Disqualification of Muhammad Nawaz Sharif-first time of any prime minister in Pakistan under Article 62(1)(f) of the Constitution-has busted many myths. The most important and significant aspect of the decision of the Supreme Court is that nobody is above law. The unanimous judgement of the five-member bench of the Supreme Court holds a lesson for all those who have been betraying the people and democracy while holding important public offices. This will go a long way to bring much-needed supremacy of law, transparency and good governance in our polity. After the judgement in the case of Nawaz Sharif, there is legitimate demand from the ruling party and others that the apex court would apply the same yardstick to all politicians, and mighty segments of society-members of militro-judicial-civil complex.
During the Panama case hearings, it was highlighted time and again in these columns that many members of the federal and a provincial cabinet were abusing the state’s resources (taxpayers’ money) on defending the Prime Minister and his three children in legal matters that were entirely of a personal nature. These misdemeanours (defined as “corrupt practice” under the law) remain unnoticed on the part of National Accountability Bureau (NAB). Now that references are to be filed against Nawaz Sharif and his offspring by NAB, the abuse of public funds and payment of fees to counsel, if from national exchequer, should also be taken note of.
Much before the verdict in the Panama case [Constitutional Petition No 29 of 2016-Imran Khan vs Mian Nawaz Sharif & others], a division bench of Lahore High Court in its order of March 2, 2017 observed that “sugar mills owned by the ruling family have brazenly flouted court orders and disregarded the ban imposed by the government on the establishment of new mills… so, what precedent are they setting for others in the country?” As per order of the Lahore High Court in 2017 PLD Lahore 68, ousted Premier Nawaz Sharif, his would-be successor and younger brother Shahbaz Sharif and family members, were flouting with impunity the laws of the land. They have yet the cheek to claim, “We are innocent and have been victimized.”
In its order of July 28, 2017 the Supreme Court noted that Nawaz Sharif “denied withdrawal of salary, but payment of salaries to all employees electronically, through the Wage Protection System, under Ministerial Resolution No. (788) for 2009 on Wage Protection used by the United Arab Emirates Ministry of Labour and Rules 11(6) and 11(7) of the Jebel Ali Free Zone Rules, would belie his stance”. Before the judgement, we commented in ‘Perjury and tax default’, Business Recorder, July 28, 2017 that while filing nomination papers for 2013 election Nawaz Sharif concealed the fact of employment with Capital FZE, did not offer for tax salary that was taxable under section 12 read with section 69(c) of the Income Tax Ordinance, 2001 and failed to disclose account(s) maintained in the UAE. Those arguing that non-receipt of salary and closing balance in the UAE bank account was not ‘asset’ are not reading the law in totality. There was escapement of income as well as non-disclosure of ‘asset’ as required under section 12(2)(f) of the Representation of People Act, 1976 (ROPA).
By filing a false statement, Nawaz Sharif was guilty of “corrupt practice” under section 78(3) of the ROPA as verdict of Supreme Court aptly observes:
“The next question emerging for the consideration of this Court is whether respondent No. 1 as a Chairman of the Board of Capital FZE is entitled to salaries and whether the salaries if not withdrawn being receivable as such constitute assets which require disclosure in terms of Section 12(2) of the Representation of the People Act, 1976 and whether his failure to disclose them would entail his disqualification? The word asset has not been defined in the Representation of the People Act, 1976, (“ROPA”), therefore, its ordinary meaning has to be considered for the purposes of this case. The word asset as defined in the Black’s Law Dictionary means and contemplates “an asset can be (i) something physical such as cash, machinery, inventory, land and building (ii) an enforceable claim against others such as accounts receivable (iii) rights such as copyright, patent trademark etc (iv) an assumption such as goodwill”. The definition of the word receivable as used in the above mentioned definition as given in the Black’s Law Dictionary is also relevant which means and contemplates “any collectible whether or not it is currently due. That which is due and owing a person or company. In book keeping, the name of an account which reflects a debt due. Accounts receivable a claim against a debtor usually arising from sales or services rendered”. The word ‘receivable’ also has similar ring and connotation according to Business Dictionary which reads as under:- “Accounting term for amount due from a customer, employee, supplier (as a rebate or refund) or any other party. Receivables are classified as accounts receivable, notes receivable etc and represent an asset of the firm”. The definitions reproduced above leave no doubt that a salary not withdrawn would nevertheless be receivable and as such would constitute an asset for all legal and practical purposes. When it is an asset for all legal and practical purposes, it was required to be disclosed by respondent No. 1 in his nomination papers in terms of Section 12(2) of the ROPA. When we confronted, the learned Sr. ASC for respondent No. 1, whether the said respondent has ever acquired work permit (Iqama) in Dubai, remained Chairman of the Board of Capital FZE and was entitled to salary as such, his reply was in the affirmative with the only addition that respondent No. 1 never withdrew any salary. This admission was reiterated in more categorical terms in the written arguments filed by the learned Sr. ASC for respondent No. 1 in the words as under:- “So far as the designation of Respondent No. 1 as Chairman of the Board is concerned, this was only a ceremonial office acquired in 2007 when the respondent No. 1 was in exile, and had nothing to do with the running of the Company or supervising its affairs. Similarly, the respondent No. 1 did not withdraw the salary of AED 10,000. Thus, the salary shown in the Employment Contract in effect never constituted an “asset” for the respondent No. 1.” It has not been denied that respondent No. 1 being Chairman of the Board of Capital FZE was entitled to salary, therefore, the statement that he did not withdraw the salary would not prevent the un-withdrawn salary from being receivable, hence an asset. When the un-withdrawn salary as being receivable is an asset it was required to be disclosed by respondent No. 1 in his nomination papers for the Elections of 2013 in terms of Section 12(2)(f) of the ROPA. Where respondent No. 1 did not disclose his aforesaid assets, it would amount to furnishing a false declaration on solemn affirmation in violation of the law mentioned above, therefore, he is not honest in terms of Section 99(1)(f) of the ROPA and Article 62(1)(f) of the Constitution of the Islamic Republic of Pakistan”.
