Panama Papers and Pakistan PM Nawaz Sharif

Nawaz Sharif in March 2016Image copyright

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What is the future for Nawaz Sharif following the revelations?

The leak of 11 million documents held by the Panama-based law firm Mossack Fonseca identified links between many political and business leaders around the world and offshore companies and accounts. Among them was the Pakistan prime minister’s family, as the BBC’s M Ilyas Khan explains.

Why is Prime Minister Nawaz Sharif under pressure?

The Panama leaks have come at a time when Mr Sharif is already reeling from his latest battle with the powerful military.

The leaks reveal that three of his children own offshore companies and assets not shown on his family’s wealth statement.

The companies identified so far include three British Virgin Islands-based companies Nescoll Ltd, Nielsen Enterprises Ltd and Hangon Property Holdings Ltd, incorporated in 1993, 1994 and 2007 respectively.

These companies have been used to channel funds to acquire foreign assets, including some apartments along Park Lane in London’s Mayfair area.

The insinuation that the companies were meant to hide or launder ill-gotten wealth or to avoid taxes has called his credentials into question.

Also, worldwide protests that embarrassed or forced political leaders elsewhere to quit their offices have added to the pressure.

How has he responded?

The leaks triggered panic in the top circles of the ruling PML-N party, and the pressure was believed to be the reason behind Mr Sharif’s unscheduled departure for London on 13 April to keep a rare appointment with his doctors.

Top PML-N figures suggested that no offshore companies or assets were shown to be held in his name, and that he could not be held accountable for what was owned by his sons. Besides, the leaks did not necessarily mean any wrongdoing, they said.

Mr Sharif himself called the leaks the work of people “targeting me and my family for their political aims”. In an address to the nation on 5 April, he said those “who use ill-gotten wealth don’t keep assets in their own names”.

In that address, he announced plans to institute an inquiry under a retired judge, which was widely rejected by the opposition and the media on grounds that such inquiries went nowhere in the past.

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Opposition politician Imran Khan wants Mr Sharif to resign

What are the opposition politicians doing to investigate allegations?

The most lethal attack was launched by opposition politician Imran Khan, the head of the PTI party, who staged a siege of Islamabad’s federal quarters in August 2014, paralysing Mr Sharif’s government for months.

Back then it was believed some elements in the security establishment were backing the protests to prevent Mr Sharif from taking domestic and foreign policy initiatives independently of the military.

Many thought that the protests left Mr Sharif’s government considerably weakened.

Mr Khan has now called for Mr Sharif’s resignation and an inquiry into the allegations by the Chief Justice of Pakistan. Failing this, he has threatened public protests, including a siege of Mr Sharif’s residence in Lahore.

This has created an air of acrimony, with both sides launching personal attacks on each other.

As a result, a number of retired judges approached by the government to head the inquiry commission have declined the offer, limiting Mr Sharif’s options.

Other major opposition groups are also demanding an inquiry under the Chief Justice, but they have stopped short of calling for Mr Sharif’s resignation or fuelling public protests.

Has the episode further weakened Mr Sharif?

There is no doubt the leaks have left him on shaky moral ground.

The allegations of corruption have chased Mr Sharif since the 1980s. And much of what the Panama Papers have revealed now was the subject of a federal inquiry in the mid-1990s.

Mr Sharif ordered that inquiry closed when he came into power in 1997, terming it “politically motivated”.

But this time he and his family have had to admit they used offshore companies to acquire foreign assets.

Also, the allegations have come at a time when his government is battling to keep some semblance of civilian control over domestic security and foreign policy issues that have been slipping into the military’s control.

On Tuesday, a statement by army chief Gen Raheel Sharif, that terrorism cannot be effectively curbed unless “the menace of corruption” is uprooted, has got the tongues wagging.

While many suggest the statement may be just a general remark to express solidarity with the popular sentiment, some ex-military analysts have said it may well be a statement of intent.

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The Panama revelations led to protests around the world – and, here in Iceland, the resignation of the prime minister

What happens between now and the end of the term?

In a recent article, independent political and defence analyst Hasan Askari Rizvi has outlined a number of possible scenarios.

One of these could be street agitation, which he says could accelerate Pakistan’s internal conflict.

It could either degenerate into a stalemated confrontation between the government and the opposition, or it could lead to an in-house change, or even the setting up of a fixed-term military-backed civilian dispensation to “clean up the stables”.

A more likely scenario is that of Mr Sharif continuing in office as a weaker leader, giving even greater initiative to the military.

What does this all say about Pakistani democracy?

Pakistan’s vacillation between democracy and military rule has prevented the state from evolving an independent system of accountability.

Successive military rulers used corruption and accountability to target opposition politicians.

Gen Zia ul-Haq’s rule during the 1980s took the matter a step further by raising a whole new breed of politicians and setting up financial procedures that made misappropriating government funds almost acceptable.

In a society where family and tribal links determine the distribution of jobs and official patronage, political corruption has not taken long to spread.

Politicians complain they have remained the only target of campaigns against corruption while the military and the judiciary remain outside the purview.

The military and the judiciary insist they have their own separate systems of internal accountability and do not need governmental controls.

Both have colluded in the past to oust politicians from power, but have abstained from calling each other’s actions into question.

There have been instances where retired military officers accused of embezzlement in civilian sphere have been co-opted back into the military to prevent them from being tried under the mainstream laws.

More recently, a sitting chief justice was accused of receiving perks from a real estate tycoon, and at least two judges, one of them now retired, have been named in Panama Papers as owning offshore companies.

In these circumstances, as Pakistan stumbles from one phase of confusion into another, democracy, rule of law and real accountability have become cliches with a negative connotation.

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