Daunting challenge for Pakistan
Dr. Ikramul Haq
For decades, Pakistan has been unsuccessfully tackling the daunting challenge of countering bribery, financial crimes, tax evasion and plundering of taxpayers’ money. It is strange that in a country where tax evasion is condoned every now and then (five times from 2013-18) through infamous amnesty schemes, not a single person is convicted/prosecuted for tax evasion. Pakistan has many laws to deal with various kinds of corrupt practices, but the issue is of their review to bring them inconformity with United Nations Convention against Corruption [“the Convention”], their effective enforcement, as well as improving investigative, prosecutorial and enforcement capacities of the agencies.
According to 2017 Report of Review Group of United Nations Convention against Corruption Office, Pakistan signed the Convention on 9 December 2003 and ratified it on 31 August 2007 with a declaration that “it does not consider itself bound by the provisions of paragraph 2 of article 66. Moreover, Pakistan also declared that it does not take the Convention as the legal basis for cooperation on extradition with other States parties pursuant to article 44, paragraph 6”.
International treaties and conventions are not self-executing in Pakistan but have to be incorporated into the domestic legal framework. Pakistan’s legal frame is not only derived from English common law, based on the 1973 Constitution (with amendments), but also with reference to many provisions of Sharia law. The sources of law that deal with “corruption” as defined in the U.N. Convention include the following:
- National Accountability Ordinance (NAO) (1999)
- Anti-Money Laundering Act, (AMLA) (2010)
- Federal Investigation Agency Act (FIA) 1974 (VIII OF 1975)
- Prevention of Corruption Act (PCA) (1947)
- Pakistan Penal Code (PPC) (Act XLV of 1860)
- Code of Criminal Procedure (CrPC) (1898)
- Extradition Act (EA) (1972)
- • Law of Evidence (Qanoon-e-Shahadat) Order, 1984, read with Electronic Transaction Ordinance (ETO), 2002, with reference to admissibility of evidence collected through modern devices
There are no reliable (official or non-official) statistics available about the quantum of corruption and losses caused to national exchequer. In a 2015 report, it was claimed that NAB recovered a sum of Rs. 262 billion in misappropriated funds over a 15-year period (2000-15). The size of monstrous informal (illegal and legal) economy confirms the seriousness of the challenge faced by Pakistan. A study by State Bank of Pakistantitled ‘[i]The Size of Informal Economy in Pakistan’estimates that total size of informal economy is around 30% of total economy. It means that annually some 800-900 billion rupees are generated in Pakistan by the parallel economy. Black money, generated through organised criminal activities e.g. kidnapping for ransom, rent-seeking, smuggling in goods and narcotics trade etc. is about Rs. 1300 billion that does not appear in the study of SBP but documented in [ii]Pakistan: Enigma of Taxation. Another study—[iii]Pakistan: Drug-trap to Debt-trap—estimates the total figure of informal economy at US$ 95 billion.
It baffles the people that when the presence of monstrous black money is so apparent, why its criminal accumulation and generation is not countered and the offenders remain unpunished? They ask whether it is on account of lack of political will, rampant corruption, ineffectiveness of law enforcement agencies, or defective laws. Terrorists and money launderers not only use hawala and hundi but exploit legal sanction available under section 111(4) of the Income Tax Ordinance which says that if anybody brings money through normal banking channels amount up to PKR 10 million (prior to 1 July 2018 there was no limit), FIA, tax authorities etc cannot pose any question about the “source.” The banks also take cover under section 5 and section 9 of the Protection of Economic Reform Act, 1992 to withhold information from tax authorities.
Established in 1999 as the country’s apex anti-corruption organisation, NAB operates under NAO, 1999, which extends to the whole of Pakistan, including Gilgit-Baltistan. The NAO, 1999 empowers the NAB to act against all those involved in corruption and corrupt practices, both the expressions are defined elaborately in the law. Private sector bribery is also criminalized in NAO vide section 9(a) when read together with section 14(c)—the expression “any other person”, according to Supreme Court of Pakistan applies equally to private persons and the private sector.
Section 4 of NAO and section 2 of PPC establish jurisdiction for offences committed in Pakistan, with section 4(4) of PPC extending this to ships or aircraft registered in Pakistan. Pakistan also has jurisdiction for crimes committed by Pakistani citizens outside of Pakistan (sect. 4 of NAO and sects. 3 and 4(1) of PPC). In relation to money-laundering, Pakistan has jurisdiction when the predicate offences are committed abroad (sects. 2(i) and (q) and 3 AMLA). Pakistan recognizes an additional jurisdictional basis where the accused was working in the service of Pakistan (sect. 4 of NAO and sect. 4 of the Penal Code).
The NAB, Federal Investigative Agency (FIA) and the Provincial Anti-Corruption Establishments as well as the Financial Monitoring Unit (FMU), main agencies mandated with the task of countering corruption, though have been strengthened over the past few years, but political interference as well as the issue of capability and efficiency is still a huge concern.
There is an urgent need to take measures to enhance data-collection systems and forge coordinate across the above cited institutions in order to achieve the effectiveness of their enforcement measures. In the NAO, 1999, there should be a catch-all clause to supplement the list of public officials [(art. 15 (a) of the Convention]. The Legislature needs to ensure adequate transparency, predictability and proportionality in entering into plea bargains and out-of-court settlements (art. 30, para. 1 of the Convention). It is painful to note that little attention has been given for the quality and continuous prosecutorial, investigative and other specialized training of the NAB and other agencies (art. 36 of the Convention).
For the successful implementation of the Convention and effectively countering corruption, serious efforts are needed to training in specialized areas such as forensic accounting, etc, foreign trainings in reputable organizations with emphasis on relevant anti-corruption case studies, on-site assistance by an anti-corruption expert. Pakistan has yet not paid attention even to go for Model legislation (arts. 21, 30, 32 and 33 of the Convention).
The discretionary powers of Chairman NAB and violations of due process of law, especially Article 10A of the Constitution of Pakistan, must end to make the process of accountability transparent and free from public criticism.