Recently different leaders of
PMLN have constantly explained, argued and challenged the people of Pakistan and
Overseas Pakistanis to present the evidence of corruption of Sharif’s family and
the nature and extent of their assets in Pakistan and overseas.
Also the issue of the income of Nawaz and Shahbaz Sharif and their tax
liabilities has been repeatedly discussed at breadth length by different leaders
of PMLN.
For time being leave the nitty gritty of the declared assets of Nawaz Sharif,
this issue could be set aside, for the sake of clarifying the issues first and
foremost. It is difficult to understand the logic, reasoning and explanations of
PMLN leaders about the tax liabilities of Nawaz Sharif. Most of the time, they
are either very confused, do not have enough details available, or are evasive
at best, if not purposefully dishonest in their answers and explanations. We all
have the interest to find the truth, and in pursuing avenues to find the truth.
The truth has to be told to the Pakistani nation, not necessarily for the sake
of Imran Khan or his party PTI. The integrity of PMLN leaders is a problem for
the whole nation, not limited to certain individuals or political parties.
It is rather disturbing the mixing of the issues and the poor grasp of
Accounting and Taxation issues. It is also quite apparent after watching the TV
talk shows that the leaders of PMLN are either blissfully unaware at best and/or
deliberately misleading the nation at its worst on the difference between an
individual, a business and a Company.
LEGAL RESPONSIBILITIES AND ENTITITES
In accounting, the application of GAAP (Generally Accepted Accounting Principle)
implemented through SORP’s and through Taxation Laws by Governments, a Business
is treated separate from its owners; similarly a Corporation is a separate legal
entity according to the definitions of Company Law.
A person pays Income Tax, while a Business also incurred Business taxes and
Company incurred Corporation Tax liabilities for the profit it earns. In any
event the Business and Company cannot be considered as individuals or the tax
paid by either the business or the Corporation can be treated as the tax paid by
the individuals.
It is necessary to record the business’s transactions separately, to distinguish
them from the owner’s personal transactions.
The idea is that the financial transactions of one individual or a group of
individuals must be kept separate from any unrelated financial transactions of a
business or a Company.
For example a sole trader in a one man business takes money from his business by
way of ‘drawings’; money for his own personal use. Despite it being his business
and apparently his money, there are still two aspects to the transaction: the
business is ‘giving’ money and the individual is ‘receiving’ money. Even though
there is no other legal distinction between the sole trader and the business,
and the sole trader is liable for all of the debts of the business, business
transactions will still be taxed separately from personal transactions
For these reasons, the affairs of the individuals behind a business should be
kept separate from the affairs of the business itself.
For Companies the restrictions are laid down in the Company’ Law, for legal
reasons company is a separate legal entity, with the Directors having limited
liabilities, unless the liabilities are covered with personal assurances or
guarantees.
A Company and its affairs are separate from its Directors or shareholders. A
company can be:
Different from its member, directors, – Limited Liability- Sue or be sued- Own
assets- Enter Contracts- Commit crimes (pollute), similarly it would incurred
separate Tax liabilities from its directors and members.
TAXATION
Mostly the British Laws and specifications are used, but Pakistan follows
similar guidelines and rules. Where ever it is applicable Pakistani taxation
laws are also outlined.
INCOME TAX
Income tax is tax on the income of the individuals, and payable by the
individuals.
It consists of Income obtained from;
- Earnings from employment
- Earnings from self-employment i.e. if you have a business
- Pension Income
- Interests on Savings and other accounts, unless exempted.
- Income from shares, dividends etc.
- Rental Income from properties and other chalets.
- Income from a trust
The individuals are liable to Income tax on a variety of Income, and should pay
taxes on them and on whatever benefits they draw from different sources.
Pakistani taxation laws also mention same sources in total and taxable income of
an individual.
Pakistani Taxation Law also specified that for resident income from both
Pakistani and foreign sources is taxable. While for non-resident individual it
is restricted to income from Pakistani sources only. This clarification is
important to counter the claims by some PMLN leaders that NS didn’t pay any
taxes before 2008 because he was not residing inPakistan.
TAX ON COMPANY’S BENEFITS
Not only are individuals liable to pay taxes on the Income they draw from their
business or employment, or Director’s remuneration, but they are also
responsible to pay taxes on any benefits in kind they draw.
- Company cars or vans
- Fuel provided for the vehicles
- Medical insurance
- Living accommodation
- Loans at low interest rates
Pakistani taxation laws also list Loan, advances, deposits or gift received from
another person or company as taxable amounts. It also listed self-hiring, or
receiving rent-free accommodation or housing as taxable Income. In Pakistan the
tax payers are also obliged to file Wealth statements, for self, their spouses,
minor children and dependent.
Pakistan taxation Laws are no different from the UK, benefits in kind are known
as Perquisite in Pakistani Tax Laws. It lists private use of vehicles, services
of a housekeeper, driver, gardener or any other domestic help. Payment of
utilities bills, Loans given on less than the benchmark rates, any amount
forgone/paid by the employer due on the employee either from the employer or any
other person or institution, transfer of any property or provision of services
by the employer to an employee, accommodation or housing provided by the
employer to the employees.
CAPITAL GAIN TAX
Capital Gain Tax is payable on certain transactions of property disposal,
business disposal, assets disposals etc.
Even Gifting your property or business to someone is actually taxable, unless
the person is your spouse (or civil partner in British Law). Gifting your assets
to your children is liable for Capital Gain Tax and/or Inheritance tax if the
assets are transferred to children in case of person’s death.
When you make a gift to a family member connecting to you, other than your
spouse, you still need to work out and pay the tax liability on it. It still
applies if you dispose of the assets in any other way to them, for example, you
sell it to them for a low price. A connected person in this context is someone
such as your brother, sister, child, parent, grandparent, mother-in-law or
business partner. The assets must be valued at the market price at the time the
gift is made and gain or loss on disposal is calculated.
INHERITANCE TAX
In the event of someone death the person who inherited the assets/properties is
liable to Inheritance Tax on anything over the threshold limits. There are
different thresholds for spouses and other people who inherit assets including
children. On taxable portion of the inheritance tax is payable at 40%.
COPORATION TAX AND OTHER TAXES INCLUDING DUTIES, VAT OR SALES TAX
Businesses on the other hand pay different taxes on their activities, if
incorporated then CT liabilities are payable.
