From January 4 this year, a five member bench, headed by the second senior most judge of the Supreme Court of Pakistan has been hearing Petitions filed by Imran Khan who is the chairman of PTI (Pakistan Tehrike Insaaf), and by the head of Jamaati Islami. The hearings have been taking place on a day to day basis since then, and the Court usually spends three hours of its time at each hearing. Judging by the comments of the members of the Bench, it is difficult to tell as to who is likely to prevail. However, the media is currently obsessed with the trial, with the print media daily placing the Judges’ comments as its lead story, and the electronic media crowds the main gate of the Supreme Court to report the comments of the Government’s ministers and Imran Khan.
The stakes are high for both the Parties, and regardless of how Prime Minister carries himself publicly, his anger at the trial is discernible. Embarrassing details about his properties and the amount of money that he and his family possess emerge almost at each hearing. This in turn is inquired into by the media and electorally would definitely haunt PM Nawaz Sharif and his party, PML (Pakistan Muslim League). As opposed to this, this is the biggest move that Imran Khan could have made to get Nawaz Sharif and his family removed from the political canvas of Pakistan’s polity. If he succeeds, there will be nothing left from his Party winning the next general elections which are due next year. If he loses the Petition, the PML of Nawaz Sharif will come clean from the Supreme Court and it would be difficult for Imran Khan and his Party to be pointing towards corruption of Nawaz Sharif and his family.
PM Nawaz Sharif initially tried to react aggressively when the Panama papers were posted by the ICIJ (International Consortium of Investigative Journalists) on its website. Based on his past political experience as he is after all elected the PM for the third time, he firstly addressed the nation on April 5, 2016 proposing to appoint a judicial commission to probe the leaks in relation to the Pakistanis, and then in an address on May 16 in the National Assembly, instead of explicitly explaining his position dwelled on the history of his business empire and suggested to refer the matter to a commission. The previous chief justice of the Supreme Court turned down the governmental direction to form a commission on the grounds that such a commission would lack substantial powers to probe the issue under the existing laws. The government then tried to propose names of a few retired judges on its own but the judges declined to head such a commission due to its rejection by the opposition which felt that a retired judge is unlikely to come up with finding a sitting PM guilty, and will lack the resources to probe the issue.
The Panama Leaks has brought everyone’s attention to offshore companies. These companies differ to a degree depending upon the corporate law in the relevant jurisdiction but they all are broadly not subject to taxation in their home jurisdiction; and the regulation of corporate activities is normally lighter than in a developed country. Lucky for PM Nawaz Sharif, and his brother Shahbaz Sharif who is chief minister of the important and most populous Punjab province, no offshore company was reported in their name by Panama Leaks. However, several offshore companies bore the name of all three children of the PM.
The children’s companies were incorporated through the Panamanian law firm Mossack Fonseca, which since its establishment in 1986, became a powerhouse of secretive offshore banking for the corrupt elite of the world. With a staff of 500, it was called by one prosecutor as a “huge money launderer.” The fact that one went to this law firm in Panama out of the thousands in the world showed to an extent the intention of the company’s founding members. The companies in the name of PM’s children were not open to scrutiny and did not pay any income tax on the proceeds of those companies; their data was not shared with any other country.
What the above meant is simple. If the Panama documents had not leaked, nobody would have found out about the ownership of these offshore companies which owned properties in London, and the matter would have remained concealed.
The very purpose of establishing an offshore company is to save income tax, although the absence of taxation or regulation in the home jurisdiction does not of course exempt the relevant company from taxation or regulation abroad. Another common characteristic of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. Such companies are used for a variety of commercial and private purposes, some legitimate and economically beneficial, whilst others may be harmful or even criminal. Allegations are frequently made in the press about offshore companies being used money laundering, tax evasion, fraud and other forms of white collar crime.
