Panama, Bahamas case
ISLAMABAD: The Federal Board of Revenue (FBR) has submitted its detailed reply in the Supreme Court (SC) in the Panama case, informing the apex court that the FBR had sent tax notices to 336 individuals named in Panama and BahamasLeaks and 132 of them were found non filers.
“To further strengthen the process of conclusive investigation, vital details as nature of assets owned, value of capital, or quantum of wealth, details of bank accounts, etc, linked with these individuals and entities are required to be collected,” the FBR, in its written reply submitted before the apex court, stated.
A five-member larger bench of the apex court headed by Chief Justice Anwar Zaheer Jamali had asked the respondents, including the FBR in the petitions seeking a probe into the PanamaLeaks to submit replies the other day.
The larger bench will resume the hearing today (Thursday) in the instant petitions, filed by PTI Chairman Imran Khan, JI Ameer Sirajul Haq and Sheikh Rashid Ahmed of Awami Muslim League, seeking disqualification of Premier Nawaz Sharif and a probe into the PanamaLeaks.
FBR Chairman Nisar Muhammad Khan assured the SC through a written reply that the FBR was keeping itself vigilant to any other information and exploring/exploiting all available resources to investigate the matter further. “It is humbly submitted that FBR shall extend its fullest cooperation to the commission constituted by the Supreme Court,” he stated.
The FBR stated that the authority wrote letters to nine tax havens through the Foreign Office for seeking information. The replies from these tax havens are still awaited, says the Board.
The FBR states that Panama Papers are documents obtained from a Panama-based offshore services provider called Mossack Fonseca. The documents were received by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ). The Panama Papers are reportedly 11.5 million leaked documents that detail financial and attorney-client information for more than 214,488 offshore entities, some date back to the 1970s. Media reporters found that many of the Mossack Fonseca shell corporations were used for illegal purposes, including fraud, tax evasion, etc.
The media in Pakistan reported about the Panama Papers on April 4, 2016 and highlighted certain names of politicians, businessmen and other famous personalities of various professions and subsequently on May 5, 2016, another 259 Pakistanis having links to offshore companies were reported by the media.
After the news about the PanamaLeaks on the media, meetings were held starting from 21.04.2016 with a view to considering the course of action to be adopted for undertaking proceedings in relation to the PanamaLeaks.
The FBR investigators, after considerable efforts, succeeded in acquiring information regarding whereabouts and addresses of 336 individuals stated to be named in the PanamaLeaks since the media information on PanamaLeaks was incomplete in a number of ways: it contained incomplete names; most of the names carried incorrect spellings; addresses in majority of cases (only 181 addresses had been published) were incomplete and; such vital information as passport, CNIC numbers, dates of birth, etc, in respect of the purported investment holders was not available. However, addresses with respect to 108 individuals/entities are still missing and all-out efforts are being made to trace out the same.
The FBR investigators, tasked with the assignment of ascertaining complete information, contacted various sources, besides waiting for the outcome of the political dialogue on the constitution of the Judicial Commission/determination of ToRs on PanamaLeaks.
However, after obtaining sufficient data, the FBR initiated formal proceedings in accordance with the provisions of ITO 2001 against the aforementioned individuals.
That notices were issued, under Section 176 of ITO 2001 in the first week of September, 2016, requiring the individuals named in the Panama Papers to provide details of their investments in the offshore companies/trusts, the properties owned by these offshore entities and the income arising there from, to as many as 336 individuals allegedly holding investments in offshore entities. A specimen of the notice issued is submitted.
It is further submitted that, so far, only 133 individuals have responded to the aforesaid notices.
That to ensure compliance of notices issued under Section 176 of ITO 2001 to individuals involved, the FBR is taking the following steps as provided in ITO 2001:
Where replies are not received to notices u/s 176, reminders have been issued.
If response is still not received, penalty notices u/s 182 of ITO 2001 will be issued.
In case of persistent non-response, provisions relating to prosecution will be invoked.
That the FBR has found 132 non-filers or irregular filers among Panama and BahamasLeaks. Particulars of these individuals have been forwarded to the FBR’s field formations concerned across the country for enforcing immediate filing of their returns and wealth statements. Letter dated 06.10.2016 issued in this behalf to the concerned section of FBR is submitted.
That although the FBR was able to issue notices to 336 individuals named in the PanamaLeaks as submitted above. To further strengthen the process of conclusive investigation, vital details as nature of assets owned, value of capital, or quantum of wealth, details of bank accounts etc. linked with said individuals and entities are required to be collected. The above-stated position was brought to the notice of the finance minister on 17.10.2016 in a meeting attended by FBR officials, Deputy Governor State Bank of Pakistan, and senior officers of SECP. The finance minister directed the FBR to communicate with the governments of Panama, Bahamas, British Virgin Islands, Samoa, Anguilla, Seychelles, Mauritius, Nieu, Jersey, etc, through the Ministry of Foreign Affairs for obtaining necessary information and documentary evidence from the revenue authorities of these tax havens.
Accordingly, after obtaining approval of the finance minister on 18.10.2016, the FBR approached nine tax havens through the Ministry of Foreign Affairs for obtaining details on those involved.
A press release issued by the Ministry of Finance in this regard on 18.10.2016 is submitted as copy of the FBR’s letter dated 19.10.2016 sent to secretary, Foreign Affairs, Islamabad, as well as copies of the letters meant to be sent to foreign jurisdictions/tax havens for obtaining information are also submitted before the court. The Ministry of Foreign Affairs has sent, through diplomatic channels, the above-referred letters to the aforementioned tax havens. Replies are awaited.
That on appearance of BahamasLeaks in media on 22.09.2016, the finance minister convened a meeting in his office on the same day and directed FBR, SECP and SBP to immediately initiate inquiry. A news report appearing in this behalf on 23.09.2016 in The News is submitted.
Investigation conducted by the FBR investigators resulted in issuance of notices, under Section 176 of ITO 2001, to 110 individuals named in BahamasLeaks.
Efforts are under way to trace particulars/whereabouts of the remaining 32 individuals. Information provided by SECP also established that 43 individuals named in BahamasLeaks are found to be directors in 148 Pakistan companies.
Meanwhile, the government successfully established links of over 400 individuals with offshore companies to further strengthen the process of conclusive investigation into Panama and BahamasLeaks.
After months-long investigation, the FBR revealed that investigators approached over 520 individuals and companies’ directors named in Panama Papers and Bahamas files.
“Investigators, after considerable efforts, succeeded in acquiring information regarding whereabouts and addresses of 336 individuals stated to be named in Panama Leaks and 110 individuals named in Bahamas files,” revealed the FBR.
The FBR investigators also found 132 non-filers or irregular filers among Panama and BahamasLeaks as some 23 individuals refused to cooperate with them and 11 owners of offshore companies questioned powers of authority to probe them for holding such business.
Investigators further revealed that eight offshore companies’ owners died, five individuals are foreigners and six individuals did not live in Pakistan. Over 34 individuals sought adjournment, 21 admitted the facts, 13 provided information and the FBR issued reminders to 92 individuals for responding queries raised by investigators.
The FIA in its official reply submitted to the apex court, also available with Geo News, narrated its legal complications but promised that “FIA being the prime investigating agency shall extend all possible assistance, in accordance with law, if any matter is entrusted to it by this court.”
The NAB, which in its earlier response argued that the Panama issue was beyond its jurisdiction because scandal was not the subject matter of any inquiry based in the country, had also showed its willingness to cooperate with the judicial commission. Meanwhile, the government is conducting series of meetings to prepare its response on this case, officials said.