Contrary to public perception, a recent investigation into Swiss accounts at one of the world’s biggest banks suggests the collective wealth stashed away by high net worth Pakistani individuals is nowhere near the purported figure of hundreds of billions of dollars.
In an investigative project dubbed ‘Swiss Leaks,’ the International Consortium of Investigative Journalists (ICIJ) recently accessed almost 60,000 leaked files that provide details of over 100,000 clients of HSBC, which is ranked as the world’s second largest bank by Forbes magazine.
With approximately $859.7 million by 2006-07, Pakistan ranked 48th on the list of countries with the largest dollar amounts in the leaked Swiss files.
As many as 338 clients of Swiss HSBC were associated with Pakistan, with 34% having a Pakistani passport or nationality. The maximum amount of money associated with a client connected to Pakistan was $133.5 million, it said.
Given that a bank as big as HSBC had about $0.8 billion of deposits belonging to Pakistani clients, it is safe to assume that the total assets of rich Pakistanis in Swiss banks should be substantively less than $200 billion – a figure that TV presenters throw around casually as the approximate value of politicians’ ill-gotten gains stashed away in offshore accounts.
Speaking to The Express Tribune, a former governor of the State Bank of Pakistan (SBP) said it is wrong to assume that the money deposited with the Swiss arm of HSBC is necessarily ill-gotten.
“Pakistan’s foreign exchange market is partially open. It is not illegal to keep a foreign account if the amount is formally declared to the local revenue authorities,” he said.
According to taxation expert, Dr Ikramul Haq, the amount of money belonging to Pakistani clients of Swiss operations of HSBC does not reveal the full extent of the issue at hand. He referred to the recent acquisition of Pakistani branch operations of HSBC by Meezan Bank as one of the reasons for the lower-than-expected estimate of Pakistanis’ wealth stashed in the Swiss bank.
Pakistani branch operations of HSBC Bank Middle East merged into Meezan Bank last October, which converted all its customers into Meezan Bank’s clients.
A wholly owned subsidiary of HSBC Holdings, HSBC Pakistan operated with 10 branches and total assets of Rs48 billion at the end of 2013. Its clientele consisted of mostly blue-chip companies and high net worth individuals.
Haq said HSBC targeted high net worth Pakistani individuals using its ‘premier’ banking facilities that allowed easy transfer of money from the local branch to a “corresponding HSBC account” anywhere in the world. Many high net worth Pakistani clients may have abandoned HSBC after its acquisition by the local Islamic bank, Haq noted.
When contacted for its version, Meezan Bank’s external communications team refused to comment on the issue.
Published in The Express Tribune, February 10th, 2015.