Please read my article on alizaidipti.wordpress ACCOUNTABILITY – WHERE DO WE STAND? By Salman Rasheed Former Investment Analyst MBA-NIU Introduction According to Transparency International Corruption Perception Index (CPI) Survey done in 2012, Pakistan ranks as the 33rd most corrupt country in the world as compared to 42nd in 2011. Furthermore, things get worse when looking at the rule of law index which indicates Pakistan is the 7th most corrupt country out of 97, showing that corruption is increasing significantly. The recently dismissed National Accountability Bureau (NAB) chief even admitted publicly that daily corruption is around PKR 7 billion translating into a yearly amount of PKR 2.56 trillion which is the equivalent of 74% of our gross budgetary revenue receipts. To combat corruption and to hold accountability is the job of NAB which has not been effective over the last few years as it is not a truly independent institution. During the last government led by the PPP, it placed NAB under the jurisdiction of the law ministry, so how could you expect independence when it comes to pursuing corruption charges against sitting cabinet ministers or Prime Minister. With the election of a PMLN government led by Mian Muhammad Nawaz Sharif, there has been speculation in the media that NAB will now be shifted under the jurisdiction of the Prime Minister Secretariat. Could this be in order to try to manipulate pending cases dealing with the Prime Minister and his family that are lying with NAB and need to be investigated? Time has come to seriously tackle the menace of corruption in Pakistan. Besides financially hurting the country corruption also damages the moral and social fabric of society. We need to have an independent anti-corruption and accountability institution that is not under the jurisdiction of the government of the day. History of Corruption in Pakistan On a macro level, there are mainly two types of corruption in Pakistan. One is tax evasion, which channels funds into the black economy; the second is the diversion of funds from the formal economy to the informal economy. It’s the second type that significantly damages the Pakistani economy. The most popular practice that yields the most gains for tax evaders is the under invoicing of imported goods, especially machinery. As the economy remains largely un-documented, the perpetrators usually get off scot free under the radar of the government authorities who are supposed to curtail such illegal practices. Many say corruption is not new to Pakistan. It had its immediate origin from the time of independence in 1947 when people, in complicity with the bureaucracy, filed fake claims to get property allotted to them. It is interesting to note that the Prime Ministers from 1947 to 1970 were never accused of being directly or indirectly involved in any type of corruption. The same goes for the governments of Ayub Khan or Zulfikar Ali Bhutto. However, corruption received a huge boost under the military regime of General Zia ul-Haq, as the Americans were fighting the former Soviet Union in Afghanistan and bags full of dollars were making their way throughout the corridors of power in Islamabad and Rawalpindi. After Zia, two governments each of the PMLN and the PPP were dismissed due to corruption charges, subsequently which Transparency International declared Pakistan the second most corrupt country in the world in 1996. When General Pervez Musharraf took over in 1999, he promised ruthless and sweeping accountability. NAB under the charge of Lt. Gen. Amjad Hussain, was able to intimidate many, especially those of the business community and achieved in recovering PKR 300 billion. However, as blowback, he ignited massive capital flight, which forced then Prime Minister Shaukat Aziz and former SBP governor Dr Ishrat Hussain to press Musharraf to end the witch-hunt for businessmen. Hussain was thus unceremoniously dumped and none of his successors were willing to take up the cause. Meanwhile, it is said, the Chaudhrys of Gujrat convinced Musharraf to give up the drive against corruption and instead go after their political opponents. This led to the infamous National Reconciliation Ordinance, the aim of which was to pardon the corrupt and the criminals under the guise of national reconciliation. However, in December 2009, the Supreme Court declared the ordinance illegal. For the moment, the outgoing PPP government has been labeled the worst government in last 64 years. This label may be largely justifiable as a number of top government officials (including ministers and senior officials) have either been sent to jail or have had criminal investigations launched against them on the orders of the Supreme Court (this list includes former Prime Minister Raja Pervez Ashraf, who faces charges in a rental power case in which PKR 120 billion were swindled). The Federal Board of Revenue (FBR) is also considered among the biggest players in the corruption game. According to former PPP finance minister Shaukat Tarin, the FBR is involved in tax evasion worth PKR 400-500 billion annually. This is the reason you never hear of tax evaders being jailed in Pakistan as punishment consists of only nominal fines and penalties, which further encourage evaders to remain a part of the growing underground