No matter if the business is incorporated or not, the persons are different from
the business and any benefits they draw from their business they are still
liable for Income tax on those benefits.
The taxes paid on material, goods or services by a business or a company are
separate from an individual. VAT or Sales tax, is collected on behalf of the
state tax authorities, and should not be treated as Income Tax or other Taxes
paid by the business or individuals. Similarly Excise Duties and Custom Duties
paid form the cost of the goods and production and cannot be treated as taxes
paid by the businesses. These costs are passed on to the customers/consumers. In
the end, all such costs are paid by the end consumers and not by the business.
Any inclusion of these duties as taxes paid is improper and shows intellectual
dishonesty and purposeful deception.
THE ISSUES
Many PMLN leaders are deliberating misleading Pakistani public by mentioning and
claiming that the businesses owned by Sharif family paid billions in taxes.
These exaggerated amounts more likely than not are the duties and sales tax
collected on behalf of the state. The businesses are just safe keepers of these
duties and other taxes, either levied as Sales Tax or VAT on goods and services,
or duties paid, which in the final analysis are paid by the end users of the
goods and services.
It saddened and enrages some of us when we see such deliberate misrepresentation
by political leaders. PMLN leadership should specify how much out of those
supposed billions were Sales Tax collected or other duties on Raw Material etc.
For example a business can show a loss on its business activities and hence pay
no Income tax on business activities, but still would pay billions in VAT, Sales
Tax and other duties collected on behalf of state during the financial year by
the business.
People of Pakistan need to know how much profit is declared by various
businesses of Sharif family over the years. PMLN need to provide break down of
the alleged billions paid by Sharif family in taxes. How much were Personal
Taxes, Taxes paid on business activities, Corporation Tax and how much of the
amounts were for sales tax and other duties collected on behalf of the state and
were not actually the taxes paid by Sharif family.
Even though it sounds like a far fetched idea, but there are some people in PMLN,
who should know how the tax laws work in the world. When PMLN leaders present
these misleading figures in political discussion programs and start to mix
different tax liabilities, they are not only doing a disservice to their own
party, but are also insulting the intelligence of decent, educated Pakistanis
and Overseas Pakistanis.
We have seen more than one classically deceptive presentation by different
leaders of PMLN. Various PMLN leaders constantly repeat same misleading lines
prove that these deceptions are not only pre planned but are party line towed by
its’ leaders. Many leaders of PMLN regularly jump on the bandwagon. Namely
Khawaja Asif, Ahsan Iqbal, Sadiq al Farooq, Mushahidullah Khan, Hanif Abbasi Etc
and now more frequently some members of Sharif Family.
Main arguments presented by PMLN leaders
First snap shots of usual comments made by various leaders of PMLN from time to
time on TV talk shows. A further analysis of contradictions in their statements
is provided later in this article.
1- Every MNA and MPA is duty bound to declare their assets. Sharif family
members including Nawaz Sharif has declared their assets with their nomination
papers.
2- Nawaz Sharif back in 90’s transferred all his assets to his sons and
therefore, does not own any substantial properties, businesses and bank accounts
in his name.
3- NS doesn’t have any substantial Income that’s why NS is indebted to his wife
and sons.
4- It has been said by PMLN leaders, in last two years and on another occasion
it has been said in last 6 months NS or his sons have transferred 65 Crores to
Pakistan.
5- All the properties owned by Hassan Nawaz in theUKwere bought on mortgage;
this fact can be confirmed from the accounts of the companies owned by Hassan
Nawaz in the UK.
6- At that time of the Purchase of these properties in the UK by Sharif family,
the properties could be bought with 5% down payment and the remaining 95%
financed by the banks.
7- In one program Mr. Khawaja Asif said Hassan owned properties from mid 90’s.
But later in the same program he confessed some of the properties were bought
4/5 years before Hassan migrated toUK. So who owned those properties before
Hassan’s migration? Mr. Asif wouldn’t give a clear and unambiguous answer.
8- In a recent program Mr. Sadiq Al-Farooq said NS was a billionaire decades
ago.
These points give snap shots and the flavour of the statements made by various
leaders of PMLN. But unfortunately their explanations and comments raise more
questions than answer them.
Document on PMLN’s web site declarations of taxes paid
PMLN recently has published brief details of their assets, in response to the
allegations that Nawaz Sharif has paid Rs5, 000 in income tax. If we ignore tall
claims on family wealth and generalise boosting (this would become obvious from
the state of financial affairs of the whole family from declared assets for a
particular year) we can gleaned following details.
1- Itefaq Foundary between 1972/73 to 1978/79 allegedly paid just over Rs 100
million in taxes consist of Custom Duty, Excise Duty, Electricity and Gas bills
and other Miscellaneous Taxes. But surprise surprise no mention of Income Tax
paid by the family members or the Corporation or Business taxes paid by the
business.
2- Between 1978/79 to 1985/86 a tax figure of 893 million is shown listing
Custom Duty, Excise Duty, Electricity and Gas bills and Misc. Taxes; but once
again no mention of Income Tax paid by the family members or Business taxes. It
seems Sharif family consider paying back Sales Tax collected on behalf of the
state, or Custom and Excise duties paid on raw material which forms cost of
production, or even utilities bills as their personal tax liabilities.
In Accounting Practices SSAP 9 requires that stock is valued in the balance
sheets at the lower of cost and net realisable value. Cost includes all directly
attributable costs incurred in bringing stock to its present location and
condition i.e.
• Raw materials
• Delivery – including import duties, excise duties, transport and handling
costs
• Manufacturing – including production overheads (i.e. Electricity and gas
usage) Net realisable value (NRV) is the expected proceeds of sale net of all
expected costs of sale.
Therefore, for PMLN leaders to include duties and other production costs such as
gas and electricity in the amount of taxes paid is little bit naughty to say the
least.
3- For Ramzan Sugar Mills Ltd, for the period covering 1992 to 2009, a figure of
3 billion 15 crores is mentioned, once again it includes Sales Tax, Excise Duty,
but surprisingly income tax is mentioned this time, but no break down is
provided.
