ISLAMABAD: The Panama Papers may have generated a worldwide controversy over the financial activities of the global elite, but the revelations made thus far do not look to be too troublesome for the ruling PML-N.
Indeed, legal experts believe that even in the face of these disclosures, the papers prove almost no illegality on the part of the Sharif family or others implicated in the leak.
Reportedly, the leaked documents identify at least 200 Pakistanis, including the family of Prime Minister Nawaz Sharif, the late Benazir Bhutto, Rehman Malik and other prominent politicians and businessmen,
Documents released by the International Consortium of Investigative Journalists (ICIJ) reveal that Mariam Safdar, Hasan Nawaz and Hussain Nawaz “were owners or had the right to authorise transactions for several companies”.
Legal experts see little to no evidence of wrongdoing in revelations made so far
Mariam Safdar is named as the beneficial owner of off-shore firms Nescoll Limited and Nielsen Enterprises Limited, incorporated in the British Virgin Islands in 1993 and 1994, respectively.
In legal parlance, the terms ‘off-shore company’ or ‘off-shore corporation’ are used in at least two distinct and different ways. An offshore company may be a reference to: a corporation or any other type of legal entity which is incorporated or registered in an offshore financial centre or ‘tax haven’.
According to senior Supreme Court lawyer Hasnain Ibrahim Kazmi, establishing an off-shore company is a routine matter and the businessmen create off-shore companies in order to avail tax holidays in certain parts of the world.
For example, he said, the government had designated Hattar in Khyber Pakhtunkhwa (KP) and Gwadar in Balochistan as tax-free zones to attract foreign investment.
The purpose of declaring any place a ‘tax haven’ was to generate business in otherwise remote, under-developed and hard-to-reach areas, he said. The British government had declared the Virgin Islands a tax haven to encourage business activities there and, after a certain period, when the area comes at par with other business centres, the relaxation may be withdrawn.
Ahmer Bilal Soofi, an expert on international law, told Dawn said that the registration of an off-shore company was not a crime, rather it was a lawful act. However, he said, what is wrong is the way these companies are run.
“If the proceeds of crime are involved in these transactions, then the law would take its course,” he said, adding that the matter may then be probed by an investigation agency.
These revelations, Mr Soofi said, may cause some concern for the incumbent prime minister and his brother the chief minister of Punjab, their relatives are implicated in this controversy. The uncertainty will prevail until an investigation agency gives a clean-chit to the off-shore companies owned by the Sharif family.
A senior Federal Investigation Agency (FIA) official, speaking on condition of anonymity, told Dawn that nearly every businessman in Pakistan wanted to avoid paying taxes and that establishing an off-shore company in a tax-free zone was a lawful way of doing so.
In the past, he recalled, politicians would establish benami, or front companies in off-shore locations to invest ‘proceeds of crime’ in real estate and other businesses in Europe, especially the United Kingdom.
He pointed out that utilising an off-shore company to convert ‘black money’ into ‘white-money’ was an offence.
He claimed that former president Asif Ali Zardari had faced a NAB reference over similar charges. However, he suggested that it should first be verified whether there was any illegality in the establishment of these off-shore companies and whether any transactions had been made from Pakistan.
On Monday, Information Minister Pervaiz Rasheed also rebutted allegations of wrongdoing against the Sharifs, saying that they had never sent any money abroad except for when they were in exile after the 1999 military coup.
Published in Dawn, April 5th, 2016