ISLAMABAD: The Sup­reme Court on Wednesday expressed disappointment over the recommendations given by a three-member committee to bring back assets of Pakistanis illegally hidden abroad and appointed a tax consultant and a chartered accountant as amici curiae to assist the court in the case pertaining to illegal capital flight from Pakistan.

A three-judge bench, headed by Chief Justice Mian Saqib Nisar, while hearing the suo motu case observed that the recommendations were not forceful and ordered that the same be handed over to renowned chartered accountant Shabbar Zaidi and tax consultant Mehmood Mandviwalla who were appointed as amici curiae.

The bench had earlier constituted the committee comprising governor of the State Bank of Pakistan (SBP) Tariq Bajwa, Finance Secretary Arif Ahmed Khan and Federal Board of Revenue (FBR) Chairman Tariq Mahmood Pasha with a direction to develop a guideline and suggest ways to retrieve money from citizens stashed illegally in bank accounts and properties outside the country.

In its recommendations, the committee said the existing legal framework for holding and transferring foreign exchange abroad was too liberal and needed to be amended by incorporating necessary checks and balances. It suggested relevant laws be amended to prohibit the deposit of foreign exchange purchased from domestic exchange companies in foreign currency accounts in Pakistan and asked for restricting the movement of foreign currency in cash without any declaration.

According to the report submitted by the committee, Section 111(4a) of the Income Tax Ordinance 2001 extends immunity without any limit to foreign exchange remittances brought in Pakistan through normal banking channels.

Justice Umar Ata Bandial, a member of the SC bench, observed that the report did not say anything specific and said amnesty schemes introduced by the governments in the past had proved unsuccessful because of loopholes in relevant laws which no one had bothered to plug.

The judge asked the committee to take the matter seriously as many names had surfaced through leaks such as Panama Papers and Paradise Papers for having properties abroad. He also highlighted the need for ‘legislation with a timeline’.

The finance secretary said the committee endeavoured to discourage the flight of capital from Pakistan by taking concrete measures. At this, the chief justice said: “You should have come up with some tangible results by tracing the properties of Pakistanis abroad.”

In its report, the committee appreciated the objective of facilitating the remittances but observed that the immunity be capped to a reasonable amount to disallow the use of this channel for money laundering. The committee also examined the efforts being made by relevant government agencies to trace and retrieve assets held abroad by Pakistani citizens and found that lack of specific information was the major hurdle in this respect. However, the committee was of the opinion that such issues would be addressed in near future due to changes taking place globally.

The report stated that exchange of information between countries was only possible through bilateral or multilateral treaties and conventions, either on their own will or due to pressure by international standard setting bodies such as the Financial Action Task Force (FATF). The committee, therefore, recommended that all relevant government agencies should make use of the global changes in future to strengthen their drive for tracing and retrieving illegal foreign assets. The steps would substantially curtail the outflow of foreign exchange as international developments strengthened the capacity of government agencies to locate and repatriate hidden assets abroad, the report explained.

Amnesty proposed

The committee observed that all the efforts still might not help trace all the foreign assets, as people holding these assets could try to use evasive methods to make it difficult to trace them. There is a growing strong perception that authorities in Pakistan may have access to foreign assets abroad because of bilateral and multilateral treaties/conventions and a realization strengthened by suo motu notice of the Supreme Court that there was a seriousness not witnessed before to address this issue, according to the committee.

The report said this was a good time to provide some incentives to Pakistanis to voluntarily declare their assets and repatriate them to Pakistan wherever possible. The committee suggested that this forum, which was constituted by the Supreme Court, be made permanent to ensure enhanced level of coordination between different stakeholders.

The committee, therefore, intended to recommend to the federal government to notify it as a permanent forum with the mandatory requirement to hold at least quarterly meetings, the report stated. The court, however, ordered the committee to hand over the set of recommendations to the newly appointed amici curiae.

Published in Dawn, March 15th, 2018