You have 0 items in your cart
Huzaima Bukhari & Dr. Ikramul Haq
All public power is a sacred trust, which is to be exercised fairly, justly, honestly and in accordance with law—Supreme Court in Workers’ Party Pakistan & Others v Federation of Pakistan & Others PLD 2012 Supreme Court 681
“The institutional structure of Pakistan’s economy is designed to generate rents for the elite at the expense of the middle classes and the poor. It is this structural characteristic of the economy and not just bribery that prevents sustained high economic growth and equity”—Economics of corruption, Dr. Akmal Hussain
Corruption is cancer which is a silent killer and NAB is absolutely committed to rooting out corruption in all its forms and manifestations with iron hands—Justice (R) Javed Iqbal, Chairman NAB
Common methods for transferring illicit funds include fraudulent trade invoicing; money services business (MSBs), to include unlicensed hundis and hawalas; and bulk cash smuggling. Criminals exploit import/export firms, front businesses, and the charitable sector to carry out illicit activities. Pakistan’s real estate sector is another common money laundering vehicle, since real estate transactions tend to be poorly documented and cash-based—2018 International Narcotics Control Strategy Report (INCSR), United States Department of State
The conviction of Mian Muhammad Nawaz Sharif on December 24, 2018 in Al-Azizia Reference and order of Supreme Court of prohibiting the sale, purchase and transfer of properties owned by Zardari Group, Bahria Town and Omni Group after a report of the joint investigation team (JIT) that the troika was behind laundering of Rs. 42 billion once again confirm that corruption has seeped deep within Pakistan’s body politic. Since the matter of fake accounts is sub judice and Supreme Court has fixed December 31, 2018 for hearing, one should refrain from adverse conclusions before any decision.
Although there are no reliable statistics available on the quantum of corruption, a recent report of National Accountability Bureau (NAB) claims to have recovered Rs. 296 billion since its inception. In 2015, the figure was 262 billion [2000 and 2015]. The sheer size of the monstrous informal (legal and illegal) economy confirms the seriousness of the challenges faced by Pakistan. A 2010 study by the State Bank of Pakistan (SBP) titled “The Size of Informal Economy in Pakistan” estimated the total size of the informal economy of Pakistan around 30% of the total economy. In 2018, black money generated through organised criminal activities alone is about Rs. 1300-1500 billion that is documented in Pakistan: Enigma of Taxation. The book, Pakistan: Drug-trap to Debt-trap, published in 2003, estimated the total figure of informal economy at US$ 95 billion.
Mian Muhammad Nawaz Sharif, ousted, convicted and disqualified ex-Prime Minister of Pakistan, seriously or in a light vein, in a private gathering, reportedly said: “Even if my assets do not commensurate with my sources, it is none of your concern”. Coming from three-times elected Prime Minister, such a statement, even in a light mood, was really shocking. Same was the attitude of Asif Ali Zardari, ex-President of Pakistan, when he told a show host, “the authorities will have to “prove that I went to open fictitious bank accounts in the name of some milkman or sweetmeat seller, only then can a case be registered against me…..”Even then, I can defend the case….Yes I have deposited money in this account, it is my wish“. When the show host asked the former president, “What about the poor fellow who has no idea about any of this”, he responded: “Then it is his fault“.
The above statements by two seasoned leaders of the country testify to our prevalent extreme decadent political culture as well as acceptance of corruption as a way of life. These leaders get votes and people elect them so they openly challenge NAB and courts that “you have no right to make us accountable as this right lies with the people of Pakistan”. Therefore, it is not strange that even senior leaders of the three leading parties of the day, Pakistan Muslim League (Nawaz), Pakistan People Party and Pakistan Tehreek-i-Insaf, defend their corrupt leaders with impunity.
Politicians need to act responsibly in all spheres—whether in power or in opposition. Their role is pivotal for effective working of institutions of the State. Being role models, it is imperative for them to show others by their conduct, the supremacy of rule of law. If they indulge in corruption and malpractices, the entire political system becomes discredited as is evident in Pakistan now.
