Mr Muhammad Hamza Tanvir is an independent journalist and a political analyst, focusing primarily on regional and global strategic and political issues. He has authored numerous articles for different national and international publications.
Introduction
The allegations of corruption on the political opponents have been a trend in the political culture of Pakistan, but in the last decade, these allegations and charges of corruption — like the Panama papers and the Pandora papers — have given a new transition to the politics of the country. PTI succeeded in the elections of 2018 based on the allegations of corruption on the two biggest and oldest political parties of the country: the Pakistan People’s Party (PPP), and the Pakistan Muslim League (Nawaz) (PML-N).
The Panama leaks scandal seconded the accusations of the electoral campaign of PTI. The central leadership of PPP and PML(N) were under serious allegations of possessing offshore companies which they allegedly bought with the money they earned through illicit means. The Panama papers gained much popularity in Pakistan as the politics of the country was still revolving around the Panama cases.
The recent revelation of the Pandora papers has opened a new pandora box in the country. This time, people close to the Prime Minister of Pakistan, Imran Khan, are accused of holding offshore companies. This has added to the malignity of the government as it is already facing huge criticism because of burgeoning inflation. The opposition of the country now seems happy as the close allies of the PM are now enlisted among those who have offshore companies.
The PTI government is now likely to face more difficulty at the grass-root level because the ordinary citizens of the country are now looking at the government to take strict actions against the cabinet members and close allies. The expectations of the common men in Pakistan depict that they have little knowledge of what an offshore company is and when it could be regarded as illicit to take action against the holder of the company.
What are the Pandora Papers?
The Pandora Papers is a global investigation collaboration that involves more than 600 journalists from 150 media groups that are from 117 countries. The investigations were conducted under the auspices of the International Consortium of Investigation Journalists (ICIJ).
The investigations are predicated on the unveiling of the confidential records of 14 offshore service providers that dispense professional services to rich corporations and individuals who seek to incorporate trusts, shell companies, foundations, and other entities in no or very low tax jurisdictions.
The owners are enabled to enshroud their identities from the common people and tax regulators. The providers also abet them to open bank accounts in the countries that have few financial regulations – also known as tax havens. The leaked data was shared with media outlets around the globe in a host of formats including images, spreadsheets, documents, and emails.
The 2.94 terabytes leaked data contains information of the directors, stakeholders, and other officials involved. The owners of these entities are registered in Hong Kong, the British Virgin Islands, Belize, Panama, and many other tax havens.
The offshore companies are not only possessed by public figures but some ordinary people are also included in the Pandora Papers. The main rationale behind making such companies is tax evasion. They can also be linked to financial crimes and money laundering.
Who Is Involved?
Scores of people including politicians, celebrities, and renowned persons from diverse fields are accused of having offshore companies. As per reports, 35 leaders, both current and former, are accused in almost 11.9 million leaked documents that embrace luxury mansions in different parts of the world.
Although in many countries using shell companies or possessing offshore companies is not illicit, the Pandora revelations have added to the chagrin of the leaders who have always shown strong abhorrence to corruption. Many international celebrities and leaders have also been named in the Pandora Papers.
In India, almost 300 people are accused of having offshore companies and the names of Sachin Tendulkar and Anil Ambani are the most prominent amongst them. From Pakistan, almost 700 people are named in Pandora Papers. Patrick Achi, the Prime Minister of Ivory Coast, also refuted the allegations of holding a Bahamas-based company through concealed ownership.
Similarly, King Abdullah II of Jordan also rejected the allegations of being involved in making offshore companies worth $100 million. President Vladimir Putin is also being indirectly connected through partners for having secret resources including a waterfront home in Monaco. Kremlin has rebuked these allegations and labeled these accusations as being “largely unsubstantiated claims”.
Dmitry Peskov, the spokesman of the Kremlin, has stated that they did not see anything on hidden wealth with Putin’s inner circle. In Pakistan, the close allies of PM Imran Khan and his cabinet members including their family members are also alleged to be involved in holding offshore companies. Furthermore, some famous politicians from the opposition, some army generals, and media personnel are also allegedly named in Pandora Papers.
Among the politicians, Minister of Water Resources Moonis Elahi; PTI leader Abdul Aleem Khan; Minister for Industries and Production Khusro Bakhtiyar’s family; PM’s Former Adviser for Finance and Revenue Waqar Masood Khan, Abdullah Masood Khan; Finance Minister Shaukat Tarin and his family; PTI donor Arif Naqvi; PTI donor Tariq Shafi; PPP’s Sharjeel Memon; PML-N’s Ishaq Dar’s son Ali Dar; PML-Q boss Chaudhry Pervez Ellahi’s wife; and Yawar Salman son of former FBR chairman and Finance secretary Salman Siddiq are the most prominent.
