Panama Papers: Court is in session, Pakistan holding its breath

If Imran Khan’s petition succeeds, the 2018 polls will be his to lose. If it does not, charges of corruption will likely never stick to Nawaz Sharif again.

Written by Anees Jillani | Published:February 1, 2017 12:31 am
nawaz sharif, panama papers, panama paper leak, money ciorruption, off shore money fraud, nawaz sharif, imran khan, pakistan supreme court, nawaz sharif corruption, Pakistan Tehreek-e-Insaaf, International Consortium of Investigative Journalists, icij, Asif Zardari, Benazir Bhutto, indian express news, india news Pakistani Prime Minister Nawaz Sharif (File Photo)

Since January 4, a five-member Bench headed by the second seniormost judge of the Supreme Court of Pakistan has been hearing for three hours every day petitions alleging corruption by Prime Minister Nawaz Sharif, filed by the chairman of the Pakistan Tehreek-e-Insaaf (PTI) Imran Khan, and the head of the Jamaat-e-Islami, Siraj-ul-Haq. It is difficult to tell from the comments by members of the Bench which way the case is going — even though the media pounces on their observations daily, and politicians, including ministers and petitioner Imran Khan, give their views.

The stakes are high for both parties, and regardless of how the Prime Minister carries himself in public, the trial is a political embarrassment for him and the Pakistan Muslim League (Nawaz). Details of his and his family’s properties and money have tumbled out at each hearing. For Khan, this is the best chance to remove Nawaz Sharif and his family from Pakistan’s political canvas. If he succeeds, there will be little to stop him in next year’s general elections. If he loses, it will be difficult to level charges of corruption against Nawaz Sharif again.

The PM initially reacted aggressively when the International Consortium of Investigative Journalists (ICIJ) posted the Panama Papers — in which the allegations against him are rooted — on its web site. In an address to the nation on April 5, 2016, he proposed to appoint a judicial commission to probe the leaks and, on May 16, told the National Assembly the history of his business empire and suggested the matter be referred to a commission. The then Chief Justice turned down the proposal, saying that under existing laws, the commission would lack powers to carry out a proper probe. The government then floated names of a few retired judges for the job, but they declined; and the opposition felt a retired judge would find it difficult to indict a sitting PM.

No offshore company in the Panama Papers is in the name of Nawaz Sharif or his brother Shahbaz Sharif, Chief Minister of Punjab province. However, several entities are listed in the names of the PM’s three children, Mariam, Hasan and Hussain, who were owners, or had the right to authorise transactions. These companies were incorporated through the Panamanian law firm Mossack Fonseca.

Mariam is described as the owner of British Virgin Islands-based firms Nielsen Enterprises Limited and Nescoll Limited, incorporated in 1994 and 1993. One of the documents released by ICIJ, dated June 2012, gives Nielsen Enterprises’ address as Saroor Palace, Jeddah, Saudi Arabia, and describes Mariam Safdar as “beneficial owner”.

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Based on the Panama Papers, the PTI filed a reference against the PM before the National Assembly Speaker who, however, refused to refer it to the Election Commission. This was in September 2016.

Khan then filed a constitutional petition in the Supreme Court. The Registrar returned it saying it was frivolous, so Khan appealed. The court decided to hear it — but after lengthy arguments and the filing of many documents, in December 2016, the Chief Justice announced he was to retire on December 30, and the petition would be heard afresh by a new Bench.

Khan’s petition is against the PM, his daughter Mariam Nawaz, sons Hussain Nawaz and Hasan Nawaz, Mariam’s husband Captain (retd) Muhammad Safdar, and Finance Minister Ishaq Dar, who is the father-in-law of another of Nawaz Sharif’s daughters. It 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 without disclosing how the money was transferred out of Pakistan, selling the mill for $ 9 million and holding this amount without declaration, building a steel mill in Jeddah and falsely claiming that six expensive flats were purchased in London through its sale, evading taxes, making false declarations, and increasing their assets from one foundry to 29 entities currently.

The petition claims the London properties were bought using illegal commissions of $ 160 million in the building of the Islamabad-Lahore motorway. It also alleges that Pakistani banks gave the Sharifs unsecured loans amounting to $ 140 million, and that the family skimmed $ 60 million from government rebates on sugar exports and $ 58 million from inflated prices for US wheat imports.

