Lose your soul to Panama

What a beautiful thing the law is: evading taxes is illegal, avoiding taxes is not

Asad Rahim Khan April 11, 2016
The writer is a barrister and columnist. He is an Advocate of the High Court, and tweets @AsadRahim

They’ve got great hats, those Panamanians. Only that’s not true: what we call Panama hats are actually from Ecuador. Just like the money’s actually from Pakistan. Or Iceland. Or, better yet, Botswana.

An 11 million file-leak and a German investigation later, it’s time to eat the rich. We’re told a fish rots from the head — in that case, the Panama Canal’s full of them: guppies from oceans away, using names as invented as ‘Harry Potter’ and ‘Isaac Asimov’.

More than the usual suspects have been rumbled: African despots, North Korean dummy companies, Putin’s gajillionaire pals, even stuffed shirts from the Tory Party (the Camerons used Bahaman bishops to sign their papers, an irony too British to be true).

Also, Pakistanis. Hundreds of them: politicians, hoteliers, and that one bozo from the Hajj scam. Welcome to Mossack Fonseca (just the name sounds like coins being bleached): a law firm that stows your hard-earned billions in hard-to-reach places.

The service is good: it confounds the taxman. Its website literally offers help registering your yacht. And it’s done nothing wrong, or so it says: the media’s “[played] on the public’s lack of familiarity with the work of firms like ours”.

Because why wouldn’t the public be familiar with liquid investments, escrow stopovers, and trust restructuring: the ins and outs of funneling billions abroad?

Back home, it’s brought a can of worms straight from the dead, if one excuses mangling two clichés together.

It’s called corruption, and no one likes talking about it: for the longest time, it’s been relegated to the Team B of Pakistan’s Pressing Issues — we’ve got guns and bombs and bad economics to think about now.

Plus the jury’s out on whether we even get to call it corruption. After all, the entire point of paying finance gurus exorbitant amounts — to sit on your exorbitant amounts — is that it’s legal. And what a beautiful thing the law is: evading taxes is illegal, avoiding taxes is not. Might we distinguish what’s legal and what’s lawful?

Mr Khan’s threatened to storm Raiwind anyway (it may be best, sir, to un-reform your Ehtesab outfit first). Mr Sharif, whose family’s been named in the papers, will appoint a judicial commission (which will then investigate himself).

The PPP perked up, then piped down, when it was learned Rehman Malik tried to buy off the Saddam regime for oil contracts. “Indian Express’s RAW lobby has copy-pasted [the report],” said Mr. Malik — one may only suppose RAW’s cutting costs.

But it would be best to cut through the spin. Nicholas Shaxson, author of Treasure Islands (a modern take on the old pirate story), puts it clean: “You take your money elsewhere, to another country, in order to escape the rules and laws of the society in which you operate.” Simple enough: we’re operating in a moral red zone at worst, and a legal grey zone at best.

One that’s tricky to resolve. First, there’s no exchange-of-information treaty between Pakistan and the tax havens — for the reason that information is poison to said havens.

Second, moral outrage may only go so far: in a land where the vast majority duck taxes, evasion is thought to snare only the dumbest and unluckiest of saps.

Third, even if Panama is blown wide open, it’ll be unlikely the state would wish to investigate itself (a retired judge weighing up the papers’ pros and cons doth not an investigation make).

Fourth, should our stars align, and a no-holds-barred investigation be kicked off by an actual investigative agency — well, we’re all out of those. A special report from another paper is making the rounds, on inquiries into the previous dispensation’s many scandals. It’s a tale of incompetence, idiocy, and ugly intentions.

The report’s author, Malik Asad, throws everything at the wall, and nothing sticks. Three years after NAB filed a reference in the Ogra corruption case, not a single witness out of the over 90 prosecution witnesses has been examined by the trial court.

Turn to the Hajj scam, and three years after the Supreme Court’s suo motu, the FIA is turning up with empty hands: it’s unlikely, save a magical turn of events, that anyone be convicted.

Finally, in EphedrineGate, the Anti-Narcotics Force’s investigation was ‘half-baked’, and the accused went on a spree of petition-filing that jammed up the case.

So even when highway robbery was plain, even when the public was appalled, even when the Court was roaring with rage, even when — in short — there was a case to answer, nothing happened. Not via NAB; not via the FIA, and not via the ANF, respectively. And the only thing worse than our investigation was our prosecution.

This isn’t ancient history — this happened when Mr Zardari’s boys were guzzling at the trough five minutes ago. Not that ancient history’s any better: might we remember the Muslim League from the ‘90s? Might we point to the co-operatives scandal, which defrauded thousands of Punjab’s poorest people? Might we remember General Beg, padding the party with petrodollars? Has anyone paid the price a quarter-century later?

“I always thought that humanity was animal-like,” Singapore’s Yew once said. “The Confucian theory was that Man can be improved. I’m not sure he can be, but he can be trained, he can be disciplined.”

Mr Yew disciplined his tiny city-state from the most corrupt, least stable to the most stable and least corrupt. Singapore’s lessons may not come easy to Pakistan, a country far larger, far more complex, and culturally, worlds different.

But they are instructive: whereas our instinct in Pakistan would be hail the Great Man doing Great Things and calling all humanity animals, it should direct its attention to matters institutional: Mr Yew empowering the Corrupt Practices Investigation Bureau, moving it to the Prime Minister’s Office, and commencing operations (as of 2014, their conviction rate after corruption was charged, has hovered above 95 per cent).

Contrast this with Islamabad threatening to clip NAB’s wings, the dysfunction of the FIA, and the FBR pointing fingers at itself. Whatever our hankering for ‘sadiq’ and ‘ameen’ gents to be parachuted in, the rot will hit them too.

It’s time we had independent institutions, instead of fly-swatters the state can look busy waving around. Until then, the Panama papers are just another racy story.

Until then, who cares?

Published in The Express Tribune, April 12th, 2016.

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