Daily Times

The successive governments in Pakistan provided tax amnesties and money laundering schemes in the name of “good economic measures” (sic) — unfortunately these were held lawful by courts, which said that they “cannot intervene in policy matters”. Resultantly, tax evaders, drug barons and persons engaged in other organised crimes, availed “legal means” to whiten assets worth billions under the patronage of the State. Till recently, anybody could bring money in Pakistan through normal banking channels without being probed by officers of Federal Board of Revenue (FBR) and Federal Investigation Agency (FIA) about its ‘source’ — courtesy the Protection of Economic Reforms Act, 1992 [“PERA 1992”]. This law is amended by Finance Act, 2018 to withdraw blanket immunity from probe. In other parts of the world, the governments through asset-seizure legislation confiscate unlawful assets/dirty money and punish the offenders — we have yet to pass any such law. Law of complete immunity, PERA 1992, was the brainchild of economic wizard (who later became samdhi) of ousted former premier Nawaz Sharif — both are presently facing criminal cases for possessing assets beyond means under the National Accountability Ordinance, 1989.

In the Income Tax Ordinance 2001, promulgated on September 13, 2001, a special provision [section 111(4)] was inserted facilitating tax evaders and criminals to launder their ill-gotten money through banking channels and surrender the foreign currency to the State Bank and get Pakistani rupees as encashment. This was done by a military dictator, General Musharraf through a Presidential Ordinance. Thus both civilian and military regimes extended immunities from probe into sources of shady funds. The Finance Act 2018 has now placed a limit of Rs. 10 million for exemption from probe. During the first government of Nawaz Sharif, many schemes like Bearer National Fund Bonds, Foreign Exchange Bearer Bonds, Special Bearer Bonds, US Dollar Bonds and Certificates were introduced to decriminalise dirty money. Since General Zia’s era, black economy has flourished at an amazing rate. According to various studies, the parallel economy has been growing at an alarming rate of 20% per annum since 1980.

A study by State Bank of Pakistan, ‘The Size of Informal Economy in Pakistan’, estimates that size of informal economy is around 30% of GDP. It means that annually some 850-900 billion rupees are generated by the parallel economy (informal, though not illegal). Black money, generated through organised criminal activities e.g. kidnapping for ransom, rent seeking, smuggling in goods and narcotics trade etc. is about Rs. 1300 billion that does not appear in the study of SBP but documented in Pakistan: Enigma of Taxation. Another study — Pakistan: Drug-trap to Debt-trap — estimates the total figure of informal economy at US$ 200 billion. Pakistan is one of the worst hit countries by tax evasion, terrorism and money laundering. There is sufficient evidence that militant groups working against the security and stability of the State generate huge funds through criminal activities and also get huge “donations” from “sympathisers” in and outside Pakistan. Yet, hardly any prosecution is reported under the provisions of Anti-Money Laundering Act of 2010. The banks avoid reporting suspicious transactions required under Section 7 of Anti-Money Laundering Act, 2010 or section 67 of Control of Narcotics Substance Act of 1997. This shows the slackness of institutions and regulators/agencies responsible for implementing these laws.

Though it is illegal to operate a hawala or hundi without a license in Pakistan, the practices remain prevalent due to lack of access to the formal banking sector, poor supervision and regulation

The illicit trafficking in drugs is not possible without the connivance of the police that has political connections and backing. The case of Lyari in Karachi is a classic study. It is sad to note that nobody has exposed the scandal of ephedrine in proper context — its business and political connections. The so-called experts writing on ephedrine in media do not even know how ephedrine is abused (many erroneously call it “poor man’s cocaine” whereas it is a main ingredient of “ecstasy” and is consumed by the rich who can spend thousands just for a single shot).

Accumulation of vast assets by drug barons in Pakistan has enabled them to continue large-scale operations even after crackdown and arrest of some of their leaders (although they have also managed to defy proper investigation and got themselves released). Over the past decade, drug barons in Pakistan have established themselves as patrons of politicians and government functionaries. The story of the Norwegian Connection is one of the clear indicators as to how narcopower flourished in the country and how drug barons managed to influence the highest authority in the State — read details in Pakistan: From Hash to Heroin. The “financial assistance” provided to some politicians by drug barons in the 1995, 1988, 1990 and all subsequent general elections have been a continuation of the ‘drug legacy’ of the mid 1970s era. The drug scene at its roots in Pakistan, like other countries, is nothing more than a business story. This is a stark reality of the emergence of “dirty money power” in the country. A recent study reveals that the share of Pakistani drug cartels in the total world drug trade is not less than $1 billion a year. A trade that started in the late 1970s has achieved this unbelievable proportion in four decades and so its political connections are understandable — those in power in Pakistan want to make quick bucks, irrespective of legality or illegality of their source.

The politics of drug trade has rendered millions of people, a most helpless lot. This is a war against the people and humanity. Our present day civilisation faces a great threat of annihilation if the rising tide of drug culture” is not stemmed. Awareness alone can bring light to overcome the darkness caused by drug traders who are merchants of death and destruction.

The writer, Advocate Supreme Court, has been studying since 1980 the linkages of heroin trade with terrorism. He is author of many articles on the issue and two books, Pakistan: From Hash to Heroin and its sequel Pakistan: From Drug-trap to Debt-trap. Email: ikram@huzaimaikram.com; Twitter: @drikramulhaq

Published in Daily Times, June 24^th 2018.