4- Chaudry Sugar Mills; 1993 to 2010 alleged tax paid is Rs 3 billion 11 crores,
once again Excise duty, Sales Tax and Income Tax is mentioned but no figures for
income or corporation taxes are given.
5- Mehran Ramzan Textiles Mills Ltd, 1993 to 2006 16 Crores and 67 Lacs is
mentioned for Sales Tax, Excise Duty and Income Tax, but to no one’s surprise no
figures of Income tax is mentioned.
6- Hamza Board Mills Limited; 1993 to 2006 a sum of 16 crores 30 lacs paid, but
no details, no mention of how much income tax is paid.
7- Hudiba Engineering Company (Private) Ltd, 1994 to 2010 paid 9 crores 18 lacs
in Sales Tax, Excise Tax and Income Tax, but no break up of Income Tax paid by
the members of Sharif Family.
Analysis of PMLN Propaganda on Official website
It should n’t surprise anyone, even such bold document full of self praising,
does n’t have any credible evidence on the Income taxes paid by Sharif family
members for over 2 decades. Something which Pakistani nation wants to know how
such lavish life styles have been maintained by them without showing any
substantial personal Incomes and taxes paid on those incomes. A family which
includes sales taxes, duties and utilities bills in the total taxes paid. It
should necessitate that independent analysts pay no credence to these
declarations. Why then some of Pakistani media give prominence to PMLN claims
without asking relevant questions or demanding complete breakdown to assess how
much Income taxes actually are paid by the individuals in the family?
Unfortunately Journalism in Pakistan leaves lot to be desired.
An analysis of these claims is necessary to show some startling facts from these
proud declarations.
1- For a period of 6 years, from 1972 to 1979, total of 100 millions were paid
which included duties and electric and gas bills. This means on average the
whole of Sharif family paid out Rs100 million as out goings for their
businesses, none of them could be classed or treated as Income or Corporation
Taxes. This comes to an average of 16 million per annum for 6 years covered. Or
in other words, they pad 1.6 crores in business expenses and cost of production.
The duties are paid on the Raw Materials imported and it is a common practice in
accountancy as demonstrated earlier to include these duties and energy bills
used in direct production to form the cost of the production of goods. The
question remains how whole of the Sharif family survived during these 6 years?
How much were their personal Incomes? How the stories of Sharif family being in
the business since 1930’s and were amongst the top industrialists reconciles
with these figures? Why Sharif’s cannot explain a simple fact which any
competent accountant or tax man should ask?
2- For 8 years period between 1979 and 1986, 894 millions were paid out in
total. It is quite obvious that the activities in the foundry increased around 6
times or 600% increase in the total amount paid compare to previous 6 years. It
seems Foundary all of a sudden expended. But how? How it is possible that from
16 million average the costs of production has gone over to almost 112 million a
year on average? From where the money came from? Cost of production also means
that the production facilities were increased, which generally indicate capital
expenditure on production facilities. How it was financed and in which years
expansion took place? Any Bank loans were obtained for the expansion of the
factory and its production facilities? Once again no figures or explanations how
much out of 894 million were Income Taxes paid by the family?
3- Another important point to make here is that during this period no other
businesses of Sharif family are mentioned in this document by PMLN. So whatever
income Taxes were paid by the family in these 14 years was derived from Itefaq
foundry; it was the sole source of Income of the whole family.
Why there is reluctance to show for each and every year the figures for Income
tax of family members and Business taxes or Corporation Tax by the Company if it
was incorporated? Younger son of Mr. Shahabaz Sharif on Geo boasted how wealthy
and prominent was Sharif Family and how much they paid out in taxes over the
years. He was given majority of the air time by the presenter, but he failed to
give any specific details or proofs. The mantra was the same, we were the
biggest business family since 1930’s and if political vendetta was not used
against us we would have been rubbing shoulders with likes of TATA’s of India.
Simple advice to the Sharifs, figures don’t lie. You cannot fool educated people
with such “Baraks” and obtaining air time from your hand picked presenters. We
can easily understand the realities of certain personalities in Pakistani media.
4- Another clever tactics used in this self praising document is that no details
of family business are given before 1972 when the business was nationalised. Why
can’t they produce how much were they worth in 1972 at the time of
nationalisation? These should be readily available figures to produce, unless
they know the reality of family’s wealth would become clearer if they produce
the total worth of the businesses nationalised.
Claims on Historical wealth of Sharifs’ and the reality
A- It is declared repeatedly NS was a billionaire two decades ago, In 90’s he
transferred his billions to his children, mostly to his two sons. According to
PMLN leaders Hassan has bought all the properties in theUKwith 5% down payments.
Similarly Hussain owned businesses in the Kingdom of Saudi Arabia are financed
by the banks.
B- How does these two supposed facts reconcile with each other?
C- If Properties they now own are mostly financed by the banks and are mortgaged
to the banks, then where are the supposed billions NS had and transferred to his
children?
D- It is well over due for PMLN leadership to their comments to the
public and explain in clear and acceptable terms, which one of the two positions
is correct? They cannot cut it both ways, if NS had billions and he transferred
it to his children, there could be only two possibilities. Either those billions
were invested by his children in assets bought and in the acquisition of
businesses or they are deposited in to the banks. It should be piece of cake for
Sharif Family to prove either possibility or mix of them with solid documentary
proofs. They cannot maintain both positions. If the properties are purchased
from the loans/mortgages provided by the banks, then the billions supposedly
transferred by Nawaz Sharif must be stacked somewhere. Where are they? They have
another choice, they can show that the overseas properties owned by different
family members, mainly in the UK and Saudi Arabia were actually bought from the
billions allegedly transferred by Nawaz Sharif to his children. In such
eventuality we need to have proofs how those billions were transferred to the UK
and Saudi Arabia? Either way deceptions or purposeful evasions are not the
answers, the issues are quite clear, educated people would n’t buy such
distorted answers from the leadership of PMLN.
E- Even though PMLN has shied away from providing the details of Income tax paid
by the family during past decades. But a glimpse of reality can be seen from
example of one such year of family’s businesses, which is hailed as era of
increase in the financial fortunes of family’s wealth. According to tax
statements at 30th June 1998, total Income Tax paid by 11 members of Sharif
Family was just 0.25 million. They paid 0.55 million as wealth tax and a further
0.13 million as agricultural tax. The businesses mostly showed losses and the
majority of income tax were paid on Director’s salaries or the dividends paid
from Chaudhry Sugar Mills. This total tax including wealth and agricultural tax
of 0.94 million was a mere 0.01% of total declared wealth of 676.8 million.
