The Indian Supreme Court, in its historic decision of 4 July 2011 in the case of Ram Jethmalani and Other V Union of India, set up a 'Special Investigation Team' to supervise the Government- led investigations into the black money of Indians lying abroad. The decision, given in pursuance of a Writ Petition filed by the Indian veteran leader Ram Jethmalani alleging inaction by the Government on unearthing of unaccounted money, has special significance for Pakistan.
The apathy of the rulers in Pakistan in probing looted money lying abroad is a great cause for concern as the government has successfully flouted the judgement of Supreme Court of Pakistan in the famous NRO case. The directions given by the Apex Court in Dr Mubashar Hasan and others v Federation of Pakistan (2010 PLD Supreme Court 265) have yet not been complied with - even after a lapse of over 18 months. This is sheer mockery of 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 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to the allegedly laundered moneys lying in foreign countries including Switzerland are declared never to have been withdrawn.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 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 mid-2011, the people of Pakistan have lost hope in everything. Beneficiaries of NRO who 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 is not inclined at all to act upon it.
In other countries, including India, corruption is an issue but at least there is will to fight it. The other day in India in an all-parties conference, it was resolved to table a consensus Bill. Two drafts of Lokpal Bill were discussed-one prepared by the government and other by activists led by Gandhian Anna Hazare. In Pakistan, on the contrary, political stalwarts (sic) are united to defeat the verdict of Supreme Court in NRO case. It is time that Dr Mubashir Hassan should play Anna Hazare and start a nation-wide campaign by establishing protest camps outside all Press Clubs of the country. The Supreme Court's NRO verdict is no longer discussed even in the Media, reflecting apathy at its worst.
All responsible governments in recent years have shown commitment to retrieve untaxed money but in Pakistan, the government is opposing 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 hidden foreign accounts of Pakistanis. It is no secret that Pakistani tax evaders have been transferring huge amounts of money to many offshore havens.
Last month, Khalid Abdul Razzaq, Consul General for Malaysia in Karachi, disclosed in a media briefing that in the past eight years, Pakistanis transferred capital of Rs 180 billion to Malaysia under the Malaysia My Second Home (MM2H) Programme. How many of them paid taxes on these funds in Pakistan, Federal Board of Revenue has no clue. According to an estimate, untaxed money of Pakistanis lying abroad is not less than US $200 billion - four times the external debt of Pakistan.
Till today, no efforts have been made by the National Accountability Bureau (NAB), Federal Board of Revenue (FBR), Federal Investigating Agency (FIA), Anti Narcotics Force (AFN) or Narcotics Control Board to conduct an in-depth study to quantify the magnitude of money unlawfully shifted abroad.
It is not possible to determine the precise amount of revenue loss and size of black money or shifting of money abroad. Revenue loss on account of smuggling of Afghan transit trade alone, as estimated by the World Bank, amounted to US $35 billion in 2009-2010. Apart from direct monetary costs of corruption, both Pakistani and international experts pinpoint many other costs, such as loss of government credibility, spread of injustice, distortions in resource allocations and loss of foreign and local investment.
When the presence of untaxed money is so apparent, why is its criminal accumulation and generation not revealed and the offenders punished, is a question which continues to baffle honest citizens. The ugliest face of black money emerges in the corridors of power, political as well as administrative. Taking this into account, the Indian Supreme Court in its judgement has very aptly observed:
"The strength of tax collection machinery can, and ought to be, expected to have a direct bearing on the revenues collected by the state. If the machinery is weak, understaffed, ideologically motivated to look the other way, or the agents motivated by not-so-salubrious motives, the amount of revenue collected by the state would decline, stagnate, or may not generate the revenue for the State that is consonant with its responsibilities".
The observations of the Indian Supreme Court about weak tax machinery squarely apply to FBR. It is getting kudos from everywhere - including the media - for surpassing the target of Rs 1588 billion by 2-3 billion rupees (originally it was Rs 1680 billion). Collection by creating fictitious demands that will not stand the test of appeal and recovering the same through coercive measures, fudging of figures, blocking bona fide refunds and taking billions in advance were some of the tactics used by the FBR.
It is a national scandal and needs thorough probe. But who will do it? Nobody is raising these issues in the so-called free media because the FBR's self-projection campaign is backed by giving advertisements worth millions of rupees to owners. The FBR helps criminals in evading taxes and the State has extended all-out support for flight of capital.