CEO of Axact Shoaib Sheikh, Arif Usmani of National Bank of Pakistan, National Investment Trust’s MD Adnan Afridi, and renowned Industrialist Javed Afridi are among the high-profile businessmen allegedly named in the Pandora Papers investigation. Pandora Papers have also included the names of some army generals and their family members.
Among them Retired Army officer and former Minister Raja Nadir Pervez, Retd Maj Gen Nusrat Naeem (former DG ISI of counterintelligence); Umar and Ahad Khattak, sons of former Chief of Pakistan Air Force Abbas Khattak; Lt. Gen. Shafaat Ullah Shah; Retd Lt. Gen Habibullah Khan Khattak’s daughter Shahnaz Sajjad Ahmed; Muhammad Hasan Muzaffar, son of Retd Lt Gen Muhammad Afzal Muzaffar; and Zahra Tanvir, wife of Retd Lt Gen Tanvir Tahir, are named in the Pandora Papers.
The Gourmet Group – the owner of GNN TV channel, Arif Nizami (late) publisher of Pakistan Today, Sultan Ahmed Lakhani publisher of Express Media Group, CEO of Dawn Media Group Hameed Haroon, and Mir Shakil-Ur-Rahman publisher of Jang Group are amongst the most prominent media moguls accused in Pandora Papers as per a report of Dawn News.
What is an Offshore Company?
As per ICIJ, offshore financial entities or tax havens are countries or places having little or no corporate taxes and hence permit outsiders to easily set up businesses. These tax havens also ensure minimum public disclosure about the ownership of the companies. They are often regarded as a secrecy jurisdiction for the intrinsic process of extracting information from these tax havens.
They are created to evades taxes and regulatory oversight. Individuals and companies often use shell companies to mask the ownership and other relevant information about the finances involved in buying those companies. Some of the most well-known tax havens include the Cayman Islands, Switzerland, Macau of China, the Isle of Man of Britain, the Cook Islands, Luxembourg, Monaco, Panama, the British Virgin Islands, and Bermuda.
Banking laws in these regions are designed to conceal the identities of the owners of the bank accounts. These countries offer such secrecy because it helps them attract money from all around the world which strengthens their economy. Having an offshore company is not a crime or offense according to the law if the company is not involved in any illicit activity.
However, not declaring the company in the tax returns can result in legal actions against the owner of the company. According to Financial Action Task Force (FATF), offshore companies or trusts can be owned for legitimate uses like mergers and acquisitions, business finance, and tax planning.
Moreover, people from countries with political instability and high crime rates can also use offshore accounts for the protection of their wealth and life. The pervasive red-tape in Pakistan coerces the business community to invest their money in the tax havens where ease of doing business is much higher than in Pakistan, as the bureaucratic travails have made it difficult for the businessmen in the country to comply with the law.
Although there are chances that offshore companies and entities could be used by terrorists and other criminals to hide the source of their money, it would be apt to surmise that not everyone possessing an offshore company is doing some illicit activity.
So, people must fathom that they must not take all the people named in the Panama case or Pandora case as criminals because they might be using these offshore companies for some valid reason but their true intentions can only be discovered by an impartial investigation by the government of Pakistan.
Pandora Papers: A Boom to the Politics of Allegations
Much of the focus of the incumbent government had been on pushing the opposition to the walls by accusing them of corruption due to Panama Papers revelations instead of focusing on improving the living standards of the common citizens of the country by eradicating poverty and illiteracy from the country.
The involvement of several cabinet members and close allies of PM Imran Khan will provide further impetus to the politics of allegations against each other in the country. PM Imran Khan has pledged to investigate the wrongdoings, but it will be hard for the government to conduct impartial investigations as it can result in losing the close allies of the incumbent government.
The Pandora Papers have brought the opposition and the government in the same line, as people from both sides are accused of setting up offshore companies and accounts. The opposition of the country now holds a stronger position and can rise the Pandora Papers issue in the upcoming general elections.
Pandora Papers are a test for PM Imran Khan as it’s time for him to prove what he had been saying throughout his political career – unbiased and similar actions against all those involved in illicit activities. Although the Pandora Papers will further polarize the politics in the country, it will have a little ameliorating impact on the plight of the people of the country as the politicians will remain busy playing blame games instead of focusing on good governance and development issues in the country.
Furthermore, the Pandora Papers have opened fissures among the government benches which can be used by the non-democratic forces in the country to pressurize the PTI government in case of any conflict in the future.
The timing of the Pandora Papers is also very crucial given the shifting paradigm of the power structures of the world as these papers could be intended to fuel political instability in many countries similar to the Arab Spring but given the reaction of the people in most of the countries, it seems less likely that any such agitation would start in any country as a response to the revelations of Pandora Papers.
PTI government must conduct impartial investigations against all named in these papers and convict those involved in any illicit activity to save its face and to provide legitimacy to its slogan of being a corruption-free party. The government’s attention to good governance and development projects could help to increase the popularity of PTI among masses of the country and they will then pay little heed to Pandora Paper accusations.
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