File photo. Money Sharma—AFP
While there are no suggestions of P.M. Khan owning offshore companies, several of his aides, political supporters and incumbent ministers are featured prominently in ICIJ probe
The International Consortium of Investigative Journalists (ICIJ) on Sunday evening revealed the “Pandora Papers”—a new tranche of documents exposing the offshore assets of high-profile personalities globally, including in Pakistan.
Investigative journalists Umar Cheema and Fakhar Durrani represented Pakistan as part of the ICIJ’s research team. Cheema, in a report published in daily The News, said that over 700 Pakistanis had been identified in the Pandora Papers. The prominent Pakistanis highlighted by the ICIJ include Finance Minister Shaukat Tarin, Senator Faisal Vawda, the family of Industries Minister Khusro Bakhtiar, and MPA Aleem Khan—all currently affiliated with the ruling PTI. Additionally, PPP’s Sharjeel Memon and Axact CEO Shoaib Shaikh are also listed as having offshore companies. National Bank of Pakistan President Arif Usmani, P.M.’s ambassador at large for Foreign Investment Ali Jehangir Siddiqui, and Managing Director of the National Investment Trust Adnan Afridi have also surfaced in the Pandora Papers.
In a bid to head off the backlash, the government has already started to clarify that the mere opening of offshore companies is not an illegal act; wrongdoing must be established through tax avoidance and non-declaration of such assets.
Noting this, the ICIJ published a report on Pakistani personalities unveiled in the Pandora Papers. “In 2018, Imran Khan, the Pakistani cricketing legend turned anti-corruption campaigner finally broke through,” it said of Khan’s election to the premiership. Noting he had promised a “new era” of supremacy of law, built on accountability for all, it said that the new leaked documents revealed that “key members of Khan’s inner circle, including cabinet ministers, their families and major financial backers have secretly owned an array of companies and trusts holding millions of dollars of hidden wealth.”
According to the ICIJ, military leaders have also been implicated. “The documents contain no suggestion that Khan himself owns offshore companies,” it added. “Among those whose holdings have been exposed are … the son of Khan’s former adviser for finance and revenue, Waqar Masood Khan. The records also reveal the offshore dealings of a top PTI donor, Arif Naqvi, who is facing fraud charges in the United States,” it said.
PMLQ trail
The Pandora Papers show how Chaudhry Moonis Elahi, a leader of the PML-Q and federal water affairs minister, “planned to put the proceeds from an allegedly corrupt business deal into a secret trust, concealing them from Pakistan’s tax authorities.” In a statement, a spokesman for the Elahi family claimed to the ICIJ that this was a case of “political victimization” without offering any evidence to support this claim.
The ICIJ reports that Thomson Reuters produced a 19-page report detailing allegations of Elahi’s involvement in “several corrupt land development projects,” including that he set up a fake company, fraudulently obtained loans and sold land at inflated prices to government agencies. The report noted that the Bank of Punjab had filed a complaint with Pakistan’s anti-corruption agency against the Elahi family, alleging that under the “influence” of Moonis’ father, the bank had made an illegal loan to the buyer of the family’s Phalia Sugar Mills property.
On Feb. 15, 2016, records show, offshore firm Asiaciti accepted Moonis Elahi as a client, despite the report’s findings. Elahi provided Asiaciti with the contract from the $33.7 million Phalia Sugar Mills sale as the source of the funds he wanted to invest, records show. “In other words, Elahi asked Asiaciti to invest the proceeds of an allegedly corrupt loan obtained from a state-owned bank,” it states.
Asiaciti registered a trust in low-tax Singapore and proposed to use part of the proceeds of the Phalia Sugar deal to invest in another Punjab sugar company, RYK Mills, in which Elahi already held a stake. The plan called for a trust to hold an investment vehicle, funded by the “sale of a sugar mill,” that would own two properties in the U.K. But, records show, when Asiaciti advised Elahi of its legal obligation to share his “financial information with the relevant tax authorities”—in this case, Pakistan’s Federal Board of Revenue—he balked.
Records show that Asiaciti received a phone call from Elahi. He wanted to scrap the trust. “Moonis,” an Asiaciti manager wrote in a memo, “has concerns about the … reporting requirements.” According to the memo, Elahi preferred to hold the investments in a U.K.-registered trust in his wife’s name; as a U.K. tax resident, she would not be subject to the same disclosure requirements. “It appears that Moonis has no connection” to that trust, the memo says.
Less than a month after the phone call, Asiaciti prepared the paperwork to terminate Elahi’s trust. The following year, public records show, Elahi’s wife used a U.K. shell company to transfer an $8.2 million London apartment overlooking the River Thames to a woman named Mahrukh Jahangir, who then filed a U.K. Land Registry document generally used by joint owners and trustees. The transfer was not for “money or anything of monetary value,” according to public records.
A woman with the same name as Jahangir appears as a 9.4% shareholder in the RYK Mills—the business targeted as an investment in Elahi’s talks with Asiaciti. Neither Elahi nor his wife disclosed ownership of the apartment or RYK assets in their official declaration of interests from 2017 as part of his candidacy to become a member of the National Assembly.
Military assets
“In one of several offshore holdings involving military leaders and their families, a luxury London apartment was transferred from the son of a famous Indian movie director to the wife of a three-star general. The general told ICIJ the property purchase was disclosed and proper; his wife didn’t reply,” it said, adding that the data was a rare glimpse into the personal finances of several individual Pakistani generals, who “use offshore to quietly enrich themselves while maintaining, until now, the military’s image as a bulwark against civilian corruption.”
