No prime minister of Pakistan has completed a full term in power since the country won independence 70 years ago. Nawaz Sharif was a year away from doing so; instead he has been ousted for a third time. On Friday the supreme court disqualified him from office and referred the issue of his family’s offshore assets to anti-corruption authorities. Mr Sharif denies the allegations, but stood down at once; his ruling Pakistan Muslim League-Nawaz party is expected to nominate a successor shortly.
Though this leaves Pakistan’s politics in turmoil, it is a very international affair. It was sparked by revelations in the Panama Papers – the unprecedented leak from an offshore law firm – concerning luxury London property, bought through British Virgin Islands companies linked to Mr Sharif’s children, who were minors at the time. In 2008, they used the Swiss arm of Deutsche Bank to borrow £7m against the flats.
The files proved, in eye-opening fashion, that members of the political elite have not played by the rules their citizens obey. The very wealthy realised long ago that they could maximise and conceal their wealth (and its origins) by exploiting the existence of multiple jurisdictions. Journalists have taken note. The German newspaper Süddeutsche Zeitung shared the data; the International Consortium of Investigative Journalists arranged for teams from 80 countries – including a group at the Guardian – to collaborate in reporting. Equally strikingly, authorities have begun to band together to tackle tax evasion and corruption across borders – sometimes through simultaneous raids.
The Panama Papers sparked the resignation of Iceland’s prime minister within days. David Cameron came under intense scrutiny over his family’s tax affairs. Malta is still dealing with the political fallout. Now Mr Sharif has gone. The impact has been financial too: governments are tracing billions of dollars in unpaid taxes or other assets. The European commission has published proposals to get tough on offshore tax schemes.
Efforts must not stop there. The public register for beneficial owners of UK companies must be extended to British tax havens; it must include trusts; and a proper means of checking it must be introduced. Accountability should not depend on leaks, however effective they have proved this time.
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