Panama leaks: Money sent through illegal channels cannot be traced

Parliamentary body could encounter difficulties in conducting the probe

ISLAMABAD: Where is the data that would help a parliamentary committee in determining the trail of money transfers the owners of offshore companies made from Pakistan to foreign territories?

This question is not being asked by critics of the people who invested in offshore companies be they politicians, bureaucrats, generals, judges or businessmen. The issue of offshore companies can be settled this or that way only with the help of credible data that can indicate whether the money transferred was stolen from the national exchequer and was remitted through illegal channels.



If Hundi and Hawala channels were used, the money trail cannot be detected by any chance. If the money was sent through channels that use documentation, then the question would be: did the relevant institutions allow the transactions under the law?

If the fact-finding parliamentary committee is able to obtain the data and finds that the transactions were not allowed under the law, there could be court cases and some punishment, both to people who did the transactions and the officials that allowed them.

But if the transactions are proved to be under the law, all the hype created by the politicians against owners of offshore companies will fizzle out. Then the hot speeches in public gatherings and on the floor of parliament would sound useless and the only question that would come to the mind is how did the politicians gather so much money that helped them create the offshore companies?

I think the parliamentary committee should primarily focus on this point. Significant data might be available to find answers to this question.

The Hundi and Hawala data is impossible to find. If it could be possible, people would come to know who sent the money from Pakistan and when, how much was transferred and to whom. But that is not possible.



The only choice left is to consider the following points:

The individuals (past and present) in politics, judiciary, bureaucracy, military and business that set up offshore companies or are beneficiaries of such companies; the declared tax history of these individuals; their declared and concealed assets history; the kind of taxes they paid and dodged; the money flow through legal and documented channels (the data of illegal channels is always missing); the kind of politico-legal bureaucratic influence these individuals exerted in relation to asset declarations and money transfers; the gap between declared and undeclared assets, profits, turnovers and money transactions; the taxes paid and assets declared by them abroad; and the level of open spending by them and on their behalf by their associates, family members and those sponsoring their activity in the country and abroad.

No serious probe can be conceived without undertaking such an exercise.

Allegations

Now, let us examine the kind of allegations being levelled against the political figures after the Panama Papers named them for owning offshore companies themselves or through their family members and associates. Most of these allegations actually complicate the entire issue and make a serious probe difficult, if not impossible.

The two major allegations are: the money transferred was stolen from the national kitty and the money was earned by suppressing the holdings, turnovers, profits, incomes and spending.



Can any probe be serious and result-oriented without first determining how and how much money was stolen from the national kitty, and how and how much was suppressed in holdings, turnovers, profits, incomes and spending?

Again you need relevant figures including data from the Federal Board of Revenue, State Bank of Pakistan, the transacting banks and the companies with whom the accused were in business.

If that data is available, let the parliamentary committee begin its probe. But first the committee should acquire the entire data that is possible to obtain.

Complex probe

What if the data-collecting and managing authorities do not cooperate? My experience tells that if the relevant authorities do not cooperate, no authority can obtain the data that is required for such a complex probe.

No law or court of law can force these authorities to expose the entire chunk of data. Only forensic experts can seek the relevant data on behalf of the probe committee.

Even all of their demands would not meet the requirement as they would not know what kind of data is actually available; how to force it out of the cupboards where it is stored and how to expose all the major amounts suppressed by the individuals being probed.

I am not making an effort to discourage a fair probe. I am only pointing out the difficulties of such a probe.

The writer has worked with major newspapers and specialises in the analysis of public finance and geo-economics of terrorism 

Published in The Express Tribune, May 23^rd, 2016.

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