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The sordid stories of plunder

While there is complete denial in Pakistan about tax evasion and illegal flight of capital, new disclosures by ICIJ unveil some shocking facts about secret offshore deals

The sordid stories of plunder

More than $50 billion of foreign aid money is pumped into Africa annually. But did you know that roughly the same amount of money is illicitly siphoned out of the continent? — Continent of Secrets: Uncovering Africa’s Offshore Empire, ICIJ Panama Papers

As predicted by us along with many others, the name and shame game in Pakistan of tax evaders and looters of public money through Panama Papers and own publications of the Federal Board of Revenue (FBR) — Tax Directory 2013 and 2014 — has failed to muster public attention or that of the agencies for taking suitable action. The apathy and indifference of masses and inaction on the part of the courts and concerned agencies in the wake of Panama Papers, once again prove that there is no hope for bringing the culprits to justice — through rejection by votes as elections in AJK confirm; or punishment by Parliament, NAB, FBR, FIA or courts as depicted by optimism of ministers in their speeches and TV talk shows. Unfortunately, the government that has the main responsibility to tackle the twin menace of tax evasion and black money is shamelessly indifferent — it rather wants to cover up the entire affair through delay or devising yet another amnesty.

Key members in all political parties, including their top men, single-handedly running the show, have poor tax records but there is no will to go for a purge from within their party ranks. The non-democratic and authoritarian models within political parties are the main hurdles. This is the real dilemma of botched democracy in Pakistan that nobody wants to discuss seriously. The political game is that of mudslinging and not a desire for across-the-board accountability.

While there is complete denial and indifference in Pakistan about tax evasion and illegal flight of capital, elsewhere in the world people and governments are proactive against the culprits since the unveiling of Panama Papers. Actions have been taken against politicians, officials, drug barons, criminals and businessmen who stashed illicit/untaxed/unreported wealth abroad. The sordid story of corruption, loot and plunder, with assets of trillions in offshore jurisdictions, critics of capitalism say, testifies to the failure of the existing system that claims to have transparency and accountability as its core attributes.

Meanwhile, new disclosures made by International Consortium of Investigative Journalists (ICIJ) on July 25, unveil some horrifying and shocking facts about secret offshore deals that had deprived Africa of billions of dollars. Like elsewhere, in this continent, politicians having mining, oil and gas interests have benefitted from secrecy and dubious multimillion dollar transfers. Review of some internal documents of Mossack Fonseca shows that the Panama-based law firm was providing secrecy to companies involved in extractive industries. The firm’s internal files include more than 1,400 companies whose names refer to mining, minerals, oil, petrol or gas!

The revelations about Farid Bedjaoui, the nephew of a former Algerian foreign minister, confirm modus operandi of many politicians in power plundering national wealth and keeping the masses poor as is the case in Pakistan as well. He is currently living in a Beverly Hills-inspired gated community in Dubai just like many of our politicians who have expensive properties abroad. According to details released by ICIJ, Bedjaoui used a cluster of offshore companies that helped him shield the transactions from scrutiny.

Twelve of 17 companies under investigation by authorities in Italy in relation to a $10 billion oil and gas deal in Algeria were created by Mossack Fonseca. Italian investigators described one of those companies, Minkle Consultants S.A., as a “crossroads of illicit financial flows” that channeled millions of dollars from subcontractors to an array of recipients whose identities are still being untangled. It is alleged that one company set up through the law firm to funnel as much as $15 million to associates and family members of Algeria’s then-energy minister. “The cross-border bribery scandal is one of dozens of cases in Africa in which companies created or administered by Mossack Fonseca have played a role in oil, gas and mining deals that have spawned public allegations of tax dodging, corruption, environmental destruction or other misconduct,” the ICIJ report adds.

Examination of Mossack Fonseca’s files reveal that numerous offshore companies were established to own, hold or do business with petroleum, natural gas and mining operations in 44 of Africa’s 54 countries. Many of them were/are controlled by politicians, their family members and business associates.

