The few and far between Pakistani taxpayers overloaded with backbreaking direct and indirect taxes are dumbfounded by the insensitivity and stubbornness of the state. Information in Panama Papers revealing hundreds of Pakistanis with opaque illegal overseas investments; unwillingness of the state at all tiers to come to grips; especially so when the ruling family itself is knee deep, indicates that all regulatory and transparency mechanisms of the country are compromised. The evasive attitude of the federal government, the duplicity of the combined opposition, the demonstrated bias of the speaker of the National Assembly and unwillingness of the State Bank of Pakistan, FBR, SECP, NAB and FIA to proceed against the financial crimes revealed in Panama Papers indicate a mechanism gradually tuned to cover tracks. This is a serious breach of Pakistan’s national interests, posing a challenge worth taking.
Inaction and unwillingness to act through checks and balances in national and public interests is conspicuous. The legislature is largely complicit and we have a token opposition. The executive repeatedly challenged by judicial activism during the PPPP government is unfettered. Panama Papers and Model Town murders are two unchallenged incidents. The judiciary, though empowered by Principles of Policy in Articles 29 (1) and 30 (1) in the Constitution of Pakistan and Law of Necessity (Suo Moto) seems in unexplainable restraint. The autonomous and semi-autonomous organisations meant for regulations and transparencies are chaired by political appointees reticent over their charter of duty. The killing of resolve of these institutions began during the tenure of the PPPP government when most entities were made answerable to a controversial chief justice and his comrades who in their bid to save the son eventually caused the weakening of our national institutions including the judiciary itself.
I recall an article (Institutional Capacity Building; Nation, July 18, 2015) I wrote over the resignation under duress of Governor State Bank Yasin Anwar. The federal government impinged upon his initiative and domain thereby preventing him from discussing NBP accounts that extended billions to questionable collaterals. He came under immense pressure from Justice Iftikhar Chaudary, Jang and JS Groups. Today, the State Bank of Pakistan is toothless. By not stepping into the investigations against known individuals and enterprises with questionable overseas businesses, Governor State Bank is guilty of willful negligence which is tantamount to failure to exercise authority in terms of section 9 of the NAO of 1999. Even Chairman NAB remains oblivious or perhaps reticent to all this.
Another institution that works hand and glove with State Bank of Pakistan is SECP. Mr Muhammad Ali was appointed as Chairman and Commissioner SECP in 2012. Both State Bank of Pakistan and SECP stood in the way of the purchase of HSBC to JS Bank. As a result, Chief Justice Retired Iftikhar Chaudary, through the courtesy of Justice Jawwad Khawaja, got declared illegal the appointment of Muhammad Ali on the pretext of hyper-technical reasoning. The present government rolled back all his reforms.
The process of defanging state institutions began much before the present government came into power. The PPPP government by not effectively resisting the excessive and unconstitutional interventions of the Supreme Court and allowing its appointees to be humbled was in a way responsible in killing the governance capacity of the state.
Vesting disproportionate powers in the persons of political heads of parties has become a major impediment in strengthening democratic norms within the political parties thereby putting on back burner the voices of reason and conscience. As a result any meaningful debate into Panama affairs will remain a cry in wilderness. Any new laws enacted by the legislature will also have question marks on the good faith of legislators and legitimacy of their legislation.As for Panama the first step is to determine whether a wrong has been committed against Pakistan’s fiscal laws and overseas investment policies?
The Prime Minister’s addresses to the nation and his speech in the Parliament do not deny the existence of overseas investments. The fact that the burden of proof is already shifted creates ethical and moral dilemmas as also raises legal questions. In Westminster traditions, there exists ample reason for the Prime Minister to resign so that the power of his office does not affect transparency. Secondly, the failure of Prime Minister and his family in discharging the burden of proof qua the legitimate sources wherefrom the offshore properties and assets were acquired, has caused all government functionaries and parliamentarians defending the Prime Minister and his family to become facilitators in helping a delinquent evading the due process of law. By converting an individual act into a Government versus Others debate; these individuals also lose their high moral pedestal and justification to continue in jobs of trust and public confidence. Unless these steps are taken this inquest into hundreds of offshore businesses will never proceed.
