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Dubai Leaks: Will Everyone Get Away?

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Islamabad (Imran Y. CHOUDHRY) :- Former Press Secretary to the President, Former Press Minister to the Embassy of Pakistan to France, Former MD, SRBC Mr. Qamar Bashir analysis :
The politicians, parliamentarians, and members of both civil and military bureaucracy create a formidable force to shield one another from the fallout of leaks like Wikileaks, the Panama Papers, or revelations concerning Dubai properties. This network safeguards those in positions of power through compliant Federal Board of Revenue (FBR) and rubber nose accountability bodies to minimize or completely neutralize the adverse effects of such leaks. Notwithstanding the fact that serious concerns about the origins of these funds and potential illicit practices such as corruption, money laundering, and tax evasion not only undermine the integrity of financial systems but also deprive the government of essential revenue needed for public services and infrastructure.

Drawing from my experience of working as Deputy Commissioner Income Tax for more than ten years (1994-2005) I can tell with certainty that the entire accountability framework, including the FBR, would already have started rectifying the gaps in the income tax and wealth tax records of prominent Pakistani figures including three children of President Asif Ali Zardari, Hussain Nawaz Sharif, the spouse of Interior Minister Mohsin Naqvi, Sharjeel Memon, Senator Faisal Vawda, Farah Gogi, Sher Afzal Marwat, several members of the Sindh and Balochistan assemblies, the late Gen Pervez Musharraf, former Prime Minister Shaukat Aziz, over a dozen retired generals, as well as a police chief, an ambassador, and a scientist.

I can also assert with certainty that tax authorities across Pakistan will be diligently examining the records of individuals beyond politicians and civil and military bureaucracies to determine if the properties leaked were declared, undeclared, or undervalued. Taxpayers and their lawyers have likely already been summoned to negotiate the cost of rectifying their records, a process that benefits themselves, their legal representatives, and the tax officials, ensuring that not a single penny goes to the government exchequer.

For those individuals whose wealth statements are available in the public domain and who either failed to declare the mentioned properties or undervalued them, they and their income tax lawyers are likely scrambling to initiate damage control measures.

The properties worth $11 billion in Dubai starkly contrasts with the economic realities facing the nation. With foreign exchange reserves far below this figure and a significant portion of the population living below the poverty line, this vast wealth disparity underscores systemic challenges in income distribution, governance, and economic development. In a country where over 40% of the populace struggles amidst inflation rates exceeding 35%, the concentration of such immense wealth abroad not only widens the gap between the rich and the poor but also exacerbates socioeconomic inequalities, hindering efforts to uplift marginalized communities and foster inclusive growth.

The $11 billion worth of leaked properties is merely the tip of the iceberg. Countless other properties have been discreetly acquired and stashed away in various countries worldwide, potentially totaling billions upon billions of dollars. This rampant acquisition of assets abroad significantly contributes to the impoverishment of our nation. It’s a stark representation of the systemic corruption and greed that plagues our society, draining resources that should be invested in uplifting our people and developing our nation.

As a senior civil servant who retired as the Press Secretary to the President in BS 21, I can attest to the fact that throughout their entire service, whether civilian or military, any bureaucrat can only afford a modest house and a middle-class car with their legal income. Similarly, my experience as Director General of the Minister’s Office for four Federal Ministers confirms that politicians can barely sustain their household expenses with their legitimate earnings, let alone accumulate significant assets.

Any wealth beyond these modest means is likely obtained through illicit means or illegal sources of income as civil and public servants are prohibited from engaging in business activities during their service.

How they launder black money through an intricate web of financial transactions is intriguing. The illicit funds are injected into the financial system through depositing cash into third-party bank accounts, acquiring high-value assets, or establishing shell companies. These funds undergo a series of transactions to obscure their origins, including transfers between accounts, investments across different markets, and international wire transfers through multiple jurisdictions. Subsequently, laundered funds are reintroduced into the economy disguised as legitimate assets, often through the sale of initially purchased high-value assets at deflated prices followed by reinvestment in legitimate businesses or the acquisition of real estate and other valuable assets.

Moreover, politicians and civil servants frequently exploit their positions of authority and leverage legislative influence to create loopholes or favorable conditions for concealing illicit wealth. They may also utilize personal connections and influence to access offshore banking systems or establish intricate corporate structures, further complicating the tracing of asset ownership.

The parliament and the executive often collaborate to introduce Tax amnesty schemes. They declare previously undisclosed assets or income, often attributing them to gifts received from friends, relatives, or loyal party supporters. Through paying nominal taxes, which are often a fraction of the true value of their assets, they effectively launder their illegal wealth freely, use or invest it without fear of legal repercussions.

Letus create a hypothetical scenario that individuals implicated in illegal asset acquisition were US citizens. They could have faced various legal ramifications under U.S. law. This includes potential charges for money laundering, stemming from transactions involving proceeds of corruption or bribery. This would have led to hefty fines and lengthy imprisonment upon conviction on two accounts, failing to report income or assets gained through illicit means, subjecting them to IRS prosecution and civil penalties and violations of the Foreign Corrupt Practices Act (FCPA) carrying fines and imprisonment and forfeiture to seize properties and assets acquired illegally.

Let us create another hypothetical scenario in which the politicians, bureaucrats, civil and military implicated in the Dubai leaks were US citizens and had acquired assets as gifts from friends, supporters or well wishers. They could face charges of bribery targeting both the giver and recipient for exchanging something of value for official favors. They could face honest services fraud charges for compromising their public duties. Failure to disclose the gift or avoid decisions benefiting the giver could lead to conflict of interest violations requiring to forfeit the gift, facing civil penalties and reputational damage with added consequences of legal risks, potentially tarnishing careers and undermining public trust.

But we all know with certainty that in Pakistan everyone will get away.

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