Corruption in Pakistan hurts common People and Breeds Extremism

By Khalid Hashmani

The Transparency International has ranked Pakistan 139th among 180 countries in its 2009 Corruption Perception Index (CPI) issued in November 2009 (http://www.guardian.co.uk/news/datablog/2009/nov/17/corruption-index-transparency-international#data). Pakistan’s 2009 vs. 2008 score further reduced by 0.1 (2.4 vs. 2.5). A recent World Bank report lists corruption and lack of transparency as the two core reasons that hamper Pakistan’s drive for development. However, these indices do not convey the terrible pain and sufferings that the brutal practice of corruption has caused to common people of Pakistan.

Many people in Pakistan believe that much of the development and a significant portion of the operations allocations are lost due to bribery and other related illegal and unethical activities. The extreme poverty and lack of infrastructure and basic services in the rural areas of Sindh and Balochistan is in part fueled by bribery, influence peddling, extortion, and abuse of power. The people of Pakistan and the international donors must rise to the occasion and start pressuring the Pakistangovernment to curtail corruption and to improve governance. Failure to do so in a timely manner will continue to frustrate poor people and make them weary of the current democratic system and drive them to extremism.

What Constitutes Corruption?

The most comprehensive definition of “corruption” can be found at the web site of the Global Infrastructure Anti Corruption Center (GIACC) http://www.giaccentre.org. It says “In its wider sense, corruption includes one or more of bribery, extortion, fraud, deception, collusion, cartels, abuse of power, embezzlement, trading in influence and money laundering.”

The underlying motive of corruption is to provide some one unfair advantage at the expense of either another individual entity (person or corporate) or a collective entity (country, province, city, community or company). In all cases, it is illegal, dishonest, and/or unethical. A bribe may be a cash payment or a gift item of considerable value.

Examples of Corruption in Pakistan

A government official or government Minister or his/her business partner receiving money in exchange for awarding a contract, job, promotion or approving invoices for payment (an example that involves Bribery and Abuse of Power and may involve Collusion).

A policeman receiving money to drop charges against some one or receiving bribe from some one to arrest another person (an example that involves Bribery and Abuse of Power and may involve Collusion and Extortion).

A political party leader of a party in power ordering police to arrest a political opponent until that opponent supports that political leader (an example that involves Abuse of Power, and Collusion and Extortion).

A medical doctor using supplies received for use in a public hospital uses them in his private practice (an example that involves Abuse of Power, Fraud, and Embezzlement).

A military General receiving commission to be deposited in an overseas bank account to facilitate procurement of military equipment (an example that involves Bribery, Abuse of Power, Fraud, Deception, Collusion and Extortion).

A contractor who uses sub-standard material in the construction of a large public project such a university building, a road by-pass, or a village road. An inspecting engineer who receives bribe to ignore the use defective material and/or workmanship and approves the project for payment. A treasury official who receives money to pass contractor invoices knowing that inspection certificates lacks all required approvals (an example that involves Bribery, Abuse of Power, Fraud, Deception, Collusion and Extortion).

A senior manager in a public or private organization giving a job to a friend or relative bypassing a proper selection process (an example that involves Abuse of Power and Trading-in-influence).

A senior official threatening and/or coercing a junior official to support his/her position (an example that involves Extortion and Abuse of Power).

The elected and appointed officials conspiring to sell government prime land to friends, relatives or business partners at much lower price with considerable loss to government Treasury (an example that involves Abuse of Power, Fraud, Deception, and Collusion).

A teacher who rarely goes to school to teach but collects his/her salary regularly. A bad village leader (wadero)illegally occupies a school and uses it as guest house (an example that involves Bribery, Abuse of Power, Fraud, Deception, and Collusion).

An international oil or gas company that instead of investing the contract-mandated percentage/amount on improving education, health, and social services of local people, uses that money to secure favors from government officials and local chieftains (an example that involves Bribery, Fraud, Deception, and Collusion).

