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Friday, March 9, 2012

Corruption in Pakistan - Mehran Scandal

Former chief of Mehran Bank, Younis Habib, disclosed before the Supreme Court on Thursday that former president Ghulam Ishaq Khan and former army chief Mirza Aslam Beg pressured him to arrange Rs 1.48 billion, out of which Rs 400 million were distributed among politicians while the remaining sum was invested by secret agencies.

Habib had appeared before a three-member bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, which is hearing Air Marshal (r) Asghar Khan's petition against the alleged use of public money by Inter-Services Intelligence (ISI) to influence the 1990 general election results. The court has sought a detailed report from the Defence Ministry on the ISI's working from 1990 onwards.

Former chief of the defunct Mehran Bank, Younis Habib, former army chief Gen Mirza Aslam Beg, former ISI chief Asad Durrani and the petitioner, Asghar Khan, appeared before the bench, whereas Commander Shahbaz represented the Defence Ministry in the case. Habib told the court that the then army chief communicated to him the message of the then president, Ghulam Ishaq, to arrange Rs 350 million, adding that he (Habib) was taken into custody by the Federal Investigation Agency on saying that it was impossible to arrange such a substantial amount.

Habib revealed that he arranged Rs 1.48 billion under duress, and of that, Rs 400 million were distributed among politicians while the rest were received by the agencies for investment. The bank account numbers in which the money was transferred was also provided by Aslam Beg, claimed Habib. He also informed the court that he was forced by Roedad Khan and then attorney general of Pakistan to file a case against Asif Ali Zardari, in 1990.

Tendering an apology before the court, Habib pleaded for mercy, saying he had no other option but to capitulate to the pressure exerted by the former president and army chief. In response to Habib's statement, Durrani tried to convince the bench that ISI had nothing to do with the disbursement of the money to politicians, saying it was his individual act. The chief justice observed that the bench would decide the case after hearing all the parties.

Pakistan has lost Rs.8,500 billion ($94 billion) in corruption, tax evasion and bad governance during the rule of Prime Minister Yousuf Raza Gilani, graft watchdog Transparency International Pakistan (TIP) has said.
TIP advisor Adil Gillani told The News that the impact of corruption is far more serious than what was believed. He said Pakistan will not need money from the outside world if the government can effectively check corruption.
The current Pakistani government that came to power in 2008 has been the worst in terms of corruption. Past records of corruption were broken and the country rose in the ranks of the most corrupt nations, the paper noted.
The National Accountability Bureau and the Federal Investigation Agency, instead of checking corruption, have been siding with the corrupt. These institutions have been helping the corrupt to get off the hook by distorting the evidence in favour of the high and the mighty, the TIP representative alleged.
Transparency International is headquartered in Berlin
Corruption in Pakistan is widespread and growing. In the latest Corruption Perception Index, the country is ranked the 34th most corrupt country in the world, up from 42nd last year. Recent polls reveal a pervasive culture of fraud, bribery, nepotism, cronyism and misappropriation of funds. 69% of poll respondents admitted to corruption when dealing with the courts, 24% said they had paid a bribe to get their children into select schools, 42% gained access to health care by paying a bribe to hospital staff, 31% reported paying bribes to police and a huge 99% said they had paid bribes to have their taxes lowered.

The amount of money involved in corruption has risen from 195 billion rupees in 2009 to 223 billion rupees in 2010 with bureaucracy and the police ranked as the two most corrupt sectors. The lure of easy money reaches even beyond the country's borders; corruption charges have just been leveled against two French officials, charged with kickbacks on arms sales to Pakistan. Known in the French press as the Karachi affair, it is a major scandal affecting the re-election of French President Nicolas Sarkozy. With corruption endemic on such a scale, it is hardly surprising that Pakistanis are cynical or even despairing about their country's administration's ability to clean house and restore public integrity.