According to documents available on the ICIJ website, the PM’s children Mariam, Hasan and Hussain were owners or had the right to authorize transactions for several companies. Mariam is described as “the owner of British Virgin Islands-based firms Nielsen Enterprises Limited and Nescoll Limited, incorporated in 1994 and 1993. On one of the documents released by ICIJ, the address listed for Nielsen Enterprises is Saroor Palace in Jeddah, Saudi Arabia. The document, dated June 2012, describes Mariam Safdar as the ‘beneficial owner’.
Based on the Panama documents, Imran Khan’s PTI first filed a reference against the PM before the Speaker of the National Assembly. The Speaker belonging to the ruling Party refused to refer it to the Election Commission in September 2016.
Imran Khan then filed a constitutional petition directly in the Supreme Court; the registrar returned it with the comments that it was frivolous. An appeal was filed and the Court decided to hear it. Lengthy arguments were heard and many documents were filed but the previous Chief Justice in December 2016 announced that the Petition could not be decided during his tenure as he was retiring on December 30, and it would be heard afresh by a new Bench; the current hearing started on January 4 and is continuing since then.
Imran Khan’s Petition is filed against the PM, his daughter Mariam Nawaz, and two sons, Hussain Nawaz and Hassan Nawaz, Mariam’s husband Captain retired Muhammad Safdar, and the present finance minister who is also father-in-law of another of PM’s daughter. The Petition accuses the PM and his children of money laundering, currency smuggling, purchase of expensive foreign properties in the name of minor children, setting up offshore companies in the British Virgin Islands and other jurisdictions, setting up bogus foreign currency accounts, setting up a Steel Mill in Dubai during the seventies without disclosing as to how the money was transferred out of Pakistan to Dubai, selling the Steel Mill for $9 million and holding this amount without declaration and building a Steel Mill in Jeddah, and claiming wrongly that the six expensive flats were purchased in London through the sale of the Jeddah Steel Mill, evading taxes, making false declaration and increasing their assets from one foundry to the current 29 entities. The Petition claims that actually the London properties were purchased through commissions made in the construction of motorway from Islamabad to Lahore amounting to $160 million; securing of unsecured loans from Pakistani banks amounting to $140 million; making $60 million from government rebates on sugar exports by the PM sugar companies; and $58 million skimmed from inflated prices paid for imported wheat from the United States.
The PM has been publicly claiming in his addresses that the London properties were purchased in 2006 from the proceeds of the sale of Dubai and Jeddah steel mills. His wife claimed in an interview that the properties were purchased in 2000. His son claimed to the BBC that the Jeddah steel mill was purchased from loans and gifts from friends.
It is Imran Khan’s case that the properties were purchased from the commission proceeds between 1993 and 1996; in this respect, he refers to incorporation of Nescoll in 1992 and Nielson Enterprises in 1994 in British Virgin Islands, with Mariam Nawaz as the beneficial owner. To substantiate the claim that the PM’s family owned these companies earlier than 2006, Imran Khan refers to attachment of the London flats by a court in England when the family was unable to repay the loans in the year 2000.
The Petition also lists payment of income tax by the PM from 1981 to 2010 which is startling considering his wealth and property. In 1981, he paid a tax of Rs 24,000; in 1992, Rs 2,680 (when he was PM); in 1996, nil; and in 2009, Rs 2.7 million. He did not file a return from 1999 to 2009 while he was living in exile in Saudi Arabia and England.
In order to show the ownership of the London flats, the Petition has attached official copies of the London Land Registry which says that the document is admissible in evidence to the same extent as the original. These documents show that the properties have been owned by the offshore companies since 1993; 1995; and 1996 and one flat owned by another offshore company Flagship Investments since 2004. Documentation secured through Panama Leaks is then attached to show that these offshore companies were owned by Mariam Nawaz, including letters written by the Panamian law firm Mossack Fonseca.
The PM and his three children since the filing of the Petition have been remaining quiet and the talking is done by a few ministers and members of the Party. Firstly, their lawyers filed replies and documentation in the Court and defended their clients aggressively before the media but all of them were replaced within days.
