Money Matters

A con system

By Ihtasham Ul Haque
Mon, 11, 16


Over the years, Pakistan’s regulations to fight money laundering and the financing of terrorism have been strengthened to an extent, but the corruption index continues to rise, which plays a major role in the flight of capital worth $25 million a month; hence the growing off-shore accounts of Pakistanis.

Senior government officials, both serving and retired, say that in the absence of certain strong accountability mechanism, gross violation of rules and regulations is freely taking place, promoting corruption that today exceeds Rs12 billion/day.

The United Nation’s regional reports as well as local official and unofficial assessments reveal that during the period of three governments - Musharraf, Pakistan Peoples’ Party, and Pakistan Muslim League-Nawaz - Zardari era was the worst when Pakistan’s corruption ranking stood at 139 out of 176 countries. It came down to 107 out of 168 countries in 2015 and the manifestation of corruption was related to off-shore accounts, mega projects, and foreign direct investment (FDI). Above $200 billion, mostly ill-gotten, had been deposited by the Pakistanis in Swiss banks, and the Finance Minister Ishaq Dar had occasionally promised to bring that money back. But so far, the promise seems to be a mere slogan, meant to get political mileage.

A new UN report estimates that over $32 trillion are currently stashed in offshore companies whose jurisdictions remain secret. This is resulting in a loss of $3 trillion every year to the governments because of tax evasion and tax avoidance. It also talks about tax heavens, which are a major discussion in Pakistan these days.   

The Asian crisis of 1998 termed ‘crony capitalism’ that hit Indonesia incredibly is explained by the UNDP’s regional human development reports on corruption. It explained the mounting corruption in development programmes, infrastructure projects, regulatory agencies and cartels of various countries, including Pakistan. There is no secret that a strong cartelisation in cement, sugar, fertiliser, and beverages continues to thrive because of the country’s alleged toothless Competition Commission of Pakistan (CCP).

Once CCP was very active when its chairman was Khalid Mirza, a reputed official, who gave a tough time to cartels, but then he had to leave because of the opposition of influential business groups. The price of sugar today is double in Pakistan compared to the international market. There is an infamous 25 percent regulatory duty that had been imposed on the import of sugar. Who are the beneficiaries? The ministries of finance and commerce are often accused of extensively favouring these politicians at the cost of the poor people of Pakistan.

Corruption worth billions of rupees is taking place across the country, the important proof of which is the manifold increase in currency circulation. The serious violations of Public Accounts Committee’s (PAC) rules, officials concede, are helping the corrupt people, both in and outside the government, to make unparalleled money, the volume of which has never been so high in the history of the country.  They also admit that corruption in power and gas utilities, water sector as well as in that of land mafia and China-cutting in Karachi was ever increasing, while both, the central and provincial administrations are doing absolutely nothing to stop that. In fact the official agencies are blamed as being ‘partner in crime’.

Now when the issue of Panama Leaks has been taken over by the Supreme Court, the role of the National Accountability Bureau (NAB), Public Accounts Committee (PAC) of the National Assembly, Federal Board of Revenue (FBR), Election Commission of Pakistan(ECP), State Bank of Pakistan (SBP), Security and Exchange Commission of Pakistan (SECP), Federal Investigating Agency (FIA) and the regulatory agencies is being discussed everywhere, with apex court lamenting that the country’s institutions are not working, and hence promoting bad governance.

Discussing corruption, the question is why NAB, often accused of arm-twisting, has been urged by the Supreme Court on various occasions to streamline its work with a view to undertake ruthless and across the board accountability to minimise, if not totally eliminate the mounting corruption that is undoubtedly plaguing the country’s fragile economy.

NAB officials are being criticised on every forum for not playing their due role to halt corruption. Rather, it has been alleged that they harass the investors, due to which the country’s economy is suffering heavy losses.

The word has it that NAB officials are frustrated over last week’s apex court decision stopping the agency from facilitating plea bargain exercise that in fact helps both the accused and the officials concerned to make money and go scot-free.  

