There is a dire need to objectively investigate the allegations related to Pakistan in Panama Leaks to determine if there is any ring of truth regarding any wrong transactions made for the offshore companies highlighted in the Leaks. Some of the allegations made have been outrightly rejected by the like of President Putin of Russia and others. Taking the Panama Leaks as a gospel truth will be a rather unwarranted conjecture and is not justifiable. Police raids on the offices of the law firm Mossack Fonseca effects their credibility in general. There was a demand from political circles for carrying out and international audits of allegations through an Inquiry Commission to be set up by the Government of Pakistan, to be headed by a retired Judge of the Supreme Court of Pakistan or through a Parliamentary Committee, though now it seems thhe government has changed its tune. But, let’s recall some of the international investigations held in some cases in the past in Pakistan. The Benazir murder case was investigated by a UN Commission but no results have come out so far.
The Cotecna case handled by an international firm proved to be controversial. It is highly imperative that any international audit process is launched through an international competitive bidding process (ICB) and not by negotiated selection on and as hoc basis, which can prove to be prejudiced. In fact international audit agencies should have no national stakes in the country of probe and the international law is rather weak to make them accountable for any corruption or mishandling. International firms are generally prone to corruption and do not comprise of angels. They can misuse their authority. They are generally covered by professional liability insurance and their defaults are covered securely.
The inquiry commission to be headed by a retired Supreme Court judge should investigate not only the issues involved in the Panama Leaks disclosures but also should formulate recommendations for curbing corruption and tax evasions in the long run. The recent statement by the Army Chief rightly points out their heavy hand against corruption and across the board accountability in the country. There is an urgent need for structural reforms to effectively curb corruption. The commission or the committee should enlarge their scope to cover effective reforms for the future also.
It may be more prudent to set up a Parliamentary Committee to go for the Panama Leaks inquiries with a comprehensive agenda including, inter alia anti-corruption prevention measures on a short and long term basis. The terms of reference may be of wide coverage. All offshore companies held by Pakistanis should also be investigated to check investments based on any ill-gotten money. International investigation companies can be hired by the Commission Committee to find out such cases. Prior to any established inquiry findings about the Panama Leaks , the demand by some political circles for the resignation of a sitting Prime Minister cannot be justifiable according to norms of justice and fair play. No body can be held guilty unless proved by law. The Panama Leaks do not allege anything directly against the Prime Minister, and do not prove any illegality. There is lot of talk of a forensic audit. Let’s understand this type of audit and its implications.
According to Wikipedia, ‘Forensic’ means suitable for use in a court of law, and it is to that standard and potential outcome that forensic accountants generally have to work. Forensic accountants, also referred to as forensic auditors or investigative auditors, often have to give expert evidence at the eventual trial. While Forensic Accountants (FAs) usually do not provide opinions, the work performed and reports issued will often provide answers to the how, where, what, why and who. The FAs have and are continuing to evolve in terms of utilising technology to assist in engagements to identify anomalies and inconsistencies. It is important to remember that it is not the Forensic Accountants that determine fraud, but instead the court.