According to the documentary evidence Nawaz Sharif has declared his Income Tax
liability as “NIL”. His total net wealth was 2.1 million and in total he had
admissible debts of 6.4 million. NS wife Kulsoom Nawaz also showed her tax
liability as “NIL” but paid Rs8, 000 taxes on dividends received from Chaudry
Sugar Mills. She had net wealth of just 32K after adjustment of 3.95 million
allowable debts, leaving her with a wealth tax bill of Rs.178.
F- On the same date Shahbaz Sharif filed “NIL” Income Tax liability, having a
negative Net Wealth of 4.5 million. He paid Rs 1000 as tax on dividends received
from Chaudhry Sugar Mills.
G- Mian Sharif paid Rs50, 102 as Income Tax and paid a further 1.96 million in
wealth tax. Mrs. Sharif paid Income tax of 60K and Rs131 as Agricultural Tax.
(Source Jang Group October 17, 1999).
H- The year 1998 falls in the same periods shown by the propaganda document
released by PMLN shows that Ramzan and Chaudry Sugar Mills each paid in excess
of Rs 3 billions over 17 years. 1998 provides us a very good indication that
Sharif family had not paid any substantial taxes which can demonstrate that
their life styles were maintained from these taxes. No wonder PMLN document does
not provides the details of income tax paid by family members. Similarly PMLN
leaders in TV talk shows always talk vaguely and always include Sales taxes,
duties and utility bills in the alleged total taxes paid.
I- It seems that nothing has changed ever since, according to their spokesmen
Mr. Nawaz Sharif has paid total Rs 2.5 million in taxes for 2010/2011 and in the
previous year 2009/2010 he paid Rs 2 million in taxes. Once again the source was
Chaudhry Sugar Mills. No breakdown of the taxes provided to show how much was
Income Tax paid. The amounts of taxes paid in last two years has increased
substantially compared to previous years due to the pressure applied by Imran
Khan and PTI.
Historical perspective on Sharif’s wealth
One major claim by Sharif family is based on their wealth since 1930 and also
that they received a massive financial hit from nationalisation by Bhutto in
1972.
1- 1970 list
Surprisingly the list of wealthiest families in Pakistanin 1970 does not mention
Sharif family at all. It contains 42 prominent groups and families; it has
Dawoods’ at number 1 with total assets worth Rs.557.8 million and Farooqs’ at
number 42 with total assets worth 36.7 million. (Source: Industrial
Concentration and economic power in Pakistan by Lawrence White).
Whatever their claims may be the evidence is stacked against these claims; just
before the privatisation in 1972 Sharifs were not the major power in Pakistan.
Recent claims by a younger Sharif to be TATA’s ofPakistanbefore nationalisation
cannot be taken seriously by any objective analyst. It is an established fact
that Sharifs’ could be termed as small entrepreneurs before 1970, but nothing
comparable to what it is claimed by the family, claim of rubbing shoulders with
TATAS’. The evidence suggests they didn’t loose out massively in privatisation
as they claim. One thing is squarely against Sharif Family, if they had the
proofs of their family wealth and evidence on the valuation of their businesses
nationalised they would have proudly produced it to convince their doubters.
2- 1990 List
A list published in Herald of June 1990 had Ittefaq group at number 25 with net
worth of Rs.398 million. The list was headed by Habibs’ with a net worth of
Rs.5781 million.
The historical evidence proves that Sharif family actually started to get rich
after Nawaz Sharif started his political career thanks the patronage of General
Zia-ul-Haq, a dictator it must be added.
3- 1997 List
Something very drastic happened in Pakistan during the period between 1990 and
1997. The wealth of richest families of Pakistan dramatically increased many
folds during this period. Ittefaq group jumped to number 5 positions with
manufacturing assets worth Rs.10000 million. The rich list was headed by Nishat
group with total Assets worth Rs.192937 million.
The massive upsurge in the fortunes of Pakistani Industrialists was direct
result of privatisation by Nawaz Sharif and Benazir Bhutto, when national assets
worth billions were sold out to the industrial groups of Pakistan. There was a
paradigm shift in the balance of power between the industrialists from Karachi,
represented by the Memons towards the industrialists from Punjab represented by
Chinnots and off course Lahore groups.
The historical Evidence shows that Sharifs’ claims to be wealthy from 1930
cannot be sustained. Their wealth started to increase between mid 80s’ to 2000,
and coincided with the period when Nawaz Sharif served first in Punjab and then
on National stage as Prime Minister.
Overseas Properties/Assets/Bank Balances
The fact is the statements made by PMLN leaders are not conclusive or
satisfactory. Financial matters cannot be cleared from vague or open ended
comments, it demands proofs; these comments raise more questions; these
questions have to be answered by PMLN leadership.
In the words and statements of various PMLN leaders the acquisition of overseas
properties of Sharif family can be summarised as follows.
A- NS had billions; he transferred those billions to his sons, who settled
overseas and are running successful businesses.
B- How these billions were transferred overseas? No evidence ever provided.
C- According to the comments by some PMLN leaders the overseas properties and
businesses by Nawaz Sharifs’ sons were bought from the money borrowed from the
banks. Simple logic tells us that if the properties were bought on 95% financing
by the Banks, those supposed billions were not spent on the acquisition of
assets and properties. In that case we are entitled to ask where are those
billions now?
D- Were these billions invested in properties on the names of different members
of NS family including his wife and daughter besides his sons or even some
outside his family? These properties not included in the list of properties
owned by the companies of Hassan in the UK? Are these properties declared as
assets by Nawaz Sharif or his family anywhere in the record submitted or
presented?
E- The companies run by Hassan in theUKearned profit? How much profit they
earned, how much CT they paid given they all are limited companies, with nominal
Share Capitals on their BS.
F- What was the Director’s remuneration drawn by Hassan or any other member of
NS family from these companies? What Income Tax paid on those remunerations? How
many other benefits in kind drawn from those companies by Hassan or NS family?
And how much tax paid on those benefits?
