This quality seems to be in short supply in Pakistan although it is most needed even to understand any issue.
Black money retrieval has caught the imagination of the people and expectations have been raised. The Nawaz Sharif Government had said before coming to power and soon after doing it that it would take steps to bring black money from abroad in 100 days. So far three names of holders of “black money ‘abroad have been given out. All the three have denied it. The Judiciary is paralyzed as it is no less corrupt than the other institutions and too busy looking after its own perks.
In the meanwhile, speculations about the quantity of black money abroad keeps going up.
Let me first make it clear. The Pakistani Black money held abroad in Switzerland or elsewhere will not come back and so the dreams about how to spend it can be stopped. If you want to know why, you need to know more about Switzerland.
Switzerland is a small, land-locked country with mountainous terrain in Europe and only 10% of its land is arable and it has only 4 sunny months. Its population is just 8.5 million. Berne is its capital. Machineries, precision instruments, watches and textiles are manufactured here. All other needs including fuel, electricity, coal etc., are imported. Financial services and tourism are the two money-spinners. The Country was established in 1848 after several Cantons were united in a Federal set-up. 44% of the labour force is women.71% of the work force is employed in financial services. 27.7% is in the manufacturing and 1.3% is in agriculture. But its per capita income is the highest $54, 600/- Its minimum wage is $22 an hour.. Its inflation is .07 % for several years. Its credit rating is AAA both domestic and foreign. Of all the off-shore funds in the world, 28% are in Switzerland. It is interesting to see how this was achieved.
Switzerland is neither a member of the European Union nor a member of the UN. During the World Wars, when things remained uncertain, Switzerland remained neutral and its stable economy stood steady like a rock. So investing in Switzerland was considered very safe. During the World Wars, Switzerland supplied arms to both Germany and Britain. Investors in both the countries invested their money in Switzerland.
Investments pour in because the names and the quantum of investment are kept secret. There is no savings bank account or current account for outsiders. All come under Wealth Management. Yield for investors is less than 1%. `Economy boomed by the financial services offered by the banks.
Now, think, why should Switzerland lift the veil of secrecy and give out the names? Will it dig its own grave? According to the Constitutional provision 13 FC, details of money of the clients and their identity, should not be disclosed without client’s permission. The wages for violation by employees is Jail sentence.
You may wonder how then we keep hearing about the treaties by which certain countries get the names. The pact between Germany and Switzerland is regarding Avoidance of Double Taxation. A German who does business or invests in Switzerland does not have to pay tax in both the countries, as they will share the tax collected once. Even then, names will not be disclosed to public.
The Treaty between the U.S.A. and Swiss under Joint Economic Commission, besides Double Tax avoidance, is to prevent money laundering. Switzerland has passed several laws to prevent money laundering of terrorists and terror activities. Recently the funds of Al-Qaeda were frozen. Any information given out under these laws will help in investigation but they have to be proved in a court of law.
Pakistan withdrew at the last moment from signing a treaty with Switzerland on multi-lateral Competent Authority which will provide for automatic exchange of information from 2017. But it is still possible to sign the treaty.
Switzerland has clarified that any information given under Double Taxation Avoidance Treaty should not be passed on to a court or to any agency outside the court. Our politicians make a hue and cry knowing the facts full well. But our TV critics, blissfully ignorant, make noises.
Yet there are chances that the veil of secrecy can be lifted just a little. If you prove money laundering, chances are more. Now money launderers and terrorists cannot hide behind the veil of secrecy. Although there are laws since 1977 against this, only recently on Jan 1st, 2011 an amended strong law came into force. Switzerland has returned 1.7 million dollars in the past 15 years under this Act.
Now certain other changes have been made through enactments. Money obtained through stealing, extortion, money to be used for terrorist activities, earned through drug trafficking, smuggling, kidnapping ,human trafficking and through tax frauds do not enjoy the same protection. Such monies will be returned if these crimes are proved in a court of law in respective countries and ordered by a court. Tax fraud is tax evasion through forgery, false documents fake invoice, fake orders etc.
Now in our country, we have to identify the persons who have committed these crimes, prosecute them and prove the charges. On the basis of the court order, we must request the Swiss banks, if they have invested there, to disclose the details. Then after several steps, money from Swiss banks must be retrieved. Are these in the realm of possibility? Remember Haasan Ali, the horse trader from Pune? He has been accused, even ten years ago, of parking black money abroad. So far there is no progress in action against him. Now you know why.
Besides, our IT Ministry has certified annually that the returns of our businessmen, politicians and industrialists are correct and there are no arrears. It is difficult to prove now they committed some of these crimes years ago.
The wise thing is to forget the past and bring reforms to prevent generation of black money and its flight abroad and thus save time.