The Bahamas too

First there was Panama, now we have the Bahamas. The leaked documents showing the ownership of offshore companies in the tax haven of the Bahamas has not caused the same stir in Pakistan as the Panama Papers because the 150 Pakistanis named include a few minor politicians. That may end up being a good thing because it will allow the country to soberly consider changes in the law to prevent tax evasion and capital flight without the distractions of political wrangling. But the leak still has the potential to be explosive internationally as some of the prominent names who appear to have stashed their wealth offshore include the former EU anti-trust chief, multiple people linked to ruling families across the Middle East, the sons of former Chilean dictator Augusto Pinochet and former Nigerian president Sani Ampatsa. The lesson, as with the Panama Papers, is that the global ruling and business elite operate by their own set of Byzantine rules that are inscrutable to the rest of the world. As for the Pakistanis on the list, we do not know if they created their offshore companies for legitimate purposes or to hide their wealth. This, once again, is for the FBR to investigate by checking if those who own offshore companies have declared it on their tax returns and shown where they obtained the wealth. If there is to be any political fallout, it should serve to sober the PTI and PPP, who have been demanding Panama-specific legislation. As should have been obvious at the time, the problem of stashing ill-gotten wealth overseas extends beyond one firm in Panama. The government had recommended passing more general legislation on corruption as part of the terms of reference into the Panama Papers investigation while the opposition wanted it to specifically mention Panama. The Bahamas leaks add more weight to the former proposal.

There are a few names that stand out among the Pakistanis in the Bahamas leaks. The Jamaat-e-Islami’s former senator Khurshid Ahmed is named as a director of Akida Islamic Bank, which was placed under sanctions by the US and UN after 9/11 for allegedly financing banned outfits although the UN removed its sanctions in 2007. The inclusion of Ahmed’s name shows once again that the problem of offshore companies also relates to connections between certain political parties, groups militant or otherwise and the financial sector. This is only strengthened by the fact that the name of Obaid Khanani, the son of Altaf Khanani, a money changer who is now in US custody for helping terrorists move money, shows up on the list. Altaf Khanani had been arrested in Pakistan in 2009 for suspicious transactions but fled to Dubai after he was acquitted by a banking court. There, he was arrested by the US and the US treasury accused him of laundering money for militant groups and drug traffickers, specifically naming the Taliban, Al-Qaida, Jaish-e-Mohammed, Lashkar-e-Taiba and Dawood Ibrahim as those he allegedly had relationships with. The appearance of Ahmed Rabab Potal, a cousin of former Afghan president Hamid Karzai on the list is also interesting since he was believed to have ties both with the Taliban and local drug lords and had faced charges of heroin smuggling. The address he listed in the offshore company’s documents was in Islamabad, which too should raise questions. This nexus between the informal financial sector and organised crime needs to be investigated. The Panama Papers caused such a political melee that the question of how money is funnelled to militant groups never came up. Even banking giants like HSBC have recently had to pay record fines for helping drug cartels launder money and Pakistan, should there be more cases like that of Khanani, will be further excluded from international finance. Online payment companies like PayPal already refuse to accept service from Pakistan over money laundering fears and those fears will only grow with the Bahamas leaks. The first priority of the government should be closing down hundi and hawala channels and carrying out investigations into the movement of money within and out of the country.