G- It has been said 65 Crores are transferred to Pakistanrecently by Sharif
Family. How much of it was from theUKand how much was it from Saudia? Any
documentary evidence of transfers of money?
H- Were these amounts from the disposal/sales of assets/properties held in the
companies’ names? If they were, CGT paid on the disposals?
I- If this amount was drawn from the profits made by the companies, how much CT
paid on those profits? Were these profits drawn by the Directors? How these
profits were drawn? Were relevant taxes paid on such withdrawals? Or tax on
dividends if the amounts were drawn as such.
Sharifs’ Companies Accounts from the UK
PMLN leadership regularly taunt their opponents and doubters that in the UK
option is available for people to obtain the accounts of the companies owned by
the son(s) of Nawaz Sharif. One shouldn’t shy away from a challenge therefore it
was paramount to go through the troubles of obtaining the financial accounts of
the companies owned by Sharif family in the UK. Sharif family has to bear the
blame that instead of being straight forward with Pakistani people and present
the full details of their assets and incomes as honesty demanded, they are
trying to shift onus on the public to obtain the information. It sounds like it
is public’s fault that Sharifs’ are suspected to have obtained their wealth by
suspicious and inappropriate means. May be Sharifs’ and PMLN leaders know the
reasons to insist on general public obtaining the accounts of the UK Companies
owned by the family; people would n’t be able to get any relevant and useful
information from the submitted companies account in the UK. In the UK small
companies are entitled for limited disclosure through their accounts. The
accounts submitted to the Companies House by Sharif family only accompanied by a
Shortened Balance Sheets. These Balance Sheets do not give any indications on
either the Director’s remuneration, dividends received by the directors or any
other benefits drawn from the companies. It does not provide any indications of
companies’ profitability either and how much CT or any other taxes paid by
different companies.
1- Quint Paddington Limited: Mr H N Sharif appointed Director on 2/3/2007.
The company shows a net worth of £1, 367,626 in 2010, increased over two
financial years from £69,995 in 2008. As the additions of almost 1.2 million is
in the last two years, therefore, the historical valuation would n’t be much
different from the current market valuation. If anything it would be worth less
due to the downturn in the property market in recent years.
There is something very interesting in the accounts submitted by the company,
for the clarification of the issues full accounts needed to be studied. Total
current assets of the company are eliminated completely in last two years. In
2008 the Current Assets were shown at £3,238,681 and in 2009 the have gone down
to £2,744,189, which means that assets worth £494,492 were disposed in 2009. The
figure shown in 2010 accounts for Current Asset is 0. It means that in 2010
remaining £2,744,189 assets were disposed off or transferred to another company.
Keeping in line the stock held has decreased in these two years, it was
£3,038,222 n 2008 and has gone down to £0 in 2010. But strangely the current
liabilities have also increased during these three years from £562,270 in 2008
to £752,626. This is rather odd occurrence, given that this company is dealing
with investment properties, the stock should have increase as well if the
current liabilities represented the loans or mortgages obtained for the purchase
of properties for stock as per PMLN claims. It indicates that the current
liabilities in 2010 accounts represent some other source. No explanations are
available in shortened and limited disclosure in the accounts submitted;
therefore, nothing could be ascertained with certainty without explanations.
For all three years the accounts showed £0 as cash at Banks. It means that this
company had no cash inflows and probably no cash transactions. It main operation
was just the properties stock, which were disposed off during last two years or
transferred to another company.
2- Flagship Securities Limited: Mr. H N Sharif appointed Director on 25/7/2005.
The company shows cash at bank £61,193 in 2010 accounts, current assets of
£698,600, stock of £0, current liabilities of £20,794 and net worth of £200,915.
The interesting and significant movement in the accounts occurred in 2007 and
2008. In 2007 current liabilities increased from £211,500 (2006) to £1,676,933.
In the same years the cash at bank increased to £1,000,069 and current assets to
£1,896,014 from £235,198 in 2006. It is obvious substantial activities and
acquisition or transfer of assets had taken place in this period, these assets
were disposed off or transferred again in 2008 period. Since 2008 the accounts
do not show any substantial movements.
The main issue need explanation in the accounts of the company is the increase
in Cash at Bank in 2007. The banks would n’t give money to the company if the
properties were bought on mortgage it would register against the properties and
should be showing in long term or current liabilities depending on the treatment
it is awarded in the accounts. This infusion of cash showed that it is either
introduced by the family in that case the comments of PMLN leaders that
properties are mortgaged do not hold water. Other possibility is that the
properties were re-mortgaged.
3- Que Holdings Limited: Mr. H N Sharif appointed director on 15/7/2003.
2010 accounts of this company show stock at £0, current assets at £12,603,
current liabilities at £429,526 and net worth of £307,421.
This company also shows movement in 2007, when assets increased by £1.2 million
compare to 2006. The increase continued in 2008 and 2009 when assets rose by 0.5
million in each year. The current assets decreased in 2010 to the figure stated
above. This means that properties were bought of transferred from another
company in the period of 2007 to 2009. But disposed off or transferred again to
another company in 2010.
4- Quint Gloucester Place Ltd: Mr. H N Sharif appointed director on 22/08/2006.
2010 accounts for this company show stock at £0, Current Assets at £ 38,791,
Cash at Bank £0, Current Liabilities at £305,175 and net worth of £56, 124.
The Current Assets in this company rose steadily from 2007 to 2009, from
£3,555,918 in 2007 to £6,536,379 in 2009; so did stock to almost same levels and
stood at £6, 535,735 in 2009. It means that Assets worth almost £6.5 million
were sold off or transferred in 2010.
5- Quint Eaton Place No2 Ltd: H N Sharif appointed Secretary on 23/11/2003
This company is now dissolved.
Main activities in this company happened in 2006 and 2007. In 2006 the accounts
showed stock of £2, 301, 049 which were reduced to 0 in 2007. This means that
the properties were either sold or transferred to other companies in 2007. In
2007 it has Total Current Assets worth £671,032 and T C Liabilities at £332,813,
and company’s net worth of £338, 219.
6- Flagship Investment Ltd: Mr. H N Sharif appointed director on 12/4/2001
This company has Total Current Assets £95,018 in 2010 accounts, T C Liabilities
are £1, 496,445 with a net worth value of £435, 890 and cash at bank £3832, and
stock at £0. While the stock remained 0 in last 5 years, the current assets did
n’t show any significant movement either, but Current Liabilities jumped by
almost £1 Million in 2010.
