The PPP government has no intention to renegotiate the existing tax treaty with the Swiss government as has been done by a number of countries including India, to retrieve billions in taxes if not the entire funds. In Pakistan, the private efforts to invoke extraordinary jurisdiction of Supreme Court to bring looted wealth and untaxed money have also failed. The Supreme Court declared the petitions non maintainable.
On the contrary, the Indian Supreme Court, in its historic decision of 4 July 2011 in the case of Ram Jethmalani and Other v Union of India reported as 2011 PTR 1933 (S.C. Ind), set up a 'Special Investigation Team' to supervise the Government-led investigations into black money of Indians lying abroad.
The decision, given by the Indian Supreme Court in pursuance of a Writ Petition filed by Indian veteran leader Ram Jethmalani alleging inaction by the government on the unearthing of unaccounted money, has special significance for Pakistan. The apathy of rulers in Pakistan in probing looted money lying abroad is a great cause for concern as the government has successfully flouted the judgement of the Supreme Court of Pakistan in the famous NRO case.
The directions given by the apex court in Dr Mubashir Hasan and others v the Federation of Pakistan (2010 PLD Supreme Court 265) have not yet been complied with - the President and his son, Prime Minister, in fact, the entire People's Party including its veteran leader Aitzaz Ahsan (once in the forefront of movement for independent judiciary) are openly defying it. This is sheer mockery of the rule of law. The common people, being highly disillusioned now, are openly saying that even the Supreme Court of Pakistan is proving to be yet another ineffective institution. The Supreme Court of Pakistan in the 2010 PLD Supreme Court 265 held:
"Since the NRO, 2007 stands declared void ab initio, therefore, any actions taken or suffered under the said law are also non est in law and since the communications addressed by Malik Muhammad Qayyum to various foreign fora/authorities/courts withdrawing the requests, earlier made by the Government of Pakistan for mutual legal assistance; surrendering the status of civil party; abandoning the claims to the allegedly laundered moneys lying in foreign countries including Switzerland, have also been declared by us to be unauthorised and illegal communications and consequently of no legal effect, therefore, it is declared that the initial requests for mutual legal assistance; securing the status of civil party and the claims lodged to the allegedly laundered moneys lying in foreign countries including Switzerland are declared never to have been withdrawn. Therefore the Federal Government and other concerned authorities are ordered to take immediate steps to seek the revival of the said requests, claims and status".
The apex court also observed in this judgement: "A Monitoring Cell shall be established in the Supreme Court of Pakistan comprising of the Chief Justice of Pakistan or a Judge of the Supreme Court to be nominated by him to monitor the progress and the proceedings in respect of Court cases (explanation added in detailed reasons) in the above notices and other cases under the NAO, 1999. Likewise similar Monitoring Cells shall be set up in the High Courts of all the Provinces comprising the Chief Justice of the respective Province or Judges of the concerned High Courts to be nominated by them to monitor the progress and the proceedings in respect of Court cases (explanation added in detailed reasons) in which the accused persons had been acquitted or discharged under Section 2 of the NRO, 2007".
By spring of 2012, the people of Pakistan have lost hope in everything. Beneficiaries of the NRO whom the Supreme Court ordered to be tried under the law are holding key positions and have made Pakistan a state captive in the hands of criminals. The above referred directions of the Supreme Court have lost their meanings as the government of PPP and its allies are not inclined at all to act upon it. The partners in the PPP government, claiming to be champions of democracy (sic), should be ashamed of their stance and must leave the government at once if they want to survive politically. The Opposition should forge the alliance on this issue and render resignation en bloc if the verdict of the Supreme Court is not implemented. The Opposition of Pakistan must learn from the German parties how they had forced their government to be tougher while dealing with tax cheats.
In other countries, including India, corruption is an issue but at least there exists a strong will to fight it. Recently in India, two drafts of the Lokpal Bill were discussed - one prepared by the government and the other, by activists led by the Gandhian Anna Hazare. In Pakistan, on the contrary, political stalwarts (sic) are united to defeat the verdict of the Supreme Court in the NRO case. It is time that people like Dr Mubashir Hasan and Imran Khan should come forward and start a nation-wide campaign by establishing protest camps outside all the press clubs of the country. The resistance of the government to write a letter to the Swiss government as per the Supreme Court's NRO verdict should be countered politically by all concerned. It can pave the way for a mass movement in Pakistan provided all political parties opposing PPP join hands.
All responsible governments in the world have in recent years shown commitment to retrieve the untaxed money but in Pakistan, the government is acting as the main stumbling block to any such move, even when binding judgement of the apex Court so requires and is enforceable under Article 189 of the Constitution. Pakistani tax authorities - knowing that there exists a treaty of avoidance of double taxation and exchange of tax information with all the governments where Pakistanis have parked untaxed money - have not yet taken any step to probe into the hidden foreign accounts of Pakistanis. It is no secret that Pakistani tax evaders have been transferring huge amounts of money to many offshore havens. In Pakistan, we have no leaders like Ram Jethmalani and Anna Hazare with will and courage to launch nationwide campaigns against corruption. Ram Jethmalani and Anna Hazare have done so because their own hands are clean whereas in Pakistan, majority of the leaders cannot justify their tax declaration vis-à-vis the standard of living and assets amassed during their public life. One hopes that Dr Mubashir Hasan and Imran Khan would join hands for this common cause.
i De Boissezon's comments during an interview with Reuters on April 10, 2012 are noteworthy because they provide a rare inside glimpse into the secretive private banking industry. De Boissezon said that big international banks like UBS and Credit Suisse with an international client base were likely to have a smaller portion of undeclared money than smaller Swiss banks, because the Swiss giants have poured resources into tapping newer markets in recent years. "Secrecy and tax considerations were mainly the considerations of the European clients. Of course, smaller Swiss banks have potentially a much higher percentage of European clients than larger international banks," he said. Around 30-40 percent of Hinduja's Swiss-managed funds were probably undeclared, he said, adding that measures are being taken to address this internally now. He did not give details of the measures. Hinduja Bank, part of an Indian family-owned conglomerate with around $3 billion under management, is a rare example of a private bank that is also active in the multi-billion a year commodity trade finance business. De Boissezon said a recent decision to double its commodity trade financing team was part of a broader strategy to appeal to a rising class of emerging market entrepreneurs in central Europe and Russia who dabble in commodities trading. "We are also looking to hire private bankers in central Europe and Russia because clients there are looking for people to help on the business side too," he said. "Clients are looking for more than just a straight-forward private bank." Traditional commodity trade finance heavyweights such as French bank BNP Paribas have scaled back their activities in the sector due to a shortage of dollar funding and tough new capital requirements. Like other banks in the sector, de Boissezon said the uncertainty over the euro zone debt crisis and global growth meant that Hinduja's clients are still holding an unusually large portion of their investments in cash and similar products. "A larger than usual portion [of investments] is still conservative," he said.
(Concluded)
(The writers, tax lawyers and partners in HUZAIMA & IKRAM (Tax and Pakistan), are Adjunct Professors at Lahore University of Management Sciences)