Panama Leaks: being ruled and fooled by Escobars

Ours are just a little more prominent

“In the United States, the mafia makes witnesses disappear so they can’t testify in court. In Colombia, Escobar made the whole court disappear.”

That’s a quote from the famous American drama “Narcos” based on life of notorious Columbian drug lord “Pablo Escobar”. Regarded as the mightiest drug lord ever born in history of this world, Escobar had very sturdy links with Panamian government, especially military dictator of Panama, Manuel Noriega. His famous drug cartel i.e. Medellin Cartel for a long time used Panama as a safe sanctuary for various illegal purposes.

Escobar was not merely a drug lord, his philanthropy made him popular among the masses; he enjoyed sound relations with the Colombian government and with many in higher echelons in USA, Panama and Latin America. His political connections were the main reason behind exponential growth and overnight success of his cocaine business.  In a nutshell, his pocket controlled everything; he was a state within a state implicitly vested with unbridled powers.

Interestingly, Escobars do exist in Pakistan, possessing the same qualities as the Colombian drug lord – the only distinctive feature they have is that they are also our political masters. The recent episode of Panama Leaks has unearthed this harsh reality: we as a nation are being fooled and ruled by Escobars.

Panama Leaks jolted foundations of many political set ups in the world like a shock wave. The resulting tremor has opened Pandora’s Box, revealing how the world’s rich, powerful and influential have hidden their wealth in tax sanctuaries. It was an unparalleled leak of 11.5 million files from the catalog of the world’s fourth biggest offshore law firm based in Panama, globally known as Mossack Fonseca. As per the information provided in documents, the firm formed secret shell companies and offshore accounts for unseen wealth of some of the world’s most influential personalities. Among these national leaders with offshore wealth are the former vice-president of Iraq, the president of Ukraine, the son of Egypt’s former president, the president of Russia, and the prime ministers of Iceland and the United Kingdom. Last but not the least, our own premier Nawaz Sharif has also been linked to Panama Leaks.

Before moving further, it is pertinent to throw some light on history of Panama’s evolution into an offshore tax haven. The foundation stone of this tax shelter was laid when the government first permitted foreign companies to register foreign ships -deliberately planned tactic to help USA’s Rockefeller’s Standard Oil attempt avoid taxes. In the 1970s, the country jumped into trading offshore accounts that provided additional level of protection to foreigners trying to circumvent snooping government eyes. In the 1980s, drug cartels started siphoning off their illegitimate gains through Panamanian-created corporations. In the 1990s, politicians, business tycoons, wealthy investors – among others – joined in.

The leaks have left Sharif and his aides astounded: some are trying to devalue the leaks, some are saying it’s a concocted tale, some are asserting it’s a misconstruction of facts and some are contending that it’s possibly a grand plot against the Premier. The cabinet’s tactic of uttering platitudes with utmost solemnity and appearing virtuous on television will not turn the tables and make the people of Pakistan buy the story. The aftershocks of the Panama revelation will continue for months – maybe years.

The leaks provide that Mariam Nawaz is the proprietor of Nielsen Enterprises Ltd and Nescoll Ltd and that both firms were established in British Virgin Island in 1994 and 1993. It is also mentioned that both Hussain Nawaz and Mariam Nawaz signed a document dated June 2007 that was part of a series of transactions in which Deutsche Bank Geneva lent up to $13.8 million to Nescoll, Nielsen and another company, with their  properties in London  as collateral. The information describes Hasan Nawaz Sharif as the sole director of Hangon Property Holdings Limited incorporated in the British Virgin Islands in February 2007, which acquired Liberia-based firm Cascon Holdings Establishment Limited for about $11.2 million in August 2007.

Nawaz has denied his link to any of the assets, while his children have given a variety of responses. Hussain Nawaz says that property business in London was financed by the sale of their steel mill in Jeddah although the London flats were purchased long before the Sharifs’ exile. Mariam has denied association with any of the offshore firms, despite the leaked documents’ and her brother’s statement otherwise. The Sharifs’ statements contradict both the Cabinet’s and their own from a decade ago.