7- Hartson Properties Ltd: Mr. H N Sharif appointed director on 26/03/2002
This company even though showing active status, does not show any activities at
all in its accounts for last 5 years and have a nominal worth of £2.
8- Quint Sloane Limited: Mr. H N Sharif appointed director on 19/11/2003
It is a Dissolved company and had no activities in its accounts of 2004.
9- Quint Limited: Mr. H N Sharif appointed Secretary on 14/7/2003, the company
is dissolved now.
First point to note from these accounts is that there was another Director on
this company, Mr. Asim Masood Mahmood. How much were his shares in the business?
Secondly, it seems this company was dissolved in 2007 (its last accounts shown)
and its assets were transferred. Was the other Director’s share bought out and
the assets of this company were transferred to another company?
It had assets worth £2,802,902 in 2006 on its books, with current liabilities
standing on £2, 327, 993, while net worth of the company is shown as £320,572
and cash at bank at £18. The cash at bank increased to £209, 330 in 2007
accounts.
Movement of Assets between the UK Companies
On the surface, it seems that cross movement of assets had taken place between
the companies owned by Hassan Nawaz Sharif. For example in 2007, Quint Limited
was dissolved. Most probably its assets and liabilities were transferred to
other companies. Another company Quint Eaton Placeno2 Ltd was also dissolved in
2007 and most probably its assets and liabilities were also transferred to other
companies. Curiously both companies had Mr. Asim Masood Mahmood as one of it two
Directors, the second director was Hassan Nawaz Sharif. It is highly likely that
there were some transactions taken place to buy off Mr. Mahmood share in these
two companies and after his ouster these two companies were dissolved. The
assets and liabilities of these two companies were transferred to other
companies owned by Hassan.
For example Quint Gloucester Place Limited had introduction of £3, 551,467 as
stock in 2007, which jumped to £5,228,208 in 2008. Perhaps the properties from
above two companies were transferred to this company in its 2007 and 2008
accounting periods. This company has also seen another change in 2010 when all
of its stock of £6,535,735 is removed from the accounts, either these properties
are sold or ownership transferred to another company.
Earnings from UK Companies
In the absence of Profit and Loss statements submitted to Companies House, it is
impossible to find out the Income of Hassan Nawaz Sharif from his companies in
the UK. Despite if one pays the prescribed fees to the Companies House. The
purpose of obtaining the records of the companies owned by Hasan was to provide
the information to the General Public that despite the claims by PMLN leaders
that the details of accounts from theUKwould shed light on the Income of Sharifs’
family through which supposedly their lavish life styles are maintained.
Alas, as proven these accounts provide no valid information, leaving the
responsibilities on the shoulder of Sharifs’ family and PMLN leadership to show
the proofs to the public. Even the movement in the Companies stock or assets is
minimal, and whatever movement is there it seems it is between group companies,
again something which cannot be confirmed or denied from the accounts submitted
to the Companies House.
One thing is certain though, the claims of PMLN leaders are not correct that the
assets and Income of Nawaz Sharif’s family are transparent. Yes accounts are
there to be seen, but they shed no light on the information sought by Pakistani
people. They don’t show how properties were financed; how much Income these
companies generated due to non submission of profit and loss accounts.
It seems that the Properties in the Company are kept as Long term investment
probably generating rental income, rather than dealing short term buying and
selling of the properties. But this can only be termed as a calculated guess
obtained from the available accounts.
One thing is sure though, the turnover and Assets of the Companies are not
enough to maintain the claims of Sharif Family and to maintain their lavish life
styles. Especially when PMLN leaders claim that Nawaz Sharif personal expenses
during his years in exile and even now are financed by his sons. They have to
show to the Pakistani people that these companies generated enough Income to
sustain the life styles of family members including Nawaz Sharif and prove their
arguments and comments accurate.
Anyway, the Tag of “Billionaires” cannot be maintained with such meagre
turnovers. In 6 years or so movements of stock worth only £6+ million with a
likely profit of around £1 million if Properties were disposed off (not clear
from the accounts though) or rental Income of a million or two over the years
could hardly be called the result of family’s billions transferred to his sons
by Nawaz Sharif. After all these companies must have expenses to pay too,
considering how expensive Londonis, the expenses would be substantial. Not to
mention the fact that according to the statements of PMLN leaders these
properties are bought on 95% mortgages; financed by the banks. If these claims
are correct, the vast majority of the rental Income would be offset against the
Interests and Charges levied by the banks. Reducing the Income of Sharifs’s
family further. PMLN leaders simply cannot cut it both ways.
PMLN Leadership is still in the same pickle this disclosure doesn’t prove their
point, but increases their vows. Unless there are other properties and assets
which are not declared in the public domain.
Nawaz’s Personal and Household Expenses
The issue of Rs5000 Income tax paid by NS has been regularly discussed on talk
shows. In response ridiculous figures are mentioned by PMLN leaders that
billions of rupees are paid in taxes by Sharif family. PMLN faces an uphill task
to the life style of Sharif’s family on the meagre income they have
shown over the years. It has been established from the regular statements made
by party leaders that NS has no income of his own as such, his life style is
maintained by the wealth generated by his sons and his family businesses. The
details of the companies’ accounts owned by Hassan in the UK prove these claims
untenable.
Contrary to earlier repeated claims by party leaders in different programs, it
seems recently the practice has changed after realisation that this could become
a thorny issue for NS. It has been said that NS has paid millions in taxes in
last two years. This once again is a departure from earlier stated claims and
raises questions, if NS didn’t have any assets before and he borrowed money from
his family members how he started to have the income and how he own assets
again? Where did he get the money for the new investment? If it is not new
investment but old, then why the income from the investment not declared in
previous years?
PMLN leadership should realise that during his exile NS still had stake in at
least one family concern which is source of current surge in his tax
liabilities. If he was drawing any Income from this business before 2008, he is
still liable to tax as non-resident for the Income generated in Pakistan. Unless
he can demonstrated he paid taxes on this income in some other country.
