INSIGHT
The much needed political stability, without which there cannot be any economic stability, is yet again jeopardised as the issue of Panama leaks refuse to die down any time soon. The Pakistan Muslim League-Nawaz leaders, particularly Interior Minister Chauhdry Nisar Ali Khan fear undemocratic ouster of the Nawaz Sharif government. But he does not think the move could achieve any success.
Panama or Pajama documents, it is widely understood, are enough to unnerve the rulers, the proof of which is the sudden departure of the prime minister to London to defuse the situation. How that can be defused, however, is a million dollar question; given the worldwide uproar.
Generally it is said the issue that concerns the Sharif family may not have anything to do with tax avoidance or tax evasion, however, it certainly relates to maintaining high moral grounds by the rulers so as to set precedent for fellow citizens.
The situation on the ground is that all the five senior former judges, approached by the government, have refused to head any judicial or inquiry commission to probe the Panama leaks, which are considered the largest in whistleblower history. The emerging details suggest there are 2.6 terabytes of data files that need to be analysed, comparatively, the WikiLeaks published in 2010 contained 1.73 gigabytes of classified communications.
But those who carefully monitor political developments maintain that nothing will happen and the nation would soon see business as usual because of not having any effective governance system and a workable Constitution that guarantees equal accountability of all the people of the country.
“There are no checks and balances in our Constitution to prevent the occurrence of corruption and the wrongdoing of the rulers, therefore I do not think the Panama leaks would harm in any way our present rulers,” said former Deputy Chairman of the Planning Commission, Dr Nadeem ul Haque.
He asked why people invest in offshore companies, and replied himself by saying, “They want to hide their income and assets and thus avoid paying taxes in their own homeland.” Every scandal has some shelf-life, how important or serious it is and at the end of the day, it gets removed from the memory of the people.
Dr Haque regretted that all those including Musharraf, Zardari and Nawaz Sharif prefer to get medical treatment abroad and get their children educated outside Pakistan, besides investing in foreign lands. “This is ample proof that they do not have stakes in this country, and the saddest part is that they continue to survive politically and thrive monetarily and that too without any accountability.”
The former deputy chairman of the Planning Commission does not see any upheaval in the wake of the new financial scandal of the elite classes. “Mark my words, nothing will happen and the hue and cry you are witnessing today will disappear soon.” He believes the prime minister would survive the new onslaught against him by hook or by crook.
Dr Hafeez Pasha
Former Finance Advisor
“The State Bank of Pakistan approves an amount of up to five million dollars that can be taken abroad. In the case of the prime minister and his family billions were transferred outside the country. Since this amount was not declared through the normal banking channel, it obviously becomes a crime and money laundering, as they have not paid taxes on this money.”
However, renowned economist Dr Ashfaq Hasan Khan does not think the matter is so simple that it can be avoided or dumped under the carpet. He said billions of rupees have been taken away from Pakistan and invested in the offshore companies by the rulers, and this time around things may not be so simple.
The State Bank of Pakistan, he said, approves an amount of up to five million dollars that can be taken abroad. Any amount over $5 million needs to be approved by the Economic Committee of the Cabinet (ECC). “And this is the normal banking practice through which you take your money abroad. In the case of the prime minister and his family, billions were transferred outside the country. Since this amount was not declared through the normal banking channel, it obviously becomes a crime and money laundering, as they have not paid taxes on this money,” he said.
The most important thing, Dr Khan said, is how the government and the rulers could attract foreign investment in Pakistan, when they themselves were keeping their investment in the offshore companies - notorious for entertaining illegal money. “The moral authority of the prime minister has been eroded and eroded terribly and I honestly believe that he has lost any moral authority to rule this country at least till the time he gets his name cleared.”
He does not think there will be business as usual after the hype created by the media over the issue. “Who knows when the prime minister will return home and as long as he is away from the country, story after story will appear in the press and situation perhaps this time cannot be saved through media management,” Dr Khan said.
It was perhaps the first time that the prime minister in his over 35 years of political life reacted to Panama leaks instantly and announced the formation of a commission to probe the allegations against him and his family. But no such commission could be set up so far because the government has not been able to finalise the name to head that forum.