At the moment, proving the Sharifs’ innocence or guilt is not easy, despite different legal procedures available whereby this matter can be investigated and settled.  Federal Investigations Agency (FIA) is mandated to probe money laundering under the Anti Money Laundering Act 2010 Act; however, it is applicable only on acts committed from 2008 onward. That’s after the alleged corruption’s timeline, and hence loses weight.

It also needs to be tested whether Forex rules of State Bank of Pakistan (SBP) were violated or not when these transactions took place? The Federal Board of Revenue (FBR) also under the provisions of Income Tax Ordinance 2001, possess wide powers to investigate tax evasion in relation to these transactions.

Another option is inquiry and investigation under National Accountability Bureau Ordinance 1999. Section 9(5) of the said Ordinance states that “A holder of a public office, or any other person, is said to commit or to have committed the offence of corruption and corrupt practices,if he or any of his dependents or benamidar owns, possesses, or has acquired right or title in any “assets or holds irrevocable power of attorney in respect of any assets or pecuniary resources disproportionate to his known sources of income, which he cannot reasonably account for or maintains a standard of living beyond that which is commensurate with his sources of income ”. Keeping mind the fact that two major transactions took place in 1993, 1994 (when Maryam and Hussein were students), it seems like a prima facie case is made out against Sharif Family under the said section.

The reason is that, firstly, the NAB Ordinance has retrospective effect from 1985 and secondly, it is almost impossible for college going children to invest in such huge amounts on their own. The only probable explanation is that the money belonged to the Nawaz himself and there was incident of money laundering. This argument is substantiated by the fact that our current Finance Minister Ishaq Dar, in April 2000 gave a statement in court of law under section 164 of C.r.P.C that Sharifs were involved in money laundering worth at least $14.886 million. Dar also implicated himself by confessing in the court that he opened fake foreign currency accounts in different international banks. He said that the entire amount in these banks finally landed in the accounts of Hudaibiya Paper Mills Limited.
However, the question of who will initiate and conduct independent inquiry proceedings against Sharifs remains unanswered.  Recent history demonstrates that the Sharifs like Escobar are above the law and possess a rare talent of escaping. Sharifs like Escobar can make a court disappear, the court is not literally disappeared rather very purpose behind existence of the court is lost i.e. it is unable to dispense justice. Sharifs are strong and mighty like Escobar, in their achievement box they have certain escape stories to be proud of, for instance, attack on Supreme Court of Pakistan, Model Town Commission report, Mehran Gate scandal, leaked audio calls of Khadim-e-Ala and ex-chief justice of Lahore High Court, exemption from suo moto powers, everlasting status quo order on NAB cases.

Although the prime minister has written a letter to chief justice of Pakistan regarding Panama Leaks investigation, it would have been much better if the chief had himself taken the initiative through exercise of suo moto power. Panama Leaks by no stretch of imagination is a lesser issue then two bottles of wine. Panama leak is a matter of public importance and has resulted in gross infringement of fundamental human rights. The ideal situation would have been that the apex court through a suo moto had ordered the government to form an independent special investigation team comprising representatives of the SBP, NAB, FIA, FBR, independent foreign forensic experts and sitting judges to investigate all those whose names have been disclosed in the Panama Papers.

How seriously this issue is managed will decide the fate of accountability and rule of law in Pakistan. What we need is a truly autonomous inquiry commission, which is entrusted with wide ranging and unfettered powers along with required terms of references. The powers of the inquiry commission and its terms of references must be decided by taking inputs of all the political parties. In addition to that, the commission shall have inherent powers to work freely without any pressure from the executive. If such a commission is established then Pakistan’s institutional arrangement will receive an incredible boost and serve the country well for times to come. If, however, a toothless inquiry commission is appointed comprising indebted and compromised members, the culture of immunity with which the Escobars roam freely in Pakistan will become an everlasting characteristic of our society.