First let’s look at snapshots of possible and realistic expenses:
1- Nawaz Sharif travels regularly, both overseas and nationally, which means
airfares, hotel expenses, travel, food etc on his trips. It is almost a
certainty that he does not travel in Economy Class, and First or Business Class
costs far more than EC.
2- Nawaz Sharif (or/and his family) maintains houses in different part of the
country and also overseas residences. Looking at their life styles, it is safe
to assume, he has servants in many places, if not all the places. Then there is
simple matter of maintenance of these properties, and running expenses like
utilities bills, repairs etc.
3- We also know that Nawaz Sharif himself and his wife both had not been well
recently. They were treated in London. We can also safely say that they don’t
use NHS treatment like mere mortals. It is an established fact private medical
treatment is tremendously expensive in western countries. UK is not a cheap
place for private treatment either.
4- Last but not least there is notoriously large “Raiwind Palace”, running it
would not be cheap. Some mentioned in TV talk shows that running expenses for
“Raiwand Palace” are 2 crores a month. The figure could be an exaggeration, but
the onus still remains on Sharif family to come clean and explain to the nation
how they maintain such life styles on the Income and taxes they disclose.
Only 4 major expenses are highlighted above in the hope that supporters of PMLN
wouldn’t complain or level charges of unreasonable expectations or estimations.
The maths is simple; NS and his family have to show that the Income received by
NS and other family members either from his businesses or from his children is
sufficient to cover those expenses. And that the Taxes are paid on that Income,
irrespective where those incomes are generated, the tax is still payable, either
overseas or in Pakistan. There is double taxation relief available between UK
and Pakistan. Anything drawn by NS from any business as his personal income, he
is liable to pay Income Tax on it. Alternatively if PMLN contention is that he
lives on the remittance sent by his sons, than the evidence of remittances and
the taxable income of his sons should be shown, together with the taxes they
paid, after all there is no free lunch, not where his sons resides. It has been
repeatedly stated by PMLN leadership the money is transferred to Pakistan using
legitimate means. If so let’ us see the proofs. Pakistanis already know there
are allegations Mr. Ishaq Dar has testified that he transferred money for
Sharifs through debateable channels; some maintain through illegal channels.
Sharif Foundation’s Hospitals
PMLN leaders constantly boost that Sahrif’s have their charitable institutions
including a massive hospital in Raiwind, and unlike Imran Khan who runs his
charitable institutions on donations, Sharif family run their institutions from
their own pockets.
It must be said it is rather commendable if they do such deeds. But
unfortunately for PMLN and Sharif’s family if this is boosting or a fact, either
way, it exacerbate the problems faced by Sharif’s family.
Massive charitable institutions need money to run, if the funding does n’t come
from donations it must come from the earnings and income of Sharif’s family.
Therefore, Sharif family has to show their income covering not only their lavish
life style but also the money needed to run their charitable institutions.
Claims by PMLN Leaders and their Contradictions
Only few examples are provided otherwise this would become a very long list.
1- Mr. Sadiq Al Farooq
A- In two different programs he first claimed that 65 crores were brought back
to Pakistan in last two years and in second he claimed 65 crores were brought
back in last 6 months.
B- But when he was challenged by PTI Imran Ismail in the program “to the point”
on 17th November 2011 to show proof of even $100 brought back to Pakistan, Mr.
Farooq failed to produce or mentioned any evidence of any amount brought back to
Pakistan as per his earlier claims. He was also asked when Sharif family left
Pakistan their assets and bank balances were confiscated by Musharaf regime. How
they have started businesses in the UK and in Saudi Arabia. Mr. Sadiq didn’t
give any plausible explanations.
C- In same program he once again repeated his claims that NS’s businesses paid
over 6 billion in taxes. When enquired does it includes sales tax, he said no it
is all other type of tax. Well it is so easy to prove what taxes were paid just
show us the tax returns of the businesses and Income Tax returns of the family
Sharif family members.
D- His best comments were that all the expenses of NS were paid by his
businesses. He said all the industrialists properties are own by the businesses,
the family household expenses are paid by the businesses too and they pay the
taxes on the rest of the amount if any left. Wow, it seems in the presence of
such person PMLN doesn’t need any opposition accountant or lawyer he is enough
to destroy the case of PMLN. Different taxes payable by individuals on any money
drawn for personal or household expenses, personal expenses received, benefits
in kind received, or profit from different Incomes, dividends etc are already
listed earlier in this article. He specifically mentioned that cars were owned
by the businesses and running costs including petrol was paid by the businesses.
Someone needs to explain to Mr. Sadiq Al Farooq that all the personal usage is
taxable as benefits in kind. Otherwise tax system would be open to monumental
abuses.
2- Mr. Ahsan Iqbal
A- In the Program “Off the record” with Kashif dated 31/10/11 AI said NS has
submitted details of his assets in 2008. In response to a question by the host,
he responded the list produced by NS is accurate.
B- In response to another question that NS is in debited to his wife and sons,
do you think he is in such financial difficulties? AI responded when NS became
PM he disassociated himself from all the Businesses. In that case it would be
very easy for PMLN to provide details of the assets NS had on a particular date
and how assets were divided and transferred to his children and wife. If any
fixed assets were sold or the liquid assets or any other businesses assets were
transferred overseas to start overseas ventures? If so then by using what means
and where? Show us the proofs.
C- In response to another question AI responded by saying; PM and President are
all answerable to the Courts too. For all practical reasons, if no one has
challenged it until now, even though the Government is a sworn enemy (of NS),
then we have to believe that there are no inaccuracies in the list submitted by
NS. First of all quoting PM and President makes the whole argument self
defeating, Pakistanis know the truth about their affairs. The other argument is
dealt in other places in this article.
D- On 2/11/11 in the same program Ahsan Iqbal said categorically NS has not
taken any money out of Pakistan. This contradicts claims by other PMLN leaders
it is explained in other places too.
3- Mr. Khawaja Asif
A) In program “off the record” on 24/3/11 Mr. Asif said, that all the properties
owned by Hassan Nawaz are mortgaged and financed by various banks.
B) Mr. Khawaja also disclosed that Hassan owns (more accurately the Companies
controlled by Hassan) properties in Mayfair and Park Lane in London.