Senior Managers of private company or a government autonomous entity that contrary to the commitments made to local people and/or provincial laws, hire much of their staff from their home provinces instead of offering jobs and on-the-job training opportunities to local people, even though local areas suffer a very high unemployment rate(an example that involves Abuse of Power, Trading in Influence, Deception, and Collusion).

An ordinary citizen and Electric Company Inspection Employee who pays and receives bribe respectively to allow stealing of electricity illegally (an example that involves Bribery, Abuse of Power, Fraud, Deception, and Collusion).

A Bank Manager, Bank Employee, relative, or associate who convolute to move a large amount Bribery cash into a foreign account illegally (an example that involves Money Laundering, Deception, fraud, and collusion and may involve Bribery).

Owners and Representatives of a commodity or manufactured products or traders (for example, sugar or shaving blades) conspire to keep prices high by agreeing to charge a minimum consumer price ((an example that involves Cartels, Collusion, and Abuse of Power and may involve, Fraud, and Deception).

Levels of Corruption in Pakistan

It is a widely held view that corruption in Pakistan is widespread, systematic, and that it is entrenched at all levels of government. A World Bank report containing an assessment of the Pakistan’s Infrastructure Capacity (PICA) dated February 2008 states that 15% of Pakistan’s Development budget for 2007-08 was lost in the procurement process alone due to corruption. This does not include subsequent costs of corruption in the implementation and maintenance stages of projects.

The important business publications such as World Economic Forum’s Global Competitiveness Report (2007-08) says that corruption is the third greatest problem for companies for doing business in Pakistan. The report lists the first two problems as government bureaucracy and poor infrastructure(http://www3.weforum.org/en/index.htm).

The Organization for Economic Cooperation and Development (OECD) [Web Site: http://www.oecd.org says that the World Bank and the Auditor General of Pakistan have complained about governance problems inrecruitment, site selection, absenteeism and bribery. This has resulted in cancellation or suspension of some of the World Bank’s projects such as the Balochistan Primary Education Project. Also, certain other loans were withheld after irregularities were uncovered.

A survey of South Asian countries at http://www.jdhr.org/publications/media-and-development/Article%20Forensic%20Accounting-Kashif%20Article.pdf) reports the following percentages of respondents for having encountered corruption in key sectors in various South-Asian countries:

Country Education Health Power Land Adm. Tax Police Judiciary

Bangladesh 40% 58% 32% 73% 19% 84% 75%

India 34% 15% 30% 47% 15% 100% 100%

Nepal 25% 18% 12% 17% 25% 48% 12%

Pakistan 92% 96% 96% 100% 99% 100% 96%

General perceptions and actual public surveys about corruption show that Police, Power Sector,Judiciary, various Taxation departments (Custom duties, Income Tax), and irrigation departments are considered the most corruption prone departments in Pakistan.

According to a report, appointments in the police force are often based on political considerations. The instances where conflicts of interest due to personal loyalties and family connections exist are numerous. Many complain that local landlords or urban groups with police support exploit poor people through extortion (bogus fines, etc.). (http://www.globalintegrity.org/reports/2006/PAKISTAN/index.cfm).

According to a 2006 survey, 96 percent of the people said that they had encountered corruption inJudiciary. 44 percent of them reported that they paid a bribe to a court official. In Pakistan, The judiciary is not viewed as independent of the Executive side of the government but rather part of it. Another report says that the Pakistani judiciary takes an average of 880 days to settle a business dispute at a cost of 24 percent of the claim (www.doingbusinesss.org).

Pakistan’s tax and public finance administration is also affected by corruption. The World Bank’s 2004 Public Expenditure Management report says that there is a widespread collusion between taxpayers and tax officials leading to lack of tax compliance by businesses. (http://www.oecd.org/dataoecd/63/31/36494011.pdf).

