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Pakistani Panama Connection & Global Tax Avoidance   

April 17, 2016

Pakistani connection to the “Panama Papers” is the hottest topic in Pakistan. There is long list of names and more is yet to come. Right now it is a politicized affair in our country rather than anything else because leaders are not keen to address or debate and correct real issues such as corruption, dishonesty, illegal acts, unethical conduct, wrong doings, bribery or embezzlement, which is the leading cause of unrest and economic misery.

However, it was courageous though not sure if intentional or unintentional move by the anonymous source who leaked 2.6 terabyte papers more than a year ago, without fearing that sender can easily be reached, as escaping on such matters is no more possible in this modern era.

The data base is bigger than WikiLeaks disclosures that contain Transcriptions, Contracts, Scanned Documents and E-mails. The leak paper material consists of 320.000 Text Documents, One Million Images, 2-Million PDF’s, 3- Million Data Entries and 4.8 Million E-mails.

Per Panama Leak in Pakistan, so far there are nearly 200 names, but it seems that the interest is not to get rid of the decomposed part. Instead politicians are more focused to gain political mileage.

However, since the pressure is immense, this is good opportunity to remove the gravel and reach the point to determine truth and expose many of the wrong doings if any.

Government is currently faced with a very tricky situation and opposing parties are quite determined to set the trap by legal means. Hence it is very a challenging task to get right type of combination for professional investigation.

With due respect to all, Commission consisting of Supreme Court Judge or Judges (Active or Retired) teaming up with FIA, NAB, SBP & FBR members will be incomplete without the inclusion of an experienced committee member having operated in Bank Treasury/Treasury Operation that will have to play major role to in Reconciling Foreign placements/entries. While all members can make valuable contribution to a certain extent because of their limited knowledge on subject

I do not believe that Forensic Auditor hired from abroad can add 100 pct value. For money trail purpose, a competent Experienced/Expert having worked in Bank Treasury and Treasury Operation having knowledge of Pakistani market and international market environment can contribute nearly 50 pct to Reach Rock Bottom and find the unattended core problem.

I can name one such person. Mr. A B Shahid having worked in Pakistan and International market and has vast knowledge of the particular subject and is the most suitable/appropriate person for this job. He has the experience of working as Treasury Head, he is well aware of matters pertaining to Treasury Operations, he has good grip on Foreign Reconciliations/Entries. Mr. A B Shahid also has Treasury Audit experience, which could be added advantage.

My question is that is this serious issue or a futile exercise? And if yes, then let’s see who will bell the cat ?

Tax Avoidance Issue at G-20 Leaders Summit

In a very latest move it has been decided to take up tax avoidance issue at G-20 Leaders Summit due in September in China that refers to links with offshore firms. UK, Germany, France, Italy and Spain have agreed to share data. If USA decides to join the bandwagon, then this critical issue will surely attain some level of success.

Panama Paper/Leak is just one particular firm, as globally there are uncountable numbers of firm that may be in the knowledge of selective lot involved directly or indirectly in this business.

For a moment I want to deviate from this topic to gather some evidence before I come back with stronger argument to prove my point.

When disastrous economic number worsens and data inflates to reach an alarmingly high level, countries even fabricate data to seek legitimacy to attract investments and avoid downgrading. Greece and some of the African countries are good example.

During Euro-zone crisis, rating agencies acted no differently and its stance was visibly surprising. Debt ridden ECB countries that do not have the ability to pay back loans were given tailor made concessions/opportunities, which suited their economic conditions. Greece for example owes USD 270 Billion to international creditors and yet has been blessed with funding with longer maturities.

Here are few number based examples for discussion sake. The overall size of the global economy is USD 78 Trillion. One of the recent survey/report suggested that Government Debt of 20-industrialized countries is USD 44 Trillion and if pension and retirement liability is added the amount is nearly three times higher.

Similarly, estimates are that the total size of global debt has surpassed USD 232 Trillion mark or 300 pct of the Global GDP, advance economies (USA, Japan, Europe and UK) is unable to generate income, as they do not have a choice and is stuck between good and evil, i.e., growth and deficit. Hence they are unable to stimulate their economies aggressively and have to curtail spending.

While, the major purpose of Quantitative Easing (QE) funding or cheap lending was/is Bank Capitalization and Deficit Financing, as the purpose of cheap lending was/is not to spur growth or inflate corporate balance sheets.

This is why so called Major Advance Economies have formally compromised to survive by means of Digital printing by keeping interest rates low, as it helps the size of Debt to inflate at a slower pace causing low global growth.

Another worrisome major indicator is the size of Over the Counter Derivative (OTC), which according to Bank for International Settlement (BIS) is USD 553 Trillion or nearly 740 pct of GDP.

Keeping in view the above data, it is interesting to point out that some of the recent data working suggests that creation of every debt produces 20 pct of growth or in ratio terms it is 5:1.

According to FED data approximately USD 1.45 Trillion in circulation was in notes. It is estimated that nearly 65-70% of the cash amount in US Dollar is outside USA. Total Circulation of Money around the globe is roughly around USD 5.2 Trillion. Value of NYSE is around USD 15 Trillion (Capitalization) is on paper.

To sum up my argument based on above data, I would never argue it is only because of structural weakness. The accommodation is intentionally done with a purpose blaming structural weakness. Global Market is highly leveraged due to incompetency/favors. Income/Revenue shortfall has reached the point of no return resulting frequent volatility in the global financial sector.

The pondering question about the Global Financial market is that when major industrial nations are loaded with debts in Trillions of US Dollar then who the ultimate beneficiary is?

-Where has all the money disappeared?

-What about Anti-Money laundering Checks?

-What about the success rate and responsibility of Customer Due Diligence?

-How effective has been anti-money laundering regulation?

-What went wrong with the Electronic Verification that prevented verification of financial transactions?

-Should the world believe that Regulators are unaware of Tax Havens/Offshore Exposure and has no knowledge of Global Offshore Industries?

-Why every cheque presented in bank should not contain Tax Identification mark so that every penny gets clean?


Crazy Pakistani Predicted Oil $ 25 in 2014 !

(Disclaimer applies in my post, which means that the perspective is my personal view. I have made every effort to ensure accuracy of information provided. However, accuracy cannot be guaranteed. This article is strictly for

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