C) Mr. Asif also disclosed that Hassan had been in the UK since mid 90’s for
over 14-16 years. He disclosed that some properties in the UK were bought 3-4
years before Hassan’s arrival in the UK. This disclosure opens a can of worm for
NS and his family. If Hassan was not resident in theUK whose name were these
properties before they are taken over by the companies of Hassan? How they were
bought or financed? How the money transferred to the UK and whose name?
Unfortunately for Mr. Asif the earliest Mr. Hassan became a Director of a
Company listed above is in April 2001. This makes it only 10 years not 14-16
years as claimed. Name of his business associate in two dissolved companies is
already mentioned earlier. Transactions for the take over his investment took
place between 2006 and 2007. Mr. Asif’s facts are rather thin on the ground. We
also have a categorical statement by Ahsen Iqbal that NS have taken no money out
of the country. How Mr. Asif would provide proofs of 5% down payments paid for
the Properties?
D) Mr. Asif also disclosed that all the properties owned by Hassan (his
companies) are mortgaged and bought by paying 5% advances while rest of the
investment is financed by the banks. Residents of the UK know even 14 years ago
banks would n’t give 95% loans for commercial properties, despite whatever
claims are made by Mr. Asif. It was possible and was the practice to obtain even
100% mortgage on your residential property (only one) but not on commercial
properties. Anyhow, it should be very easy for PMLN to show the documents if
what Mr. Khawaja says is right. Why are they reluctant?
Secondly, the problem of properties bought before Hassan’s arrival in
theUKaccording to Mr. Asif, is never solved by PMLN. Even 5% down payments for
the properties; if we to accept Mr. Asif’s explanations (not a remote
possibility); are quite a substantial amount. How this money was transferred to
London ?
We also have AI categorical statement that NS has taken no amount out of
Pakistan. How these 5% were paid? More accurate representation of banks loans
for purchase of commercial properties is 65% to 75%. This means NS family must
have paid anything between 25% to 35% advances for the properties.
E) Mr. Asif also disclosed that the steel mill in Saudia Arabia is owned by NS
other son Hussein. Rumours has it, it was transferred from Dubai. Any how it’s
Acquisition or transfer from Dubai, whatever the facts may be, it has to be
proven by PMLN. It is their responsibility to dispel all doubts and show clear
evidence of their business dealings to Pakistani nation. Pakistani nation wants
credible evidence and plausible explanations, not off the cuff remarks in talk
shows.
4- Mr. Hanif Abbassi
A) Mr. Abbassi is quite vocal on the assets issue in talk shows, usually
repeating the arguments presented by other leaders of PMLN, these arguments are
already listed above.
B) Mr. Abbassi recently attacked Imran Khan and wanted to know how much taxes
Imran paid from his income during his playing years in theUK. Perhaps Mr.
Abbassi is either unaware of the Taxation Laws in theUK, or he is deliberating
trying to mislead, later looks more likely. In the UK all sport organisations
who employ professional sportsmen like Cricketers, Footballers or Rugby players
deduct the taxes on their income at source. Most sportsmen are paid on PAYE
basis, where the taxes are deducted from their monthly or weekly wages. Mr.
Abbasi said nation wants to know how Imran paid his taxes during his years as a
professional. Mr. Abbasi, Imran can defend himself, but don’t you think
similarly Pakistani nation also wants to know the sources of Sharifs’ family
income which can sustain their lavish life styles. Hopefully you would be man
enough to address the issues raised in this article, for the sake of consistency
and honesty.
Proofs required from Sharifs
Pakistani nation wants to see, first of all how much Income tax the individuals
members of the family specifically Nawaz Sharif’ and his family has paid, lets
say in least last 20 years.
What were the sources of their income, where that income was generated and
declared and how it was transferred toPakistan.
They have to provide details of their expenses, especially of Nawaz Sharif and
show that the income or transfer of money from overseas is sufficient to meet
those expenses.
They also have to show in precise manner, how much actual Profits generated and
CT or Income tax paid on those profits by their businesses in last 20 years.
Both in Pakistan and overseas.
Any duties and sales taxes paid should be listed separately from actual Taxes on
income or profits. Duties and sales taxes are collected on behalf of the state
and are not taxes paid directly by the individuals or business. A business could
pay back billions collected on behalf of the Revenue in connection with duties
and sales tax or VAT, but still make a loss for the year and don’t pay any
Income Tax or CT on profits at all.
We need to know, how much were actual profits of the businesses, how much
business tax or Corporation tax was paid by the businesses and how much personal
tax paid by Sharif family on the money allocated to them for personal
expenditures. Was that money enough to sustain their lavish life style and the
money they allegedly spent on their charitable institutions?
Pakistanis also want to know where the wealth Nawaz Sharif and his family
allegedly had for decades is. If his sons started businesses both in the UK and
Saudi Arabiaon Bank Loans and Mortgages according to PMLN leadership then this
money must have been kept safely somewhere, where is it? How that money was
transferred outside ofPakistan? Or is it still inPakistan, if it is where is it
kept?
Conclusions
PMLN instead of firing the blanks or making meaningless and purposefully
misleading statements should own up to the people of Pakistan and talk in a
manner befitting a political party.
People are wiser and would n’t be distracted from uneducated and corrupt
politicians who are in the Politics for one reason only to make money using
unethical and immoral means, including theft and loot of national resources.
Mr. Khawaja Asif advised people that accounts for Hassan’s companies are
available after payment of fixed fees; one has to spend a fiver to obtain them.
First of all, he should be aware that for small companies there are exemptions
for accounts disclosure. Hassan’s companies are registered and classified as
small companies, with only abbreviated versions of the Balance Sheet provided as
accounts. Providing Income Statement is not an obligation for small companies.
Pakistani people need to know how life styles like kings are maintained on small
companies’ accounts. Mr. Asif shouldn’t worry many have spent those fivers, and
£4 needed for property searches.
We are at our wits end listening to incredibly unreliable and untruthful
politicians; we want the truth, nothing but the truth.
It is an era of openness, era of credible and responsible people. Pakistani
politicians have played enough games with poor people of Pakistan. It is duty of
all educated Pakistanis and overseas Pakistanis to spread the word, to catch
these immoral characters; they are literally getting away with day time
robberies. They come across as a cross between a Pantomime and a Puppet Show.
The Spivs who caused mega corruptions in the first place, should not and could
not be trusted with the nation’s resources and wealth again, enough is enough.
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