On the other hand the Supreme Court chief justice has made it amply clear that he should not be expected to take any suo moto notice or concede to establishing any high powered commission to take up the issue. In so many words he said that the government, which has at its disposal the National Accountability Bureau, Federal Investigation Agency and other bodies, should decide the issue.
The opposition parties, especially the Pakistan Tehreek-e-Insaf is demanding the setting up of a high level commission to probe the allegation against the prime minister. Imran khan is also seeking the resignation of the ruling party head. Though the Pakistan Peoples Party agrees with him on the issue, it is not asking the prime minister to step down.
Dr Nadeem ul Haque
Ex-Deputy Chairman, Planning Commission
“All those, including Musharraf, Zardari and Nawaz Sharif, prefer to get medical treatment abroad, and get their children educated outside Pakistan, besides investing in foreign lands. This is ample proof that they do not have stakes in this country. The saddest part is that they continue to survive politically and thrive monetarily and that too without any accountability.”
Other political parties including Jamiat Ulema-e-Islam, Jamaat-e-Islami, Awami National Party, and Pakistan Muslim League Quaid-e-Azam, are also demanding a high level inquiry against all those whose names have appeared in the Panama papers to discourage money laundering and tax avoidance.
The government side continues to reject the allegations of the opposition parties by saying that they only want to dislodge the prime minister and they do not have any case to win. The interior minister is cautiously talking about the issue by saying that the prime ministers’ two sons should offer their comments on the issue.
Provincial Law Minister Rana Sanaullah calls the Panama leaks, Pajama leaks, while others, particularly Information Minister Pervaiz Rashid, Talal Chaudhry and Danial Aziz do not respond to the allegations, but do accuse Imran Khan of concealing the financial affairs of Shaukat Khanum Trust. The information minister goes further by saying that probe against Imran Khan’s three children should also be undertaken. What have they done, the minister does not say anything concrete.
The government’s optimism, it appears, is coming in the wake of a number of scandals that have surfaced during the last few years including that of ephedrine, Ogra and Hajj; but no heads were rolled to become examples for others.
One does not see the formation of any commission so early. So far no terms of reference (TORs) have been made and people within the government concede that any commission’s mandate is likely to be too narrow to decide anything against the ruling elite. The law ministry is said to be busy in preparing TORs but could not complete it –thanks to political interference in the matter.
The entire issue revolves around taxes that are very low in Pakistan because rich do not pay their due taxes and often are found either avoiding or evading these taxes. As a result, the tax-to-GDP ratio, which once used to be 13 percent plus, has gone down to nine percent. This credit for this goes to former President Gen Pervez Musharraf, for having increased annual tax revenue from Rs600 billion to Rs1,100 billion. But when he started making political compromises, this increased tax-to-GDP ratio started coming down and since then has not picked up due to one reason or the other.
The saddest part is that regular money laundering has been taking place for the last many years. It is being done by politicians, bureaucrats, industrialists, rich agriculturists, former judges and former army generals.
The International Monetary Fund estimates that up to $1.5 trillion worth of illicit money is laundered every year in the world, which is close to five percent of the global economy. In recent years, drug money has been laundered in a bigger manner and this is being done with the active connivance of the offshore companies and banks in 40 countries.
It is also said that one trillion dollar goes out from the developing countries to safe havens annually, including Pakistan, as a result of which more and more people have started living below the poverty line. Simultaneously, such practices leave no good budget for healthcare and education. The phenomenon is also contributing in price hike that is gradually diminishing the middle class and turning it into lower middle class.
Part of the problem is that richer classes do not pay their due taxes and at the same time prefer to invest outside Pakistan. Somebody at the top will have to take the lead to put the country on a sound economic foundation and it will not happen unless the politicians of all shades and parties realise the gravity of the problem. They need to start paying their due taxes and avoid taking their money abroad.
The situation gets murkier when the politicians join hands for their own vested interests. Whenever the issue of taxing agriculture income comes in the parliament, both Pakistan Peoples Party and the Pakistan Muslim League-Nawaz, despite having serious differences over other issues scuttle the move because it suits both of them.
And so are other matters, which if taken seriously and honestly, could change the fate of the poor Pakistani nation. It certainly would a change for good. If that will happen is anybody’s guess, because the rulers do not really believe in delivering but only making themselves prosperous through all illegal and unlawful means.
The writer is a senior journalist based in Islamabad