An article in one of Pakistan’s major English newspaper Daily Times (http://www.dailytimes.com.pk/default.asp?page=story_9-1-2003_pg3_3 says that the cost of corruption by political leaders using public office for private gain in banking sector alone cost 10 to 15%. The same newspaper reports that the overall cost of corruption by political leaders in Pakistan is between 20% and 25% of the GDP. This is equitant to an annual average GDP growth rate over 4 years.

A statement by Asian Human Rights Commission (AHRC) issued on December 8, 2009 says that “. . . long periods of martial law have provided opportunities for the generals to loot the country, by siphoning public funds for their own personal gain. The media, judiciary, military and civil bureaucracy, became part of the loot of the generals’ corruption.”

A report accessible at http://pakobserver.net/200912/28/Articles02.asp provides the following explicit and implicit examples of corruption in Pakistan:

”Perks are a type of corruption which country’s ruling politicians, bureaucracy and military elite is enjoying in the form of free fuel, electricity, accommodation, luxury cars, army of servants. There is no legal and/or moral justification for such perks.”

“It is opined that 30 percent of total corruption is in government departments and banks. In 1997 Nawaz Sharif government appointed 30 judges to settle 48,000 registered bank loans cases of 217 billion rupees. The reports of 193 billion rupee loan right off from 1999 to 2009.

The 2005 Karachi Stock Exchange Scam that cost 25,000 families allegedly some 800 billion rupees while Islamabad, State Bank of Pakistan and Securities and Exchange Commission looked the other way.

A 1996 investigation by Sindh Education Department discovered that 2,932 schools in rural areas existed only on paper. Many of the buildings had been converted into guesthouses, stables, or storage facilities. http://www.oecd.org/dataoecd/63/31/36494011.pdf

Similarly, the Punjab government found that about 1,600 “ghost schools” which had not operated for years, but theteachers continued to get paid. http://www.oecd.org/dataoecd/63/31/36494011.pdf

Impact of Corruption

To a varying degree, Corruption exists in the almost all countries. However, the degree to which corruption adversely impacts common people’s lives and increases poverty is directly proportional to the level of corruption and how wide spread it is in the society. A country’s or province’s development depends on how much of that country’s resources are lost to corruption. In developed countries where corruption is limited to a small number of projects and where common people do not encounter corruption on a daily basis, the adverse impacts tend to be marginal and do not jeopardize the welfare of its people. In contrast, a poor country like Pakistan, where each paisa must be spent to uplift people from poverty, corruption has a significant impact. The following are some examples of the damage that is caused by corruption:

Defective or dangerous Infrastructure – poor roads, badly constructed college buildings, schools, railway tracks, hospital facilities, water projects, bridges or housing units.

Inadequate Infrastructure – incomplete roads, fewer classrooms in schools, dams that cannot stop floods or buildings that do not meet original requirements.

Poor education standards as Schools remain unoccupied due to absence by teachers or fewer teachers to effectively educate students. Technical and Engineering schools that lack laboratory facilities or library books.

Hospitals that have inadequate number of beds, no medicine for patients, and no vehicles to transport patients to hospitals.

Eventually, the budget planners and donor countries loose confidence in the ability of an organization to deliver improved infrastructure and become reluctant to provide further funding. As people of rural areas are poor and cannot pay for any services, they will not have access to educational or health institutions. Alternatively donor agencies force privatization of infrastructure building and delivery of services giving contracts to companies that specialize in urban areas. Such private companies often do not trust or have confidence in the local labor and tend to bring labor from other provinces or focus only on projects in urban areas resulting in the continued suffering of people living in rural communities.

Causes of Corruption and Current anti-corruption institutions in Pakistan

A culture that encourages display of affluence without any regard how the wealth was obtained.

