Daily Times

When criminals are in the hiding they should not be pursued. As long as you are not caught you are innocent. Out of geographical boundaries, out of legal boundaries — that is the definition of money stowed away in grey warehouses in foreign lands. The Panama Papers have created sensation everywhere in the world. From Russia to Iceland and from India to Pakistan, there is uproar on hide-the-billions game played at the highest level. Most countries are mortified and are willing to investigate this scandal. Iceland has demanded and achieved the prime minister’s resignation, and India is promising a thorough investigation. In Pakistan, the attitude of the government and the Sharif family is typical: what is the big deal if a few billions have mysteriously found their way in other countries in some offshore and offhand accounts. The outrage at being questioned on a scandal that has rocked the world is really the root cause of why governance and rule of law is merely a matter of lip service in this country.

Having an offshore company is perfectly legal. However, offshore bank accounts and other financial dealings in another country can be used to evade regulatory oversight or tax obligations. Companies or individuals often use shell companies, initially incorporated without significant assets or operations to disguise ownership or other information about the funds involved. Shell companies and other entities can be misused by terrorists and others involved in international and financial crimes to conceal sources of funds and ownership. The ICIJ (International Consortium of Investigative Journalism) states that the files from Mossack Fonseca — the law firm involved in the Panama Papers scandal — include information on 214,488 offshore entities, linked to 14,153 clients, in 200 countries and territories. Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s Prime Minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, President of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the Prime Minister of Iceland, Sigmundur Davíð Gunnlaugsson.

While establishing an offshore company is not illegal the purpose for which it is used is what makes it questionable. Majority of these companies are not used for foreign investment in the countries where they are established, like Panama and British Virgin Islands (BVI), but for hiding illegal black money, and then whitening it through some means to create investments in a third country. That is why the whole world is rattled by this scandal, and busy trying to investigate its depth and extent, while in Pakistan the accused are in a denial mode. All sorts of confusion prevails. After denying for years that the prime minister owned billions of rupees of property overseas, finally, Sharif and sons have admitted that they own property in UK. Maryam Nawaz Sharif’s flat denial previously, and a partial acceptance presently is something that is nothing new. What is new is that there are documents present that are direct from the agent the family hired to authenticate the claim that they are shareholders in this deal that they keep on denying.

The real issue is if it is straight money why hide it in a crooked dark alley. Why create a route through another country. Why deny its existence. All these why’s are responsible for the present uproar in the world, and in Pakistan. For example, while Maryam has said that she was just a trustee, the documents show that she is a shareholder. According to the Panama leaks, Nescol Limited and Nielson Holdings Limited were incorporated in the BVI in 1993 and 1994, respectively, and were held by one bearer share each, in the name of Maryam Safdar (Maryam’s married name). In February 2006, Maryam Safdar signed a resolution of the Nescol Limited as the “sole (bearer) shareholder”. Mossack Fonseca was appointed as the registered agent through the Minerva Trust, which described Maryam Safdar as the beneficial owner of both companies.

Aside from the ruling family, almost 200 Pakistanis are implicated in this scandal, which includes businessmen and judges. As is the case with other countries that include the US and UK, investigations and tax law changes are already in the offing. India has already asked for investigation involving top agencies with a deadline of April 25 to find the truth. Iceland Prime minister had to resign as the public protest forced him to give up his position. The reaction of the government in Pakistan has been typically late and lame. Prime Minister Nawaz Sharif addressed the nation and narrated a whole story of how every government had targeted his family business, and reduced it to nothing. How he and his family had risen from these knockdowns and became richer than before. More than the content the prime minister’s attitude was the most disturbing part of his speech; here is a scandal that has rocked the world, and here is evidence from an international consortium of 400 journalists that had investigated this scandal. Here IS a case where country after country is forced to take extraordinary steps to deal with the crisis, and here is a prime minister who with a perturbed look on his face, puts the whole blame of these global leaks on local opposing forces conspiring in the country to bring him down. This response just about sums up the extent of understanding of the situation by the man in the top position, and his ability to deal with crisis. Eventually, there was the offer of forming a judicial commission under a retired judge, and asking the opposition to bring evidence and prove the case against him.

Firstly, the prime minister has to realise that this is not a local opposition party pressing charges, and thus a judicial commission would not be presented evidence by them. What is needed is to form an independent and empowered inquisitorial committee acceptable to all parties that uses international financial audit firms, NAB, and FIA to trace the trail of money to uncover any wrongdoing in its declaration, remittance and source. Without proper and thorough investigation, it will be merely another joint investigation team working without success, or produce a commission report like that of the Model Town incident, where despite concrete evidence nobody except the most dispensable were punished.

Even if all the Sharif family is saying is true, imagine the impact of the prime minister’s family setting up an example of tax avoidance to which they have admitted. While the FBR last week preached and celebrated “pay your tax week”, how in the world are they going to convince people to pay taxes when the prime minister is professing to practising tax avoidance? Also in question are the record 42 foreign tours the prime minister has made to invite investment in the country among other things. If billions of rupees of investment is being made by his own family outside Pakistan, imagine how convincing he must be painting Pakistan as an ‘investment haven’. Panama leaks are thus not just document leaks, they are leaks in trust; they are leaks in transparency; they are leaks in accountability; they are leaks in credibility and they are leaks in integrity.

The writer is a columnist and analyst and can be reached at andleeb.abbas1@gmail.com