The fact that the furore and hullabaloo over the Panama leaks by the political opponents of the government targets only the prime minister and his family, notwithstanding the fact that the leaks mention another 200 Pakistanis who have offshore commercial interests, is quite understandable in the backdrop of the prevailing political scenario in the country.
It is the track record of the political parties in the opposition not to let go of any opportunity to take digs at the ruling party to serve their narrow political objectives, rather than making genuine efforts to fix the maladies afflicting the system of governance, from which all of them have also benefited at the cost of the masses.
The leaders of the opposition parties represented in parliament rejected the government’s initiative to form a judicial commission and invariably tried to rub in the notion that the revelations made by the Panama leaks contained incriminating evidence against the Sharif family. That is certainly tantamount to declaring a guilty verdict without looking into the facts. It is a deliberate attempt to mislead the public, laced with political overtones.
Where in the leaks has it been claimed that those whose names have appeared in the report, indicating their offshore commercial interests, were necessarily involved in corrupt practices or that the money that they have invested in offshore companies was black money accumulated through illegal means? The Panama leaks, like a number of other such leaks, simply document the names of the firms and individuals who have invested in the offshore companies.
It is said that money goes where it is safe and more profitable. The practice of individuals and business concerns making investments in foreign lands or keeping their money in the financial institutions of those countries is not a new phenomenon. Among the reasons that prompt individuals and big businesses to form and own offshore companies are political instability in their own countries, high rates of corporate taxes and stringent fiscal policies.
Almost all multinational corporate entities have been using offshore companies, set up in tax-havens around the globe, to swell their profits, an initiative that is absolutely legal in the countries where these offshore companies are located. This ploy is known as tax avoidance through legal means. Nevertheless, this arrangement is also known to have been extensively misused by some world leaders, businessmen and drug barons, to legitimise their ill-gotten money. Businessmen usually do it through tax evasion, which is universally considered a crime. So while tax avoidance is legal, tax evasion is illegal.
As is evident, the funds invested in offshore companies could be legitimately earned or ill-gotten. Therefore, it is a mere misconception that offshore business is all about evading taxes and hiding money from governments. Tax experts in every country would certainly know that there are innumerable legitimate ways to structure business interests overseas and realise significant benefits from an asset protection standpoint, as well as from a tax standpoint. These tax wizards call it ‘tax management’, not tax avoidance.
The onus of checking the flight of the ill-gotten wealth lies with the governments of the countries whose citizens are investing in the offshore companies by adopting legal and administrative measures that adequately plug all the loopholes and avenues for transfer of money through illegal means. There is a growing concern in the international community about money laundering.
Financial institutions around the world are also adopting stringent measures to obstruct the path of illegal money from becoming legal investment but, unfortunately, the results have not been so encouraging. This problem can be only checked if governments all over the world, including the known tax havens, agree on the principle of international tax equity.
Nevertheless, the Panama leaks have been able to raise international concern and some countries have already initiated inquiries of their own to investigate the legitimacy of the funds invested or parked by their citizens and public office holders in the tax-havens. The Panamanian government has also taken the initiative to form an international panel to look at the whole affair and also share tax details with the international community.
In Pakistan too, the government has decided to constitute a judicial commission to investigate the whole issue, to determine whether the individuals who have been identified as the owners of the offshore companies invested in those ventures by transferring funds gained through illegal means. The opposition parties have not only rejected the government’s proposal to set up a commission headed by a retired judge of the Supreme Court, but are also divided on an alternate course of action. The PTI is even contemplating launching a movement against the government, if its demands for a probe into the leaks are not met.
The nation also heard politicians saying that after the Panama leaks, the prime minister had no moral reason to continue heading the government and should resign. I am afraid the opposition parties and their leaders have no moral authority to make such a demand, in view of their tainted past and involvement in corruption and wrong-doing. Imran Khan, who carries a lot of baggage from his past and the illegal political antics displayed during the sit-ins, also lacks the moral ground to make such demands.
The campaign against the Sharifs is sheer politicking. Had the opposition parties, including the PPP and PTI, been sincere in their demands for a probe and the elimination of corruption from society, they would have demanded a wider inquiry. I am sure none of the existing politicians would ever demand that or have the spunk to take initiative in this regard.
Under the circumstances, the opposition is well advised to decide the probe issue through dialogue with the government instead of confrontation, as the latter has already shown its willingness to have the matter investigated. Differences on the modalities should not be allowed to muddy the political atmosphere and undermine national interests. And till such time that the investigations are completed and the results revealed, the debate on the issue should be put on the back burner.
A word of caution: Whether the investigations are done through a commission or an international firm having expertise in forensic audits, nothing can be unearthed unless the government of Panama and the legal firm involved cooperate.
The writer is a freelance contributor.
Email: ashpak10gmail.com