Lack of accountability

Low Salaries

Unrestrictive discretionary powers given to officials

In addition to the law enforcement agency call anti-corruption department which is largely a non-effective organization, a high-level body called National Accountability Bureau (NAB) is supposed to ensure accountability of high officials and political leaders. According to governance experts, the NAB is influenced by the military and largely ignores corruption by military. Its real function appears to be a tool for those in power to target political opponents and junior government officials. They rarely investigate cases against judges, military, and political allies of the group that is in power. More over, NAB suffers from structural limitations and its authority is widely contested. Other than innuendo and allegations, there is hardly any high-profile cases prosecuted in Pakistan. More details can be found athttp://www.freedomhouse.org/template.cfm?page=140&edition=7&ccrcountry=138§ion=73&ccrp%20age=31.

The U4 case study discusses various obstacles that have hampered the effective performance of NAB http://www.cmi.no/publications/file/2914-anti-corruption-policy-making-in-practice.pdf

The reputation of the office of the Auditor General (AG) of Pakistan is largely tarnished as rumors of collusion between auditors and civil servants have long persisted.

Although lately, Pakistan’s television media has increased their interest in the rampant corruption, the newspapers generally do not engage in investigative journalism and support allegations of corruption.

Some Steps to curb Corruption

Most experts think that corruption is one of the most difficult problems in Pakistan’s society. Its impact on country’s towns and villages is extremely profound and poses long term threat to its culture, economics, and general well-being of provinces such as Sindh. The following are some of steps and methods at grass roots and government levels that have helped to curb corruption in some countries, particularly in South East Asia, where once corruption was as rampant as it is now in Pakistan:

Increase salaries of government officials and workers in line with the remuneration prevalent in private sector ofPakistan.

Speedy Judicial process.

Persons who can clearly see the damage that is being caused by corruption in Pakistan must speak up. They should discuss, debate, and voice their concerns openly with friends and family. They should help create a culture where corruption is looked down. The virtue of being honest and simple living should be lauded and only the persons who possess such qualities be accepted as the role models.

The media should take a lead in launching anti-corruption campaigns. They should conduct investigations and report cases of corruption supported by facts report on estimated damage done and identify people who are involved in such cases.

Authorities that provide funding for projects should encourage whistle blowing and provide monetary and other awards to those whose reports on corruption proven to be correct.

Authorities should maintain black-lists of those officials and agencies that are known to engage corrupt practices and should keep them away assignments that involve public projects and services.

Authorities should not shy away from prosecuting senior civilian and military officials and political leaders who engage in corruption to set examples.

The political parties of Pakistan should have policies that shun any leaders and workers who engage corrupt practices.

All institutions including political parties should have policies that force those officials to temporarily resign when credible allegations of corruption surface until those allegations are proven to be false in a court of law.

Encourage formation of Non-Governmental Organizations and voluntary groups within public and private organizations to act as coalitions against corruption.

The educated and those would like to curb corruption should visit the web site of Global Infrastructure Anti Corruption Center (CIACC) http://www.giaccentre.org/why_avoid_corruption.php. This site has excellent resources on measures to prevent corruption in the infrastructure, construction and engineering sectors.

Conclusion

The future of Pakistan and alleviation of poverty in rural areas of Pakistan is highly dependent on successful and completion of all development projects. This success is threatened by the evil of corruption that must be stopped on urgently before it is too late. The religious extremism, deteriorating economic conditions, and worsening living conditions are unnerving the people of rural Sindh and Balochistan, who until now have refused to fall in the trap of extremism. It is imperative that all stakeholders including political parties, government officials, civil society organizations, private companies, donor agencies and common people recognize the carnage that current levels of corruption can do to the heartlands of Pakistan. They must form a grand coalition to stop the menace before it is too late.

About Author: Mr. Khalid Hashmani is a Washington DC-based veteran human rights activist. He is the founding President of Sindhi Association of North America (SANA) and Chief coordinator of Sindhi Excellence Team (SET) that participates in advocacy activities on behalf of rural Sindhi.