The petition says the PM paid income tax of Rs 24,000 in 1981; in 1992, when he was PM, Rs 2,680; in 1996, nil; in 2009, Rs 2.7 million. He did not file returns from 1999 to 2009, when he was in exile in Saudi Arabia and England.

Nawaz Sharif has claimed that the London properties were bought in 2006 with the proceeds of the sale of the Dubai and Jeddah steel mills. His wife said in an interview that the properties were purchased in 2000. And his son told the BBC that the Jeddah steel mill was purchased with loans and gifts from friends.

In alleging that the properties were purchased with the motorway kickbacks between 1993 and 1996, Imran Khan has referred to the incorporation of Nescoll in 1992 and Nielsen in 1994 in the British Virgin Islands, with Mariam as the beneficial owner. To show that the family owned these companies before 2006, he has referred to the attachment of the London flats by an England court when the family was unable to repay loans in 2000.

Attached to the petition are official copies of the London Land Registry, showing the properties have been owned by the offshore companies since at least 1993. One flat was owned by another offshore company, Flagship Investments, since 2004.

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A first set of lawyers for the PM and his children was replaced within days. In November, the defence produced a fresh explanation for how the Sharifs bought their London properties. A letter, on the letterhead of Hamad bin Jassim bin Jaber Al Thani, the ruler of Qatar from 2007 to 2013, was presented in court. It said that Hamad’s father, Jassim bin Jaber al Thani, had “longstanding business relations with Mian Mohammad Sharif”, Nawaz Sharif’s father, “which were coordinated through (the prince’s) eldest brother”.

The letter, dated November 5, 2016, and signed by Hamad, added that in 1980, “Mian Sharif (had) expressed his desire to invest… in real estate business of Al Thani family in Qatar”, and “an aggregate sum of around Dirhams 12 million was contributed…, originating from the sale of business in Dubai.” Four flats, 16, 16A, 17 and 17A, Avenfield House, Park Lane, London, were registered under the ownership of two offshore companies, and their bearer share certificates were kept in Qatar. “These were purchased from the proceeds of the real estate business.”

The letter said that “on account of [the] relationship between the families, Mian Sharif and his family used the properties whilst bearing all expenses relating to (them)”. Mian Sharif “wished that the beneficiary of his investment and returns… (should be) his grandson Hussain Nawaz Sharif”, and in 2006, accounts were settled between the families.

The Sharif family also produced a Declaration of Trust signed in February 2006 between Mariam and Hussain, which said that the beneficiary of Nescoll and Nielsen would be the brother, while the sister would hold in trust the shares of the “special purpose vehicles” (the offshore companies) for the brother’s sole and absolute benefit.

The court observed that the Qatari letter had originated only a few days ago, and asked the counsel whether the person who had signed it would appear for cross-examination. Although he didn’t respond in court, the lawyer told reporters afterward that the former Qatari premier would indeed come to court if necessary.

The PM’s children claimed that no amount was ever transferred or remitted from Pakistan to set up, finance or run steel mills in the UAE. They emphasised that Mariam was only a trustee for the benefit of Hussain; therefore, from 2006 onwards, the London properties were Hussain’s.

On January 26 this year, Mariam’s lawyer produced yet another Qatari letter, written by the same Hamad, saying Mian Sharif was the prince’s father’s close companion, and had invested 12 million dirhams in cash in 1980. For the settlement of the property, certificates of companies were handed over to Hussain’s representative, the letter said, and claimed that the English court had wrongly attached the four London flats.

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The hearing may be concluded soon. The court is obviously under tremendous pressure — in a country where democracy has struggled to take root, the petition is asking it to remove an elected PM on corruption charges that look strong. The court has convicted an elected leader of contempt once earlier, after Prime Minister Yusuf Raza Gilani refused to comply with its order to take steps against Asif Zardari and Benazir Bhutto.

If the petitions are accepted, Pakistan will set a new standard for response to corruption in South Asia. The court may also dismiss the petitions, or refer the matter to a commission to probe the evidence further.

The author is a lawyer at the Supreme Court of Pakistan.jillani@jillani.org

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