Pakistan is a unique country where various laws protect tax evaders and criminals to hide their funds, facilitate creation of assets inside and outside the country and help in whitening black money through inward remittances. The rich and mighty in Pakistan, many of whom have dual nationalities or businesses abroad, enjoy full protection from probe into sources of monies/assets under Foreign Accounts (Protection) Ordinance, 2001, Protection of Economic Reforms Act, 1992 and section 111(4) of the Income Tax Ordinance, 2001. Pakistan aptly fits the concept of a “soft state”—famously articulated by the Nobel Laureate, Swedish sociologist Gunnar Myrdal in his 1968 three-volume work, Asian Drama: An Inquiry into the Poverty of Nations. It is a broad based assessment of the degree to which the state, and its machinery, is equipped to deal with its responsibilities of governance. The more soft a state is, the greater the likelihood that there is an unholy nexus between the law maker, the law keeper, and the law breaker. Pakistan is a classic case of this unholy nexus where since 1958 numerous tax amnesties were announced but failed to achieve the desired results.
Pakistan is one of the 140 countries that is signatory to the United Nations Convention Against Corruption (UNCAC) which defines ‘offence of illicit enrichment’ to mean ‘a significant increase of the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income.’ The Convention covers many different forms of corruption, such as bribery, trading in influence, abuse of functions and various acts of corruption in the private sector but the most prominent is the inclusion of provisions regarding asset recovery, aimed at returning assets to their rightful owners including countries from where these were originally taken illegally.
There cannot be two opinions about the adverse effects of corruption on the polity, society and governance in general, and in particular these create hurdles for the realization of government’s objectives to uplift the marginalized sectors of a country. The secrecy behind corruption crimes poses hardship in collecting the necessary evidentiary proofs for successful prosecution and punishment of white collared criminals. However, resorting to circumstantial/corroborative evidence such as possession of property or having a lifestyle that exceeds legitimate income sources can unveil enough to proceed against the perpetrators. While in 2018 and earlier, the international community has been urging member states to criminalize such activities as corruption and illegal enrichment, the Government of Pakistan of PMLN was offering amnesty to those who had the audacity to rip the country of its vital resources without paying due taxes and created assets or stashed money in foreign currency accounts within the country and abroad. How offensive for those handful of honest taxpayers whose unquestionable loyalty to the country has placed them in a defeatist position whereas the ‘criminals’, who blatantly kept violating laws of the land are awarded with the opportunity of ‘decriminalizing’ their sinful deeds through tax amnesties.
The issues rent-seeking, tax evasion and black money have always been a serious challenge to Pakistani State. Unfortunately, even in the recent report of NAB not a single word has been uttered about revenue losses caused to the national exchequer due to crimes and frauds committed by the powerful elements that hijack the mandate of the masses through money power and corrupt all the State institutions.
The slow progress of mega corruption cases lying with NAB and how corrupt our body politics has become can be gauged from the following sample cases:
- In its report re-submitted on 13 July 2015, NAB gave details to the Supreme Court about 150 mega corruption cases with dates of initiation of proceedings and progress so far. This number has now jumped to 179 plus. These cases include serious charges of misuse of authority and financial bungling against the former prime ministers, chief ministers, ministers, former generals and top bureaucrats. The quantum of money involved in the 150 mega corruption cases is in billions of rupees. The report revealed that an inquiry was being carried out against Nawaz Sharif, Shehbaz Sharif in a case pertaining to construction of a road worth Rs.126 million from Raiwind to the Sharif family House on a complaint (undated) received from an informer.
- A case is in an accountability court against Asif Ali Zardari for having assets beyond known resources. Investigations are also in process against him for corruption of US$22 billion and US$1.5 billion.
- Three cases are pending against Ishaq Dar for 23 million pounds, 3488 million dollars and 1250 million dollars.
- Case of money laundering of Rs. 700m against Ghazi Akhtar of Tandiyanwala Sugar Mills was dropped due to political influence.
- Case against former chairman of National Insurance Company Limited (NICL) Ayaz Khan Niazi of embezzlement charges worth Rs. 2 billion has recently been decided by Accountability Court after lapse of many years.
- Little is still known about investigations against Schon group for alleged embezzlement of Rs1245 billion, Younus Habib for allegedly ill-intentioned default of three billion rupees, former Balochistan chief minister Nawab Aslam Raisani for possessing Rs 100 million in assets beyond known resources. A similar enquiry is under process against ex-premier Chaudhary Shujaat Hussain in assets beyond means case, worth Rs 2428 billion.
- Hussain Haqqani, former information secretary and ambassador to US, was accused of embezzling funds, but NAB has so far failed to file a case.