The zealous defenders of Nawaz Sharif are arguing that entitlement to salary was not as ‘asset’ as per income tax law. They should be reminded that the ROPA and the Income Tax Ordinance, 2001 are two independent laws. The ROPA is not subservient to Income Tax Ordinance, 2001. It does not borrow any definition or concept of Income Tax Ordinance, 2001.
The bases of recording of assets/liabilities for filing a wealth statement under Income Tax Ordinance, 2001 cannot be incorporated as such in the ROPA. It is well established that the words occurring in a statute have to be understood with reference to the objects of the Act and in the context in which they occur, in the absence of any definition in that statute. The definitions given for the terms in one statute cannot automatically be imported for the interpretation of the same words in another statute. The word “asset” not defined in the ROPA has to be assigned its generally accepted meaning and those prevalent in accounting as this expression is not defined in the General Clauses Act. Those arguing that mere entitlement to receive salary was not taxable on the basis of section 32 of the Income Tax Ordinance, 2001 must be reminded that choice of method of accounting on accrual or cash basis is available to the individuals for business income. As regards salary income, taxation cannot be deferred or avoided even when salary is forgone or not received as envisaged in section 12(5) and section 69(c). The basis of charge under the head ‘Salary’ is actual receipt or due, whichever matures earlier, as salary in any case is also received in advance and in arrears. In case salary is received in arrears and higher rate becomes applicable, relief is provided under section 12(7) of the Income Tax Ordinance, 2001. The benefit of Avoidance of Double Taxation between Pakistan and the UAE was also not available to Nawaz Sharif as in Tax Year 2013 he was resident of Pakistan and not the UAE. Nawaz Sharif deliberately concealed the fact of employment with Capital FZE.
The Supreme Court, while applying the well-established principles of interpretation of statutes, rightly determined the scope of word “asset” as in the ROPA. The following unanimous order of July 28, 2017 of all the five members of Supreme Court is thus unexceptionable:
“It is hereby declared that having failed to disclose his un-withdrawn receivables constituting assets from Capital FZE Jebel Ali, the UAE in his nomination papers filed for the General Elections held in 2013 in terms of Section 12(2)(f) of the Representation of the People Act, 1976 (ROPA), and having furnished a false declaration under solemn affirmation respondent No. 1 Mian Muhammad Nawaz Sharif is not honest in terms of Section 99(f) of Const. Ps. No. 29-30/2016 & 03/2017. 24 ROPA and Article 62(1)(f) of the Constitution of the Islamic Republic of Pakistan, 1973 and therefore he is disqualified to be a Member of the Majlis-e-Shoora (Parliament)”.
Pakistan under the rule ‘of the House of Sharif’ presents a classic model of sham democracy where the rulers flagrantly violate laws to expand their business empires. Democracy-if truly practiced-embodies some vital elements that are: fair and just electoral process, sovereignty of parliament, separation of powers and independence of judiciary, public accountability and rule of law. Elections alone cannot guarantee these elements. Those at the helm of affairs must realise that democracy is not electioneering per se. At the heart of the concept of democracy is the assurance for the citizens that their affairs are going to be managed by a ‘Responsible Government’. The rule of law embraces at least three principles. The first principle is that the law is supreme over officials of the government as well as private individuals, and thereby preclusive of the influence of arbitrary power. The second principle requires the creation and maintenance of an actual order of positive laws which preserves and embodies the more general principle of normative order. The third principle requires that the relationship between the state and the individual be regulated by law.