The ICIJ noted that while Khan’s ascendance was linked to his anti-corruption rhetoric, he had not examined the “legacy of colonial rule” in the military’s wealth. “The military’s combined business holdings amount to Pakistan’s largest conglomerate, and it controls 12% of the country’s land. Many of the landholdings are owned by current or former senior leaders,” it said.
“The Pandora Papers reveal that in 2007, the wife of Gen. Shafaatullah Shah, then one of Pakistan’s leading generals and a former aide to president Pervez Musharraf, acquired a $1.2 million apartment in London through a discreet offshore transaction,” it said, adding that this was done by an offshore company owned by Akbar Asif, the son of the Indian film director K Asif. “Gen. Shah told ICIJ that the purchase of the London apartment had been made through a former army colleague then acting as a consultant to London real estate firms, not through any personal connection to Asif. Gen. Shah said the flat ‘was named’ to his wife because ‘I already had properties in my name while she did not have any and to balance tax deductions’”—suggesting a clear goal of tax avoidance.
“Insights into the private wealth of top military officers and their families are exceedingly rare; journalists who have written about the military within Pakistan have been jailed, tortured and killed,” noted ICIJ.
The Pandora Papers also reveal that Raja Nadir Pervez, a retired army lieutenant colonel and former government minister, owned International Finance & Equipment Ltd, a BVI-registered company. In the leaked files, the firm is involved in machinery and related businesses in India, Thailand, Russia and China. Records show that in 2003, Pervez transferred his shares in the company to a trust that controls several offshore companies. While he owned International Finance & Equipment, Pervez also held several high-level positions in Pakistan’s government. He was elected to the National Assembly in 1985 and later joined Khan’s party.
Another influential former military leader who shows up in the leaked documents is Maj. Gen. Nusrat Naeem, the ISI’s onetime director general of counterintelligence. He owned a BVI company, Afghan Oil & Gas Ltd, which was registered in 2009, shortly after his retirement. He said that the company had been set up by a friend and that he didn’t use it for any financial transactions. “Islamabad police later charged Naeem with fraud related to the attempted purchase of a steel mill for $1.7 million. The case was dropped,” it added.
The Pandora Papers also bring to light the notable offshore holdings of close relatives of three senior military figures. Umar and Ahad Khattak, sons of the former head of Pakistan’s air force, Abbas Khattak, in 2010 registered a BVI company to invest what documents call “family business earnings” in stocks, bonds, mutual funds and real estate. Shahnaz Sajjad Ahmad, meanwhile, inherited a fortune from her father, a retired lieutenant general, through an offshore trust that owns two London apartments, purchased in 1997 and 2011 in Knightsbridge. She, in turn, set up a trust for her daughters in 2003 in Guernsey, a tax haven in the English Channel. Her father was a favorite of Field Marshal Mohammad Ayub Khan, the country’s first military dictator (1958-1969). After her father retired from the army, he founded one of Pakistan’s biggest business conglomerates. Ayub Khan’s son later married into the family and sits on the boards of several of the group’s businesses. “Taken together, the findings offer a portrait of an unaccountable military elite with extensive personal and family offshore holdings,” said ICIJ
Omer Bakhtyar, the brother of Khan’s minister for industries, Khusro Bakhtyar, transferred a $1 million apartment in the Chelsea area of London to his elderly mother through an offshore company in 2018. The state anti-corruption agency has been investigating allegations that his family’s wealth inexplicably “ballooned” since Bhaktyar first became a minister in Pervez Musharaff’s government in 2004. In a written statement to ICIJ, Bakhtyar said that the anti-corruption agency’s investigation was founded on baseless allegations which had underestimated his family’s past wealth, and that it has so far not resulted in a formal complaint.
The son of Waqar Masood Khan, Khan’s chief adviser for finance and revenue between 2019 and 2020, co-owned a company based in the British Virgin Islands. Masood resigned in August amid a policy dispute. He told ICIJ that he did not know what his son’s company did and that his son lived a modest life, and was not his financial dependent. Khan’s former minister for water resources, Vawda, set up an offshore company in 2012 to invest in U.K. properties, the Pandora Papers show. He told ICIJ that he has declared all worldwide assets held in his name to Pakistani tax authorities.
Khan’s financial backers are also prominent in the files. Arif Naqvi, the financier and major donor to Khan’s 2013 campaign, owned several offshore companies. The files show that in 2017, he transferred ownership of U.K. holdings—three luxury apartments, his country estate and a property in London’s suburbs—into an offshore trust operated by Deutsche Bank. The next year, he presided over the spectacular collapse of his Dubai-based private equity firm, Abraaj Group. U.S prosecutors charged Naqvi with engineering a $400 million fraud against Abraaj investors and this year persuaded a court to allow his extradition from the U.K. Naqvi has denied wrongdoing.
Tariq Shafi, a leading businessman and another PTI donor, held $215 million through offshore companies, the records show. Apart from the political personalities, Ali Dar—the son of former finance minister Ishaq Dar—is also featured in the Pandora Papers, as are several owners of media enterprises in Pakistan, including Jang Group’s Mir Shakilur Rahman; Dawn Group’s Hameed Haroon; Express Group’s Sultan Lakhani and Pakistan Today’s late Arif Nizami.
The Pandora Papers comprise a global investigation into the shadowy offshore financial system that allows multinational corporations, the rich, famous and powerful to avoid taxes and otherwise shield their wealth. The probe is based on more than 11.9 million confidential files from 14 offshore services firms leaked to the ICIJ and shared with 150 news organizations around the world.