Pakistan has had a painful history of corrupt leadership for example, with the Bhutto family and more recently, Nawaz Sharif, a wealthy steel magnate who battled for years to stay out of jail on a range of corruption charges, before defeating Benazir Bhutto's government which had been brought down by serious economic and financial scandals. But as Bilal Hussain wrote in a Guardian article in April 2011, the basic problem in Pakistan is not just corruption. Many countries are corrupt but at least they are competent. "Today," he says, "a terrifying level of incompetence pervades the entire sphere of governance in Pakistan. Because of bribery, jobbery and nepotism, the lower ranks of our civil bureaucracy are filled with incompetent and under-educated people."

This paralysis affects institutions like the country's co-called National Anti-Corruption Strategy launched in 2002, and the Accountability Courts set up in 1999 to address corruption charges. Police reforms have been instituted to attempt to change the culture of lawlessness and lack of credibility or trust in the authorities but all that has happened is further non-cooperation and lack of coordination, and a continued questioning of the integrity and political motives of those appointed as watchdogs. Integrity Pacts for example, or formal no-bribery contracts, have been established for major public/private transactions, with some success in establishing transparency in procurement and financial systems. But it is too little, too late, in spite of all the help given by organizations such as the Asian Development Bank, the World Bank and the UN Development Program. Pakistan has reverted to a culture of incompetence, with a stagnating economy, rising inflation, shortages, rising unemployment and poverty.

At the same time, there is deep concern about the way Western funds are being seen as propping up a corrupt and incompetent elite. Confirming the larger debate about the nature of foreign aid and its creation of a dependency culture, aid to Pakistan has enabled it to build an all-powerful military and a public debt approaching more than US $105 billion. US and international aid to Pakistan is now being monitored by Transparency International Pakistan (TIP) to ensure that funds are not misdirected away from the World Bank's five year irrigation project for example, or funds promised to health and education projects. But recent actions by President Zardari's administration to cut ties with TIP will do nothing to stop the increase of corruption and are seen as yet another blow to democracy and the rule of law.

Pakistan's former envoy to the US and India, Ashraf Jehangir Qazi, wrote in a December 2010 article, that "all is not yet lost. Our people are indeed resilient. They need to be organized and provided with hope." Qazi reviewed the WikiLeaks revelations and the cables from the US ambassador that made it clear what has been known for a long time -- that a corrupt Pakistan leadership is held in international contempt, and is being kept in place as long as it serves the interests of the US. This is indeed problematic as the country continues to disintegrate.

Qazi also referred to the WikiLeaks cable describing politician Imran Khan's interview with a US congressional delegation in January 2010, where he bluntly criticized US policy as dangerous and mistaken in supporting "the man and not the democratic process" first with Musharraf and then with Zardari. Khan called on the US to scale back its operations in Afghanistan and replace the counter-productive military action with "dialogue, policing and intelligence gathering" as the drone attacks are simply radicalizing Pakistani youth and provoking revenge and animosity against the US.

Imran Khan is being recognized as the only Pakistani politician ready to stand up against US policy and is gaining popularity for his refusal to compromise with power in return for political benefit. Described by Ghazi as "clean, devoted, trusted and capable", Khan's popularity is increasing as his campaign gets underway for Pakistan's Presidency. His party, the PTI, has no patrons in high places, he vows to disassociate Pakistan from the US war on terror and he has announced that he will tackle terrorism, corruption, unemployment and inflation. Described as the last hope for Pakistan's future, he has increasing support from the youth of the country. He sounds confident that he can mobilize the trust of the people and that his party will sweep the polls in the coming election. Certainly the people of Pakistan deserve a political alternative to the vicious indifference of the current administration.

Dr Azeem Ibrahim is a Fellow and Member of the Board of Directors at the Institute of Social Policy and Understanding and a former Research Scholar at the Kennedy School of Government at Harvard and World Fellow at Yale.

More writings here: www.azeemibrahim.com

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