The Panama Papers and political risk in Pakistan

Last year’s scandal surrounding the leak of the so-called ‘Panama Papers’ has blown over in most of the affected countries. Not so in Pakistan. The leak implicated the family of Prime Minister Nawaz Sharif, and has launched a legal battle that threatens his career and the country’s political stability.

Panama flats

The leak to the press last April of documents from the Panamanian law firm Mossack Fonseca, a specialist in creating offshore companies, confirmed that three of the Pakistani prime minister’s adult children, Maryam, Hassan and Hussein, controlled offshore entities incorporated in the British Virgin Islands, a tax haven. These entities in turn owned a number of apartments on London’s Park Lane, one of the world’s most expensive residential streets. How the prime minister’s family acquired these properties has become the crux of opposition demands for Nawaz to resign – a demand he has said he will yield to if the court finds against him.

The supreme court began hearing the case in January. According to documents submitted to the court by the family, the Sharifs purchased the Park Lane flats between 1993-96, the first while Nawaz was nearing the end of his first term in office (1990-93). His family’s ownership of these properties had been a source of opposition criticism since the 1990s, and was sometimes cited by Nawaz Sharif’s political opponents as evidence of corruption.

Immediately after the Panama leaks, Nawaz gave a speech to the National Assembly pledging to clear his name and to clarify the sources of his wealth. Then, in November 2016, his family released a letter by a former Qatari prime minister – a prince of the ruling al-Thani dynasty – in which he stated that he had given the Sharifs the properties in 2006, to close out an investment the prime minister’s father made in an al-Thani real-estate company in 1980.

Complicating the issue is that the Sharif family is legitimately wealthy. They are well-known industrialists in the province of Punjab, owning steel, paper and sugar mills.

As one of the five judges pointed out, the prime minister had somehow failed to mention this Qatari connection in his original statement to the National Assembly. The opposition dismisses the family’s explanations. According to Imran Khan, the former national cricket captain who now leads the opposition PTI party, the assets were purchased via corruption in office by the prime minister. The PTI had been accusing Nawaz of such corruption long before the Panama Papers emerged.

One claim levelled against the prime minister is that he received USD300 million in kickbacks from foreign investors building Pakistan’s highway network in 1992 and 1993. Sheikh Rasheed Ahmad, who leads the small Awami Muslim League party and served as information minister during the period in question, testified in court that a German sales intermediary visited Pakistan to offer this colossal sum in bribes, though he provided no documentary evidence to support this.

Complicating the issue is that the Sharif family is legitimately wealthy. They are well-known industrialists in the province of Punjab, owning steel, paper and sugar mills. The fortunes of their businesses have waxed and waned depending on the government of the day: they suffered under Zulfiqar Ali Bhutto’s programme of nationalisation in the 1970s, but prospered in the 1980s under the military regime that deposed and executed Bhutto.

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