An international watchdog has pried open eleven million documents from the database of law firm Mossack Fonseca in Panama that provides off-shore financial facilities to the global rich for various purposes. The lay presumption of holding “off-shore companies” is to avoid transparency in some sense, hence the common suspicion that their activities are illegal in some significant sense, regardless of the fact that these companies are legal where they are incorporated and their business activities comply with the laws of the land where they do business.
Among the beneficial owners of these companies, or linked to them in some way, are twelve current or former heads of state and over sixty people linked to current or former world leaders. These include the Presidents of Russia, China, Ukraine, Azerbaijan, Argentina and the Prime Ministers of Iceland and Pakistan. Curiously enough, there is no significant mention of Latin American or African generals or American and Western leaders and businessmen. This has provoked the Russians and Chinese leaders to allege a CIA conspiracy to defame them.
Panamaleaks has compelled Prime Minister Nawaz Sharif to appear on TV and disclaim any act of illegitimacy on the part of his two sons and daughter whose names figure in the list of beneficial owners of some companies. In his defense he claims that (1) he and his wife are personally not listed as owners of any such company (2) his two sons, who are listed, are residents in the UK and Saudi Arabia respectively and have complied with the laws of their resident countries, including those related to taxes and investment incomes in off-shore companies. As such, he argues, he and his family are immune from charges of wrong doing in any sense. But the critics, who are aplenty and include all the opposition parties and a large swathe of the media, raise two fundamental questions. The first relates to the law: what is the original source of the Sharifs’ wealth that is lodged in these off-shore companies? The second is moral: should the prime minister’s children do business via non transparent off-shore companies if they have nothing to hide?
In their defense, the Sharifs say that the purpose of their off shore companies is not to be opaque because they have done something illegal, but to be simply more efficient or profitable in the maze of tax laws in the countries in which they have invested their funds. On the face of it their argument is credible for two reasons: this is indeed one significant legitimate reason why many businessmen set up such companies. The Panamaleaks story does not accuse them of wrong doing. But the common presumption of wrong doing attached to off shore companies is difficult to dodge. Hence the demand for the PM’s resignation followed by his decision to establish a commission of inquiry to investigate whether any or all of those Pakistanis listed in Panamaleaks, including his family, have done wrong.
As the critics reject the inquiry commission on one count or another, it is worth asking whether or not Panamaleaks is fated to be Mr Sharif’s Panamagate.
The logic of analysis on that count is weak for several reasons. (1) It will be difficult to prove in Pakistan that the source of the Sharifs’ funds in Saudi Arabia and UK is illegal since the authorities in both countries have already deemed them to be legitimate. (2) It will be difficult to build a mass movement to overthrow the government because all the political parties, except for the PTI, are loath to pave the way for a military intervention to get rid of a democratically elected government. Since Mr Sharif has vowed not to be cowed down – as demonstrated by his resolve during the four-month dharna last year – nothing less than a naked coup will send him packing. But the domestic and international situation is not conducive for a coup despite continuing disagreements, even tensions, between the government and military on several counts. At home, a military coup will not be acceptable to the political parties and judiciary. Abroad, the US Congress will slap economic and military sanctions on aid to Pakistan. Given the hostility of Afghanistan and India and prickly borders, war with insurgents and terrorists, and a weak economy, no general in his right mind should want to seize power. Far better, it may be argued, to keep the civilian government weak and destabilized and amenable to the demands of the military than to take control directly and be responsible for the attendant sins of omission and commission.
At the end of the day, the only good argument is the moral one. Should the PM’s sons even do legal business under cover of off shore companies? The sad fact is that if charges of corruption against the Sharifs and Bhuttos, and immorality against Imran Khan, have never amounted to much in the eyes of the common people of Pakistan in the past, they are unlikely to do so now.
Among the beneficial owners of these companies, or linked to them in some way, are twelve current or former heads of state and over sixty people linked to current or former world leaders. These include the Presidents of Russia, China, Ukraine, Azerbaijan, Argentina and the Prime Ministers of Iceland and Pakistan. Curiously enough, there is no significant mention of Latin American or African generals or American and Western leaders and businessmen. This has provoked the Russians and Chinese leaders to allege a CIA conspiracy to defame them.
Panamaleaks has compelled Prime Minister Nawaz Sharif to appear on TV and disclaim any act of illegitimacy on the part of his two sons and daughter whose names figure in the list of beneficial owners of some companies. In his defense he claims that (1) he and his wife are personally not listed as owners of any such company (2) his two sons, who are listed, are residents in the UK and Saudi Arabia respectively and have complied with the laws of their resident countries, including those related to taxes and investment incomes in off-shore companies. As such, he argues, he and his family are immune from charges of wrong doing in any sense. But the critics, who are aplenty and include all the opposition parties and a large swathe of the media, raise two fundamental questions. The first relates to the law: what is the original source of the Sharifs’ wealth that is lodged in these off-shore companies? The second is moral: should the prime minister’s children do business via non transparent off-shore companies if they have nothing to hide?
In their defense, the Sharifs say that the purpose of their off shore companies is not to be opaque because they have done something illegal, but to be simply more efficient or profitable in the maze of tax laws in the countries in which they have invested their funds. On the face of it their argument is credible for two reasons: this is indeed one significant legitimate reason why many businessmen set up such companies. The Panamaleaks story does not accuse them of wrong doing. But the common presumption of wrong doing attached to off shore companies is difficult to dodge. Hence the demand for the PM’s resignation followed by his decision to establish a commission of inquiry to investigate whether any or all of those Pakistanis listed in Panamaleaks, including his family, have done wrong.
As the critics reject the inquiry commission on one count or another, it is worth asking whether or not Panamaleaks is fated to be Mr Sharif’s Panamagate.
The logic of analysis on that count is weak for several reasons. (1) It will be difficult to prove in Pakistan that the source of the Sharifs’ funds in Saudi Arabia and UK is illegal since the authorities in both countries have already deemed them to be legitimate. (2) It will be difficult to build a mass movement to overthrow the government because all the political parties, except for the PTI, are loath to pave the way for a military intervention to get rid of a democratically elected government. Since Mr Sharif has vowed not to be cowed down – as demonstrated by his resolve during the four-month dharna last year – nothing less than a naked coup will send him packing. But the domestic and international situation is not conducive for a coup despite continuing disagreements, even tensions, between the government and military on several counts. At home, a military coup will not be acceptable to the political parties and judiciary. Abroad, the US Congress will slap economic and military sanctions on aid to Pakistan. Given the hostility of Afghanistan and India and prickly borders, war with insurgents and terrorists, and a weak economy, no general in his right mind should want to seize power. Far better, it may be argued, to keep the civilian government weak and destabilized and amenable to the demands of the military than to take control directly and be responsible for the attendant sins of omission and commission.
At the end of the day, the only good argument is the moral one. Should the PM’s sons even do legal business under cover of off shore companies? The sad fact is that if charges of corruption against the Sharifs and Bhuttos, and immorality against Imran Khan, have never amounted to much in the eyes of the common people of Pakistan in the past, they are unlikely to do so now.