Early last month, we saw the Panama Papers create havoc amongst a big number of politicians, government officials, judges and leading businessmen. The leaded papers revealed secret details about individuals and companies which have invested in (or owned) offshore shell companies to launder money and evade taxes. The Securities and Exchange Commission of Pakistan (SECP) has begun investigating the suspicious companies named in the leaks.
The SECP will investigate 192 companies, which hold shares in or have parallel offshore shell companies, and were named in the Panama Leaks. Initially, the investigation will conducted against 18 individuals who are (or were) associated with some of the 192 companies.
According to Form 29 of the SECP regulations, the Director of any company is liable to inform the organisation in case of any foreign investments. Most of the companies under investigation are involved in foreign investment. Owners or CEOs of companies, who have individually invested in offshore companies will also be investigated.
Sources indicate that the SECP will be using its discretionary powers, sourced from the Companies Act. The commission will be serving notices to all the Directors of these192 firms. It has already started inquiring against the registered companies which have been investing in some offshore companies. Initial investigation has revealed that most of these companies run offshore ones in tax havens as well.
Another part of the investigation will include looking for any evidence regarding black money. The SECP will try to find if any of the firms have tried to legalise black money by investing in foreign companies or are involved in any practise related to money laundering. Using shell foreign companies to invest in local market will also be investigated. The investigation will be sped up after the second episode of Panama Leaks are revealed.