Recovery of Illegal Wealth
Making money illegally has become institutionalised. To break that cycle, a concerted effort must be made to recover illegal wealth so that the acquisition of wealth illegally attracts exemplary punishment. Wealth that is not declared is illegal, or whether it be held in one’s own name, relatives, proxies, nominees, dummies, etc or in the name of individuals/groups, business entities, etc. For any wealth declared there has to be a source of income, an income on which commensurate tax must have been paid. For wealth traced out that is not declared, there can be only one rule of law, confiscation by the State without recourse to any caveat. Illegal wealth is usually kept either in a real estate within the country, though abroad it is mostly in numbered accounts or under the cover of offshore companies in UK and elsewhere. After years of fruitlessly chasing after people in the traditional way of searching for assets of the rich who had the money to finance the use of smart tax lawyers and accountants to keep money in safe tax havens, the US Internal Revenue Service (IRS) has now switched over to collecting information about the lifestyle of individuals and calculating tax thereof. This change in modus operandi has made it increasingly difficult for people to enjoy their wealth without coming under the censure of the tax-man. Theoretically this could be possible in Pakistan but our Income Tax Department which has checking of tax evasion as their primary reason for existence has more individuals within the department with illegal wealth than any other commensurate group of individuals, except maybe in comparison officials of Customs and Excise and/or Immigration. Without fear of discovery retribution thereof, the show of wealth is so blatant that one tax man displays at least four “Chughtai” miniatures prominently in his house, each painting worth over Rs.2-3 lacs. Obviously we cannot expect our tax-men to blow the police whistle on themselves or on whom they consider their own (for a price, of course).
There have to be priorities in the chasing of illegal wealth. Illegal wealth must first be classified into (1) mega-wealth, ie. those who have acquired wealth far in excess of their declared income, above US$ 12.5 million (Pak Rs.500 million approximately), (2) super-wealth, between US$ 5-12.5 million (Pak Rs 200 million to Rs.500 million) and maxi-wealth, upto Rs.200 million ie. US$ 5 million. A few are in the super-mega class ie. US$ 1 billion and beyond. Illegal wealth within Pakistan will rarely be in bank accounts or either in one’s own name. It will invariably be held in real-estate, stocks and shares, in industries, etc. A far greater amount is invariably held abroad through various sleight-of-the-hand structuring, however Pakistanis (and Indians and Bangladeshis) tend to keep a substantial amount in banks and other financial institutions in numbered accounts. Many corrupt bureaucrats lost their ill-gotten life-savings when BCCI crashed. Different teams must go after priorities set, within Pakistan and abroad. In Pakistan, the FIA made an excellent headway in tracing out the wealth looted by the cooperatives, finance and investment Companies in the 80s but the poor depositors did not get even a fraction, most went into the pockets of corrupt FIA officials. The lifestyle of our Income Tax, Customs, Excise and Immigration staff can be assessed from the real estate records in the posh areas in Karachi of KDA Schemes 1 and 5, PECHS, Defence, Bath Island, etc. One will find an inordinate amount of property in the names of females and children. How can they justify the type of income that can afford such valued real-estate ?