The poor are dying of hunger while the greedy politicians, corrupt officials and profit-hungry businessmen are keeping and shifting billions abroad. This is a great tragedy, heinous crime and national stigma. We have nobody like Anna Hazare to stand against it and start a national campaign - not just limited to TV talk shows or drawing room discussions.
Quoting Professor Rotberg that "failed states offer unparalleled economic opportunity - but only for a privileged few", the Indian Supreme Court observed, "Those around the ruler or ruling oligarchy grow richer while their less fortunate brethren starve. Immense profits are available from an awareness of regulatory advantages and currency speculation and arbitrage. But the privilege of making real money when everything else is deteriorating is confined to clients of the ruling elite.... The nation-state's responsibility to maximise the well-being and prosperity of all its citizens is conspicuously absent, if it ever existed... Corruption flourishes in many states, but in failed states it often does so on an unusually destructive scale. There is widespread petty or lubricating corruption as a matter of course, but escalating levels of venal corruption mark failed states."
The Indian Supreme Court, taking strong exception of government's lukewarm attitude in probing untaxed money lying abroad, has noted that the laxity of investigation indicates multiple problems of serious non-governance, and weaknesses in the system, including pressure from political quarters to hinder, or scuttle, the investigation, prosecution, and ultimately securing the return of such monies. Pakistan's position with this reference is no different.
The attitude of Indian government (likewise the NRO case in Pakistan), says the Supreme Court, was evasive from the very beginning. It is highlighted in the judgement: "We must express our serious reservations about the responses of the Union of India. In the first instance, during the earlier phases of hearing before us, the attempts were clearly evasive, confused, or originating in the denial mode. It was only upon being repeatedly pressed by us did the Union of India begin to admit that indeed the investigation was proceeding very slowly".
The Indian Supreme Court during the hearing proposed to the Union of India that it should reconstitute its High Level Committee (HLC) engaged in probing the matter by converting it into a Special Investigation Team, headed by two retired judges of the Supreme Court of India. The Union of India opposed the same, but provided no principle as to why that would be undesirable, especially in the light of many lapses and lacunae in its actions in these matters spread over the past four years. Taking cognisance of this, the Indian Supreme Court decided:
"We are of the firm opinion that in these matters fragmentation of government, and expertise and knowledge, across many departments, agencies and across various jurisdictions, both within the country, and across the globe, is a serious impediment to the conduct of a proper investigation. We hold that it is in fact necessary to create a body that co-ordinates, directs, and where necessary orders timely and urgent action by various institutions of the State.
We also hold that the continued involvement of this Court in these matters, in a broad oversight capacity, is necessary for upholding the rule of law, and achievement of constitutional values. We note that in many instances, in the past, when issues referred to the Court have been very complex in nature, and yet required the intervention of the Court, Special Investigation Teams have been ordered and constituted in order to enable the Court, and the Union of India and/or other organs of the State, to fulfil their constitutional obligations".
Finally, the Indian Supreme Court ordered that the High Level Committee constituted by the Union of India, comprising of (i) Secretary, Department of Revenue; (ii) Deputy Governor, Reserve Bank of India; (iii) Director (IB); (iv) Director, Enforcement; (v) Director, CBI; (vi) Chairman, CBDT; (vii) DG, Narcotics Control Bureau; (vii) DG, Revenue Intelligence; (ix) Director, Financial Intelligence Unit; and (x) JS (FT & TR-I), CBDT be forthwith appointed with immediate effect as a Special Investigation Team; (ii)That the Special Investigation Team, so constituted, also include Director, Research and Analysis Wing; (iii) That the above Special Investigation Team, so constituted, be headed by and include the following former eminent judges of this Court: (a) Hon'ble Justice B.P. Jeevan Reddy as Chairman; and (b) Hon'ble Justice M.B. Shah as Vice-Chairman; and that the Special Investigation Team function under their guidance and direction.
The Special Investigation Team is made responsible to the Supreme Court and not the government and it shall be charged with the duty to keep the apex Court informed of all major developments by filing periodic status reports, and following any special orders that the Court may issue from time to time. It has been further directed that all organs, agencies, departments and agents of the State, whether at the level of the Union of India, or the State Government, including but not limited to all statutorily formed individual bodies, and other constitutional bodies, extend all the co-operation necessary for the Special Investigation Team.
