The Supreme Court of Pakistan delivered a long-awaited ruling on Thursday over Prime Minister Nawaz Sharif's exposure to the Panama Papers revelations.
The court said there was insufficient evidence to remove Sharif from office amid allegations of corruption after a 2016 leak of 11.5 million documents known as the Panama Papers raised questions about his family's wealth.
The Panama Papers claimed three of Sharif's four offspring — Maryam Safdar, Hasan Nawaz Sharif and Hussain Nawaz Sharif — controlled shell companies through which they purchased costly real-estate in London. The prime minister was not named directly.
It is not illegal to set up trusts or secret corporate entities known as shell firms, but many critics believe these vehicles facilitate money laundering and tax evasion. In Sharif's case, the issue is that his children didn't disclose the offshore accounts to Pakistani authorities and it's not clear how they funded the property purchases.
Sharif, who has been in power since 2013 following two earlier stints as PM in the 1990s, and his family have denied wrongdoing. But it's not the first time the prime minister's wealth has been in the spotlight.
In 1998, the deputy head of Pakistan's Federal Investigation Agency alleged the Sharif family had purchased upmarket London property through corrupt practices — a claim that was echoed in 2000 by a chief corruption prosecutor at the time.
Following the release of the Panama Papers, thousands of protesters in Islamabad demanded the prime minister's resignation in September while opposition parties have also attacked Sharif for failing to declare his family's offshore connections.
"The decision not to disqualify Sharif from holding office over his involvement in the Panama Papers case will prevent his ouster in the near term," analysts from political risk consultancy Eurasia Group said in a note. "Corruption allegations will continue to beleaguer the PM, but his political position will hold for now."
The Supreme Court has now ordered an investigation team to examine the Sharif family's finances, which will "undermine his standing with the public and give opposition parties an issue to rally around," Eurasia Group said.
Pakistan's top court took up the case late last year and wrapped up hearings on the matter in late February, but chose to reserve its decision until Thursday.
In an April 7 report, Credit Suisse said the court's long pause on issuing a verdict was weighing on investors, and helped caused a 35 percent drop in market activity from March to April on the the KSE 100 equity index.