- Former Interior Minister Aftab Sherpao was also facing an inquiry for having assets beyond resources. Ex-premier Raja Pervaiz Ashraf is also being probed for the rental power plants case.
- Though in the latest judgement Nawaz Sharif’s sons have been declared proclaimed offenders, strangely, till today, NAB has not requested the Accountability Court to invoke section 31A(a) of the NAB Ordinance for avoiding trial. This provision provides imprisonment up to three years if any person “absconds in order to avoid being served with any process issued by any Court or any other authority or officer under the NAB Ordinance or in any manner prevents, avoids or evades the service on himself of such process or conceals himself to screen himself from the proceedings or punishment…”
- Majority of the members of Parliament have shamelessly declared low incomes as evident from Parliamentarians’ Tax Directories for tax years 2013, 2014, 2015 & 2016, published by FBR, yet NAB has taken no action till today. They have assets inside and outside the country—mostly held benami as defined in Benami Transactions (Prohibition) Act, 2017.
The ultimate cynicism that afflicts a society is acceptance of corruption as a way of life. Unfortunately, after seven decades of independence, this is precisely where we have reached. Pakistan by all means has a soil, which is very well suited for illegal gains since the very early days of independence when allotment mafia came into existence and many notorious elements who turned rich overnight, later became politicians and bureaucrats. They now control all spheres of life in this country.
Pakistan cannot progress unless foundations of corruption and rent-seeking are destroyed. For this it is necessary to forfeit all benami (untaxed) assets in favour of the State. Immunities and amnesties for criminals, plunderers of national wealth and tax evaders must be abandoned without any further delay. Unless the government shows determination and sternly cracks down on parallel economy, things will not change.
If Pakistan has to remove the cancerous growth of corruption in its body politics, democratisation of political parties is a must. Political life of an individual requires that he complies with all laws of the land—one demonstrative proof of it is to discharge fiscal obligations. If a politician does not pay his taxes honestly and indulges in corrupt practices, then how can he expect the man on the street to do the same? Lack of tax culture and transparency in Pakistan has its roots in the open defiance of tax laws by the rich and mighty. Not only have they kept themselves outside the tax ambit, they also take pride in telling others that tax officials dare not question them. For them this vulgar show of power is necessary to emphasise why they are superior to the meek common folk and thus have unchallengeable right to rule. With this mindset, the rulers in Pakistan have turned the country into their personal fiefdom, and they want it should be inherited by their offspring. It is high time that accountability of all is ensured.
The elected members, politicians, public office holders, bureaucrats, generals and judges should be investigated by an independent commission, comprising experts and men of impeachable integrity, as to ownership of their assets (in own name, family, relatives and benami) and style of living vis-à-vis their declared incomes. This process alone will ensure true accountability in Pakistan. Once the rich and mighty are taken to task, the citizens will abide by laws and pay their taxes honestly and diligently.
Corruption, tax evasion, rent-seeking and black money are not isolated phenomena. These are symptoms of crony capitalism in a dominantly mendacious society. The real challenge is dismantling of structures giving rise and protection to these maladies. Pakistan, or any other country, cannot win the war against corruption and eliminate black money by demonetisation alone unless it destroys the very foundations of corruption and confiscates assets created by both plunderers of national wealth and tax evaders.
Though corruption is a way of life in Pakistan—all institutions are affected with this malady—but the target of retribution in the media as usual, are politicians and not civil-military high-ups and members of judiciary. Politicians allege that “the sacred cows”—military and judiciary—are once again “united” to “malign” them. Strangely, they do not realise that nobody is preventing them to start accountability first amongst their own ranks and then against the mighty militro-judicial-civil complex.
Accountability should be for all—selective one is as bad as for none. The real rulers of Pakistan—powerful members of militro-civil complex—have been protecting and promoting the corrupt, inefficient politicians and then used media to weaken their authority to take independent decisions as legislators and policymakers. Through these tactics, they still subtly profess control over the State. However, the blame should not be attributed to them entirely as greedy businessmen-turned-politicians cannot absolve themselves of wrongdoings by using the argument “we are helpless or trapped”. If they are serious, which they are certainly not, to carry out accountability of all, they must demonstrate it with their actions instead of abusing NAB and what they call “Establishment”.
______________________________________________________________
The writers, lawyers and partners in HUZAIMA & IKRAM, are Adjunct Faculty at Lahore University of Management Sciences (LUMS)