Beneficial owner of an offshore company not bound to declare it, says IK in SC

ISLAMABAD: The beneficial owner of an offshore company is not bound to declare it as its shares are not registered in the name of the beneficial owner, says Imran Khan in his written response to the Supreme Court.

The PTI chief, Imran Khan’s, response in a petition seeking his disqualification as a parliamentarian because of non-declaration of his hidden offshore company can become the major defence for the ruling family in the Panama Papers case as the main petitioner against them is the PTI chief himself.

The PTI chief, in his response, submitted before the apex court in the last week of November that even if one is absolute owner of an offshore company, one is not bound to declare the offshore company if the shares are registered in the name of proxy directors and not registered in the owner’s name.

It is important that Imran Khan in his response completely avoided sharing details of the bank accounts associated with the Niazi Services Limited and the statement of accounts from 1983 to 2015, the years in which the company remained alive and continued to file returns. The PTI chief continued to insist that only one asset was linked with his offshore company but shied away from discussing bank accounts and bank statements. Despite repeated promises with The News to provide details of bank accounts of Niazi Services Limited by the PTI through its spokesman, the PTI always hesitated to share details of bank accounts of Niazi Services.

It is also important that in majority of cases, the offshore company is not directly registered in the name of the actual owner and shares of the company are issued in the name of fake or proxy directors.

Usually, people take help from some financial services providing agencies to set up offshore companies and these agencies also provide proxy or fake directors for the offshore companies to be established. Record of beneficial ownership is maintained separately and is kept secret. In some cases, shares of offshore companies are issued in the name of directors, nominee directors of director companies. 

Imran Khan, who has already admitted owning an offshore company “Niazi Services Limited”, while submitting the written response to the petition seeking his disqualification stated before the apex court that though he was the absolute owner of the offshore company yet he was not the registered shareholder of nine shares of Niazi Services Limited, there was no mandatory, substantive or binding obligation to even make a disclosure.

Para-7 of “Facts” given in the response of Imran Khan (answering respondent) reads: “Since purchase of property in the UK is undertaken through solicitors, the answering respondent was advised that the London apartment be placed in the name of a juridical entity with the answering respondent remaining its sole beneficial owner, having paid the entire sale price. Consequently, Niazi Services Limited (NSL) was incorporated with a total subscribed capital of GBP9 and its only asset was the London apartment, whose absolute owner was the answering respondent. 3 shares each were held by three other companies who submitted the requisite returns.”

Whereas the para-5 of the “preliminary objections” given in response by Imran Khan (answering respondent) reads: “The allegations and averments of non-declaration of offshore company or its intentional, wilful concealment is totally misconceived. The only asset under NSL being the London apartment was sold in April 2003. The total issued share capital of NSL was GBP9 which was not held in the name of the answering respondent. Once the only asset was sold, the NSL existed on paper only, without any asset. Since the answering respondent was not the registered shareholders of the 9 shares (of GBP1 each) of NSL, there was no mandatory, substantive or binding obligation to even make a disclosure.”

In the ongoing Panama case in the Supreme Court against the Sharif family, currently it is being argued if Hussain Nawaz or Maryam Nawaz is the beneficial owner of the offshore companies Nielsen and Nescoll. However, for either case, the registered shares of offshore companies are in the name of proxy directors (of Minerva Financial Services) and hence according to the logic of PTI chairman and the stance taken by him before the apex court, it is not mandatory to declare the offshore companies. Investigations are needed to ascertain the correctness of claims but the stance taken and pressed by the PTI chief regarding non-declaration can destroy his case in the apex court.