How rule of law has been blatantly violated by the Sharifs is highlighted in Para 6 of JDW Sugar Mills Ltd etc. Versus Province of Punjab etc 2017 PLD Lahore 68 which reveals the interest of the ruling family in the business:
“One of the main arguments raised by the Petitioners was that Respondent sugar mills are owned by the Chief Minister, Punjab and the Prime Minister of Pakistan along with close family relatives. Hence the Impugned Notification has been issued to benefit their business interest. Further that the Impugned Notification has been issued simply to facilitate and legalize the establishment of new sugar mills owned by the families of the Chief Minister, Punjab as well as the Prime Minister given the ban on establishing sugar mills in the Province. In this regard, it is specifically alleged that Ittefaq Sugar Mills Limited and Chaudhary Sugar Mills Limited are owned by Mian Muhammad Nawaz Sharif, Hassan Nawaz Sharif, Hussain Nawaz Sharif, Mrs. Marriyam Nawaz, Mrs. Kalsoom Nawaz and Hamza Shahbaz along with other family members. Haseeb Waqas Sugar Mills Limited is owned by Haseeb Ilyas, Zakia Ilyas, Mrs. Shahzadi Ilyas and other family members. Abdullah Sugar Mills Limited is owned by Mian Mohammad Ejaz Miraj, Yasmin Riaz and other family members”.
The above judgement shows business interest of the Sharifs as owners of sugar mills. It is pertinent to mention that while explaining their position regarding offshore companies and properties in London, Nawaz Sharif in his two addresses to nation and speech before the National Assembly as well as in concise statements in Supreme Court categorically said that his sons had no business links in Pakistan. However, the above case shows otherwise. It is now also proved that Nawaz Sharif had direct links with Capital FZE, the UAE, and had accounts there which he concealed. It is hoped that NAB in its references will concentrate on concealed accounts.
Will Federal Board of Revenue (FBR) proceed against Nawaz Sharif for concealing foreign income and assets (accounts in the UAE)? It is also hoped that the Chairman FBR will act swiftly-the final fact finding of concealment has been made by Supreme Court on the basis of which disqualification is made. If FBR fails to follow the judgement that is binding under Article 189, it will prove that the state machinery is still captive in the hands of money power.
Will Chairman FBR also take action against Hussain Nawaz who claims to hold National Tax Number but failed to file tax returns? Haroon Pasha, the CEO Ittefaq Group, in a TV interview misstated the law that being non-residents Hussain Nawaz was not obliged to file tax returns in Pakistan as his only source of income was dividends. He should have read section 115(4) of Income Tax Ordinance, 2001 which reads as under:
“Any person who is not obliged to furnish a return for a tax year because all the person’s income is subject to final taxation under sections 5, 6, 7, 148, 151 and 152, sub-section (3) of section 153, sections 154, 156 and 156A, sub-section (3) of section 233 or sub-section (3) of section 234A shall furnish to the Commissioner a statement showing such particulars relating to the person’s income for the tax year in such form and verified in such manner as may be prescribed”.
Hussain Nawaz was even required to file wealth statement as per section 116(4) of the Income Tax Ordinance, 2001, which says:
“Every person (other than a company or an association of persons filing statement under sub-section (4) of section 115, falling under final tax regime (FTR) shall file a wealth statement along with reconciliation of wealth statement”.
Tax Directories published by Federal Board of Revenue (FBR) for tax year 2013, 2014 and 2015 do not mention the name of either Hassan Nawaz Sharif or Hussain Nawaz Sharif as taxpayers! Their names are also not appearing in Active Taxpayers List maintained and updated by FBR at http://www.fbr.gov.pk/ATL
The Chairman FBR should start actions against all tax evaders. Majority of our elected members are declaring meagre incomes as compared to their living standard. On moral grounds, many members of PTI, presently fighting cases against the alleged corrupt practices of the rulers, need introspection. They have been getting salaries and perquisites even after tendering resignations and some received full amounts as arrears on return.
Democracy is no doubt a system of choice of modern day to represent the will of people, but devious and disingenuous leaders like ours are instrumental in discrediting it. National Assembly every year approves funds of billions of rupees for luxuries of members, maintenance of palatial houses of President, Prime Minister, Governors, Ministers, expensive cars, army of servants and foreign trips, but not enough for the welfare of people. This extravaganza and unscrupulous use of taxpayers’ money is a criminal act as ordinary Pakistanis pay billions as taxes and get little in return, while rulers pay meager amounts and enjoy unprecedented luxuries. This aspect of corruption and accountability is still not being debated in the public domain.
(The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences)