In 2016, we have all become familiar with the “Panama Leaks” which is a giant leak of more than 11.5 million financial and legal records exposing a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies to take place. This was coupled more recently with the “Bahamas Leaks” where a cache of 1.3 million files from the island nation’s corporate registry provides names of directors and some owners of more than 175,000 Bahamian companies, trusts and foundations registered between 1990 and early 2016.
The unprecedented revelations via the Panama and Bahamas leaks has led to a global reaction and or moratorium in the realms of anti-money laundering, corrupt practices, tax evasion, nepotism and malpractice. Whilst is important to emphasise here is that holding or investing in offshore companies- accounts-funds is not illegal per se, where it becomes extremely problematic is when senior public state officials and CEOs of multi-national companies, supra-national organisations have had direct or indirect stakes or interests in these offshore havens without having disclosed these interests as part of their official inaugurations to key senior roles and high public offices where the laws/ rules within those jurisdictions demand that such disclosures should have been made. Offshore companies can be used to hide assets from tax authorities, launder the proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth. This then leads to a lack of transparency with reference to the financial and wider dealings of such senior officials and especially when such individuals hold high public offices with their networks lurking in the shadows, it leads to a conflict of interest and a breach of trust between representatives of the state and its citizens whom these high officials espouse to serve.
The Panama and Bahamas leaks have unraveled unknown or little-reported connections to companies owned or run by current or former politicians, their family members from the Americas, Africa, Europe, Asia, South Asia and the Middle East. As a result of these disclosures, one of the first casualties was Iceland’s Prime Minister Sigmundur Davíð Gunnlaugsson who was elected to Parliament as a reformer in 2009, promising transparency following the ruinous collapse of three Icelandic banks the year before but had failed to disclose that his family secretly held bonds worth millions of dollars in the same banks, through a shell company in the British Virgin Islands. The resignation was preceded by more than 20,000 protesters who had massed outside Iceland’s Parliament demanding the resignation of the Prime Minister and fresh elections.
In England, David Cameron who was the Prime Minister and leader of the Conservative Party at the time, had to publish six years of his tax returns in a bid to end scrutiny over his investment in an offshore investment fund Blairmore Holdings Inc which was set up by Ian Cameron, David Cameron’s father in Panama in 1981 and moved to Ireland in 2010 the year in which David Cameron sold his £30,000 investment in his father’s offshore fund just four months before he entered Downing Street. Post the leaks, the UK held an Anti-Corruption Summit in May 2016 where global actions were agreed to expose corruption, punish the perpetrators and support those affected by corruption and drive out the culture of corruption wherever it exists. Key strides have been made since the summit in presenting a Criminal Finance Bill 2016 before Parliament where amongst the changes proposed is the failure to prevent the criminal facilitation of tax evasion and also that foreign companies seeking to buy property in the UK should be forced to reveal their owners.
In Pakistan, the Panama Leaks has revealed many prominent leading current and former politicians who have direct or indirect links with offshore companies along with prominent businessmen and media moguls.
The current Prime Minister Nawaz Sharif is linked to 9 companies connected to his family name. Those involved include Hassan Nawaz, Hussain Nawaz and Maryam Nawaz. Relatives of Punjab Chief Minister and brother of Prime Minister Shahbaz Sharif are linked to 7 companies whose names are Samina Durrani and Ilyas Mehraj. Now deceased former Prime Minister Benazir Bhutto was linked to one company. However, relatives and associates are linked to others.
The above revelations have not led to any official public resignations as such but have led to increase pressure from opposition parties, in particular from Imran Khan’s PTI party that PM Nawaz Sharif should resign as a result of the revelations disclosed in the Panama Leaks primarily on the grounds of conflict of interest and lack of disclosure. A constitutional petition on behalf of PTI Chairperson Imran Khan has been submitted to the Supreme Court of Pakistan seeking the disqualification of PM Nawaz Sharif and members of his family for their alleged involvement in the Panama Leaks furor. The National Accountability Bureau (NAB) in Pakistan has given hints of further investigations into the leaks but up until now, no concrete pathway has been agreed.
As an ardent observer of international relations with a keen interest in South Asian affairs, the Pakistani media have focused on the offshore financial aspects of senior politicians with occasional diversions to impending regional tensions but what seems to have been neglected now and previously is what I would coin as “offshore politics” that has plagued Pakistani recent political history in particular and previous generations too.
When one observes First World, Developing and Emerging Nations the political elite within these respective nations ensure that their key domestic cabinet meetings and decisions take place within the geographical terrains of their own sovereign nation states. Very rarely would one see for example the Prime Minister of the UK, President of the U.S.A, Prime Minister of India or Bangladesh to name a few countries holding their key domestic cabinet meetings in an offshore land. The respective countries would have foreign ambassadors and diplomats who would be designated with key roles to perform on behalf of a sovereign nation abroad. When a head of state from these respective nations would visit a prominent country abroad, they would be given the appropriate protocol that a visiting head of a sovereign nation gets. The head of state may attend key summits and international diplomatic meetings on global policies and regional affairs, but it would be a misnomer to expect that key domestic cabinet meetings would be taking place abroad often in confidence via backdoor channels at the behest of a foreign country. Has one ever heard of the UK Prime Minister holding a key domestic cabinet meeting in the U.S. or a U.S. President holding a domestic cabinet meeting in the UK!
Let us turn to Pakistan, where offshore political theatrics often have more credence in terms of pulling the strings as to what will unfold domestically than domestic political dynamics themselves. From “London Plans” to “deals” in Abu Dhabi, Dubai, and Washington to politicians in exile pulling strings in London vis-a-vis Nine Zero in Karachi along with transitional residents in Saudi Arabia and Mayfair pulling the strings for Punjab and wider Pakistan all colluding to hymn the tunes of the Pied Piper at the behest of the masses and sensitive political factions across the country.
For Pakistan to achieve its optimal potential, it is high time that the political elite in particular and the wider elite that have ties to Pakistan focus on redirecting their offshore energies, resources and wealth onshore within Pakistan. Whilst it is paramount to have strategic international economic, political and diplomatic ties and cooperation; the future prosperity and development of Pakistan lies in forming an institutional and governance structure operating from within that is sincere to the core values that underpin what the founding fathers of the nation fought for. Until this political and economic reality of self-sufficiency does not kick in, the spiral of offshore political turbulence will continue to plague Pakistan for future generations.
By Kaleem Hussain
The writer has a background in law, economics & government studies, Warwick University, UK-A Young Diplomats Forum Member & frequently writes on contemporary social, economic and political affairs. He tweets @KaleemHussain20
