This is the first in a series of articles on those subject to corruption and tax evasion charges in light of the Panama leaks. I hope to cover the diverse range of people subject to controversy in future articles, though I plan to focus mainly on the Muslim world. Those subject to any charges will be analysed in light of their record, and also the facts in relation to the current leaks.
This scandal involves Nawaz Sharif and three of his children, Maryam, Hassan, and Hussein. According to the ICIJ:
“Controversy has long engulfed Pakistan Prime Minister Nawaz Sharif’s family, including three of his four children – Mariam, Hasan and Hussain – over their riches from a network of businesses that include steel, sugar and paper mills and extensive international property holdings. At various times, depending on the political party in power, the Sharifs – one of Pakistan’s richest families – have been accused of corruption, ownership of illegal assets, tax avoidance and money laundering. Mariam, Hussain and their father have been detained on such charges, exiled to Saudi Arabia and also acquitted. When allegations first surfaced in 2000, a family member called them “completely wrong,” and declared: “This is a very religious family.” Hasan, who moved to London over 16 years ago, and Hussain have been running family businesses from abroad. Mariam reportedly is being groomed to take over leadership of her father’s political party.”1
“Three children of former and current Pakistan’s Prime Minister Nawaz Sharif – Mariam, Hasan and Hussain– were owners or had the right to authorize transactions for several companies. Daughter Mariam Safdar was the owner of British Virgin Islands-based firms Nielsen Enterprises Limited and Nescoll Limited, incorporated in 1994 and 1993. Sharif’s first term as prime minister ended in 1993. The companies owned “a UK property each for use by the family” of the companies’ owners. Hussain and Mariam signed a document dated June 2007 that was part of a series of transactions in which Deutsche Bank Geneva lent up to $13.8 million to Nescoll, Nielsen and another company, with their London properties as collateral. In July 2014, the two companies were transferred to another agent. Mossack Fonseca knew that Mariam Safdar was Nawaz Sharif’s daughter, a “Politically Exposed Person,” and committed to checking her activities twice a year beginning in July 2012. Hasan Nawaz Sharif was the sole director of Hangon Property Holdings Limited incorporated in the British Virgin Islands in February 2007, which acquired Liberia-based firm Cascon Holdings Establishment Limited for about $11.2 million in August 2007. Mossack Fonseca resigned as agent for Hangon because Hasan Nawaz Sharif was a “Politically Exposed Person.”2
It should be mentioned that having an offshore account is not illegal in Pakistan, though the Sharif family has a long history of corruption scandals, which raises suspicion. Nawaz Sharif has denied any wrongdoing on the part of his family, and was bold enough to claim he has “never betrayed the trust of the nation.”3 Likewise, Hussein Sharif claimed that his family have operated in accordance with Pakistani law, given that nationals living abroad are not required to file income tax papers if they live abroad for 180 days or more.4 He also reiterated that offshore companies are legal, and provide a means to avoid paying what he termed “unnecessary taxes.” Hussein has also claimed he sold a steel mill in Jeddah, Saudi Arabia during 2006 in order to secure funding for offshore investments.5 Maryam tweeted an official statement which claimed that Hussein and Hassan have lived in Saudi Arabia and the United Kingdom for over two decades, and reiterated that “neither is a tax payer in Pakistan.” We are told they have been “diligently filling their company reports and tax returns in their legal and tax jurisdictions.” It is claimed that Maryam is not involved with the companies beyond her being a trustee, and “has not received any income or financial benefits from the corporations owned by her brothers that warrant any tax disclosures or implications.” It is also professed that Hussein has disclosed the funding for all corporations mentioned in the leaks, with the steel mill being mentioned in particular. The statement ends by reiterating that all corporations owned by the Sharif family, particularly by Hussein, and Hassan, are “financially sound.”6 Other family members have been more critical. Nawaz Sharif’s sister-in-law, Tehmina Durrani, stated that legal facilitation for vast offshore wealth is itself a major problem, tweeting: “Even if off shore companies, foreign properties, and accounts ’mite’ be legal, for ME they are unethical,”7
The value of the Sharif family overseas holdings remains a mystery, though the family itself has been mired in corruption charges in the past. Nawaz Sharif is a particularly dubious figure in this regard, and one cannot discount that his penchant for corruption may have come to influence his children, and that he has profited as a result.
Nawaz Sharif’s political career began at the behest of his father, Muhammad Sharif, who urged him to join the corrupt administration of Zia ul-Haq, and later, as reward for his son’s services, the previously nationalised family business was returned. Nawaz Sharif further enriched himself via hefty bank loans, which later caused much controversy. During Sharif’s first term, Pakistani media reports often covered stories about various politicians demanding loans worth millions and during his second term in 1998, Sharif himself admitted to various outstanding debts. He offered the assets of his Ittefaq Group in order to pay these back, but the remunerations were unsatisfactory. The Sharif family relinquished over 33 industrial units to the state, but investigations confirmed most were defunct., thus it came as no surprise that the value of these units did not cover the debts. Various estimates of Sharif’s liability have ranged from 211 billion rupees according to Musharraf’s military regime, to an amount 2-3 times more according to the Pakistani press. Sharif also has a history of both tax evasion, and also paying a negligible amount of taxes. From 1994-1996, he paid under $10 income tax, and whilst it was said this was legal, and that he paid an additional $60,000 wealth tax, the point still remains that his personal wealth would have permitted for much more generosity.8 Allegations of corruption also plagued successive Sharif governments more generally. Allegations emerged in 1991 regarding the embezzlement of public funds culminating in the collapse of Punjabi cooperatives, and a total loss of Rs. 20 billion for investors. Another notable incident came the following year, with the appearance of dubious Foreign Currency Bearer Certificate advertising in American, European, and Japanese newspapers, which offered both source and purchaser anonymity. This was taken as a subtle attempt to launder drug money and led to boycott threats by the American government, which were retracted only when the propositions were halted.9
During July 2000, Sharif was also found guilty under Musharraf for failing to declare ownership of a helicopter he owned during the 1990s, stated to have been worth $1 million. According to the BBC, this was only the first charge of corruption, with 18 separate allegations having been made against Sharif by this point.10 Some Sharif supporters argue that Musarraf’s NAB (National Accountability Bureau) was unable to bring any prosecutions against Sharif, yet this occurred only due to Musharraf’s own dubious morality. Despite his public opposition toward corruption, Musharraf essentially pardoned Sharif by exiling him to Saudi Arabia. Moreover, he granted amnesty to the entire Sharif family. In the end, the NAB was no more a deliverance from corruption than prior accountability bodies, leading to the expected conclusion that: “instead of impartially investigating cases of corruption in order to facilitate the return of social and psychological equilibrium to society, and allowing the country to leave behind the sour memoirs of a murky past and move ahead, NAB’s actions have often been accused of being against the business and investment interests of the country.”11 In its dealings with the Sharif family, this much becomes rather obvious.
