The release of the list of those who received extremely expensive gifts during their official foreign tours (mostly from oil-rich Arab countries) from 2002 to 2023 has stunned a nation trying to cope with the aftermath of the devastating 2022 floods, a Sensitive Price Index of 41 percent this week past, large scale manufacturing growth of negative 4.40 percent and rising unemployment levels.
In their own defense all the recipients of gifts who opted to retain them insist that their retention of the gifts was legal based on the prevailing rules and regulations – rules and regulations that are in the domain of the cabinet division under which Toshakhana (treasury) operates.
Irrespective of whether Pakistan was ruled by a civilian dispensation or a military dictatorship, cabinets by and large rubber-stamped the will of the leader which made amending Toshakhana rules or granting a one-off approval an easy task.
Examples of two one-off favours granted to two national party leaders merit a mention as they allowed them to purchase cars that were expressly forbidden in the then prevalent 2007 Toshakhana rules and regulations: (i) former Prime Minister Nawaz Sharif in 2008 purchased a bullet-proof Mercedes Benz valued at 4.2 million rupees for which he deposited 636,888 rupees at a time when he held no portfolio but his party was a major alliance partner of the Zardari-led government; and (ii) The then President Zardari in 2009 purchased two BMWs bullet-proof (valued at 85.1 million rupees) and a Toyota Lexus valued at 50 million rupees retaining all three for 20 million rupees.
The amended 8 March 2023 Toshakhana rules and regulations allow the recipient to retain a gift valued up to 300 US dollars or less which one would assume pre-empts the retention of extremely expensive gifts including cars, antiques or one of a kind specially made items though previous amendments to the rules in 2007, 2017 and December 2018 explicitly barred purchase of gifted cars and antiques.
Two further observations with respect to the current controversy are critical. First and foremost, former prime minister Shahid Khaqan Abbasi claimed that the gift is meant for the individual and not in that individual’s official capacity. This claim needs to be looked into and all gifts received by any individual previous to his/her holding public office need to be declared.
In Western democratic countries determinations of whether a gift is for the individual as opposed to the office he/she holds is made through a rigorous process.
Be that as it may, it has been reported that congressional investigators are looking for gifts foreign governments gave Donald Trump and his family with an estimated total value of 50,0000 dollars which include diamond earrings, golf clubs, a large painting of Trump, a gold plated collar of the Egyptian god Horus, a soccer ball from Putin and a 6,400 US dollar collar of King Abdulaziz al Saud.
The UK ministerial code states that UK ministers are allowed to keep gifts below the value of 140 pounds unless they pay their value above that sum.
And as and when a member of the Cabinet pays for a gift from his own pocket his tastes are revealed which explains how the media became aware of former British Premier David Cameron’s taste for designer shoes coupled with Qatar’s propensity to lavish designer watches on the Ministry of Defense as revealed in official documents.
Second, what is a source of extreme concern to the general public is that gifts during foreign tours are a source of yet another asset accumulation for the recipients - be they cabinet members, senior civilian and military personnel.
In December 2018, Imran Khan administration raised the amount payable to retain a gift from 20 percent of the value of the gift to 50 percent however this raise does not provide a comfort level as the cost is determined by government functionaries (Federal Board of Revenue specifically the Customs wing) who come under the administrative control of members of the executive and are therefore susceptible to coercion.
While resale of gifts maybe unethical (a stigma that Imran Khan can easily dispel by donating the money he received from sale of gifts to his own extremely well run charities notably his cancer hospitals or universities) yet it is not illegal however what is relevant to note is that an expensive gift is an asset and if it is not subject to depreciation, say a car, and instead has the potential of gaining in value for example jewellery and/or carpets then it will almost certainly be passed onto heirs who must declare it as their asset.
No disrespect intended but one would like to draw the attention of the government to the retention of the following gifts by the late Kulsoom Nawaz from 2014 till 2017 when her husband was the prime minister which included a gold necklace and earrings assessed value of 41,624,000 rupees at the then controlled rupee dollar parity of around 104, a wrist watch Chopard with an estimated cost of 380,000 rupees, large gold necklace (approximately 21 karat) 465,000 rupees and other jewelry items.
The question is who has inherited these jewelry items and whether they have been declared in their asset statement – be it with the FBR or Election Commission of Pakistan.
All resident/non-resident persons including Pakistani Nationals may be treated to have derived, as income chargeable to income tax under the Income Tax Ordinance, 2001, an amount equal to 10 percent of the fair market value of capital assets (including motor vehicles, gold, jewelry and other assets) held on the last day of every tax year ending on 30th day of June.
The tax will be applicable as and when the heir sells the item. However, as market value increases (of the jewelry item and in rupees due to annual depreciation) so does the individual’s total asset value and while there are more than sufficient resources available to the Sharif family to retain and not sell inherited jewelry yet one would hope that in the interest of rendering the tax system equitable and fair jewelry over and above a certain minimum value must be taxed. This may well enable the government to reduce the 18 percent sales tax on the hapless public levied this month.
Transparency International however highlights an obvious fact: hospitality and expense are vulnerable to being used for bribery. They can be used as bribes on their own but they also pave the way for bribery by entrapping a person. And if one extends this to gifts received by members of the cabinet/senior military and civilian personnel who routinely take policy decisions that can benefit another state or a company or indeed an individual then there is a need for reforms.
Corruption through bribery/gifts is rampant in Pakistan. Politicians are also accused of engaging in all available corrupt practices that range from awarding contracts after payment of a commission, misuse of authority to benefit a company by changing the statutory regulatory orders, and the most inexplicable of all extending subsidies to the rich. This is over and above their considerable perks and privileges paid for by the taxpayers’.
In other words, to allow them to retain expensive gifts that raises their net worth further perhaps at the cost of compromising policy should be abandoned and the UK model or the Modi model (auctioning off gifts with the money raised to be given to a favourite charity).
To conclude, Pakistani politicians must surely be aware of the general public’s growing anger at not only sustained high levels of corruption, nepotism, mismanagement, and misgovernance but also sustaining the policy of elite capture with Toshakhana rules viewed as merely an extension of such capture.
Before anger spills onto the streets it is time to voluntarily begin making amends or else deal with the prospect facing former Brazilian President Bolsanaro who has been directed by a court to return 3.2 million dollar worth of jewelry gifted by Saudi Arabia.
Copyright Business Recorder, 2023
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