The PM can’t escape scrutiny

Hit and hurt by the exposure of his family’s offshore companies, Prime Minister Nawaz Sharif seems clueless and is trying to hide his head under the sand to avoid a storm that is global and inescapable.

Even if he had to leave the country on genuine medical grounds, he should have first relieved his moral burden by presenting himself for accountability through some credible and acceptable investigative mechanism.

PM Nawaz Sharif, however, is not the only one embroiled in this scam; 13 other top national leaders stand among 143 politicians, including their family members, who have been allegedly using offshore tax havens to either whiten their ill-gotten money or evade taxes and hide properties. Other names include David Cameron, Russian President Putin (though not directly), Ayad Allawi, former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president, the prime minister of Iceland and others.

In the UK, six members of the House of Lords, three former Conservative MPs and dozens of donors to British political parties have had offshore assets. The families of at least eight current and former members of the Communist Party of China’s Politburo have been hiding their wealth in offshore companies. Over two dozen of Mossack Fonseca’s clients have been those who are under international sanctions for supporting governments in Russia, North Korea, Iran, Zimbabwe and Syria. Their companies were harboured by the Seychelles, the British Virgin Islands, Panama and other jurisdictions.

Although Mossack Fonseca is the fourth largest law firm dealing in safe placement of funds in offshore tax-evasion havens, the Panama Papers – leaked by an anonymous source – are about 11.5 million documents pertaining to 300,000 cover-companies managed by the law firm. As for the legal defender of the PM and his family, it will be good to read what the firm says about itself. One leaked memorandum from a partner of Mossack Fonseca said: “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.”

In a 2008 TV interview, Fonseca said: “Together, we created a monster.” Ramses Owens, a partner in the firm, said: “Secure your wealth with an 82-year-old proven, virtually 100% courtroom-proof structure. This fascinating structure has managed to evade the slickest attorneys’ tricks and protect the wealth of individuals worldwide for the last eight decades.”

An offshore insurance provider in the Isle of Man reads: “How to stiff contingency lawyers, unscrupulous creditors and greedy ‘exes’ – all with this one savvy vehicle. This off-the-beaten-path structure does all that … and defers taxes. It’s perfect for beating wealth leeches at their own game.”

According to renowned economist Gabriel Zucman, 80 percent of the world’s wealth – amounting to $7.6 trillion – is stashed in these firms, resulting in the loss of $200 billion in revenues annually.

This has raised such an unprecedented storm over the fraudulent nature of world capitalism that G-20, G-8, OECD and other financial and tax institutions are meeting to find ways to regulate offshore safe-havens and plug the legal loopholes to hide sources of income, evade taxes and launder dirty money.

After the exposure of the Watergate scandal that cost Richard Nixon his presidency, we have now come to and are living in the post-WikiLeaks/Snowden times when some of the most secret massive data has been revealed through an obliging media that rewrote the parameters of access to information amid collapsing walls of secrecy and censorship.

The WikiLeaks exposed some of the ugly truth about the sole imperial power and the behind-the-scene wheeling and dealing of the power-players. It also helped ignite the Arab Spring, starting with the ouster of President Zine el-Abidine Ben Ali of Tunisia. The United States’ National Security Agency’s collection of the phone records of Americans was exposed in the data leaked by former intelligence contractor Edward J Snowden. And just recently, the San Bernardino case provoked a legal battle between Apple and the US Justice Department over encryption of the iPhone.

Now, thanks to the International Consortium of Investigative journalists (ICIJ), the world of finance, power and politics and the media is changing with the biggest ever exposure of dubious financial businesses in the form of the Panama Papers leak. What has come out is still the tip of the iceberg; much is yet to be revealed to keep the financial and political turmoil boiling.

Around 370 reporters from 100 media organisations have spent a year analysing and verifying the documents. The ICIJ is quite cautious and very careful to avoid any legal and ethical repercussions. With successive leaks over the years, hackers, freelancers and bloggers, rather than the traditional media, had taken the lead. WikiLeaks had accused the traditional media that if you keep 99 percent information you are doing one percent journalism. Now social and informal media is opening up new horizons of accessing information, and also creating a new era for whistle-blowers.

In the case of Pakistan, it is not just 200 persons or their offshore companies; reportedly, more are yet to be identified. Even if much more is revealed, it will be an extremely difficult job to dig out the reality and find substantial evidence to prosecute the accused. Pakistan is no less a haven for money laundering, tax evasion and corruption. We don’t even have laws and the institutional capacity to unearth the ill-gotten money that has been stashed overseas.

However, even if the investigators get a clear clue about the amount involved the accused could be asked to explain the sources of that unaccounted-for money. But, that is easier said than done. The variant of capitalism that we have in the country carries more features of what is called ‘primitive accumulation’ through bribes, commissions, tax evasion, rent-seeking, money laundering and fraudulent business transactions.

Times have changed. We cannot hide behind excuses, nor should we allow self-serving politicking to settle political scores. We have seen how the PPP was hounded in the past, and opponents were victimised. It is also a well-established fact that alleged corruption by politicians was used either as a ploy to marginalise civilian leaders or pack off elected governments. That did not help any cause, except an eventual breakdown of civilian and constitutional order. The civilian rule is already very fragile and cannot take the shock of PM Nawaz Sharif’s alleged involvement with the offshore companies and properties in London.

So far neither the opposition nor the government has come up with any workable investigative mechanisms. The people don’t have any faith in judicial commissions, and they don’t trust government-controlled agencies either. The best course for the politicians is to agree on a powerful, independent and competent investigative mechanism to probe all whose names have come in the Panama Papers.

In the meanwhile, parliament must initiate legislation to stop money laundering, tax evasion and corruption. It is time to strengthen accountability and investigative institutions such as NAB, FIA and FBR. The PM must know that this is the time to act, not opt for an escape route.

The writer is a senior journalist.

Email: imtiaz.safma@gmail.com

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