During his second term, Sharif became the object of the scandal involving undeclared high-end flats in London’s notably affluent Park lane. Suspicion arose given the deeds of the properties, which were in the name of offshore companies in the British Virgin Islands. Moreover, it so happened that Hassan Sharif was living in one of the flats whilst studying at the London School of Economics. At the time, he freely admitted to not paying any rent.12 More recently, it was reported that he and Maryam raised a $7 million dollar loan from Deutsche Bank using these four flats, which have since been found on the books of Mossack Fonseca according to the recent leaks. According to former Interior minister Rehman Malik, these properties were acquired via “ill-gotten wealth earned through corrupt practices”, further claiming that the properties were not declared.13 This is obviously another case of the corrupt accusing the corrupt, though it is doubtful that Malik is mistaken in this case. After all, Malik was suspiciously suspended from the Federal Investigation Bureau by Sharif due to his reporting on the family’s money laundering activities involving £5 million being transported offshore and invested in family businesses via “fictitious bank accounts” in the UK. In a scandalous display of double standards, Sharif charged Malik with corruption and imprisoned him without trial for a year. Malik then fled to London and went into hiding.14 It should also be mentioned that Hussein’s claim regarding the sale of a steel mill in Jeddah is contradicted not only by Malik, but by his earlier claim that he bought the flats in 2006 and took a loan on them in order to finance his business.15
Despite a deeply troubling history of corruption, it can at least be said that Nawaz Sharif appears to have enjoyed a greater degree of approval in his current term according to independent observers. According to a Pew Research Center report from 2014, 64% of Pakistanis reported a favourable view of Sharif, contrary to 32% who opposed him. Furthermore, the report found that concerns regarding corruption in particular had declined by 77%-59%. That said, it is clearly discernible that the country remains politically divided, with 53% having expressed support for Imran Khan and the PTI, and only 24% having disapproved.16 One might add that any increase in approval could only have resulted from the PML-N learning from various past mistakes, and even then, the possibilities of public coercion cannot be ruled out. At present, the calls for Sharif’s resignation can only mean that the Sharif family is under heightened pressure once again.
The Sharif family has been guilty in the past, and is guilty now. Given his own history, it is rather obvious that Nawaz Sharif has lied in asserting he never betrayed the trust of the nation. He has done so repeatedly, along with his successive regimes. To make matters worse, his children have clearly shared in the family enterprise. Hussein and Hassan may not be obliged to pay tax in Pakistan under current laws, but even if this is true, we still have the matter of how the London properties were obtained in the first place. The Sharif apologetics contradict in this regard, and no adequate response has been given to the allegations of money laundering in the UK. The family must seriously be made to account for where the reported £5 million has disappeared to. It is possible that some of this money may have been transported to family accounts in the British Virgin Islands, and may therefore involve Mossack Fonseca. It is also necessary to discern which family businesses have received this money. All things considered, it is doubtless the names of Nawaz and his children would emerge under the auspices of a just and independent inquiry. Furthermore, the money obtained from bank loans must also be held in suspicion, given that the properties were used as collateral. Hussein’s notion of “unnecessary taxes” should also be called into question, for even if we assume the legality of his actions, the point still remains that legal reform is necessary to ensure that the rich are obliged to pay their fair share, rather than hoard wealth.
The Sharifs are not the only ones to have essentially stolen from the people. The Panama Papers have shamed 200 amongst the country’s politicians, businessmen, and other influentials. The issue of corruption has plagued Pakistan for generations and has ensured the loss of tens of billions by this point. In the midst of such controversies, one cannot forget the infamous premiership of Yousaf Raza Gilani, who lost Pakistan $94 billion given rampant corruption and tax evasion. Controversies such as these point toward the need for a new political generation, one that can finally address this issue once and for all. Pakistan is subject to shari’a rulings on corruption which make it illegal, and further oblige that any wealth obtained by unlawful means be returned to those wronged. If this is not possible, then such wealth should be invested in public services. Imprisonment of those guilty goes without saying.
8 Owen Bennett-Jones, Pakistan: Eye of the Storm (New Haven: Yale University Press, 2002), 232-234.
9 Ian Talbot, Pakistan: A Modern History (London: C. Hurst & Co. Publishers Ltd., 1998), 320.
11 Zulfikar Khalid Maluka, “Reconstructing the Constitution for a COAS President,” in Pakistan on the Brink: Politics, Economics and Society, ed. Craig Baxter (Lanham: Lexington Books, 2004), 63.
12 Bennett-Jones, Pakistan, 232-233.