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And now Pandora Papers

The Pandora papers, though revealing a gigantic store of hidden treasure of riches beyond the reach of the law and accountability, have, surprisingly, evoked far less excitement among the general public in Pakistan than did the Panama Papers which, nevertheless, had disclosed far less. The list of 700 Pakistanis named in the Pandora Papers as compared to 400 in the Panama Papers includes a number of cabinet ministers and high profile persons belonging to ruling Party’s circle of friends and acquaintances plus some retired high-ranking uniformed officers but does not contain anyone from the Sharif or Bhutto-Zardari families; there are also no high-profile opposition leaders on the list except for just one small- time PPP politician. This perhaps could be one of the major reasons why the government side does not feel like celebrating the revelations. But most probably the miserable failure of the government in achieving even a modicum of success in its corruption campaign in the first three years of its tenure had perhaps caused even its staunchest supporters to lose faith in the ruling coalition’s capacity to govern effectively.

The government seems to have wasted three precious years in trying to subject the opposition, especially the PMLN, to blatant witch-hunting, hoping perhaps to eliminate it completely from the country’s political arena before the next election but has, instead, succeeded in turning the opposition into even more of a formidable challenger.

In Pakistan the very electoral system serves as the mother of all corruption. Those who reach Parliament spending millions shamefacedly employ their political privileges in trying all through their elected terms to get back their investment with a thick margin of profit. And the system of allocation of development funds to be spent in accordance with the wishes of individual members in their respective constituencies tempts them to indulge in further corruption.

Corruption cannot be eliminated completely, but it can be kept under control by employing social levers like a truly independent judiciary, a fearless press and a strong parliament. But so far we have not been able achieve any success in this endeavor because of the first-past-the-post system of election which invariably sends to parliament members capturing only 20-25 percent of votes of a constituency which in turn renders the elected member totally unrepresentative of the constituency from which he or she had won the election. That is why there emerges a complete political disconnect between the elected member and the majority of his or her constituency. And this invariably leads to bad governance.

To wage a serious and sincere war against corruption, we need to regulate 10 key white-collar professions. This concept has been elaborated by Josh Rudolph, a fellow for malign finance at the Alliance for Securing Democracy in his article ‘How Art Dealers, Real Estate Agents, and Hedge Funds Enable Corruption’ published in Foreign Policy on Sept. 26, 2021. Though the piece has been written in the US context, the suggestions contained in it can be useful for developing countries as well.

“Private investment companies such as hedge funds and private equity firms are only one sector among 10 types of white-collar professions whose loose rules pose grave dangers to national security. Others are real estate title insurers, company formation agents, art dealers, lawyers, accountants, covert public relations firms, real estate agents, luxury car sellers, and cryptocurrency businesses. Highly nontransparent and insufficiently regulated, these financial professions have a long record of being used by hostile regimes and their cronies to weaponize corruption, launder funds, or skirt sanctions. One needs to ensure that the official economic managers make these professional enablers watch out for dirty money in the same way commercial banks are already required to do.”

One sector that particularly threatens a nation’s security is real estate, where hidden ownership by foreign oligarchs and corrupt officials is common. In addition to providing a haven for laundering illicit funds, real estate is also a potential avenue to bankroll and influence political actors.

According to Washington Post dated Oct.4, 2021 (Billions hidden beyond reach), a massive trove of private financial records exposes vast reaches of the secretive offshore system used to hide billions of dollars from tax authorities, creditors, criminal investigators and — in 14 cases involving current country leaders — citizens around the world.

“The Pandora papers revelations include more than $100 million spent by King Abdullah II of Jordan on luxury homes in Malibu, Calif., and other locations; millions of dollars in property and cash secretly owned by the leaders of the Czech Republic, Kenya, Ecuador and other countries; and a waterfront home in Monaco acquired by a Russian woman who gained considerable wealth after she reportedly had a child with Russian President Vladimir Putin.

“The disclosures exceed the dimensions of the leak that was at the center of the Panama Papers investigation five years ago. That data was drawn from a single law firm, but the new material encompasses records from 14 separate financial-services entities operating in countries and territories including Switzerland, Singapore, Cyprus, Belize and the British Virgin Islands.”

The files detail more than 29,000 offshore accounts, more than double the number identified in the Panama Papers. Among the account owners are more than 130 people listed as billionaires by Forbes magazine and more than 330 public officials in more than 90 countries and territories, twice the number found in the Panama documents.

The offshore financial system is said to offer privacy, which provides an opportunity to hide assets from authorities, creditors and other claimants, as well as from public scrutiny. This system is known as offshore finance because the countries that popularized this method of sheltering wealth were often in island or coastal locations, but today “offshore” signifies anywhere that is not a customer’s country of residence. Offshore providers are typically established according to the laws of the country where they are located. But some clients have used offshore services in ways that are not legal.

As a result, the Pandora Papers are said to allow for the most comprehensive accounting to date of a parallel financial universe whose corrosive effects can span generations — draining significant sums from government treasuries, worsening wealth disparities, and shielding the riches of those who cheat and steal while impeding authorities and victims in their efforts to find or recover hidden assets.

M Ziauddin, "And now Pandora Papers," Business Recorder. 2021-10-06.
Keywords: Political science , Pandora papers , Electoral system , Corruption , Switzerland , Singapore , Cyprus , Belize , PMLN , PPP

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