Panama Papers: Can Nawaz Sharif save himself?

While most of the world is focused on the November 8 US presidential elections, in Pakistan, all eyes on November 7 would be on the Supreme Court.

The court is considering several petitions, including one by cricketer-turned-politician Imran Khan, on the involvement of Prime Minister Nawaz Sharif in the acquisition of expensive properties in London, as revealed in the Panama Papers.

The April 3, 2016, leaked documents from a law firm in Panama, Mossack Fonseca, showed three children of Sharif - sons Hassan and Hussain, and daughter Maryam - owned at least three offshore holding companies registered in the British Virgin Islands (BVI) - Nescoll, Nielson Holdings and Coomber Group.

According to the International Consortium of Investigative Journalists (ICIJ) that studied the papers, Maryam Safdar, Hassan Nawaz and Hussain Nawaz "were owners or had the right to authorise transactions for several companies".

Sharif's defence has been that he and his wife are personally not mentioned in the Panama Papers; his children had earned the funds through legitimate business ventures abroad; since the money was earned in Saudi Arabia, and routed through a tax haven into a property investment in London, no Pakistani laws have been violated.

Since April, Sharif had managed to stall any inquiry into the matter. What worked in his favour was the lack of unity among the opposition parties. While Imran Khan's Pakistan Tehreek-e-Insaaf (PTI) party saw a golden opportunity to dislodge the PM, the Pakistan People's Party (PPP) was more guarded in joining hands with the PTI because it, like the Pakistan Muslim League (Nawaz) (PML-N), has much to hide on corruption.

Moreover, it feared that any successful agitation would benefit the PTI, to its own detriment or lead to military intervention.

However, against the backdrop of a potential November 2 confrontation between the government and Imran Khan, the Supreme Court intervened decisively asking both parties to accept a court-appointed judicial commission on the issue.

In a hearing on November 3, the court upbraided Sharif's counsel for not submitting the replies of the PM's children and gave them up to November 7 to do so. In case they failed, the court would take the accusations against them to be true.

The Panama Papers revealed the following facts - offshore companies were owned by Sharif's children; properties in London were owned through these offshore companies; loans were obtained using these properties as collateral and loan payments were made abroad.

The key questions the PM may need to answer to clear his name are (i) When were the offshore companies in the name of any family member formed or purchased (ii) The names of owners/trustees of all offshore companies (iii) source and amount of initial and subsequent investment/transfer of funds in these companies (iv) Loans obtained through these companies and against what securities.

Hussain has maintained that it was only after selling a steel mill in Saudi Arabia in 2006 that the offshore companies and flats were purchased and that neither he nor any of his family members owned these offshore companies prior to 2006. However, no audited statements of accounts of their companies abroad have been furnished to support claims of huge profits.

In any case, the defence is contradicted by two sets of British government official documents. According to one, Nescoll, incorporated on January 27, 1993, purchased flats 17 and 17-A of Avenfield House, Park Lane, London, on June 1, 1993, and July 23, 1996, respectively; and Nielson Holdings, incorporated on April 14, 1994, purchased flats 16 and 16-A of Avenfield House, Park Lane, London, on July 31, 1995.

This was at a time when the children were minors and incapable of earning the amounts required to purchase such expensive property. The assumption thus has to be that the real owner was Sharif or his wife or both.

The second is the decision of the UK High Court in the Hudabiya Papers Mills loan default case in March and November 1999 that shows that for the loan acquired by Hudabiya on February 15, 1995, flat 16, flat 16-A, flat 17, flat 17-A of Avenfield House were pledged with the Al Towfeek Investment Fund.?

Court documents of Pakistan establish the Hudabiya Papers Mills is owned by the Sharif family. The 2013 general election's nomination forms filed by Nawaz Sharif show Hudabiya Papers Mills as one of his companies.

Logically, if the offshore companies Nielsen and Nescoll owned these Park Lane flats since 1993/1995, the only way the Sharif family could have pledged the flats to a UK bank in 1995 to obtain a loan would be if they also owned the offshore companies. Thus it is clear that the Sharif family owned these flats in 1995 and not 2006 as is being claimed.

Another complicating factor for the PM is that while he claimed Maryam as a dependent, he did not declare her assets/liabilities in the declarations filed before the Election Commission in 2013.

Since the Panama Papers confirm Maryam's status as a beneficiary of BVI companies, Sharif's declaration is violative of several sections of electoral law which could lead to his being de-seated.

If proved, all the above could make the PM liable for concealment of assets, concealment of facts, failure to pay taxes and movement of personal funds using illegal channels.

Despite the evidence, sceptics believe Sharif could manipulate the system to prolong the case till the next general elections. Judicial precedent in Pakistan is not very encouraging when it comes to punishing the high and mighty.

While this remains to be seen, coupled with the October 6 Dawn story and the army's attitude towards it, the Panama Papers have pushed Sharif on the backfoot.

It will require all his accumulated acumen and manipulative skills to ease his family out of this one. He would be especially concerned about his daughter Maryam, who is the only one among his four children who has taken an active interest in politics.

The PM has been grooming her for the next generation of leadership. Her being shown as a direct beneficiary of the family's offshore companies is a huge hurdle that Sharif will have to cross if he is to try and pass the baton to her.

Also read: India can use Nawaz Sharif to wrangle army and put Pakistan in place