The Panama Papers set off a scandal that resulted in a premature end to the premiership of Nawaz Sharif, reports Irfan Husain
The downfall of Pakistan’s Prime Minister, Nawaz Sharif, was a letter of appointment issued by Capital FZE, a Dubai-based firm. This document, which led the country’s Supreme Court to disqualify him from office, reveals a monthly salary of 10,000 Dirham ($2,720) to Sharif. Though not illegal in itself, he failed to declare this income in his nomination papers filed before the 2013 elections, which breached Pakistan’s electoral laws.
Immediately after the verdict, Sharif stepped down, despite his ‘serious misgivings’ about the decision. The cabinet was dissolved, but Sharif’s ruling party, the Pakistan Muslim League (Nawaz), or PML-N, will continue to hold power until the next general elections due in 2018. The party immediately chose Nawaz’s brother, Shahbaz Sharif, as his successor, but since Shahbaz has to stand down as chief minister of Punjab and be elected to the National Assembly, the former petroleum minister, Shahid Khaqan Abbasi, was named as interim PM.
The reason for the Supreme Court’s decision might appear technical – Nawaz’s job title of chairman of Capital FZE and his salary allowed him to obtain a work permit, which allows entry to the United Arab Emirates without a visa. This arrangement began in 2007 and ended in 2014, a year after he became prime minister. Many in Pakistan use this device, including three members of his cabinet, but the document was merely one in a welter of scandal and embarrassments that have embroiled Sharif and his family.
The saga began last year, when details of the offshore companies registered by the Panama-based legal firm Mossack Fonseca were leaked to the International Consortium of Investigative Journalists. This data was passed on to 60 media outlets around the world, and led to the unmasking of several politicians and businessmen. Again, owning offshore companies is not illegal, but the assets they control are subject to taxation in the countries in which their owners are based.
When news of such questionable entities emerged, the Pakistanis on the list were subject to immediate scrutiny. In particular, the focus was on Sharif and his children, who own several of the family’s offshore companies – his younger son Hassan, who like his brother Hussain lives in the UK as a dual citizen, turned out to be the owner of Capital FZE, for example. Their sister Maryam, meanwhile, plays a high-profile role in politics, and was apparently being groomed to succeed her father as leader of PML-N. But she was the subject of further embarrassment, even mockery, for what erupted on Twitter under the hashtag #fontgate.
The Panama Papers revealed that Maryam Sharif and her brothers were the beneficiaries of companies in the British Virgin Islands which owned four luxury flats on London’s Park Lane. Maryam produced documents, purporting to be from 2006, to show that she was a trustee of the companies, not the owner. But the documents use the Calibri typeface, a Microsoft Office type font which did not become commercially available until a year later. Wikipedia had to ‘lock’ editing of its entry on Calibri, because of persistent attempts, allegedly from Pakistan, to change the date of the font’s release from 2007 to 2004.
This is the third time Nawaz Sharif has been elected Prime Minister of Pakistan, only to be ousted each time. He was dismissed by President Ghulam Ishaq Khan in 1993 and overthrown by General Pervez Musharraf’s 1999 coup. Now the Supreme Court has acted against him under articles 62 and 63 of the constitution, which call for members of parliament to be ‘honest and upright’.
These articles were invoked in a petition to the Supreme Court following mass protests led by Imran Khan, the cricketer turned politician, who threatened to lead his supporters to Islamabad and bring the capital to a halt. He had already caused such a lockdown to protest against what he called ‘massive rigging’ in the 2013 elections to deny him the premiership. Despite court-ordered enquiries, little evidence of any such tampering has emerged.
The Supreme Court ordered the setting up of a Joint Investigative Committee (JIT) to probe the Panamagate allegations, and submit its report in two months. While four of the six members were civil servants, two brigadiers represented the powerful military agencies, Inter-Services Intelligence (ISI), and Military Intelligence (MI).
The inclusion of these officers raised eyebrows, as neither was experienced in investigating white-collar crimes. But it was widely assumed that their presence would allow the army high command to monitor proceedings, while ensuring that the civilian members were not subjected to government pressure. The inclusion of the two agencies in the investigation would also place their massive resources at the disposal of the JIT.
Despite the army’s backing, few expected the JIT to dig up so much dirt on the Sharifs. But its report, submitted in July, revealed a litany of complex financial structures and a convoluted money trail. While Sharif has never been known for his ability to separate business from politics, or recognise conflicts of interest, it took Panamagate for people to seriously question the source of the family’s wealth. One anti-corruption inquiry in the 1990s was quashed when Sharif was in power.
The military has long been wary of Sharif – not for ethical reasons, but because of his attempts to improve relations with India. As a businessman, he realises that Pakistan’s economy will remain hamstrung as long as it does not trade with its giant neighbour. He would far prefer to put the Kashmir conflict on the back burner – a provocation as far as the generals are concerned – and open up the border to facilitate exports and imports.
The uncertainty generated by the JIT bombshell caused the stock market to shed nearly 5 per cent in a week, with the rupee under pressure and investment decisions put on hold. Previously Pakistan’s economy had been performing well under a business-friendly leadership, with growth at a respectable 5.1 per cent last year. A deficient power sector had seen a significant boost, and many new roads were built under Sharif, with the creaking railway system also showing marked improvement.
Normally, these factors might have ensured victory in the general elections due next year. Sharif’s popularity is high in Punjab, Pakistan’s biggest province, where state education and public health facilities have both benefited from increases in funding as well as better management. But challenging Sharif in his home province is Imran Khan, whose Pakistan Tehrik Insaf (PTI) – or Justice Party – has attracted many young urbanites hungry for change, and dismissive of traditional dynastic parties like PML-N and the Bhutto family fiefdom, the Pakistan People’s Party.
After years in the political wilderness, PTI emerged with the third largest number of seats in the National Assembly in 2013, also forming a coalition government in Khyber-Pakhtun Province (formerly North West Frontier Province). How the Supreme Court verdict will impact Sharif’s electoral prospects remains to be seen, however. His supporters are fiercely loyal, and view military and judicial attempts to destabilise his government as part of a plot. PML-N loyalists point out that only politicians are subject to scrutiny, unlike generals and judges.
The second part of the verdict calls for the JIT’s findings, which name several members of Sharif’s family and his inner political circle, to be investigated by the National Accountability Bureau within six months. Grappling with these accusations, and preparing for a bitterly-contested general election next year, will be no easy task.