KARACHI: When the Panama leaks hit the headlines in Pakistan suddenly everybody said what was happening and became very emotional, said retired Justice Shaiq Usmani, adding that people forgot that offshore companies had existed even before the 1970s to avoid taxation.

Speaking at a session on the legal and business aspects of the Panama Papers organised by the Pakistan Institute of International Affairs on Thursday evening, Justice Usmani explained that anyone could open an offshore company; the problem started when people who ran your company used public money and parked it there.

For the last several years, he said, this had been happening in Pakistan and other countries. He added that Panama was just one place people had offshore companies, other places include British Virgin Islands, Cayman Islands and Bahamas. These places, he explained, were tax-free havens as they had lax tax and secrecy laws which restricted the governments from sharing names. He said that 75 per cent of the world’s shipping industry ships were owned by offshore companies.

“What is the hoopla about? This is just 500 people who didn’t pay their taxes. There are more than 500,000 people here who haven’t,” he said. “What is lost is lost. That money is not going to come back. What the government and lawmakers should have done after the leaks is pass laws and regulations to make sure it didn’t happen again.”

He discussed how offshore companies were an off-shoot of limited liability companies.

He explained how people avoided tax and how it became easier to keep money earned through illegal means such as corruption and criminal activities in offshore accounts.

To discuss the investigative, business and social aspects of the leaks, PIIA had invited former LG minister Sindh Agha Masood Hussain, Prof Dr Tanweer Khalid and AF Ferguson & Company’s Mohammad Raza and Shabbar Zaidi.

Mr Hussain said that there were more than 200 people who had offshore companies in Panama. He added that some people he had spoken to had told him that they kept their money in offshore accounts owing to the unstable situation in the country, security threat as well as for tax evasion.

Dr Tanweer Khalid, a political scientist and faculty dean at Ziauddin University, said: “The Panama Papers are an important milestone in data journalism”. She said it took the journalists one year to investigate and verify the 11.5 million financial papers.

She said it was important to discuss the legal aspect of the Panama Papers to understand how the leaks would affect business and society.

Mohammad Raza claimed that the Panama leaks were just the tip of the iceberg in terms of offshore accounts. “Panama is just one tax haven and this is information from just one firm,” he said, adding that there were several countries and several firms that should be looked into.

Talking about the Panama Papers, he said the information was incomplete as the whistleblower and journalists had only uncovered names — not their financial statements. He said that wide estimates suggested that there could be $70 billion to $100bn kept away in offshore companies.

“This is a blessing in disguise,” he said, adding that now offshore companies and tax evasion could be discussed openly.

“Any company formed outside Pakistan is offshore — but we are talking about companies set up in tax havens such as the Isle of Man etc,” he said. “These are mostly shell companies — this means that they don’t do any business or have money in the country where they have been registered.”

Mr Raza also discussed the foreign exchange regulation and income tax laws in detail.

Published in Dawn, May 27th, 2016