This indicates the crumbling condition of state institutions in Pakistan. In view of inaction on the part of government institutions, the apex court took up the matter as public interest litigation under Article 184(3) of the Constitution of Pakistan and reserved the judgement on February 23, 2017 after hectic hearing for nearly a month. The decision of the Supreme Court is now awaited eagerly by the litigants and the public at large. Since the charges relate to the sitting Prime Minister and his family, undoubtedly the verdict is going to have far-reaching effects on the country's polity.
The issues to be decided by the Supreme Court are:
a. Implication of non-disclosure of assets and use of offshore companies bya public office holder using the names of offspring who had no sources of their own and the trail of Qatari investment by their grandfather in the absence of any banking instrument.
b. Application of Article 62(f)(d)/63(q)(r) of Constitution and section 12(2)(c)(d)(f) and 99 of Representation of People Act, 1976 (ROPA).
c. Ramifications for NAB for not challenging the Lahore High Court decision in the Hudabiya case.
d. How to deal with inaction by Federal Board of Revenue (FBR), Federal Investigation Agency (FIA), Election Commission of Pakistan (ECP) etc.
Whatever the findings of the Supreme Court may be, the Panama case arising from the 'Panama Papers: Politicians, Criminal & Rogue Industry That Hide Their Cash', published by International Consortium of Investigative Journalists (ICIJ), has exposed mighty segments of society for plundering of national wealth, corruption and tax evasion, whether with or without the aid of money laundering (the term is loosely defined as an act of 'washing' away unaccounted or illicitly sourced money through a cobweb of complex transactions typically involving more than one jurisdiction. The objective of this is undoubtedly to hide the ownership or the destination of such funds).
On April 3, 2016, the people all over the world, including Pakistanis, were jolted by publication of the Panama Papers. Pakistan's premier announced on April 5, 2016 a judicial commission comprising a retired judge of Supreme Court for investigating the Panama Leaks. Many termed it an eyewash-their main criticism since then has been that it is for him to present documents to refute charges levelled in the Panama Papers and elsewhere to satisfy the people.
Plundering of national wealth, rent-seeking, financial corruption, tax and money laundering are daunting challenges faced by many countries of the world and Pakistan is no exception. In fact, Pakistan is one of the worst victims of money laundering and tax evasion. Lack of political will, poor enforcement capacity, corruption and inefficiency of NAB, FIA and FBR, etc, are the main factors leading to the present state of affairs in Pakistan. However, the main blame lies with the political elite who introduced obnoxious laws like Protection of Economic Reforms Act, 1992 to give legal cover to dirty money for self-aggrandisement.
The known modus operandi of money laundering scheme is:
(a) Placement stage-the objective is to move illicit funds away from source location;
(b) Layering stage-the most crucial stage as money virtually conceals ownership and mitigates audit trail by deploying funds in complex dealings (stocks, commodity futures, investments). Often the sheer volume of transactions makes it difficult to trace the origin of funds. Most common form of layering entails placing funds at the disposal of financial intermediaries in tax efficient jurisdictions as it is easier to ensure secrecy about its origin under de facto banking secrecy norms; and (c) Integration stage-In the final step, the 'cleaned' money is deployed for integration in the real economy.
In the case of four offshore companies and properties in London, admittedly owned by the sons and daughter of Premier Nawaz Sharif, all the three elements stated above are present.
Since the NAB, FBR, Financial Monitoring Unit (FMU) and Federal Investigation Agency FIA consistently showed indifference and inability to investigate, Supreme Court remained the only institution to pass order under Article 184(3) read with Article 187(1) as was done by the Indian Supreme Court in Ram Jethmalani and Other v Union of India [(2001) 8 SCC 1= 2011 PTR 1933 (S.C. Ind)].
There is no disclosure by Prime Minister of any asset abroad in his name or in the name of any of his family members in his nomination papers filed on March 31, 2013. It is pertinent to mention that in a TV interview Maryam Safdar admitted that she has been living with her father and owns no property in and outside Pakistan. Interestingly, in her wealth statement for tax year 2011, she owned agricultural land. Now her counsel in Supreme Court also admitted her ownership of two offshore companies for six months. During the said period, she filed wealth statement in Pakistan without declaring these companies and assets held in London through them.
During the course of hearing, it is not know whether any proof of investment in Gulf Steel was ever provided. Whether money was transferred from Pakistan through banking channels or hawala, is still a mystery. Since the loan was taken from erstwhile BCCI or some other banks, the ultimate fate of proceeds from sale of the mill could not be explained. If money was given to the royal family of Qatar, where is the trail? In his speech, before the National Assembly on May 16, 2016, the Prime Minister, while explaining the money trail for purchase of London flats claimed that his late father, Mian Muhammad Sharif, established a company in the name of Gulf Steels in Dubai in 1972 and sold it in 1980 for US $9 million. He further revealed that the late Mian Sharif also set up a steel unit in Jeddah, after the family was sent abroad on December 10, 2000 by Pervez Musharraf, who confiscated all their assets. He said that capital for this came through the sale of the Dubai factory. It was said to be a confession that sale proceeds were lying abroad from 1980 to the day of investment in Saudi Arabia in violation of the Foreign Exchange Act of 1947. Premier went on to claim: "We sold this factory (Jeddah Steel Mill) for US $17 million in June 2005 and all record for the Jeddah and Dubai Steel Mills is available". Later in the Supreme Court, he detracted from this statement. This is a serious matter indeed.
