Transparency International moves Supreme Court against nominees of Pandora and Panama Papers

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A veteran lawyer Hashmat Ali Habib Advocate has filed a petition in the Supreme Court of Pakistan, Islamabad, against the nominees in Pandora Papers and Panama Papers, on behalf of Transparency International of Pakistan (A Non-Partisan, Non-Nonprofit Coalition against Corruption) through its Managing Director Syed Adil Gillani.

The petition is filed under Article 184(3) of the constitution of the Islamic Republic of Pakistan-1973 read with all enabling laws to affect recovery and initiate penal action. The Respondents are:
1. Government of Pakistan through Secretary Ministry of Finance Pakistan Secretariat, Islamabad
2. National Accountability Bureau through its Chairman NAB Head Office
3. Federal Investigation Agency through its Director General FIA Head Office
4. Asset Recovery Unit of Stolen Properties, through its Head ARU Cell PM Secretariat, Islamabad
5. Federal Board of Revenue through its Chairman Constitution Avenue, Islamabad
6. State Bank of Pakistan through its Governor, Karachi
7. Securities and Exchange Commission of Pakistan (SECP) through its Chairman, Islamabad

In this petition the apex Court is requested to order FBR and all respondents to seek information from those named in Pandora Papers and Panama Papers. In order to determine any wrong doing, it is imperative that the FBR seeks from those named in Pandora Papers and Panama Papers to provide proof that the sources of funds were not derived from criminal offence.

Provide an explanation, with supporting documentary evidences, explaining how the funds were sent to Offshore Companies from Pakistan, or abroad. Foreign Assets (Declaration and Repatriation) Act, 2018 is not applicable if any of; Government of Pakistan and National Accountability Bureau are not satisfied.

All foreign assets of Pakistani citizens named in the Panama Papers and Pandora Papers shall be frozen by FBR, and those assets which will not be justified within 3 months shall be confiscated, and proceedings shall be initiated to recover these assets under Article 51/52/53/54/55/56/57/58, Chapter V (Asset Recovery) of Stolen Asset Recovery Initiative included in UN Convention Against Corruption (UNCAC) ratified by GoP in August 2007.

FBR shall also conform that all the foreign assets declared in 2018, were not from or derived from the commission of a criminal offense, i.e. Tax Evasion, Money Laundering etc.
The Respondents shall initiate penal action against corruption in accordance with law. And Grant any relief which may be deemed as fit and proper to secure the ends of justice, the Petitioner prayed.

According to details the Petitioner is International Organization, a Non-Partisan, Non-Profit Coalition against Corruption and working for corruption free society. TIP (Transparency International of Pakistan) is striving for across the Board of application of Rule and Law, it is only way to stop corruption and achieve Zero Tolerance against Corruption.

Syed Adil Gillani Managing Director of TIP is fully authorized to file any Suit, Application, Petition, any case before any Court of competent jurisdiction on behalf of Transparency International as per Board’s resolution.

He said over 700 citizens of Pakistan are named in Pandora Papers in 2021, in addition to 450 persons/ citizens earlier named in Panama papers in 2016, which make a total of over 1150. Owning an offshore firm is not illegal, but hiding it from the FBR, SECP and SMP is illegal. When Panama papers were released in May 2016, cases were filed in the Supreme Court of Pakistan. The SECP, SBP, FIA and FBR also took up the matter to investigate citizens named therein. However, the Supreme Court of Pakistan took action only against a few Pakistani citizens, while no action was taken against a majority of the citizens named therein.

Similarly, SECP, SBP, FIA and FBR failed to initiate any tangible action against them. Unfortunately, the Federal Board of Revenue (FBR) and the Securities and Exchange Commission of Pakistan (SECP) were supposed to initiate inquires under the provisions of Income Tax Ordinance 2001.

It seems failure of these departments to act on their own Law, conforms the World Bank report score of Pakistan in Transparency International Corruption Perception Index (CPI) 35 out of 100, “a state capture by narrow vested interest”.