economy. While the World Bank gave $150 million to Pakistan for reforming the FBR and carrying out real documentation of the economy, nothing has happened so far. The Singapore and Hong Kong accountability models In the Asian region, it is widely acknowledged that Singapore and Hong Kong have enjoyed relative success in combating corruption through effective accountability mechanisms. Singapore Experience Corruption in Singapore was rampant during the British colonial period. In 1871, corruption was declared an illegal offence through the enactment of the Penal Code of the Straits Settlements of Malacca, Penang and Singapore. In 1879, a Commission of Inquiry into the causes of inefficiency of the Straits Settlements Police Force established that corruption was widespread among the European inspectors and the Malay and Indian junior officers. Similarly, another Commission of Inquiry into the extent of public gambling in the Straits Settlements in 1886 corroborated the existence of systematic corruption in the police forces in Singapore and Penang. However, the enactment of the POCO as the first anti-corruption law in Singapore, Malacca and Penang on December 10, 1937 did not improve the situation. Conversely, the problem of corruption worsens during the Japanese Occupation (February 1942 to August 1945) due to rampant inflation making it difficult for civil servants to live on their low wages. This led to increasing black marketeering and nepotism and corruption to obtain jobs. Situation stagnated further in the post-war era as corruption spread among civil servants due to low salaries and high inflationary environment along with insufficient supervision by their superiors. The turning point was the opium hijacking scandal of October 1951 that revealed the widespread corruption in the police force. This led to the realization of the British colonial government of the requirement to have an anti-corruption agency (ACA) independent of the police force. Thus, the Anti-corruption Branch of the Criminal Investigation Department was replaced with a Corrupt Practices Investigation Bureau (CPIB) in October 1952. The CPIB’s mission statement is: “To combat corruption through Swift and Sure, Firm but Fair Action”. To fulfill its mission, the CPIB performs these three functions: To receive and investigate complaints alleging corrupt practices; To investigate malpractices and misconduct by public officers with an undertone of corruption; and To prevent corruption by examining the practices and procedures in the public service to minimise opportunities for corrupt practices. In addition to the three functions mentioned above, the CPIB also ensures that candidates selected for positions in the civil service and statutory boards in Singapore are screened to certify that only those candidates without any taint of corruption or misconduct are actually recruited. The CPIB operates under the jurisdiction of the Prime Minister’s Office (PMO) and is divided into the Operations Division and the Administration and Specialist Support Division. As the CPIB’s major function is the investigation of offences under the Prevention of Corruption Act (POCA), the Operations Division has four investigation units including the Special Investigation Team, which handles the more difficult and major cases. These four units are assisted by the Intelligence Department, which gathers intelligence and carries out field research. The Administration Unit is responsible for administrative and personnel matters, provides screening services to government departments and statutory boards, and conducts strategic planning for the CPIB. The other three units in the Administration and Specialist Support Division deal with prevention and review, computer information system, and plans and projects. Hong Kong Experience Similar to Singapore, corruption was widespread and a way of life in Hong Kong under British colonial rule. Corruption stemmed from 4 main reasons: Rapid population growth after 1945 severely strained the social services, government resources and manpower in Hong Kong and contributed to corruption as “everything was in short supply. Chinese immigrants to Hong Kong paid bribes to the police and other civil servants to rid themselves of harassment by them Government’s monopoly and regulations of various activities and the discretion of civil servants responsible for these activities provided many opportunities for corruption. Rampant police corruption. To deal with corruption in post-World War II, similar methods to Singapore were used as Anti-corruption Branch (ACB) was established as a special unit of Criminal Investigation Department of the Royal Hong Kong Police Force (RHKPF). The ACB in 1952 was separated from the CID but still under the jurisdiction of RHKPF. However, the ACB was an ineffective organization as the number of prosecutions was meager. After review of anti-corruption agencies of other countries such as Singapore and undermining of ACB due to a high profile incident, the Independent Commission Against Corruption (ICAC) was established February 15, 1974 with the mission “to root out corruption and to restore public confidence in the Government.” The ICAC’s role is to investigate, prevent and educate and it has 3 departments comprising of Operations, Corruption