Facing the music
The Panama Papers are making the headlines in most news outlets all over the world. Many readers question regarding the Panama Papers. In a nutshell it is an unprecedented leak of 11.5 million files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca. The records were obtained from an anonymous source by the German daily Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ further shared them with a large network of international partners, including dailies, journals and TV channels.
The documents shed light on the myriad ways in which the rich can exploit secretive offshore tax regimes. Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president Hosni Mubarak; the Russian President Vladimir Putin and the prime minister of Iceland, Sigmundur Daviǒ Gunnlaugsson. British Prime Minister David Cameron is also in hot waters owing to the discovery of an offshore investment fund run by his father to avoid paying taxes in Britain.
In order to understand the depth of the Panama Papers, it is essential to take cognizance of the operations of Mossack Fonseca, which is a Panama-based law firm whose services include incorporating companies in offshore jurisdictions such as the British Virgin Islands. It administers offshore firms for a yearly fee. Other services include wealth management. The firm is Panamanian but runs a worldwide operation. Its website boasts of a global network with 600 people working in 42 countries. It has franchises around the world, where separately owned affiliates sign up new customers and have exclusive rights to use its brand.
Mossack Fonseca operates in tax havens including Switzerland, Cyprus and the British Virgin Islands, and in the British crown dependencies Guernsey, Jersey and the Isle of Man.
Mossack Fonseca is the world’s fourth biggest provider of offshore services. It has represented more than 300,000 companies. There is a strong UK connection. More than half of the companies are registered in British-administered tax havens, as well as in the UK itself.
A major query arising is concerning the depth of the leak, which is one of the biggest ever – larger than the US diplomatic cables released by WikiLeaks in 2010, and the classified intelligence documents released to journalists by Edward Snowden in 2013. The 11.5 million documents are spread over 2.6 terabytes of information drawn from Mossack Fonseca’s internal database.
In the aftershocks of the Panama leaks, a number of governments have toppled. The Prime Minister of Iceland and President of Ukraine succumbed to public pressure and rendered their resignation. Brazilian president Dilma Rousseff, who has not been named in the Panama Papers but faced scrutiny for financial misdeeds, is facing impeachment. The Brazilians, who had elected her as President reposing their trust in her fondly, now have taken to the streets in millions baying for her blood. She is the latest casualty.
Prime Minister Nawaz Sharif tried to display naiveté by indulging in a long tirade over how his family fortunes were gathered and agreed to form a judicial inquiry commission to probe the possible wrongdoings of his children. He however insisted that using offshore structures is entirely legal. There are many legitimate reasons for doing so. However, not acceding to the demand of the opposition that the current Chief Justice of Pakistan be appointed to head the inquiry commission and also beating a hasty retreat to the safer climes of London made his involvement more suspicious. Indian media went into high drive implying that ISI had launched a soft coup to oust Nawaz Sharif. Some Indian media analysts lamented that they had invested in Nawaz Sharif to serve the interests of India thus giving him the kiss of death. Good sense prevailed and Nawaz Sharif decided to return home and face the music. He is fortunate that Pakistan comprises masses that are either dead or have no sense of democracy. They tolerate the corruption, sleaze and graft of their leaders without a demur. If they had taken out massive protest rallies like in Brazil or Iceland, the Prime Minister of Pakistan too would have faced impeachment.
It again befell the Chief of Army Staff General Raheel Sharif to issue a statement that across the board accountability is necessary for the solidarity, integrity and prosperity of Pakistan. While addressing an event at Signal regimental Center Kohat, without mincing words, the General stated that the war against terror cannot be won unless “the menace of corruption is uprooted.” He demanded across the board accountability for the solidarity, integrity and prosperity of Pakistan. Speaking in the context of waging the war against terror, he reiterated that it cannot be won unless the menace of corruption is uprooted. It is up to Nawaz Sharif to read between the lines.
Unfortunately, team Nawaz has little to offer in the defence of the Prime Minister other than attacking the PTI leader Imran Khan’s handling of the Shaukat Khanum Cancer Hospital’s financial matters. Two wrongs do not make a right. Moreover, Nawaz Sharif is neither the only Pakistani politician, who has been stashing funds in offshore accounts. The writing on the wall is clear, those corrupt politicians, who have accumulated ill gotten pelf and transferred them into secret off shore accounts and yet claim they serve the nation, must get their wealth back to Pakistan. Accountability has to be across the board and more importantly, it is essential to draft and adopt strict legislation to ensure a strict tax regime and adherence to the law as far as transferring money into offshore accounts to avoid taxes is concerned. It is imperative that the people of Pakistan demand that the politicians who present themselves for election to public office, should not be tainted with corruption.