Ishaq Dar’s reappointment as the Federal Minister for Finance appears to be less a reflection of a sagacious decision by the senior party leaders and more a reflection of not only his continued high standing with former Prime Minister Nawaz Sharif but also, perhaps in part, a seemingly hostile reaction to the Supreme Court verdict in the Panama papers case.
The 28 July judgement refers to Ishaq Dar as Respondent Number 10 and notes that Respondent No 10 had a 91 times increase in income (from 9.11 million rupees to 831.70 million rupees) within a short period of time and directs that a “reference against Respondent No 10 for possessing assets and funds beyond known sources of income” (be filed and)…”the accountability court shall proceed with and decide the aforesaid reference(s) within a period of 6 months from the date of filing such reference(s)”. The apex court has appointed Supreme Court Justice Ijazul Ahsan as the monitoring judge for National Accountability Bureau (NAB) proceedings as well as the accountability courts in the case. In his absence Justice Ejaz Afzal Khan, who headed the three-member bench for implementation of the Panama papers case, will supervise the adjudication.
This verdict was passed subsequent to Ishaq Dar’s submission of two types of documents – (i) his 34-year-tax record which constituted an impressive number of boxes; and (ii) a letter from the United Arab Emirates Shaikh Nahayan bin Mubarak Al Nahayan that stipulated that Dar provided professional advisory services to him from February 2002 to March 2008 (when Dar was a non-resident Pakistani and not liable to file returns) which enabled him to earn 837.15 million rupees by 2008. Upon becoming a resident Pakistani in 2008 Dar, under Section 11 (5) of Income Tax Ordinance, merged his overseas assets (837.15 million rupees) and local assets (44.83 million rupees) in his wealth statement. The three-member bench implementing the Panama papers case requested banking transactions (deposits) that would support Dar’s substantial foreign earnings during the 6 years that he was a non-resident as it is highly unlikely that Shaikh Nahayan bin Mubarak Al Nahayan delivered millions of pounds salary in cash, which has yet to be provided and which, needless to add, if provided, would completely exonerate Dar of all charges.
At present, Ishaq Dar’s status is that he has not been disqualified from his membership of parliament but neither does he enjoy immunity from money laundering charges as he quashed his affidavit as approver detailing how money was laundered for the Sharif family in the Lahore High Court in 2010 (during Shahbaz Sharif’s tenure as Chief Minister Punjab) – a stance that he maintained with the Joint Investigation Team as well as during the hearings in the Panama papers case. In other words there is a possibility, however remote Dar may think it is, that he may be unable to prove his innocence in which case it would have been appropriate for him to defer accepting the portfolio of Finance.
The waiting period before the final judgment on the matter is a maximum of six months (ending January 2018, well before the next elections) and a true democrat may have preferred to refuse a portfolio till such a time as he was cleared of all charges, leave alone accept a portfolio that his critics maintain has already compromised his ability to legislate appropriately especially with respect to money laundering/benami account holders. In 2016, the then Governor of the State Bank of Pakistan, a Dar appointee, updated the 2010 Anti-Money Laundering/Combating Financing Terrorism (AML/CFT) regulations by adding a subsection titled Politically Exposed Persons (PEP) which made it mandatory for banks/development finance institutions to first obtain approval from their senior management prior to initiating any investigation – senior management on which any federal government can exert considerable pressure. NAB and Federal Investigation Agency (FIA) have initiated no more than 8 cases under AML/CFT since then and when asked by Business Recorder refused to reveal if any of these cases included PEPs.
Shahid Khaqan Abbasi’s cabinet has increased the number of ministers from Nawaz Sharif’s 29 to 43 but what is noteworthy is that the economic related ministries have not only been consolidated (energy ministry has merged petroleum and water and power ministry while commerce and textiles has been merged into commerce ministry) but the number of supervising ministers has been reduced: the Prime Minister retains the energy ministry and planning and development portfolio (which was previously led by Ahsan Iqbal, an academic, who was playing the lead role in the game changer China Pakistan Economic Corridor) and Commerce would be led by Pervaiz Malik. The question is whether this consolidation would strengthen Dar’s hand or the prime minister’s?
In this context, it is relevant to note that even the incentive packages announced amidst much fanfare by former prime minister Nawaz Sharif to the agriculture sector (over 300 billion rupees) and export sector (180 billion rupees) were never fully implemented due to Dar’s overarching focus on budget deficit reduction; in addition, decisions that accounted for declining exports and rising imports are sourced to the Ministry of Finance (an overvalued rupee and delay in sales tax refunds) rather than the Commerce Ministry; subsidies to the power sector as well as setting the price of imported oil and products by fluctuating taxes on these items is also a decision sourced to the finance ministry. In addition Ahsan Iqbal’s growing prominence as the man leading the CPEC effort which was to spearhead Pakistan’s growth and development momentum may have irked Dar. Thus it is a distinct possibility that Dar’s hand has indeed been strengthened within the cabinet as he is perhaps the man most trusted by Nawaz Sharif.
It is critical to select a cabinet member who, at worst, should not have any conflict of interest in holding that particular portfolio. That is certainly not the case with Ishaq Dar. Had he been given the Energy Ministry or even Commerce Ministry one could have argued that there would be no possible conflict of interest given the ongoing references filed against members of his son’s family (by marriage) or his own. That clearly is not the case as the Federal Board of Revenue, Securities and Exchange Commission (SECP), National Bank of Pakistan and State Bank of Pakistan, entities that are under him directly (or under his pervasive influence as the SBP) have been cited as not having conducted any meaningful investigation after the Panama papers leak last year with the former SECP Chairman currently behind bars.
To conclude, one cannot expect Prime Minister Abbasi to either fire Dar or give him another ministry in which case one can only exhort the Finance Minister to do the right thing till the final judgment in his case.