Prevention and Community Relations. The Operations Department is the investigative arm of ICAC. The department is responsible for receiving, considering and investigating reports of alleged offences under the Prevention of Bribery Ordinance, the Independent Commission Against Corruption Ordinance and the Elections (Corrupt and Illegal Conduct) Ordinance. In terms of Corruption Prevention, the Commissioner has a statutory duty to scrutinize the practices and procedures of government departments and public bodies and to secure the modification of methods of work or procedures which may be conducive to corrupt practices. The Commissioner is also required by law to provide corruption prevention assistance on request to any member of the public. These duties are discharged by the Corruption Prevention Department. It also provides upon request corruption prevention advice to the private sector as the department as an Advisory Services Group. The role of the Community Relations Department is to educate the public against the evils of corruption and seek support in the fight against graft. Recent ICAC’s annual opinion surveys conducted by independent research agencies show that almost all (98%) respondents said the ICAC deserved their support. The work of the ICAC is closely scrutinised by four independent committees comprising leading citizens as members and non-officials as chairmen. The Advisory Committee on Corruption advises on Commission-wide policies and issues. The Operations Review Committee examines and monitors all ICAC investigations. The Corruption Prevention Advisory Committee oversees the work in improving practices and procedures to minimise opportunities for corruption. The Citizens Advisory Committee on Community Relations advises on measures to cultivate public support in tackling corruption and to educate the public against the evils of corruption. An independent ICAC Complaints Committee examines complaints against the ICAC or its staff, monitors the handling of complaints and advises on follow-up actions. The Way Forward for Pakistan Given the experiences of Singapore and Hong Kong, it is safe to say that Pakistan’s experience dealing with corruption and accountability is quite similar. Whatever institution was established to fight corruption has always been tainted as a tool used for political victimization against opponents of the government of the day. This is one of the main reasons that any anti-corruption institution in Pakistan be it the existing NAB needs to be independent from the executive branch. We need to take Singapore as an example to follow as this small island nation which was rampant with corruption turned itself around to be now the fifth-least corrupt country in the world in 2012 according to Transparency International’s Corruption Perception Index. Singapore’s fight against corruption is a two part plan: one is to have tough laws and punishments while the other part is to prevent corruption and encourage ethical behavior by having high salaries for politicians, government officials and civil servants. According to many academics the main lessons to be learnt from the Singapore experience that can be applied to the Pakistani context as follows: Political will is essential for success. Anti-corruption/accountability institution needs to be independent from the police and political control. Anti-corruption/accountability institution must be incorruptible. Comprehensive anti-corruption legislation is essential. Anti-corruption/accountability institution must be adequately staffed and funded. Impartial enforcement of anti-corruption laws by anti-corruption/accountability institution. Minimize corruption by dealing with its main sources: low salaries, ample opportunities and poor policing. Out of these lessons mentioned above, the most critical is political will. To change the culture of corruption in any society, the politicians are the primary people who can make this happen as they are the ones that make the laws and allocate money to make possible the laws to be enforced. PTI’s policy on corruption and accountability has been to make NAB an independent institution under the jurisdiction of the Judicial Commission and the head would be provided constitutional protection. We would strengthen the role of the Public Accounts Committee (PAC) in monitoring the financial transactions of the government. Discretionary funds at the disposal of high officials will be subjected to proper audit by the PAC. Make the government contract awarding system transparent by making the concerned regulatory authorities autonomous, effective and efficient. Reduce the role of government by revising rules and regulations and doing away with ineffective and unproductive government departments and thus, reducing the opportunity for graft. The formation of a PTI-led government in Khyber-Pakhtunkwa province has given PTI the opportunity to put its policy into practice. Imran Khan in recent public pronouncements has stated that an independent accountability cell will be established in KPK to ensure transparency in provincial governance. We hope that this will serve as a model for the rest of provinces and the central government
Posted on: Wed, 10 Jul 2013 20:13:06 +0000
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