On 8th April 2018, the Tax Amnesty Scheme Foreign Assets (Declaration and Repatriation) Act, 2018 was announced which was wholly rejected by the Prime Minister, in his capacity as the head of PTI, stating that such an Act is intended to punish tax-payers for their honesty and provides a chance to corrupt individuals to “turn their black money white”. However, under this Act, it is stated in the Section 5 (2), that the provisions of this Act were not applicable to any proceeds or assets that are involved in or derived from the commission of a criminal offense.

In a press report published in newspaper DAWN on 30 June 2018, it was published that a Karachi-based individual has deposited Rs 3.2 billion (which mean the assets declared were worth over Rs 1 billion), while a woman from Peshawar paid Rs 1.2bn (which means the assets declared were over Rs 0.40 Billion) on her foreign assets, and that with the curtain set to drop on the amnesty scheme by the end of the day (Saturday), nearly 5,000 people have filed returns declaring their foreign assets and deposited approximately Rs 80 billion in taxes till June 28, Dawn has learnt through knowledgeable sources.

It was mandatory for all including the two declarants to satisfy FBR that the proceeds of Rs 1 billion and Rs 0.4 Billion are not involved in or derived from the commission of a criminal offense. It means the proceeds of assets so declared shall not be from Tax Evasion also.

The Tax Amnesty Scheme Foreign Assets (Declaration and Repatriation) Act, 2018, under section 4 is also not applicable on Public Office Holder, their spouses and dependent children, under Section 4, which includes members of Board of Directors of Public Sector Enterprises, like PIA, SSGCL, and PQA etc.

The SECP under article Companies (Amendment) Ordinance, 2020 dated 30th April 2020, had tried to change definition of Beneficial Ownership of foreign companies, in Section 452, from following provision, to that less than 10% foreign holding by citizen is not to be declared to SECP, on which TI Pakistan sent objection to SECP on 15.6.2020.

“Companies’ Global Register of Beneficial Ownership. (1) Every substantial shareholder or officer of a company incorporated under the Company law, who is citizen of Pakistan within the meaning of the Citizenship Act, 1951 (II of 1951), including dual citizenship holder whether residing in Pakistan or not having shareholding in a foreign company or body corporate shall report to the company his shareholding or any other interest [or any change thereof] 203 as may be notified by the Commission, on a specified form within thirty days of holding such position or interest.”

Under the Tax Amnesty Scheme Foreign Assets (Declaration and Repatriation) Act, 2018 declaration of assets at 2 to 3 percent values were allowed, but money trail and proof that the sources of funds were not derived from criminal offence were to be provided to FBR. Tax Evasion (under Income Tax Ordinance 2001, Section numbers 192,193,194,195,196,197,198 and 199), remittance of money from Pakistan, not through SBP route, are declared as criminal acts under the laws of Pakistan.

The FBR did issue notices on 10th August 2018 to at least 294 Pakistanis out of 444, who were named in the Panama Papers leak, as was stated by Federal Minister for Finance Asad Umar. However, following such a sensational announcement nothing seems to have come to fruition from issuance of said notices.

On 7th October 2021, Transparency International Pakistan requested the Prime Minister of Pakistan to order FBR to initiate proceeding against all Pakistani citizens named in Panama Papers and Pandora Papers. TI Pakistan recommended that in order to determine any wrong doing, it is imperative that the FBR seeks from those named in Pandora Papers and Panama Papers, the following:

(i) Provide proof that the sources of funds were not derived from criminal offence.
(ii) Provide an explanation, with supporting documentary evidences, explaining how the funds were sent to Offshore Companies from Pakistan, or abroad.
(iii) Foreign Assets (Declaration and Repatriation) Act, 2018 is not applicable if any of; Government of Pakistan and National Accountability Bureau are not satisfied.
(iv) All foreign assets of Pakistani citizens named in the Panama Papers and Pandora Papers shall be frozen by FBR, and those assets which will not be justified within 3 months shall be confiscated, and proceedings shall be initiated to recover these assets under Article 51/52/53/54/55/56/57/58, Chapter V (Asset Recovery) of Stolen Asset Recovery Initiative included in UN Convention Against Corruption (UNCAC) ratified by GoP in August 2007. The Petitioner craves leave to add further grounds at the time of hearing of this petition, Hashmat Habib, the lawyer for Petitioner concluded.