‘Panama leaks a wake-up call’

Karachi: The Panama leaks are a wake-up call for our government and our legislature to frame iron-jacketed laws to prevent the transfer of funds to offshore tax havens.

This advice came from Justice (Retd) Shaiq Usmani as he addressed members of the Pakistan Institute of International Affairs (PIIA), the media and the intellectual elite of town at the institute on Thursday evening.

He was of the view that the people would just have to forget the money that had leaked from Pakistan into the offshore accounts as there were no laws to prevent such a thing happening. 

He said getting the money back would be impossible as the secrecy laws of those havens were so strict that details of the funds and their owners would never be revealed by them and no amount of sit-ins or resolve by the politicians could possibly start off an investigation. 

He said investigating those accounts would be like hitting a blind alley. Justice Usmani hinted that politicians were just using these leaks as a means of stealing a quick one over each other and just as a political weapon. “People forget that offshore companies had existed since the beginning of the 1970s.”

Seventy-five percent of the world shipping was registered in those tax havens, he said, adding that a vast majority of ships sailing the seas were registered in the tax havens of Panama and Liberia.

Tracing the history of the problem, he said that in the post-World War II era, money assumed lots of importance and as such investment was called for; hence the inflated importance of money.

Among the tax havens he named was Jersey and Channel Islands in the British Isles, Grand Cayman in the Bahamas in the Caribbean, Panama and Liberia. In the 1980s, he said, there was lots of illicit money finding its way into Panama.

“The trouble begins,” Justice Usmani said, “when people who are in positions of influence, pelf and power start stealing the country’s money. The people of Pakistan suffer. People have been skipping the treasury and taking the money out of the country.”

Sindh’s former housing and local bodies minister and noted journalist, Agha Masud, was bitter about the social conditions that had existed from the very beginning. While he did not defend the defaulters, he blamed it all on the social conditions. He said 204 people from Karachi had invested in Panamanian offshore companies while the total number from all over Pakistan was 300. He cited the case of a person whose nephew was kidnapped and he had to pay a ransom of Rs20 million to the kidnappers.  

“If the taxpayer is a large one and through sheer honesty pays what is legally due, the tax authorities come over to him the following year and demand twice the amount. Industrialist have to pay large amounts to political parties.”

He said there was no proper legislation, no implementation of laws and it was for this reason that people were forced to put their money away in foreign safe havens. There was no social security and safety of person, he said. “It is for this reason that between 2008 and 2013 there was such a flight of capital to countries like Bangladesh and Malaysia.”

Muhammad Raza, an associate of Syed Shabbar Zaidi, senior partner of AF Ferguson and Company, while substituting for Zaidi who had to go on an urgent trip out of the country on Wednesday night, suggested that some regulatory task force be formed to prevent such happenings in the future, a firm policy be formulated for the future to prevent money laundering, and amendments be brought about in money-laundering laws.

Political scientist and former Karachi University professor Dr Tanvir Khalid termed the Panama leaks as most sensational, and said the disclosure of 11.5 million papers was indicative of the fact that the rich and powerful could hide their nefarious activities by indulging in this kind of moral and ethical impropriety. The function was presided over by Dr Amjad Saqib, honorary secretary of the PIIA, in the absence of Dr Masuma Hassan, chairperson of the institute.