Panama Leaks

The Offshore World

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Dr Ahmad Rashid Malik

What is happening in the offshore world? Revelations are threatening. All is secret including ownership and wealth. No details are exposed. They are safe havens. Weather it is democracy, military rule, kingdom, or socialist state all is run by a financial scam. Black money comes in many ways and offshore companies are safe havens for managing black accounts the world over. British Virgin Islands, Panama, Bahamas, Cayman Islands, and Seychelles are notorious for black accounts.

Interestingly, over 45 percent worlds’s offshore companies are found in the British Virgin Islands, politically controlled by United Kingdom. There are around 500,000 offshore companies on the British Virgin Islands. Pressure is mounting on UK to end the special status of the Islands.

The Panama Leaks got 45 years of data of 214,000 offshore companies mostly manage by corrupt leaders, businessmen, smugglers, drug traffickers , criminals, terrorists, mafia, military men, bureaucrats, and NGOs across the developed and developing countries during 1970-2016.

The Panama Leaks built a new synthesis about massive corruption around the world for over four decades. The leaked documents are around 11.5 billion – a data never found before in human history. The leaked data was analysed by a German-based newspaper, Süddeutsche Zeitung in cooperation with the International Consortium of Investigative journalists (ICIJ), numbering around 400.

Not necessarily all offshore companies are illegal but most of them are. They do easy and large transactions. Most companies are secretly hiding the names of actual owners and working on proxies. Actions are underway in many countries such as Germany, Austria, Australia, New Zealand, Indonesia, and Iceland.

Banks in Singapore and Hong Kong rejected the pressure. Russia denied the charges as unfounded. Ukraine defended its position.  Saudi Arabia remained silent. China blocked the Panama leaks information. The Prime Minister Sigmundur David Gunnlaugsson of Iceland resigned next day of the opening of the scam. The Indian Government started the probe against 500 Indians involved in offshore business. The Transparency International called to outlaw all secret companies.

Pakistan is a safe haven for corrupt rulers from the time of the Ayub Khan. The name of the present ruling family of Prime Minister Nawaz Sharif and his brother is prominent among the list of leaders provided by Panama Leaks. Leaders from China, Ukraine, Russia, Saudi Arabia, Syria, Libya Iceland, Argentine, Azerbaijan, Egypt, Malaysia, South Korea, South Africa, UAE, and UK are among others. The names of 200 Pakistanis are linked with mega scam among them are Saifullahs, Behria Czar, Bhuttos, Hashwanis, Lakhanis, and Dauds.

The event went like a thunder storm in Pakistani politics. NAB said that it will investigate. A judicial commission will probe allegations levelled against the children of Prime Minister Sharif. Opposition leader Khurshid Shah demanded that the Prime Minister should resign over his family unchecked overseas investment and to hide their fortune.

It is learnt that the family setup four offshore companies in the British Virgin Islands through Mossack Fonseca. Additionally, Maryum Safdar, daughter of Prime Minister Nawaz Sharif, owns several companies overseas. Nielsen Enterprises Limited and Nescoll Limited, incorporated in 1994 and 1993, belong to her. These companies own six properties in London. Hasan Nawaz Sharif is the owner 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 US$ 11.2 million in August 2007.

The Sharif family defended its position. Accepting offshore companies ownership, the Sharif family is of the opinion that their business is legal and transparent. A spokesman of the Sharif family made it clear that there are no wrongdoings. The spokesman said that Hussain Nawaz and Hassan Nawaz have been the residents of Saudi Arabia and the US respectively for over two decades and neither was a tax payer in Pakistan. He said they have been diligently filing their company reports and tax returns in their legal and tax jurisdictions.

Federal Information Minister Pervez Rashid said that Prime Minister Sharif and Chief Minister of the Punjab Shahbaz Sharif own no assets overseas. As the family was expelled from Pakistan by the military ruler, they set up legal business overseas. The judicial commission appointed by Prime Minister Nawaz Sharif will probe into the Panama Leaks with regard to the Sharif family.

A through and a transparent investigation is essential to weed out financial corruption across the board in the country and to clear the record of the Sharif family. Stringent anti-tax measures should be adopted. Smugglings and drug-tracking should be effectively controlled. After thorough investigation there will be more causalities. The character of the Mossack Fonseca is highly dubious too. The safe havens and black money is exposed. The revelation will help create transparent governance. The electoral laws should incorporate measures on the basis of these new realities.

The writer is a Senior Research Fellow at the Institute of Strategic Studies Islamabad.