In the recent Public Accounts Committee deliberations, heads of SECP, NAB and State Bank did not make an appearance. Chairman FBR though present, shirked responsibility. As mentioned earlier, Parliament being largely complicit may continue to show reticence. The speaker of National Assembly has become a party by shirking his moral and legal obligations. The registrar of the Supreme Court, a deputationist who does not belong to the legal fraternity is violating the judicial precedents with impunity right under the nose of Chief Justice of Pakistan and his fellow judges.
If law is still to be followed in letter and spirit, the first course to be adopted is that pending investigations and inquiry, the Prime Minister and all parliamentarians, advisors and government functionaries in interests of transparency must be asked by the apex court to step down. As a logical effect, the Supreme Court should order all the relevant agencies to complete their investigations at the earliest with zero tolerance for any corruption or corrupt practice.
Election Commission of Pakistan should restrict itself to questions of eligibility under articles 62 and 63 of the constitution including false statements. This criterion has to be argued by lawyers before the ECP according to Section 4 of NAO in which NAB applicability extends to all public servants and citizens. Once placed in juxtaposition with Section 9 of NAO, a combined reading leads to an irresistible conclusion that none are excluded from scrutiny. Depending how lawyers frame their arguments, many parliamentarians including the Prime Minister may become ineligible.
All petitions before the Supreme Court must be decided expeditiously in public interest in the light of relevant laws including those contained herein-below.
The first law is The Foreign Exchange Regulation Act, 1947: Art No. VII of 1947. Any overseas investments, businesses and movement of currencies abroad, if in violation are illegal. This Act has never been repealed and even today takes precedence over all other laws.
The second Law is the Protection of Economic Reforms Act, 1992: Art No. XII OF 1992. This Act was enforced by the PMLN Government. The Act has effect notwithstanding anything contained in the Foreign Exchange Regulation Act, 1947 (VII of 1947), the Customs Act, 1969 (IV of 1969), the Income Tax Ordinance, 1979 (XXXI of 1979), or any other law for the time being in force. The major custodian of this law is State Bank of Pakistan that reinforced it through its F.E. Circular No. 66 of September 09, 1993. Any violations in investments abroad (allowed only on repatriable basis through Foreign Exchange Bearer Certificates) are illegal. Having passed such a law, how the then prime minister at helm through his dependent children was making such investments is a question that needs settlement.
In continuation, the State Bank of Pakistan made clarifications to the law through F.E. Circular No. 11 March 15, 1995 under the title ‘Investment Abroad by Resident Pakistanis’. The Government allowed residents of Pakistan including firms and companies to make overseas investment on reportable basis through Foreign Exchange Bearer Certificates subject to the stringent conditions. Any foreign investments and businesses abroad in violation of this circular are illegal.
In suppression of the circular No 11, State Bank of Pakistan issued F.E. Circular No. 12 dated September 01, 2001 allowing residents of Pakistan including firms and companies to make equity based investment (other than portfolio investment) in companies (whether incorporated or not)/Joint Ventures abroad on Repatriable basis, with prior permission of State Bank of Pakistan. Amongst the stringent conditions were the requirements to submit a return to State Bank on the prescribed form V-97 within one month of making the investment and providing a copy of Certificate of Incorporation and Certificate of Commencement of Business in the country where investment take place with copies of the share certificates so invested and bonus issues, if any. This Circular is in force even today and any activity in violation is illegal.
Political rhetoric will never convince courts. It is the responsibility of well-meaning politicians and citizens of conscience to form study groups to explore legal avenues. The first priority should be based on the conflict on interest and eligibility. This achieved, the violation of laws will be easier to prove.
Courtesy The Nation.