Since a long time real estate sector has been a preferred and safe venue to park financially ill-gotten wealth. The sector serves both as storeroom or investment venture. The revelations by the International Consortium of Investigative Journalists (ICIJ) and more than 100 media partners, popularly known as Pandora Leaks around the globe, just validates the point. From the cliff-top Malibu mansions to majestic London apartments, various world politicians and Pakistani bigwigs allegedly use real estate properties to hide their wealth and avoid taxes.
Why Real Estate
Gone are the days when hidden offshore accounts and money was protected in countries and territories with lax banking laws, like small islands in the Caribbean and Switzerland. In recent times real estate provides a corridor to legitimacy that is more efficient than the purchase of stocks or other assets related to financial institutions. It’s also less subject to scrutiny, as reporting requirements for suspicious activity in trade of properties remained almost nonexistent until the arrival of FATF regulations.
Rich rulers and corrupt politicians also shield their wealth through purchases of real estate, yachts, jets and life insurance. But Real estate is more functional, as anybody could use a property as a second home or rent it out, earning income from the investment.
The Pandora Leaks is a glimpse of an almost endless amount of rampant tax avoidance by some of the world’s wealthiest and most powerful people. Like Jordanian King Abdullah II bought whopping 14 properties, all of which are worth more than $100 million, in both the UK and US, including highly coveted multimillion-dollar cliff-top bungalows in Malibu, California. Tony Blair and his wife purchased a historic London town house and sneakily skipping nearly half a million US dollars stamp duty.
Real estate is everyone preferred venue and Britain is their popular destination. As 1,542 UK properties purchased through 716 offshore firms, revealed in the Papers. The value of these properties is said to be beyond $ 5.5 billion. More than two-thirds of properties are in London, with Westminster and Kensington and Chelsea being the most popular. While these properties are mostly owned by offshore firms based in the British Virgin Islands and a handful in Seychelles and Panama.
Pakistanis in Pandora Leaks
An analysis of Pandora Papers’ documents shows that Pakistanis are the 5th largest buyers of properties in London through offshore companies. Several members of Pakistani Prime Minister Imran Khan’s inner circle, including current and former cabinet ministers, “secretly owned an array of companies and trusts holding millions of dollars of hidden wealth,” the Papers reports.
The list includes Punjab Senior Minister Abdul Aleem Khan, Khusro Bakhiar, Faisal Vadwa, Arif Masood Naqvi, Lieutenant General (retd) Shafaatullah Shah’s Family, Lieutenant General (retd) Habibullah Khattak’s Daughter, Tariq Saeed Sehgal, Sikandar Mustafa Khan, Amir Ishaq Khan and others. They are few of Pakistan’s leading figures used to buy properties in the UK. Some of their details are given;
1. Aleem Khan, along with his wife, owns Hexam Investment Overseas Limited, a company registered in the British Virgin Islands to buy property in London. The ownership record of the company shows three properties.
2. Arif Masood Naqvi, another Imran Khan financier who is currently in British custody and awaiting extradition to the United States, owns six properties through two offshore companies, Blondell Assets Limited and Valolia Star Limited.
3. Lieutenant General (retd) Shafaatullah Shah’s wife acquired a $1.2 million apartment in London through a discreet offshore transaction.
4. Moreover, the daughter of Lieutenant General (retd) Habib ullah Khattak, Shahnaz owns two properties named as Shady Tree Properties Limited and Southwest Holdings Limited.
With the formation of Investigative Cell by PM Imran Khan to conduct inquiry about those, named in Pandora Papers, is welcome. Let’s see what happens next.