Money Matters

Politics, economy and Panama papers

By Ihtasham Ul Haque
Mon, 04, 16


The political temperature continues to rise due to revelation after revelation against 200 Pakistanis involved in the Panama leaks, including the Prime Minister Nawaz Sharif’s family. The obvious causality, however, is once again the national economy which is unlikely to jumpstart considering the recurrence of scandal after scandal.

The issue is further scaring the investors and the matter is compounding due to the delay in the formation of any judicial or inquiry commission by the Pakistan Muslim League-Nawaz government. Stories coming from the official and unofficial quarters suggest that the ruling party is divided over the issue, which is why there has been no decision on setting up a judicial commission or a joint parliamentary committee to probe the issue.

According to one senior Pakistan Muslim League-Nawaz leader, the issue of Panama leaks could have been saved by the prime minister, had the government urgently announced the formation of a parliamentary commission. “But I don’t know why the prime minister and Ihaq Dar are unable to take any decision. Who does not know that the delay is causing numerous political problems to the prime minister, his family and the ruling party at large?”

He said that Pakistan Tehreek-e-Insaf was out to exploit the issue, while the Pakistan Peoples Party was supporting Imran Khan by not accepting any former judge to head the proposed commission. Both the parties were demanding the setting up of a judicial commission under the chief justice of Pakistan. Other parties, including Awami National Party, Jamaat-e-Islami, and Muttahida Qaumi Movement were also saying the same, except Jamiat Ulema-e-Islam of Maulana Fazlur Rehman.

“The maulana, everyone knows, will blackmail the government for his support over the issue, but how will the prime minister deal with the other major political parties is the big question. I honestly believe the prime minister could have gotten away with the situation by announcing the setting of the parliamentary commission in a timely manner. But now it seems difficult to escape the onslaught,” he said, requesting anonymity.

The situation has turned interesting as on one hand there is a delay in the formation of any commission or parliamentary committee and on the other, the National Accountability Bureau, Federal Investigation Agency, and the Federal Board of Revenue are offering to run a probe.

Though the Federal Board of Revenue authorities have still not been given any permission by Finance Minister Ishaq Dar, they plan to issue notices to 200 Pakistani owners of the offshore companies for allegedly avoiding and evading due taxes. The FBR officials maintain that they have decided to take up the issue on the directive of the Standing Committee of the National Assembly.

According to the details, the FBR will write to the authors of the Panama Paper to share details on the basis of which notices will be issued to the owners of the offshore companies who also include the prime minister’s two sons – Hasan and Hussain.

How well it would go with the rulers is anybody’s guess. But one can be sure that the Federal Board of Revenue’s action will not be endorsed by the government and its ministers who are unprepared to respond to the allegations. They are more curious to find out any tax evasion or money laundering on the part of Imran Khan and his Shaukat Khanum cancer hospital.

The government circles believe that since the matter has not been decided by the government, the Federal Board of Revenue’s initiative to probe the issue is uncalled for. They will have to get the nod of the finance minister to devise any strategy and accomplish any task.

Since the Panama scandal erupted earlier this month, over 50 percent space of the newspapers and the electronic media is being dedicated to discuss the issue, highlighting the unparalleled magnitude of the corruption and tax evasion in Pakistan.

This is perhaps the first time that so many newspaper editorials, articles and talks shows are discussing the grave issue of Panama leaks on regular basis. As the opinion makers mostly recognise corruption as the number one problem, they are seeking a probe to unearth the unprecedented wealth of looters and plunderers.

There is an estimated $21 trillion wealth hidden in the thousands of offshore companies mainly spread in 40 countries. The uproar over the issue has forced the President of the United States and the European Union (EU) higher authorities to look into the issue. Those who think the scandal will die down with the passage of time are certainly living in a fool’s paradise.

All the 11.5 million confidential documents containing information about more than 214,000 offshore companies compiled by the Panamanian corporate service provider Mossack Fonseca, including the identities of company shareholders and directors, have jolted the financial world. Some major countries are taking the matter very seriously with a view to arrive at some decision to stop corrupt practices worldwide.

The incoming details show how wealthy individuals, including public officials, hide assets from the public scrutiny. At the time of publication, the papers identified five then heads of state or government leaders from Argentina, Iceland, Saudi Arabia, United Arab Emirates (UAE) and Ukraine as well government officials, close relatives and close associates of various heads of more than 40 countries. The British Virgin Islands was home to half of the companies exposed and Hong Kong contained the most affiliated banks, law firms and middlemen.

It is generally said that while the use of offshore business entities is not illegal in the jurisdiction in which they are registered, and often not illegal, reporters found that some of the shell corporations seem to have been used for illegal purposes, including fraud, drug trafficking and tax evasion.

In our context, it saddens the people when they come to know that $1 trillion are taken away every year from developing countries like Pakistan and deposited in these offshore companies which protect the wealthy individuals.              

The story in Pakistan mainly revolves around Asif Zardari and Nawaz Sharif. Their opponents and critics allege every now and then that the two had been making phenomenal money, while the rest of the people suffered in one way or another.

It is in this backdrop that people allege the prime minister went to London to meet Zardari and seek his support against Imran Khan who is out to capitalise the issue. Have they met or communicated through their advisors in London is the talk of the town, and will they really join hands to save each other is being discussed in all the relevant quarters.

The issue became more prominent when Army Chief General Raheel Sharif said last week that there was a need for across the board accountability, and that war on terror could not be effectively won in the presence of corruption in the country.

The timing of the chief’s statement was considered very important and most people thought it was a warning to the corrupt politicians and other government functionaries. The good thing, however, was that nobody said the military and security establishment was thinking to remove the government.

Gone are the days that such a thing would happen in Pakistan. One thing is clear that the army has effectively become a huge stakeholder in the political affairs of the country - thanks to the failure of the politicians who eventually proved that they would continue to pursue their petty vested interests in the grab of the politics.

Now it seems that business as usual will not be tolerated by the establishment. In public, the PML-N leaders and ministers are saying the statement of the army chief is very much in line with the government’s policy of zero tolerance against corruption and corrupt practices. But who would buy it? So far the government failed to manage the media, despite having an effective media team headed by Marium Nawaz.

Whatever response against Panama leaks has come so far was largely considered counterproductive, and writers and analysts are not missing any opportunity to seek ruthless accountability of all so as to minimise if not eliminate corruption from the society.

The contradictory statements of the ruling family are mind boggling. The matter of the London apartments is also controversial since in an old BBC interview to Tim Sebastian, Hussain Nawaz had said that the apartments did not belong to him or his family, and that he rented those apartments.

However, in subsequent interviews he accepted the ownership of the Mayfair apartments that are highly expensive.

All this suggests that the government will have to form some consensus commission at the earliest to probe allegations against the ruling family. Who would deny that without improving, rather overhauling the political system, one cannot ensure across the board accountability of all, neither can one eliminate corruption, tax evasion, tax avoidance and money laundering.

In the days to come, instability, be it political or economic cannot be effectively dealt with without isolating corruption from the system. Perhaps this is the most important moment which can be a catalyst to rehabilitate institutions. The job cannot be done by the army alone, and everyone will have to play their due part positively to stop Pakistan from turning into a failed state. Or else, our opponents will continue to malign our country and not miss this opportunity.

The writer is a senior journalist based in Islamabad