Panama leaks were revealed on April 3rd 2016, but no investigation is taking place in Pakistan. Govt is not ready to have the PM's name in the TORs though he is the declared guardian of those who are named in Panama leaks. But the big question is why the Pakistani institutions like FBR, NAB, State Bank of Pakistan and the Securities & Exchange commission are not even sending out notices to the 600 Pakistanis involved. I have written a letter to the Chairman Public Accounts Committee to summon these agencies and find out why no action has taken place.
July 14, 2016
Mr Khurshid Shah MNA
Chairman Public Accounts Committee.
On 3rd April 2016 important revelations were made in an expose that came to be known as ‘Panama papers’ wherein 11.5 million documents of the law firm Mossack-Fonseca were released. Names of 600 Pakistanis were also published, who have offshore shell companies registered through this firm, and through which various holdings of properties, investments and accounts in banks outside Pakistan were done.
Income tax authorities and regulators in affected countries have inquired from these individuals about the source of these funds, whether they were acquired through legitimate sources or through illegal means. Such illegalities may include tax evasion, drug income, illegal commissions, money laundering, fraud, and theft.
A multi-agency group was set up in India for example, within days of the Panama revelations that included officials from the Central Board of Direct Taxes, Reserve Bank of India, Financial Intelligence Unit and Foreign Tax & Tax Research. This unit started work immediately, sent out notices to all the people involved and are investigating Indians who were involved.
Estimates of corruption in Pakistan have varied and recently the DG of NAB Sindh Mr Col (R) Siraj Naeem made a statement reported in DAWN of April 1, 2016 that ‘Pakistan bears a loss of $133 million daily due to corruption’. This translates into US $ 48 Billion per year. A significant portion of this money is smuggled abroad and taken into tax havens where they are held secretly.
Besides Panama leaks, some lists of Pakistanis owning properties in Dubai have also been released by media investigators, the source being the official records of the UAE governments. Some of these properties may be legitimate, of residents who are working in Dubai, but it is public knowledge that a lot of illegal wealth is also invested there.
As a member of the Public Accounts Committee I am shocked and alarmed by the fact that I see no effort, no movement and no interest of government agencies to probe this issue at all. I believe that some politicians are also involved, but in trying to protect them I am afraid that 95% others may also escape scrutiny.
I am requesting you as Chairman that the following government agencies and departments should be summoned urgently:
- Federal Board of Revenue
- National Accountability Bureau
- State Bank of Pakistan
- Securities & Exchange Corporation of Pakistan
- Federal Investigation Agency
- Ministry of Foreign Affairs
- Ministry of Finance
It may be inquired from them as to why they have not initiated investigation, or even issued notices to the entire list of Pakistanis that has been published, to ascertain:
- The reason for establishment of offshore shell companies in their name or in the name of their siblings, parents or children;
- Whether this was done in a legitimate manner and not in violation of the laws of Pakistan;
- Whether the said wealth which was deposited or invested in these offshore shell companies was accumulated through lawful means and not through kickbacks, commissions, over/under invoicing, tax evasion or other forms of corruption;
- Whether money was taken out of Pakistan in a legitimate manner after obtaining necessary statuary permissions from the relevant authorities, and in observance of the law;
- Whether the money was reported in their wealth and tax returns;
- Whether legitimate tax was paid on these amounts;
- Whether any help & cooperation has been sought from international agencies subscribing to ratified conventions in this regard for example:
- The World Bank that has the StAR (Stolen Assets Recovery Initiative) program for assistance of countries needing such help;
- UN Office on Drugs & Crime (UNODC);
- UNCAC (UN convention against corruption)
- At least 15 international treaties exist on mutual assistance on illicit wealth smuggled abroad, to which Pakistan is a signatory. Whether any letters have been written or requests made to other countries in this regard, specially to the following for information and help:
- Government of Panama for official information;
- Government of Switzerland under the Swiss ‘Foreign Illicit Assets Act’ (FIAA) that has been set up in Dec 2015 specifically to help countries like Pakistan in this regard;
- To countries where properties have been bought, to obtain lists of Pakistani property owners, for example Dubai, Malaysia, UK etc.;
- To other governments to probe STRs (suspicious transaction reports) of which Panama leaks is the best example of suspicious transactions. Under this terminology requests for information can be made to all financial institutions and countries.
I consider this matter of an urgent nature and of great public importance. It is in violation of my fundamental rights and that of every citizen of my country. Immediate action must be taken within days and I believe if this is not done the trail available today may become invisible within days and months to the detriment of the people of Pakistan whose hard earned money may have been stolen.
Please summon the above agencies and call an urgent meeting of the Public Accounts Committee.
Dr Arif Alvi
Public Accounts Committee