Pakistan’s Prime Minister Imran is in a perilous place as are several political leaders across the globe in the aftermath of the earthshattering revelations in Pandora Papers. The massive investigation by the International Consortium of Investigative Journalists (ICIJ) alleges that some prominent members of Khan’s government, donors to his Pakistan Tehreek-e Insaf Party along with the family members of the country’s powerful military generals and opposition political families have moved millions of dollars of wealth via offshore companies.
The allegations present a conundrum for Khan who rose to power in 2018 on the back of promises to reprimand Pakistan’s “corrupt” political elites. His own name does not appear in the newly leaked documents but the two of his cabinet ministers are among over 700 other Pakistani citizens are named in the probe. Given the anti-corruption wave that landed him the top job in the country, the scenario presents being in between a rock and a hard place situation for Khan, whose government is already embroiled in several other crises.
Owning offshore holding companies is not illegal or amount to wrongdoing; however, but the practice is frequently connected to an attempt to avoid tax liability along with maintaining secrecy around large financial transactions.
Earlier on Sunday, Khan said his government would “investigate all our citizens mentioned in the Pandora Papers [and] if any wrongdoing is established we will take appropriate action”.
Cabinet ministers under fire
Pakistan’s Water Resources Minister Moonis Elahi and Finance Minister Shaukat Tarin were the most prominent names in the leaked documents. Minister Tarin has since denied any wrongdoing. The allegation is that he was named as the director and beneficial owner of a Seychelles-based holding company Triperna Inc., founded in 2014. The leaks suggest that the company was to be used for an investment transaction into a bank that he owned; although, the deal did not take place. Tarin said the company never held any assets and was shut down.
Tarin said, “No account was opened, no transactions were made. Before it could happen there was a bomb blast in Karachi, and Tariq bin Laden [the potential investor, a Saudi national] became disinterested in our bank.”
As for Moonis Elahi, the ICIJ investigation claims Elahi sought to invest $5.6m from an alleged loan scandal into a trust through international financial services provider Asiaciti Trust in January 2016. The probe revealed that Asiaciti accepted Elahi as a client a month later. He was inducted despite the company’s risk assessment report expressing apprehension about his involvement in “several corrupt land development projects”. The report was referring to his time as a provincial politician in the country’s most populous province Punjab.
ICIJ’s probe said that Elahi’s proposed $5.6m transaction to Asiaciti Trust was allegedly made from proceeds from unsecured Bank of Punjab loans. In 2007, allegations surfaced that the Bank of Punjab had reportedly issued $608m in unsecured loans. These loans were doled out to companies owned by the families or friends of political leaders or to the bank’s own directors. The government had to pay to bail out the bank from the taxpayer money when the loans were not recovered.
The leaked records show that Elahi backed out of the proposed investments in two properties in the UK and the RYK Sugar Mill in Pakistan when Asiaciti said they would have to inform Pakistan’s tax authority, the Federal Board of Revenue, about the transaction.
Later in 2017, Elahi’s wife used a UK shell company to transfer a London apartment worth $8.2m to a woman named Mahrukh Jahangir for no monetary exchange. The same woman’s name appears on public documents as a 9.4 per cent shareholder in RYK Mills.
Elahi too has denied any wrongdoing. A spokesperson for the minister blamed the allegations on “political victimisation”. Elahi’s Pakistan Muslim League-Q is a coalition partner with the ruling PTI.
Money behind Khan’s rise to power
Names of the son of Prime Minister Khan’s former finance and revenue adviser Waqar Masood Khan, the brother of Industries Minister Khusro Bakhtyar, and former water resources minister Faisal Vawda are also mentioned in the stunning probe.
The minister’s brother Omer Bakhtyar transferred a $1m apartment in London to his mother via an offshore company in 2018, the same year Khan’s PTI swept to power.
Key financial backers of Khan’s PTI have also been named: disgraced banker Arif Naqvi and prominent businessman Tariq Shafi.
Naqvi was a major donor to Khan’s 2013 election campaign. The files show that Naqvi employed an offshore trust operated by Deutsche Bank to transfer ownership of three luxury apartments, a country estate, and a suburban London property in the UK in 2017. These days, Naqvi stands charged by US prosecutors with more than $400m in fraud. The banker is facing extradition while being a resident in the UK.
The documents show that the business tycoon Shafi holds about $215m through offshore companies.
Rare revelations about powerful military
A 2021 United Nations report said that the Pakistani military is “the largest conglomerate of business entities in Pakistan, besides being the country’s biggest urban real estate developer and manager, with wide-ranging involvement in the construction of public projects”.
The ICIJ documents named five former high-ranking military officers, linking them to large offshore investments in property and commercial enterprises. The list includes a former air force chief and two lieutenant-generals in the army.
The leaks show that the wife of Lieutenant-General Shafaat Ullah Khan acquired a $1.2m apartment through an offshore transaction in 2007. Shah has since denied any wrongdoing in his tweets.
The former director-general of the country’s intelligence agency Pakistan’s Inter-Services Intelligence (ISI), Major-General Nusrat Naeem is said to have owned a company in the British Virgin Islands that was registered in 2009, shortly after he retired from service. General Naeem was later accused of $1.7m in fraud related to the purchase of a steel mill. The case was dropped and he denies any wrongdoing.
The documents show that a retired army lieutenant-colonel and former government minister Raja Nadir Pervez owned a British Virgin Islands-registered company. The ICIJ probe said that the company has been related to major transactions “in machinery and related businesses to India, Thailand, Russia and China” and in 2003 “Pervez transferred his shares in the company to a trust that controls several offshore companies” while “one of the trust’s beneficiaries is a British arms dealer”.
Pervez joined Prime Minister Khan’s PTI party, In 2013.
The papers also name two sons of former Pakistani Air Force chief Abbas Khattak. The Khattaks registered a British Virgin Islands company in 2010. In a separate allegation, it is claimed that the daughter of a retired lieutenant-general currently owns two apartments in one of London’s most expensive neighbourhoods through an offshore trust.
