Pakistani MPs' wealth declaration 'is a farce'


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ISLAMABAD // An annual public declaration of assets by Pakistani legislators has ignited a debate about the legitimacy of wealth accumulated by politicians in a country where most people live below the poverty line.

The ensuing media scrutiny on Monday prompted an admission by election commission officials that, while a false declaration carries the penalty of disqualification and a three-year jail term, there was no legal mechanism of verifying the claims. "We simply collect and publish the information, as the law does not authorise the election commission to examine the data on assets and liabilities provided by the parliamentarians," Ishtiak Ahmed Khan, the secretary of the Election Commission of Pakistan, told the Daily Times, an English-language newspaper.

But not all the declarations, made to the election commission in February by members of the federal parliament and four provincial assemblies, seem to be false, with some confirming that politicians tend to rapidly grow richer while in power. The local media has highlighted declarations by three members of the federal cabinet as cases in point. Aijaz Hussain Jakhrani, the health minister, declared his assets had quadrupled in value to 60 million rupees (Dh2.6 million) within a year. Similarly, Manzoor Wattoo and Syed Khurshid Shah, respectively the ministers for Kashmir affairs and labour, doubled their assets in 2009, a year marked by economic recession caused largely by a Taliban insurgency.

The validity of the declarations made by many politicians has also come under question for making claims widely characterised as "a farce" by the media. Those claims include declarations by many legislators that they do not own personal vehicles, despite holding substantial residential and agricultural properties. The carless category includes opposition legislators who held high office during the administration of Pervez Musharraf, voted out in February 2008 general elections.

Among them are Chaudhry Amir Hussain and Sardar Mohammed Yaqub, the former speaker and deputy speaker of the National Assembly, the directly elected lower chamber of the federal parliament. The former federal ministers, Aftab Ahmed Sherpao, Faisal Saleh Hayat, Ijaz-ul-Haq, Nasir Khan and Wasi Zafar have made similar claims, as have the heads of the Jamiat Ulema-i-Islam and Jama'at-i-Islami, the country's two major Islamist parties.

Under the media spotlight, they have since explained that personal vehicles had been registered in the names of dependents. Other politicians have declared ownership of premium vehicles given to them as gifts by undisclosed "friends", with little regard for the ethical questions that might give rise to. They include Mohammed Aslam Raisani, the chief minister of Balochistan province, who owns a Hummer H2 sport utility vehicle he described as a present from a friend in the UAE.

Many legislators have either failed or declined to fully or correctly fill in the declaration forms provided by the election commission. Of the 100 members of the Senate, the indirectly elected upper chamber of parliament, 42 did not declare the cost and present value of immovable properties or furnish details of their liabilities. Humayun Akhtar Khan, a former commerce minister, left the business holdings column blank, although his commercial interests are known to be vast.

The questionable declarations of wealth by legislators, and the absence of a legally prescribed means of verification have attracted scathing criticism from the news media. "Declaring assets and then forgetting them is like playing a big joke with the people," wrote Shaheen Sehbai, the editor-in-chief of The News, an English-language newspaper. "What is the point if no one asks our elected representatives how they got the millions, or how they doubled, tripled or even, in one case, quadrupled them in just 12 months, given all the gloom and doom around our economy and business?"

The controversy has also generated questions about the high costs to the exchequer incurred by ministers and legislators during a time of growing poverty in Pakistan. Farrukh Saleem, an independent analyst, has calculated the average cost of each of the 70 federal and junior ministers at 100,000 rupees per day, describing the amount as "legitimised corruption when three out of four Pakistanis have to live on less 150 rupees".

Politicians have hit back by saying they have been unfairly singled out for criticism because they, unlike their counterparts in the civil service, judiciary, media and military, are required to make public declarations of wealth. Some, including Maulana Fazl-ur-Rehman, a religious party chief and federal coalition member, see the media criticism as "a conspiracy against democratically elected representatives".

However, such responses have only deepened a growing public perception that many politicians have turned the democratic process into a moneymaking exercise. "The politicians only ever come to us when they need our votes. Once they are elected, they ignore us for their tenure in office and spend that time accumulating wealth," said Amir Meer, a doctor in Rawalpindi. "The huge differential between the average wealth of a member of parliament and his or her constituents is that of ruler and ruled, not voter and representative."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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