Story of foreign currency accounts getting immunity in Pakistan through a legal process.

Courtesy: Social Media


It is alleged that hard Samsonite suitcases began to arrive in batches at the Sharif residence in Model Town in April 1992 after the signing of the Lahore Islamabad Motorway Contract in December 1991. In June 1992, Mian Sharif summoned the two chartered accountants of Ittefaq Group and directed them to equally stash the contents of the suitcases into three accounts in the name of his three sons.

The two chartered accountants were baffled on the contents of the boxes and consulted Ishaq Dar, the Group’s tax advisor, who was then heading the Pakistan Investment Board and also ran Hajveri Holdings Ltd.

Dar subsequently went to see the prime minister, briefed him on the orders of Mian Sharif regarding distribution of the contents of the suitcases, and the legal issues such a move could create. Dar handed over a piece of paper on which were scribbled some Economic Reforms to be enacted so that the instructions of Mian sharif could be carried out legally.

The prime minister summoned Sartaj Aziz, the then minister of finance and instructed him to do the needful.

Henceforth Protection of Economic Reforms Act was passed by the Senate in July 1992, with following salient points:

PERA July 1992

4. Freedom to bring, hold, sell and take out foreign exchange:

All citizens of Pakistan resident in Pakistan or outside Pakistan and all other persons shall be entitled and free to bring, hold, sell, transfer and take out foreign exchange within or out of Pakistan in any form and shall not be required to make a foreign currency declaration at any stage nor shall anyone be questioned in regard to the same.

5. Immunities to foreign currency accounts:

All citizens of Pakistan resident in Pakistan or outside Pakistan who hold such accounts shall continue to enjoy immunity against any inquiry from the income tax department or any other taxation authority as to the source of financing of the foreign currency accounts.

The balance in the foreign currency accounts and income therefrom shall continue to remain exempted from the levy of wealth tax and income tax and compulsory deduction of zakat at source.

The banks shall maintain complete secrecy in respect of transactions in the foreign currency accounts.

The state bank of Pakistan or other banks shall not impose any restrictions on deposits in and withdrawals from the foreign currency accounts and restrictions if any shall stand withdrawn forthwith.

Thereafter, some $32 million were transferred into various fictitious foreign currency accounts, all opened and operated by Dar. The No 17 Avenfield House at 118 Park Lane was a mere £850,000 bargain, acquired through Nescol in June 1993, as it was kept in poor shape by its previous owner.

Mian Sharif had directed his grandson Hussain Nawaz who was then studying in London, to acquire four flats in the same building for his four off-springs. Hussain obediently carried out the instructions and by July 1996 had acquired No 16, No 16A and 17 A.

Now where does corruption comes in? All was legally done under the umbrella of the law passed by the Senate of Pakistan. The only corruption or criminality appears to have been done by Dar by opening and operating fake foreign currency accounts.

But morally speaking, its a different story altogether.