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SC seeks data of people who sent money abroad – Pakistan

ISLAMABAD: The Supreme Court on Thursday asked the State Bank of Pakistan (SBP) to provide it with details of foreign currency transactions of $50,000 or more by Pakistani nationals who quietly siphoned off foreign currency to other countries over the past year.

A three-judge Supreme Court bench, headed by Chief Justice of Pakistan Mian Saqib Nisar, gave SBP Governor Tariq Bajwa one week to submit details of all transactions involving tranches of $50,000 or more, along with particulars of the individuals who made the transactions.

The court had taken up the case regarding illegal transfer of money from Pakistan to other countries on a suo motu notice after learning that several Pakistanis continued to maintain bank accounts abroad, without disclosing them to the authorities or paying taxes in accordance with the law.

The court noted that foreign currency was being siphoned off, without payment of taxes, through illegal channels. This money, the court concluded, either represented ill-gotten gains or kickbacks from public contracts. The court added that this created gross disproportion, inequality and disparity in society, which warped economic activity and growth, and constituted plunder and theft of national wealth.

SBP asked to provide details of transactions worth $50,000 or more over the past year

On Thursday, when the SBP governor told the apex court that Section 5(3) of the Protection of Economic Reforms Act 1992 provided protection to account holders from sharing personal information with the public, the court ordered the central bank to furnish the information to it in a sealed envelope.

During the proceedings Chief Justice Nisar regretted the depreciation of Pakistani currency and said the US-Pak currency parity was Rs118 to a dollar at present.

On April 5, Prime Minister Shahid Khaqan Abbasi unveiled the Economic Reforms Package (ERP) — another ‘one-time’ amnesty scheme, which many believe will help criminal elements whiten undeclared assets at home and abroad. Under the package income tax has also been reduced for existing taxpayers and issuance of dollar-denominated bonds has been allowed.

Under the scheme the government intends to offer amnesty to those who have not been paying taxes to become taxpayers and whiten their assets — both local and foreign.

On March 26, the court constituted a 12-member committee and tasked it with tracing and encouraging Pakistani nationals to declare their assets abroad.

The SBP governor highlighted the need to scrutinise existing rules and agreements to consider how the money might have been sent abroad.

The court wondered whether or not the Federal Board of Revenue (FBR) could ask taxpayers about their foreign accounts. The SBP governor replied that every taxpayer was obligated to disclose their foreign assets and accounts in income tax returns. If they failed to disclose these details, the authorities could not ask them for information about their foreign accounts.

A former minister and one of the petitioners in the case, Mohammad Ali Durrani, regretted that usually a country’s economy was supposed to improve and get stronger if a money launderer was nabbed; however, the opposite was true for Pakistan. He said the economy registered a negative effect when the chief justice spoke about arresting financial offenders.

While hearing a case about non-performing loans worth billions of rupees, as well as the ones that are written off by commercial banks, the apex court observed that loans that were waived off on political grounds would be recovered.

The court also warned that it would forfeit the assets of those who failed to return the loans. The court said a summary of all such loans should be submitted within a week’s time.

During the hearing one of the petitioners, Barrister Zafarullah Khan of the Watan Party, alleged that former prime ministers Nawaz Sharif, Benazir Bhutto, Mohammad Khan Junejo, Yousuf Raza Gillani and others had gotten loans worth Rs518 billion waived off during their tenures. Similarly, Chaudhry Pervaiz Elahi and his brother had gotten loans worth Rs120bn written off.

The court recalled a report prepared by a three-person commission constituted to probe bank loan write-offs worth billions of rupees between 1971 and 2009.

The commission report, which was spread over more than 2,200 pages, had suggested that Rs87bn worth of loans had been waived off in the past four decades, a major chunk of which (Rs84.62bn) was waived off between 1992 and 2009, while Rs2.3bn worth of loans were written off from 1971 to 1991.

The suo motu case was initiated by the top court in 2008 on news reports that the central bank had quietly allowed commercial banks to write off non-performing loans (NPLs) under a scheme introduced by former dictator retired General Pervez Musharraf.

Instead of launching an effective campaign for the recovery of NPLs, the SBP issued an incentive scheme for banks/DFIs in October 2002 to waive off the loans of organisations showing “losses” for three years.

In their voluminous report, the commission regretted that they examined 740 cases but, despite their best efforts the banks and DFIs did not provide information regarding loans sanctioned on “other than business considerations”. The report added that either bankers were afraid of politicians or the civil/military bureaucracy, or were privy to sanctioning loans or factually the quantum of such loans was not high.

Of the 740 cases it examined, the commission stated, a comparatively small number was directly related to well-known politicians and civil or military bureaucrats. Though there were some prominent names of people who had availed write-off concessions, the number and quantum was not large enough.

Published in Dawn, April 27th, 2018

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