It is also pertinent to note that under the Wealth Tax Act, 1963 [repealed in 2003] the late Mian Muhammad Sharif did not disclose foreign assets (Gulf Steel), shares (from 1972 to 1979) and then cash of US$ 9 million? It is also not revealed who were the other shareholders in Gulf Steel, Dubai? Hassan and Hussain in their interviews claimed that investment in Azizia Steel Mills came from Saudi banks and friends. However, Nawaz Sharif said it came from sale of Gulf Steel alone. Who has been lying?
Nawaz Sharif, after returning to Pakistan in late 2007, filed wealth statements for tax year 2011 and 2012 on March 21 and 22, 2013 respectively. He did not file wealth statements from 2007 to 2010 to justify increase in assets vis-à-vis wealth statement filed as on 30.06.2007. The question is why were these statements not filed in time? It is strange that wealth statements were filed by Nawaz Sharif just a few days before (on 22-03-2013) filing the nomination papers (31-03-2013). Why was this lapse/default ignored both by FBR and ECP? Had it been a case of ordinary citizen, things could have been different (penal actions under the law alone can be suggested) but for a person who was twice Prime Minister of Pakistan and aspiring in 2013 for this position for the third time, it was simply unbelievable.
Nawaz says he has no financial connection with offspring whereas frequent exchange of gifts and loans between family members confirms otherwise. In tax year 2010, Maryam Safdar had no agricultural land. Subsequently, she became owner of two agricultural lands in tax year 2011 and 2012 for which funds were provided by her father through gifts. It is obvious that her agricultural income is thus nothing but income of Nawaz Sharif as he financed it for his dependent daughter. Had she not been dependent, as claimed by Nawaz Sharif, she would have bought the income-yielding agricultural land either with her own resources or that of her spouse. This clearly establishes that claim of respondent Nawaz Sharif is incorrect that she is not dependent on him.
Section 116 of the Income Tax Ordinance, 2001 provides three categories of persons in whose names any asset is held has to be declared by a taxpayer, namely, spouse, minor children and any other dependent. Maryam Safdar qualified as 'any other dependent' as she received gifts from her father and also lives with him. It is evident from the fact that in the wealth statement filed for tax year 2011, Mian Muhammad Nawaz Sharif showed agricultural land worth Rs 24,851,526 in the name of Maryam in column 12 of wealth statement that is confined to spouse, minor children or other dependents! It is an admitted fact (Panama Papers and interview of Hussain Nawaz) that Maryam has been sole owner of two BVI companies and also co-owner of one BVI company. She signed loan papers to secure funds against London properties. Her husband Mohammad Safdar never disclosed assets of his wife (Maryam Safdar) in his nomination papers.
Maryam Safdar filed her income tax return under section 114 of Income Tax Ordinance, 2001 for tax years 2010, 2011 and 2012 at NTN.1308504-2 as per nomination papers filed by her spouse in 2013. In wealth statement as on 30.06.2011, Respondent Nawaz Sharif declared land with the description "land in the name of daughter Maryam Safdar" at Rs 24,851,526. In the very next year that is wealth statement as on 30.06.2012, Respondent No.1 did not declare this property. According to concise statement and as per letter of A.F. Ferguson attached by Respondent No.1, he sold out this property to his daughter Respondent No.6 Mrs. Maryam Safdar. In wealth statement of Respondent No.6 as on 30.06.2012 a new agricultural property with the description "140 kanals 03 marla land at Mouza Sultankey" appears for value of Rs 41,996,191. This cannot be the same property because had it been statedly sold for the same consideration i.e. Rs 24,851,526it should have been declared by Respondent No.6 and if the said property was sold at premium, the resultant gain of Rs 17,144,665 (41,996,191-24,851,526) should have been declared. Isn't it a clear contradiction? For all her properties and expenses she in fact, mainly depends on her father and even for agricultural income showed by her, investment/gift was made by father.
In her wealth statement as on 30.06.2011, new agricultural land valuing Rs 32,058,930 has appeared whereas in reconciliation statement gift from father Mian Muhammad Nawaz Sharif has been shown at Rs 31,700,000. Similarly, another agricultural property valuing Rs 41,996,191, as discussed in above para, has appeared and another gift from Respondent No.1 has been shown at Rs 51,624,000 proving her total dependence on her father and claim of Respondent No.1 that she is not dependent on him is factually wrong. It is claimed that even for acquiring the asset (agricultural land) she had to take gifts from father. In other words, own money of Nawaz Sharif is being utilized to show assets in the name of daughter who having no resources of her own is fully dependent on him.
In tax year 2010, Maryam Safdar showed loan to father at Rs 2,200,000 and to grandmother (Mrs. Shamim Akhtar) at Rs 1,000,000 and to Chaudhry Sugar Mills at Rs 42,304,310). Where does she give these loans from and meet personal expenses is unknown.
(To be continued) (The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences)