Daily Times

The elected public representatives, public office holders and persons serving as government employees cannot hide behind laws relating to ‘confidentiality’ and ‘secrecy’. They cannot avail tax amnesty schemes as it would be a confession of some wrongdoing in discharging tax obligations and having unexplained money. It appears that while advising politicians of Pakistan who opted to participate in politics, tax consultants have been clearly overlooking this vital point. It has prominently surfaced in the proceedings in Supreme Court where matter of disqualification of Chairman and General Secretary of Pakistan Tehreek-e-Insaf (PTI) is presently sub-judice. It is pertinent to note that counsel of Imran Khan and Jahangir Tareen Khan admitted that their clients used offshore companies/trusts for tax benefits.

The most vital issue for determination by Supreme Court in the cases against Imran Khan and Jahangir Tareen is the alleged non-disclosure of assets camouflaged by beneficial owner(s) under the cover of an offshore company. Since the matter is sub-judice, propriety demands that merits of the cases should not be discussed. However, it is imperative to highlight that Supreme Court has already held in the case of Rai Hassan Nawaz v Haji Muhammad Ayub and others (2017 PLD 70 SC) that:

“Where assets, liabilities, earnings and income of an elected or contesting candidate are camouflaged or concealed by resort to different legal devices including benami, trustee, nominee, etc. arrangements for constituting holders of title, it would be appropriate for a learned Election Tribunal to probe whether the beneficial interest in such assets or income resides in the elected or contesting candidate in order to ascertain if his false or incorrect statement of declaration under Section 12(2) of the ROPA is intentional or otherwise.”

Election Tribunal, under section 76A of the Representation of Peoples Act, 1973 (ROPA) could have started suomoto proceedings in the light of information becoming public through Panama Papers in respect of assets held abroad by a number of public officeholders in their names or through legal devices, including benami, trustee and nominee etc. Had this process been initiated, litigation in Supreme Court could have been avoided. The unwillingness of National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Federal Board of Revenue (FBR), State Bank of Pakistan (SBP) and Election Commission of Pakistan (ECP) to investigate the financial affairs of legislators is the real cause leading to exercise of extraordinary jurisdiction by Supreme Court under Article 184(3).

Even elected representatives have been protecting themselves from probes of funds under section 5 and 9 of the Protection of Economic Reforms Act, 1992 and section 111(4) of Income Tax Ordinance, 2001. This means that they have confessed to concealing un-taxed incomes and assets. This fact alone is sufficient for disqualification

It is true that companies and shareholders are distinct entities and a shareholder is not accountable for all assets and liabilities of the company. But this principle does not apply in the case of a shell company, usually managed through multiple layering. For example, a company owning a London mansion could be registered in the British Virgin Islands, but its nominee directors may be corporations in the Cayman Islands, which in turn are owned by companies in yet another offshore jurisdiction. This is what is done in the case of offshore companies established by Jahangir Tareen and Nawaz Sharif or many others who are yet not investigated. Where shell companies are used as a conduit to hide wealth and/or evade taxes, corporate veil has to be lifted to make the investor/beneficial owner liable to explain sources of all assets/liabilities in his/her nomination papers as well as in the wealth statement filed under the Income Tax Ordinance, 2001.

Any public representative who disguised ownership of the properties for avoiding personal scrutiny under the election laws, tax laws or accountability under anti-corruption laws cannot hold the office.

The laws for public office holders specifically require scrutiny of disclosure of wealth in their own name, in the name of spouse or any other person (benami) and a reconciliation of total means and total investment/expenditures. These laws cannot be defeated by resorting to different legal devices including benami, trustee, nominee or any other arrangement for constituting holders of title etc.

It is horrifying to learn that even elected representatives have been taking shelter of amnesties/concessions/ from probe of sources of funds under section 5 and 9 of the Protection of Economic Reforms Act, 1992 and section 111(4) of Income Tax Ordinance, 2001. It means that they have confessed to concealing un-taxed incomes and assets. This fact alone is sufficient for disqualification.

The most pertinent question is why such obnoxious laws protecting money launderers and tax evaders, are still in operation. If laws of the land facilitate whitening of assets — offshore/onshore — it is a matter of collective shame. Citizens have every right to ask whether it is beneficial for the state to have such laws and amnesties. If no question can be asked about illegal and un-taxed funds, remitted in Pakistan or sent abroad from foreign currency accounts through banking channels, then why waste time on hearing legal niceties in the cases presently sub-judice in the highest court of the country? Of course disqualifications of individuals as per law are justified, but this alone is not the solution. The solution lies in across the board accountability through Parliament.

It is high time that all political parties should seriously consider enacting a comprehensive law, ‘Investigation of Declarations of State Functionaries and Public Representatives’. Under this law, SBP, FIA, FBR, ECP and any other department or institutions should be obliged to share with joint Parliamentary Standing Committee on Asset Disclosures and Investigation all declarations filed by persons in the service of Pakistan, holding public offices and elected representatives or any other information specifically required for any investigation.

The committee should compare declarations filed under respective laws with those filed under the income tax law or with any other department for any purpose. In case of any discrepancy or proof of suppression and/or concealment (provided by anybody or a whistleblower), the Committee should refer the matter to the relevant department/authority eg SBP, FBR, NAB, FIA, military authorities, as the case may be, to take action under the law. This is the most desirable/reliable system of accountability, adopted by many countries known to be highly transparent as per authentic surveys and indices. If they really want to ensure supremacy of Constitution and sovereignty of Parliament our legislators must follow suit.

The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS). Email: ikram@huzaimaikram.com; Twitter: @drikramulhaq

Published in Daily Times, October 29^th 2017.