A question of credibility
The Panama leaks have taken the whole world – including Pakistan – by storm. In response, the government has publically stated than an inquiry commission headed by a retired judge will look into the matter particularly that involving the Prime Minister’s children’s assets. A number of observers on television have stated that the Prime Minister’s family have owned the Mayfair apartments for some time – at least since the mid-nineties, but questions still remain regarding the source of funding of these apartments, as well as how they are maintained and how the mortgages – if any – have been serviced.
As per the tax laws of Pakistan non-resident Pakistanis do not have to declare their income or file a wealth tax statement to Pakistani tax authorities. In that respect, legally, the Prime Minister’s sons are within their rights to stick to their guns and not elaborate further. Similarly, if indeed there is a trust set up whose beneficiary is Mariam Nawaz, then she is well within her right for tax purposes not to disclose of any income until she has actually gained any benefit from that trust.
However what is being questioned is the chronological history of the London flat acquisition and the source of funding for this acquisition. Many an observer has openly questioned PM Nawaz’s son’s contention that the properties were acquired in 2006 after he had sold his Steel Mill on the Mecca-Jeddah road. The point is that the Prime Minister of Pakistan’s own credibility – like that of many other world leaders including UK Prime Minister David Cameron – is in tatters. People feel that instead of hiding behind “all shall be revealed” to the so call “Judicial Commission”, the Prime Minister and his family should come clean and truthfully tell the people of Pakistan the lay of the land. According to today’s newspapers no retired judge is willing to head this commission. And given the treatment mooted out to Justice Ali Baqar Najafi’s report of the Model Town incident, one doubts if any serving judge who values his credibility would even take up this thorny issue, as even before he or she starts – it’s damned if you do and damned if you don’t!
In case an actual inquiry is held (given the multi jurisdiction of this case) two entities are qualified to be involved in it to ensure an impartial yet accurate investigation. The first is the World Bank Stolen Assets Recovery (STAR) initiative (www.star.worldbank.org). This is a partnership between the World Bank Group and the United Nations Office on Drugs and Crime (UNODC). This initiative supports ending of safe havens and works with developing countries to prevent laundering of stolen funds and helps with the recovery and return of proceeds of corruption and drug monies.
The STAR initiative is based on three sub elements
- Capacity building in developing legal framework an institutional expertise and skills to discourage corruption and recover assets,
- Assistance with Policy initiatives to end corruptions and
- Case Assistance- practical advice on strategy and management of asset recovery efforts including acting as a facilitator in bringing together different jurisdictions in recovery of assets.
A recent case involved Siemens (the global energy company that agreed to pay US $ 100 million as part of its settlement for misconduct in its global business) and a World Bank investigation into corruption in a project in Russia involving a Siemens subsidiary. However this initiative largely depends on the government entities lending support and agreeing to work with the World Bank, if this is not forthcoming then the results of this investigation may take a long time to reach fruition.
The second of the entities to be involved are private firms that specialize in remediating and recovery of Assets, a mixture of forensic accounting and global asset search. Although all the big five accounting firms have a forensic accounting department, to the best of my knowledge the global leader in the field of international asset recovery is the Risk Management firm Kroll (www.kroll.com). The US $ 1 billion firm is the go-to firm for due diligence on ethical business practices and corporate integrity issues – including due diligence on hiring of senior executives, acquisitions and pre IPO risk management etc.
Forensic accounting requires close examination of accounting ledgers, books, records and agreements including bank transfer records to determine what really happened and whether local laws and company compliance procedures were adhered to? In addition to accounting experts, legal or rather prosecution experts are required to provide insight and guidance on financial misconduct and regulatory compliance.
Asset search involves tracing of funds to help answer the age old question “where is the money”? This is complicated by the use of multijurisdictional or off shore companies – directly owned or through legal proxies; creditor unfriendly jurisdictions and complex investment ownership structures, nominees and alter ego companies. The expertise include understanding and access to databases for off-shore entities, business associations or partnerships, financial investigation and law enforcement.
For the sake of the country it would be much simpler if our leaders regardless of party affiliation actually come out clean with the facts, as it will be a time consuming and costly affair to get to the bottom of the case. By dribbling half-truths, and attacking others instead of addressing the facts, all that the PML-N reinforce is that they have something to hide – ruining the credibility of the Prime Minister. Integrity and trust and the single most important components for defining a leader, by obfuscating or even trivializing the issue Mr Nawaz Sharif and his family are seriously in danger of betraying their voters’ trust.
