Bringing Pak money back from Swiss banks is wild goose chase

ISLAMABAD: The federal government is all set to strike an agreement on exchange of information regarding bank accounts with the Switzerland but it would be a gigantic task to unearth roots of money and identify its size deposited secretly in the Swiss banks by the Pakistanis in last many decades.

During an interaction of this correspondent with prominent economists, it was pointed out that all the claims regarding sums of money stashed in the Swiss banks were made without supporting evidence and without making distinction between Pakistanis living here or abroad.

“There is no valid data about the black money generated in Pakistan through various means such as kickbacks, fake invoices, property deals, prize bonds, gifts, agricultural income and drugs and transferred to Swiss banks using easily available illegal ways and means,” said prominent economist Dr Shahid Hasan Siddique.

“Making efforts to trace black money of Pakistanis and seeking its return to the country from the Swiss banks can be termed a wild goose chase that would not less than a task to search a needle in a haystack,” said former adviser to the prime minister on financial affairs Dr Salman Shah.

“In today’s world money maintained in Swiss banks can be shifted swiftly to other offshore tax and other havens and invested in other financial and non-financial assets or brought back to Pakistan to conduct a fresh round of business operations,” said economic expert Dr Ashfaq Hasan.

Talking to The News, Dr Shahid Hasan Siddique said according to the local law, the black money is defined as tax-evaded income that is earned through both legal and illegal means, creating an informal economy in the country.

He said, “Unfortunately, the system, as well as the country’s Constitution, legally protects, if not actively facilitates, capital outflows from the country, whether the source of the funds is white or black.”

“The money changers take the ill-gotten cash and transfer it in foreign currency to another agent based elsewhere in the world, he said, adding, “Then that money is rerouted back as a foreign remittance. The tax evader can get this money back to Pakistan as foreign remittance,” he said.

Revealing the process of transferring black money from Pakistan to the Swiss banks, he said suppose person ‘A’ has black money worth Rs100 billion that he wants to transfer to person ‘B’ in Switzerland. Person ‘A’ would approach a hundi person ‘C’ and gives him money and details of person ‘B’ in Switzerland. Now person ‘C’ would call his assistant in Switzerland and tell him to give 90 percent equivalent of Swiss currency to person ‘B’ assuming 10 percent is his cut. Now person ‘B’ can deposit it in the Swiss banks.

Talking to The News, Dr Salman Shah said two type of Pakistanis would surface in the list that would be provided by the Swiss authorities to the Pakistan’s government including those who transferred money to Switzerland from Pakistan and other who did it from any other foreign country.

“Calculating black or informal economy is very difficult in a country like Pakistan where people prefer to keep themselves out of the tax net by dodging the tax authorities and keeping business in hiding,” he said.

The Switzerland’s central bank stated that the total funds linked to Pakistan in Swiss banks stood at CHF 1,513 million at the end of 2015, up nearly 16 percent from CHF 1,301 billion a year ago.

According to a 2012 report by Bloomberg news, Pakistan’s black economy is probably worth half of its 18-trillion-rupee ($200 billion) official gross domestic product.

Dr Ashfaq Hasan said the ill-gotten money earned from illicit businesses by smugglers, abductors, drug peddlers, blackmailers, and others was still being whitened by decades-old method of purchasing prize bonds from bond winners, paying them more than the actual prize amount.

He said, “Black money is also generated on the sale of assets as well. If the actual value of an asset is higher than the one shown on paper and declared in the income tax return, the excess is taken in cash and becomes black money as tax was not paid on it.”