Pakistan and the Transparency report

Pakistan’s latest transparency ranking may prompt the FATF to revisit its compliance level

Pakistan and the Transparency report

“This is no coincidence. Corruption enables human rights abuses, setting off a vicious and escalating spiral. As rights and freedoms are eroded, democracy declines, and authoritarianism takes its place, which in turn enables higher levels of corruption.” — Executive Summary, Corruption Perception Index 2021

The Corruption Perception Index (CPI) 2021 released by the Transparency International (TI) lowered Pakistan’s overall score from 31 to 28 due to absence of the Rule of Law and State Capture and downgraded its ranking from 124/180 (2020) to 140/180. This is a huge setback to the incumbent prime minister’s narrative as his entire politics is based on this single issue.

This report not only damages his credibility but also exposes his governance style. It has ranked his government as the most corrupt of the era. An overview of the ranking assigned to Pakistan in the last two decades includes the tenure of Gen Pervez Musharraf, of Pakistan People Party government under Asif Ali Zardari, and of Pakistan Muslim League (Nawaz) government as well as the three years of Pakistan Tehreek-i-Insaaf (PTI) under the leadership of Imran Khan.

Pakistan got the worst ranking in the region. The country witnessed an increase in corruption for the third consecutive year, sliding 16 places to rank 140. In the tenure of the Pakistan Muslim League (Nawaz), corruption perception index had registered some improvement and Pakistan was ranked 117/180.

Now, what are the root causes of the failure in improving our ability to eradicate corruption? In its manifesto, the PTI promised the nation that it would ensure full autonomy for, and build the capacity of the National Accountability Bureau (NAB) and other accountability institutions and pursue all major corruption scandals regardless of political affiliation.

The PTI has been criticising the previous governments, accusing them of stifling accountability institutions to create an environment in which corruption by the ruling elite was concealed rather than aggressively exposed. The PTI also promised to review the National Accountability Ordinance, 1999, to strengthen its independence and appointment process of the chairperson, supporting the head of NAB in conducting organisational reforms, addressing legal gaps in the accountability laws, including the review of voluntary return and plea bargain.

It also promised to provide support to the NAB in tracking key indicators to boost performance, transparency and corruption score, including the number of references, duration of prosecution and spending versus recovery ratio.

However, in its three and a half years in office, the focus has remained on alleged political victimisation and selective accountability apparently with the purpose of strengthening its power base. The promise of giving more independence to the NAB to ensure transparency did not materialise and it became the most controversial institution of Pakistan. Even the Supreme Court remarked that the NAB was deliberately used for political engineering.

The promise of introducing reforms also remained unfulfilled. Before coming to power, Imran Khan had mentioned at various international forums that Pakistan lacked skilled professionals to investigate white-collar crime. However, after taking charge of the government, he introduced no measures to control corruption/white-collar crime. Though the government recommended some changes in the NAB Ordinance, those were criticised in the media and legal experts called them “an act of saving one’s own skin”.

The Transparency International has downgraded Pakistan due to corruption scandals linked to various members of the prime minister’s cabinet. It is time for the prime minister to honour his promise and initiate the process of accountability.

As per its promise, the government was supposed to maintain transparency, introduce reforms to improve the understanding of the law enforcement agencies about the transnational dimensions of corruption, train them regarding intelligence collection, develop a mechanism to engage public-private sectors for information sharing, enhance their resources and apply the beneficial ownership rule but nothing concrete was done.

Pakistan also needed to introduce specific regulations regarding high-risk businesses hiding illicit cash or laundering criminal proceeds. The will of the government, law enforcement agencies and the judiciary are required for holding corrupt elements accountable by maintaining transparency and extending the right to fair trial envisaged in Article 10A of the Constitution.

All accountability should be across the board irrespective of political affiliation. The Transparency International has downgraded Pakistan in the last three years due to corruption scandals linked to various members of the prime minister’s cabinet. It is time for the prime minister to honour his promise and hold accountable those involved in the sugar crisis, wheat shortage, medical scandals, ring road scandal, BRT scandal, Tosha Khana scandal (linked to prime minister), allowing the sale of subsidised wheat for the poultry sector. The list goes on.

Pakistan’s evaluation by the Financial Action Task Force (FATF) is approaching. In the recent past, we have witnessed two major developments that can impact our assessment by the FATF. Recently, the Federal Investigation Agency uncovered a $100 million fraud, admitting potential money laundering using crypto-currency. The way crypto-currency is being handled in Pakistan invites a lot of risks. The watchdogs might end up revising our rating on Recommendations 15 and 23.

Moreover, the latest transparency ranking which further downgraded Pakistan may prompt the FATF members to revisit the compliance level for Recommendations 12, 22, and 36 as a majority of the scandals highlighted in the media pertain to politically exposed persons, including the prime minister.

The Index 2021 suggested that corruption levels remained at a standstill worldwide. The report evaluates 180 countries and territories with their perceived level of public sector corruption with a scale of zero (rated as highly corrupt) to 100 (very clean). However, the report has not recorded any visible change in the global perception index for the tenth-year in a row with a rating of two-thirds of countries below 50.

The global highlights of the report indicate that more than two-thirds of the countries (68 percent) score below 50 and the average global score remains stagnant at 43. It further highlights that 25 countries have improved their scores whereas 23 countries have significantly declined.

The region-wise ranking shows that the Western Europe and European Union ranked as high-scoring region with an overall score of 66, Asia Pacific 45, Americas 43, Middle East and North Africa 39, Eastern Europe and Central Asia 36. The Sub-Saharan Africa is ranked as the lowest region with an overall score of 33.

The region-wise comparison shows that the Americas have made no progress in the last three years with the same score of 43, whereas Asia Pacific showed improvement in curtailing petty corruption. The issue of grand corruption could not be addressed, therefore, the average score stalled at 45 out of 100 for the third consecutive year. The Eastern Europe and Central Asia are still the second-lowest performance region.

The Middle East and North Africa maintained their score of 39 for the fourth consecutive year. However, the region is trying to achieve the desired results to curtail corruption. However, the political misconduct and private interests are overtaking common interests and this region is already devastated by various conflicts.

An interesting fact highlighted in the report is that the Sub-Saharan region, ranked as the most corrupt region, showed no improvement over the previous year. 44 out of 49 countries still score below fifty. The index notes that progress to eradicate corruption in recent years has flatlined.

While ranking the countries individually, the index ranked Denmark, Finland and New Zealand as the cleanest countries with an overall score of 88 each. South Sudan, Syria, and Somalia are listed at the bottom of the index. As per the report, countries experiencing armed conflicts or authoritarianism tend to earn the lowest scores. These include Venezuela, Yemen, North Korea, Afghanistan, Libya, Equatorial Guinea and Turkmenistan.

The report shows that from 2012 to 2021, twenty-five countries improved their control to counter corruption whereas 23 countries’ scores declined. The status of 131 countries remained the same. It further states that control of corruption has stagnated or worsened worldwide over the last decade.

Abdul Rauf Shakoori is a corporate lawyer based in the USA and an expert on white collar crimes and sanctions compliance

Huzaima Bukhari is an advocate of High Court and adjunct faculty at Lahore University of Management Sciences (LUMS)

Pakistan and the Transparency report