‘Blaming and shaming should be a side business. The focus needs to be on opening channels and creating an environment where offshore account holders find repatriation of their wealth back in Pakistan to be the most economically viable option.’

while Panama leaks corruption cases have consumed public attention and power yielders wrestle in courts, the business elite fears that Panama/Paradise leaks may further polarise society across the class divide and pollute the business environment.The future strategy, businessmen said, should be to suppress the temptation of a witch-hunt. “Blaming and shaming should be a side business. The focus needs to be on opening channels and creating an environment where offshore account holders find repatriation of their wealth back in Pakistan to be the most economically viable option,” a businessman said. They detested projecting all offshore account holders as scoundrels. They stressed upon the need for evolving some mechanism to distinguish fair operators from foul. The private sector regretted the country’s environment that forced people to shift their assets overseas. According to initial estimates, the collective wealth of Pakistanis hidden overseas is around $300-$500 billion. Of this, about $200bn is said to be in Switzerland. Currently, the GDP of the country, projected by the World Bank, is around $300bn. Underplaying the astonishing volume of asset transfer and the income disparity dimension in Pakistan, free market advocates insisted that the real culprits were government’s unstable policies, the corruption/inefficiency of the tax machinery and the precarious security situation. Chief Economist Dr Nadeem Javed did not see an issue if transparency could be ensured. “We are for free flow of resources for optimal returns. As long as people see a comparative advantage they will be inclined to transfer their wealth to options that promise the best returns. It doesn’t mean indemnity from law. Within legal boundaries, everyone, rich and poor, should have the right of choice,” he said.Naheed Memon, head of the Sindh Board of Investment, mailed a long complex response. “It is not illegal but regulation, access to information laws and technology is cleaning up the grey areas. If you argue that putting money abroad increases global wealth that is then reinvested to improve human welfare through better business, you may think this crackdown is political and populist. I am a proponent of growth and progress but the idea of siphoning off wealth and running undisclosed businesses is, to me, bordering on unjust,” she said.”Instead of celebrating success we tend to penalise achievers out of sheer contempt (sour grapes phenomenon),” commented a top businessman whose name was on the latest list. “If you want something good to come out of this global thrust for greater transparency you must try and be objective. Instead of jumping to conclusions, the situation demands evidence-based planning and adjustments,” he added. As much as the private sector dismissed it there is no denying that Pakistan is perceived to be a poor country with an astonishingly rich elite. The leaks of offshore accounts of Pakistani individuals and companies did highlight the anomaly. It also exposed the nexus between law firms and financial institutions and a web of complex transactions, all shrouded in mystery.Let us answer some key questions.Where do the leaks came from?The data originally came from legal service providers (Mossack Fonseca, active in Panama; and Appleby, which has offices in Bermuda, the Cayman Islands, the British Virgin Islands, the Isle of Man, Jersey) in offshore industry, helping clients to set up companies overseas with low or zero tax rates. These documents were obtained by a German newspaper. Under an agreement, it was forwarded to the US-based International Consortium of Investigative Journalists (ICIJ), which studied millions of documents to identify investors. The list includes 643 Pakistanis, 450 in Panama Papers and 193 in Paradise Papers. They are estimated to own 5 per cent of the total hidden $10 trillion global wealth.What is peculiar about offshore accounts?It is an overseas account operative at a place where Pakistan’s regulations are not applicable and through which individuals and companies can route money (profits, assets) to take advantage of lower taxes.

Why should we care?

First, the volume is humongous, entailing a very high opportunity cost in terms of loss of investible funds in a country struggling with low investment-to-GDP ratio. Second, the burden of tax avoidance of rich in an expanding economy is borne by the poor and salaried class. “The government functions have to be financed. The government recovers what they lose from the rich by squeezing the vulnerable multitude through indirect taxation,” commented an economist. Transparency is almost always good and lack of it is conducive to promoting and perpetuating injustice. Who is hiding their wealth?Panama and the second list include names of politicians, businessmen, bankers, brokers, realtors, doctors, lawyers, management hierarchy, bureaucrats, and senior military men.  Is there a defence for tax havens?The small island governments say that they indirectly force governments to apply constraints in applying tax rates. They say they facilitate the global circulation of wealth by offering services to asset owing entities. Joseph Stiglitz, however, considered them a threat to global governance as they facilitate money laundering, corruption and an unacceptably high level of wealth inequality.By arrangement with the Dawn