," went on to say, "I want to ask you only one question: from where did you get $32 million"? In a strange and disgusting manner, the then Interior Minister claimed that whatever he was presenting was his "personal collection" of proofs against the Sharif family. This was a most shocking revelation where a responsible minister in Pakistan talked about serious alleged crimes of corruption and money laundering. He was duty-bound to take action against all acts of corruption and money laundering, but for him selective attack on opposition was the only priority. On the other hand, PML(N) while refuting all these allegations asked for return of $60 million allegedly obtained by President Zardari after the Swiss authority unfroze accounts on receiving a letter from the Attorney General-Supreme Court wanted its withdrawal while the government was of the view that it was not possible till the time that Zardari was President of Pakistan. After coming into power in 2013, Nawaz and Shahbaz conveniently forgot their speeches and promises of retrieving the looted money!
The first release of the Panama Papers by International Consortium of Investigative Journalists (ICIJ) on April 3, 2016 and subsequent many releases, proved a blessing for Pakistanis. The issue of corruption rekindled with definite information. Earlier, there were reports in media of corruption of political leaders, bureaucrats, businessmen and generals but without documentation. For the first time, reliable documents surfaced from leaked or hacked data of a law firm (Mossack Fonseca founded in 1977 in Panama). These papers could not be denied by the super rich as they were seeking help of the firm to hide their money and/or avoid taxes!
The biggest defenders and protectors of the prevalent anti-people, pro-rich system are not only politicians and bureaucrats who thrive on rent-seeking but also those who get enormous kickbacks in arms deals as proved in the plea bargain case of former Naval Chief Admiral Mansurul Haq. Even the Supreme Court under Iftikhar Muhammad Chaudhry did not entertain on technical grounds a public-interest litigation seeking direction for the government to approach Swiss authorities for repatriation of looted money lying in their banks.
For ruling elite-indomitable militro-judicial-civil complex, corrupt politicians and unscrupulous businessmen-it is necessary to maintain status quo so that no questions are raised about their vast untaxed, undeclared funds/assets lying in and outside Pakistan. It is, thus, not surprising that successive governments in Pakistan-civil and military alike-have demonstrated criminal apathy and negligence in protecting dirty money, promoting tax evasion and flight of capital from Pakistan. The amnesty given to cat-fat investors by President Zardari through Presidential Ordinance, Finance (Amendment) Ordinance 2012, just a day before the session of National Assembly, proved the point beyond any iota of doubt. Nawaz Sharif, during his third stint as Prime Minister has already extended three tax amnesties to tax evaders.
The government of Mian Nawaz Sharif legalised untaxed dirty money through dollarization of economy by enacting the so-called Protection of Economic Reforms Act, 1992. This law still gives a free hand to tax cheats and money launderers to whiten their ill-gotten billions. The companies of the Sharif family took huge benefit of this obnoxious law as judgement [1998 PTD 34] in the case Hudabiya Engineers Mills (Private) Ltd proves. Unfortunately, this law has never been scrutinised from this perspective by anyone else, except us (see details in our book, Pakistan: Drug-trap to Debt-trap). The Supreme Court has also never examined this law from the angle of being violative of fundamental rights of the citizens. All public officeholders who have taken advantage of this law to avoid tax should have been disqualified for open admission of cheating the State, but not a single case has been filed till today. It shows how the rulers in this country engineer laws for self-aggrandisement. The only losers are the poor and helpless of this Land of Pure, who are burdened with exorbitant indirect taxes and yet get nothing in return. The rich and mighty enjoy all luxuries of life at the expense of taxpayers whereas nearly 60 million are compelled to live below the poverty line.
In these columns since 1999, we have been persistently asking for a crackdown on underground economy, money laundering and revenue leakages. We intentionally never cited any known or hidden assets of Zardari or the Sharifs, quoted by various writers, as this is the job of the concerned authorities to obtain authentic information and evidence. Those at the helm of affairs in National Accountability Bureau (NAB), Federal Investigation agency (FIA) and Federal Board of Revenue (FBR) should be taken to task for not investigating financial crimes and bringing on record all hidden assets. They have never bothered to employ modern intelligence gadgets, investigation techniques and other tools to detect tax evasion and laundering of dirty money. The persons working in these agencies should be trained and must be asked to read a highly informative book, The Infiltrator, by Robert Mazur who, as undercover agent in Internal Revenue Service (IRS), the US Customs and Drug Enforcement Agency (DEA) successfully led one of the biggest money-laundering prosecutions in the US history. He not only demonstrated courage and dedication as undercover agent but also valiantly resisted political pressures and bureaucratic hurdles.
It is also widely reported in the press [PTI's Tareen finally admits owning offshore company in children's name, The News, April 30, 2016, 'PTI lawmakers have the highest number of offshore companies', Dawn, May 14, 2016, Imran Khan admits forming offshore company to 'evade British taxes, Dawn, May 14, 2016, PTI leader didn't disclose offshore company, SC told, Dawn, November 29, 2016] that some leaders of PTI have interest in properties abroad held through off-shore companies. Although they claim that these stand declared in tax returns but the critical issue remains of unchecked outflows from Pakistan that have a negative impact on capital formation and investment inside the country. As reported by us earlier, investment of billions of rupees in real estate have been made in Dubai alone by Pakistanis during the last many years while our tax authorities, FIA and financial investigation units have remained silent spectators. The people have right to make investment abroad but after satisfying that funds are legitimate and declared in tax returns.
In the wake of disclosures of money stashed by Pakistanis in Swiss banks, both the governments of PPP and PML(N) intentionally avoided renegotiations with the Swiss government regarding existing tax treaty for exchange of information (see detail in With help from the Swiss, Dawn, October 11, 2010, Our Swiss dilemma, The News, August 17, 2014, Pakistani cash in Swiss banks pulled out, The Express Tribune, February 22, 2017). Though knowing that majority of the offshore companies are registered in British Virgin Islands, yet no government has ever taken any initiative to sign a Tax Information Exchange Agreement (TIEA) with British Virgin Islands that India signed way back in 2011.
Till today, no serious effort is made for retrieving looted wealth invoking Swiss law (Foreign Illicit Assets Act (FIAA) of 18 December 2015) or tax losses caused by non-reporting of income by Pakistanis having off-shore accounts. On the contrary, the government is considering extending amnesty to them! Even the Opposition has not tabled any Bill in the Parliament to show its interest and concern in the matter proving emphatically that an unholy, anti-people alliance lurks among all forces of loot on this issue.
The successive governments in Pakistan, unfortunately, showed a policy of appeasement towards tax cheats and looters of national wealth. Even private efforts to invoke extraordinary jurisdiction of Supreme Court and high courts to retrieve looted wealth and untaxed money have not been fruitful. The Supreme Court in 2012 and 2013 declared the petitions filed by some individuals as "non-maintainable" and same was the fate of many petitions in the Lahore High Court. On the contrary, the Indian Supreme Court, in its historic decision of July 4, 2011 in the case of Ram Jethmalani and Other v Union of India [(2011) 8 SCC 1=2011 PTR 1933 (S.C. Ind)], ordered to form a 'Special Investigation Team' (SIT) to supervise the government-led investigations into black money of Indians lying abroad. The Congress government did not implement it and went into review. However, the government of Narendra Modi after coming into power on May 26, 2014 immediately constituted SIT and started negotiations with Switzerland. One hope the Supreme Court will take note of the Ram Jethmalani and Other v Union of India case.
(The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences)
Copyright Business Recorder, 2017