Panama case Verdict 20th April 2017

Supreme Court of Pakistan on Thursday announced the verdict of the high profile Panama Case against Sharif. Here are some salient features of the judgment.

  • Supreme Court of Pakistan has ordered Prime Minister Nawaz Sharif to appear before a joint investigation team which will be formed to probe the Panama Papers scandal.
  • The bench has ordered the authorities to form a joint investigation team within seven days to investigate the accusations mentioned in the Panama Papers against Prime Minister Nawaz Sharif.
  • Officials from the Inter Services Intelligence (ISI), Military Intelligence (MI), State Bank of Pakistan (SBP), National Accountability Bureau (NAB) along with other state institutions.
  • Justice Asif Saeed Khosa and Justice Gulzar Ahmad, in their dissenting notes, wrote that Prime Minister Nawaz Sharif was not eligible to be premier as he was not Sadiq and Ameen. The rest of the bench called for additional investigation of the accusations.
  • The Qatari prince’s letter, presented as evidence by the Sharif family in the case, was rejected by the Supreme Court.
  • The bench remarked whether Hassan and Hussain Nawaz were in the position to buy flats in London at such a young age.
  • The bench also remarked that the authorities should investigate how money was laundered to Qatar.
  • The bench has ordered the investigation team to submit its report within 60 days.

Supreme Court verdict in the Panama case.

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Political Climax at the Forefront
Panama case verdict by Pakistan’s top judicial court today hints at initiation of fresh interrogation of PM and family. While the bench delivered a split 3:2 decision spanning over 540 pages, it ordered formation of a Joint Investigation Team (JIT) to further probe Premier of the nation (Nawaz Sharif) and his family’s alleged offshore assets. Although evidence remained insufficient to disqualify and remove the Prime Minister from office, the following 60 days are deemed crucial with the commission tasked to reach conclusion over the fate of PM Nawaz and his ruling party (PML-N).
The Supreme Court has reserved the lag of a week following today’s judgement to compose a commission comprising of one senior official from the National Accountability Bureau (NAB), the Federal Investigation Agency (FIA), the Securities & Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP), the Inter-Services Intelligence (ISI) and the Military Intelligence (MI). With the PM and his two sons (Hassan and Hussain) set to appear before the committee, this JIT will present its report before the bench on a fortnightly basis for the next two months.
Panama Case Scandal Recap
The Panama Papers Scandal revolved around alleged investments made by the Prime Minister (PM) and members of his family through offshore investment companies. The case was filed by major opposition parties primarily aimed at seeking disqualification of the PM on charges of offshore assets, tax evasion and money laundering. The Supreme Court reserved its decision over the case dated 23rd Feb’17.
Market Reaction
Ruling on the Panama case triggered a swift rally at the market today; the index touched its intra-day high of +1,906 points (49,906 level) within a few minutes of announcement. Albeit, swing trading kicked-in with the KSE-100 closing positive at 48,744pts (+1,140pts; 2.34%). With political uncertainty almost drawing curtains, we now expect the market sentiments to improve with focus to shift on much anticipated inclusion into MSCI EM in June’19, budget FY18-19 (expected in the last week of May 2017) and economic developments. In this back drop our preferred sectors include Cements, Banks and Autos with selective play in E&P and OMC sector. The KSE-100 is currently trading at a PER of 9.9x (2017) against Asia Pac regional average of 12.6x while offering twice as better dividend yield of ~5.0% versus ~2.7% offered by the region.

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