While ordering the Special Investigation Team, the Indian Supreme Court very rightly observed: "The resources of this court are scarce, and it is over-burdened with the task of rendering justice in well over a lakh of cases every year. Nevertheless, this Court is bound to uphold the Constitution, and its own burdens, excessive as they already are, cannot become an excuse for it to not perform that task. In a country where most of its people are uneducated and illiterate, suffering from hunger and squalor, the retraction of the monitoring of these matters by this Court would be unconscionable".
In Pakistan, our apex Court is faced with the same challenge. But it is not adopting the correct approach and methodology. Instead of involving the sitting judges in matters of public importance, except where a judicial commission is constituted, it should order special investigation teams with retired judges to supervise the proceedings and report to the Court rather than the government. Such a move would not hamper the routine work of the apex court where thousands of cases are pending and litigants are forced to wait many years for justice.
The issue of bringing looted wealth back has assumed renewed significance in many countries but in Pakistan there is still no public campaign to force the government to take necessary steps. The Indian Supreme Court has rightly pointed out that "the fact that there is some information and knowledge that such vast amounts may have been stashed away in foreign banks, implies that the State has the primordial responsibility, under the Constitution, to make every effort to trace the sources of such monies, punish the guilty where such monies have been generated and/or taken abroad through unlawful activities, and bring back the monies owed to the country. We do recognise that the degree of success, measured in terms of the amounts of monies brought back, is dependent on a number of factors, including aspects that relate to international political economy and relations, which may or may not be under our control. The fact remains that with respect to those factors that were within the powers of the Union of India, such as investigation of possible criminal nexus, threats to national security etc, were not even attempted. Fealty to the Constitution is not a matter of mere material success; but, and probably more importantly from the perspective of the moral authority of the State, a matter of integrity of effort on all the dimensions..."
It is necessary to remember, as noted by Indian Supreme Court in its judgement, that the revelation of details of bank accounts of individuals, without establishment of prima facie grounds to accuse them of wrong doing, would be a violation of their rights to privacy. Details of
bank accounts can be used by those who want to harass, or otherwise cause damage, to individuals. The Indian judges have rightly observed: "We cannot remain blind to such possibilities, and indeed experience reveals that public dissemination of banking details, or availability to unauthorised persons, has led to abuse.
"The mere fact that a citizen has a bank account in a bank located in a particular jurisdiction cannot be a ground for revelation of details of his or her account that the State has acquired. Innocent citizens, including those actively working towards the betterment of the society and the nation, could fall prey to the machinations of those who might wish to damage the prospects of the smooth functioning of society. Whether the State itself can access the details of citizens bank accounts is a separate matter. However, the State cannot compel citizens to reveal, or itself reveal details of their bank accounts to the public at large, either to receive benefits from the State or to facilitate investigations, and prosecutions of such individuals, unless the State itself has, through properly conducted investigations, within the four corners of constitutional permissibility, been able to establish prima facie grounds to accuse the individuals of wrong doing. It is only after the State has been able to arrive at a prima facie conclusion of wrongdoing, based on material evidence would the rights of others in the nation to be informed, enter the picture", the Indian Supreme Court concluded.
In Pakistan, we have no leaders like Ram Jethmalani and Anna Hazare having the will and courage to launch nation-wide campaigns against corruption and approach Supreme Court for forcing the government to take stringent measure against this cancerous malady. Ram Jethmalani and Anna Hazare have done so because their own hands are clean. In Pakistan majority of leaders cannot justify their tax declaration vis-à-vis standard of living and assets amassed during the public life. One hopes that Imran Khan would take the cue and follow suit. He has been claiming himself Mr Clean in all the TV talk shows. If he has paid his taxes honestly and all his money lying in Pakistan and abroad is from declared sources, he must come forward and file a petition in Supreme Court. Any citizen of Pakistan can file this petition but coming from a politician, as the case in India, would certainly have different dimensions and greater affect. It would be a starting point for accountability of the corrupt, tax evaders and plunderers of national wealth. If we can get one clean politician who has courage to follow in the footsteps of Ram Jethmalani and Anna Hazare, the fate of nation can change.
(The writers, tax consultants and authors of many books on Pakistani tax laws, are Adjunct Professors at Lahore University of Management Sciences.)
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