Often, the oil, gas, gold and diamonds formed beneath the earth’s surface over millions — even billions — of years are traded by shadow companies that have existed for months. Companies created and assisted by Mossack Fonseca include at least 27 subsidiaries of one of the world’s biggest gold producers, the mining behemoth AngloGold Ashanti and its predecessor. AngloGold told ICIJ it complies with relevant tax laws and that its offshore companies held investments and allowed it to “mitigate double taxation”.

According to latest report of ICIJ, criminal charges have been filed against Bedjaoui by Italian authorities. Prosecutors allege that he inflated contracts for the benefit of Algerian officials, adding a standard cut for himself that earned him the nickname “Mr. 3 per cent” — much lower than our infamous “Mr. 10 per cent”!

It is worthwhile to mention that according to the research group Global Financial Integrity estimates between 2004 and 2013, Algeria, home to the second-largest oil reserves in Africa, lost an average of $1.5 billion annually through tax avoidance, bribery, corruption and criminality. Across the continent, the United Nations estimates at least $50 billion each year goes unaccounted for due to illicit money flows. The figure for Pakistan alone is as high as $20 billion per annum, yet nobody is ready to take any action.

How the plunderers of national wealth and tax evaders in Pakistan and elsewhere rob the masses can be seen in a report titled, Illicit Financial Flows from Developing Countries: 2004-2013, prepared by Dev Kar and Joseph Spanjers. The report reveals that “developing and emerging economies lost US$ 7.8 trillion in illicit financial flows from 2004 through 2013, with illicit outflows increasing at an average rate of 6.5 per cent per year — nearly twice as fast as global GDP.” The example of oil-rich Nigeria is worth mentioning as it routinely tops the list of African nations from which billions of dollars are siphoned off each year. Mossack Fonseca’s files show that their former customers included three oil ministers, senior national oil company employees, and two former state governors were later convicted of laundering oil-tainted wealth. In Pakistan, we are praising and embracing the customers of this law firm with open arms!

Those who are not ready to believe that this firm helped the rich and mighty of Pakistan to conceal the stolen wealth of the country by rulers must read reports of the British and US investigators which reveal that Diepreye Alamieyeseigha, governor of Nigeria’s oil-rich Bayelsa State from 1999 to 2005, used money skimmed from public funds, including government oil contracts, to buy a home in Rockville, Maryland, and four homes in London held by an offshore company set up through Mossack Fonseca. An honest person would never buy such properties in London and elsewhere through offshore companies. This is a clear message for the owners of properties who are members of various political parties in Pakistan — whether in power or in opposition!

Our political elite, corrupt civil-military officials and unscrupulous businessmen should remember the end of Alamieyeseigha, who was arrested in UK for money laundering charges in 2005. Later, though he slipped out of UK dressed as a woman but was impeached and removed in his home country, served a short prison term, pardoned in 2013 by President Goodluck Jonathan and finally died in 2015.

There are lessons for the corrupt in the story of Alamieyeseigha and other plunderers of national wealth who were finally brought to justice or died in painful circumstances. They must remember the words of Nigeria’s current President, Muhammadu Buhari, in his speech delivered at anti-corruption summit in London one month after the release of Panama Papers: “Every dollar siphoned through dirty deals and corruption to offshore tax havens makes the livelihood and survival of the average African more precarious”. This holds true for Pakistan and all other countries if only we are ready to understand.

Dr Ikramul Haq

One comment

  • May the corrupt so called elite, political establishment, and rogue businessmen perish!

    May Allah, SWT destroy them and bring them to an ignominious end in this world and send them to eternal damnation in the hereafter

    Let them remember they may escape punishment on earth but on Judgement Day there shall be no escape!

    The public is not innocent-The apathy of the public means that the public is passively condoning the misconduct of the miscreants and thus will continue to be punished by the rogues in power and in opposition-the public will be ruled by the politicians they deserve!

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