In November, the PM’s side suddenly came out with another explanation for the purchase of the London properties. A letter on the letterhead of Hamad Bin Jassim Bin Jaber Al Thani, who ruled Qatar from 2007 to 2013, was produced signed by his son prince Hamad bin Jassim bin Jaber Al Thani. The letter issued the same month last year stated that Hamad’s father had “longstanding business relations with Mian Mohammad Sharif”, PM’s father, “which were coordinated through (the prince’s) eldest brother”. In the year 1980, “Mian Sharif expressed his desire to invest a certain amount of money in real estate business of Al Thani family in Qatar,” the document said. “(The prince) understood at that time, that an aggregate sum of around Dirhams 12 million was contributed by Mian Sharif, originating from the sale of business in Dubai,” the document said, adding that four flats: 16, 16A, 17 and 17A Avenfield House, Park Lane, London, were registered under the ownership of two offshore companies, while their bearer share certificates were kept in Qatar. “These were purchased from the proceeds of the real estate business,” the document claimed. It went on to explain that “on account of [the] relationship between the families, Mian Sharif and his family used the properties whilst bearing all expenses relating to the properties, including the ground rent and service charges. (The prince) can recall that during his life time, Mian Sharif wished that the beneficiary of his investment and returns in the real estate business [should be] his grandson Hussain Nawaz Sharif,” it explained, adding that in the year 2006, the accounts in relation to this investment were settled between Hussain and the Al Thani family, who then delivered the bearer shares of the companies to his representative.
A Declaration of Trust signed in February 2006 was also produced signed between Mariam Nawaz and her brother Hussain Nawaz which stated that the beneficiary of the two offshore companies, Nescoll and Nielsen, was the brother while Mariam will hold on trust the shares of the “special purpose vehicles” (the offshore companies) for the sole and absolute benefit of her brother.
The Supreme Court at the time of submission of this Qatari letter observed the document originated only a few days ago, asking the counsel whether the gentleman who signed the letter would appear for cross-examination if the court placed the document on the record. Although he didn’t respond before the court, the lawyer told reporters after the hearing that the former Qatari premier would appear before the court, if necessary.
The PM’s children, Mariam, Hassan and Hussain Nawaz claimed in their replies that no amount was ever transferred or remitted from Pakistan in order to set up, finance or run steel mills in the UAE. They emphasized that Mariam was only a trustee for the benefit of Hussain Nawaz in pursuance of the 2006 trust deed. Therefore, from 2006 onwards, the London properties were the property of Hussain Nawaz.
On January 26, Mariam’s lawyer produced yet another Qatari letter written by the same prince Hamad. In the letter, the Qatari prince stated that he came to know that various questions were raised on his first letter. He said he is presenting his stance in a response to those queries.
Mian Sharif was the prince’s father’s close companion, he said. He invested 12 million dirham cash in 1980. For property settlement, bearer certificates of offshore companies were handed over to the representative of Hussain Nawaz. The letter also claimed that the four London flats were not mortgaged for the PM’s Papers Mill but were attached wrongly by the English Court.
The hearing of the Petition in the Supreme Court is coming to an end and may be concluded soon. Almost all have their fingers crossed, and it is hard to predict the outcome. The Court is obviously under a tremendous burden as de-seating of a powerful prime minister is involved although it has done this once in the case of PM Yusuf Raza Gilani during the previous tenure of the People’s Party for his refusal to comply with the Court’s direction to take steps to retrieve funds allegedly owned by Asif Zardari and Benazir Bhutto.
If the Petitions are accepted, they can go a long way in curbing corruption in the country and the earning of commissions by almost anybody at any level. The Court may also dismiss the Petition; or it may also refer the matter to a commission for probing the evidence further. The polity in the meantime is on hold while the media in Pakistan has a field day reporting the daily hearings and the subsequent statements by the politicians.
The Last Stop 