Huzaima Bukhari and 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.—Former Justice 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, a top land developer 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 lawmaker, 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 of rent-seeking, tax evasion and black money have always been a serious challenge to the 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.
(To be continued)
(The writers, lawyers and partners in HUZAIMA& IKRAM, are Adjunct Faculty at Lahore University of Management Sciences)