Under these circumstances, people do ask whether there needs to be a new NAB after getting its existing ordinance further amended to stop corruption instead of increasing corrupt practices. Incumbent Chairman, NAB, Qmaruzzam Chauhdry, often claims that Standard Operating Procedures (SOPs) as well as timelines have been drastically changed to speed up investigation. This is being done to conform to the Supreme Court’s decision of last year, which stipulated 75 days maximum for the accountability court to decide any reference.

Inner circles of the ruling Pakistan Muslim League-Nawaz (PML-N) maintain that the accountability bureau is still under pressure from the establishment to conduct inquires and prepare references against those rich businessmen, who allegedly made huge amount of money during the current and previous regimes. The bureau had been sitting on cases against politicians for years. NAB officials so far have failed to carry out ruthless accountability of everyone, including, politicians, businessmen, former and sitting army generals.

Who does not know that corruption amounting to billions of dollars is taking place every year in Pakistan, profoundly destroying the economy and fattening the black economy.  The NAB, it is said, took few initiatives at the behest of the establishment but then stopped its activities following the prime minister’s public outburst against the agency, which did not go well with the relevant quarters.

The general feelings in the political circles are that the prime minister will have to extend his full support to introduce certain amendments in the working of NAB ordinance to deal with the menace of corruption. 

There are no two opinions in Pakistan that corruption must be eliminated and those involved, including politicians, generals and bureaucrats be brought to book in order to save the sinking economic ship of the country. At the same time, people do want NAB to be free of all kinds of political interference and manipulation so it can deliver accordingly. It is generally said that NAB needs to be reinvented and its laws, rules and regulations changed to make it an independent body. People used to ask why NAB must continue with the much condemned plea bargain mechanism under which the culprits can get away with any punishment by paying some amount of the looted money.

Since the current NAB ordinance allows a certain commission or so-called legal additional remuneration to its officials who are investigating, they often indulge in unnecessary activities to harass businessmen and bureaucrats. However, thanks to the Supreme Court of Pakistan, the situation today is changed. It is one of those practices that must to be done away with right from the beginning.

Yes, accountability must be undertaken against all those who are involved in looting and plundering, but it must be across the board and without a bias against anyone. The untrained officers of the NAB are part of the problem, as they remain incapable to investigate corruption on scientific lines. They need all the required forensic aid so the matters can be investigated thoroughly and leave no shadow of doubt to leave anything to uncertainty.

For this, American and European Union models, essentially that of the United Kingdom can be replicated with a Serious Fraud Office (SFO). It can remove any need to have any supra-commission to oversight the working of the investigating body.

Now, once again the political temperature is rising to revelations against 200 Pakistanis involved in the Panama Leaks that mainly includes the prime minister’s immediate family members. Part of the problem is that the national economy is held hostage due to growing political uncertainty, notwithstanding government’s claims of having jump-started the country’s fragile economy.

The FBR after facing a lot of public criticism had decided to issue notices of tax evasion to the holders of offshore companies. FBR officials, in fact, were even directed by the national standing committee on finance to take action against those involved in the Panama Leaks.

However, after the passage of almost seven months, no communication has been made by the FBR with the Panama authorities. It is reportedly said that since the government has not given a go-ahead to FBR, its officials are reluctant to accomplish any task regarding the issue.

The emerging reports suggest that $1 trillion are taken away from developing countries, including Pakistan and deposited in offshore companies, which protect the wealthy individuals.

The million dollar question now is how best Pakistan’s institutions, destroyed over the years, can be rebuilt, and whether the country’s apex court can play any effective role in this behalf. The crude reality, unfortunately, is that vested interests of the institutions never allowed them to take corrective measures to eliminate corruption and ensure good governance. Political elite maintains that corruption is not a very serious issue as it has become a way of life in Pakistan and that people will have to live with it.

The writer is a senior journalist based in