The “Panama Papers leak”, which cost last week Nawaz Sharif his prime ministership in Pakistan, figured in Lok Sabha on Tuesday (August 1), with Finance Minister Arun Jaitely assuring the House that criminal proceedings would be carried out in cases arising of “the Panama Papers disclosures”, and the tax department will go into claims about people claiming NRI status to avoid scrutiny.
In the wake of Sharif’s ouster in Pakistan, opposition Congress party in general, and its vice president Rahul Gandhi in particular, is putting pressure on the Modi government to take action against Chhattisgarh Chief Minister Raman Singh’s son Abhishek Singh (a ruling BJP member in the Lok Sabha) as his name figured in the Panama Paper leak, though indirectly. Apparently Singh was a shareholder of Quest Heights Limited, a company that figured in the leak.
It may be noted that the Panama Papers refers to a massive leak of information dating back to 1977 and encompassing more than 11 million documents involving about 214,000 offshore entities. The leak originated in Panama in 2015. According to reports, the Indian-angle of the leak displays about 22 offshore entities, 1,046 officers or individual links, 42 intermediaries and as many as 828 addresses within the country ranging from the tony and posh locations of metropolitan cities like Delhi, Mumbai, Kolkata and Chennai to mofussil locations like that in Haryana’s Sirsa, Bihar’s Muzaffarpur and Madhya Pradesh’s Mandasaur and state capital Bhopal. As many as 424 prominent people of India including Amitabh Bachchan, Asihwarya Rai, Vinod Adani and more have been named in the Panama papers.
Interestingly, apart from the indirect linkage of Abhishek Singh (having shares in a company, that, in turn, has an illegal foreign account. This is the inference by the Congress party; Singh, otherwise, has not been named in the leak as such), no major Indian politician figures in the Panama Papers. In contrast, there are links to 12 current or former heads of state and government in the data, including dictators accused of looting their own countries. More than 60 relatives and associates of heads of state and other politicians are also implicated. The papers also reveal a suspected billion-dollar money laundering ring involving close associates of Russia’s President, Vladimir Putin; the brother-in-law of China’s President Xi Jinping; Ukraine President Petro Poroshenko; Argentina President Mauricio Macri; and Syria’s President Bashar al-Assad.
The late father of the then UK Prime Minister David Cameron was also named; Cameron then came under intense political pressure to reveal his detailed tax returns, along with his Chancellor of the Exchequer George Osborne and Secretary of State for Foreign and Commonwealth Affairs Boris Johnson. In fact, the Leader of the Labour Party and Leader of the Opposition in Britain since 2015, Jeremy Corbyn, succumbed too to public pressure and released personal tax information, following the leak of the Panama Papers.
The serious most political casualty among the total 143 politicians from all over the world named in the leaked papers happens to be Nawaz Sharif. He has been dismissed from office by the Pakistani Supreme court. The leaked documents also showed the then Iceland Prime Minister Sigmundur Gunnlaugsson having an undeclared interest linked to his wife’s wealth; he himself preferred to resign over the row.
Be that as it may, the fact, however, remains that finding one’s name in the Panama Papers does not make one necessarily guilty. After all, not all the offshore accounts are used for illegal or sketchy purposes, even though in many cases people set up an offshore company to avoid taxes, hide assets from government regulators, launder money for criminal enterprises, and get around international sanctions. The Panama papers have focused essentially on these shady things. But ultimately whether one is guilty or not is decided by the courts, depending on the allegations being proved. In the case of Nawaz Sharif, he and his children have not been proved to have committed any wrong doings as yet. The case is still under investigation. But he has been punished by the Supreme Court for bringing “bad name” to the position he held; in the court’s view, it seems that a Prime Minister(or any high public official) must be seen to be moral and of impeccable integrity.
In other words, if Pakistani example is any indication, the problem goes beyond violating laws – proving one’s behaviour to be ‘legal’ does not minimise the gravity of the issue that is essentially “ethical” or “just”. But then, such a principle has dangerous implications in the sense that it is prone to grave misuse; there can be no stable government anywhere if its head or chief’s “morality” is under scrutiny by the judiciary. After all, unlike a law or regulation which has definite legal parameters, what is moral and immoral is highly subjective.
This, perhaps, explains why the governments the world over, try to bring out laws aimed at ensuring that people pay taxes and provide tax-relevant information. It is in this context that one understands why the Modi government has decided to link “PAN” number with that of the “Aadhar”. But then, this decision is being challenged as an invasion into “the right of privacy”. The matter has assumed such proportions that it is now being debated before a constitutional bench of the Supreme Court.
There are two sides to the issue of tax- transparency. One way of looking at is that the more transparent the system of tax-information is, the lesser will be the scope for tax-evasion. People who know that that their details could always be scrutinised will report their income more meticulously and hesitate before using convoluted schemes to evade taxes.
But then, the converse is also understandable. The human nature is such that people will always find ways to circumvent the laws. Tax-evading behaviour can change form, rather than being eliminated completely. Besides, the personal safety of wealthy individuals against violent criminality, including kidnapping and murder, becomes a real issue if their taxes become public knowledge. The case for privacy, thus, is purely utilitarian.
In the ultimate analysis, to justify tax information in public domain, the case must be made that it is the best way to achieve a greater good. At the same time, it has to be ensured that in the name of tax-compliance, the executive (officials and the government) do not turn out to be uncontrollable. There has to be a checks-and-balance perspective under which parliamentarians, media and the general public are provided access to the administrative practice of tax authorities. Those who make and implement the laws should show that they are not subject to conflicts of interest.
By Prakash Nanda