Other people’s money

April 21, 2016

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The writer is a member of staff.
The writer is a member of staff.

OF all the questions that are before us at the moment, there is one that needs to be asked first. What is the source of the funds revealed in the Panama Papers? Other matters connected to whether they have been taxed or not can come later.

The Sharif family is working to build a story to claim that the funds were earned by the offspring of the prime minister through business ventures abroad. Since the money was earned in Saudi Arabia, and routed through a tax haven into a property investment in London, no Pakistani laws are relevant, they will argue.

There will remain the matter of the $20 million from a private bank in the early ’90s, but if history is any guide, this matter too will be very hard to build any kind of a legal case on. In fact, in a court of law it will be very difficult to find an actionable path forward based on the disclosures in the Panama Papers.


The fact is Zardari did recover and so will Sharif. And they both know it. Hence the smug confidence.


But in the court of public opinion, the verdict is already in. In the court of public opinion, it doesn’t look good when the family of the leader of an impoverished Third World country is found to own millions of dollars worth of assets in foreign countries, with elaborate arrangements made to conceal the funds. It is even less impressive that the same leader has a history of accusing political opponents of corruption, to the point of hounding them out of the country or throwing them in jail on charges of misappropriation of public wealth.

It looks even worse when the same leader travels to London right after these hidden assets have been exposed and sparked a national furore, where he is photographed presumably shopping for expensive suits in Savile Row, and Rolex watches, and driving a Bentley.

This London trip was Sharif’s moment of shame, the equivalent of when Zardari was photographed landing in a helicopter on his estate in northern France while the floods ravaged the country back in 2010. “He will never recover from this” members of the PML-N were saying in those days. What a PR disaster it was.

Fact is Zardari did recover and so will Sharif. And they both know it. Hence the smug confidence.

The elaborate global network for concealing, moving and laundering ill-gotten gains is far too powerful for any single country to stand up to any more. An estimated $21 trillion is hidden in these cracks in the world’s financial system according to a study in 2012 commissioned by the Tax Justice Network. Fiscal authorities of every major country, particularly those whose leaders have been named in the leaks, have met and looked for ways to try and apprehend the money moving through these centres. And now they’re looking for help to multilateral bodies like the IMF.

Back in the late 1990s, a Senate committee in America had investigated these tax havens and secrecy jurisdictions, and in its report gave the examples of four Third World leaders who were channelling vast amounts of wealth through these jurisdictions, with the help of some of the largest American banks. The inquiry focused specifically on Citibank and its private banking division in those days, whose client list had included drug lords and heads of state from Latin America and Africa. One of the cases whose details were given in the report was Asif Zardari.

John Reed, then CEO and president of Citibank, testified before the Senate subcommittee that produced the report that when he heard of the Zardari accounts, which were opened in Switzerland, he thought whoever opened those accounts “must be an idiot”.

But that individual was not an idiot. He was a good bank officer, as the remaining portions of the report detailed. The largest American banks were involved in the business of moving and laundering ill-gotten gains from around the world in those days, and the business was a profitable one. Emails between bank officers cited in the report showed not only that handling these monies, of criminals and leaders from across the Third World, brought great returns and bonuses for the officers who dealt with them.

But today the system of concealing and laundering funds has become so large that it can challenge the largest mainstream authorities of the global financial system. It’s not only Third World criminals and crooks who are using it now, but almost everyone with money who would prefer to not pay taxes or shoulder any of the burden for maintaining the system from which they draw their riches.

Given the massive requirements for money in politics, the availability of rentier possibilities that power brings, and the elaborate system for transferring your proceeds into hidden destinations only to have it appear in another part of the world under no identifiable name, the power of any of our institutions to actually stand up to this reality inspires little confidence.

So should we just resign ourselves to living with crooks? Or should we, once again, go running into the arms of the military, which has always used corruption as a reason to legitimise past seizing of power? Or should we believe that somehow, through the force of his personality alone, Imran Khan can deliver us from this state of affairs?

My answer is none of the above. Our institutions are no match for this monster, but that doesn’t mean they shouldn’t be mobilised anyways. Previous military regimes have not proved themselves exceptions to the rule. And Mr Khan, by gleefully agreeing to play into an old game of political engineering is actually part of the problem, not the solution.

The only solution is to drain the swamp slowly by bringing down the cost of conducting politics, ending horse-trading and cobbling together temporary alliances to promote temporary ends. Of course, the Sharif family ought to be investigated to the fullest extent possible, but don’t expect miracles. The man is smiling for good reason.

The writer is a member of staff.

khurram.husain@gmail.com

Twitter: @khurramhusain

Published in Dawn, April 21st, 2016