Hidden corruption – who is the winner?
Team Politicians? No, they stood third with 10-20% of corruption volume. Team Government Officials? No, they stood second with 20-30% of corruption volume.
Who is the surprise winning team then, with a share of around 70% of corruption volume in Pakistan? Let me give you a few excerpts from entries by players of the winning team.
i) I had some connections with power circles, so I got a loan from a government-owned bank and “invested” in an industrial venture. After a few years, the business started getting down, therefore I got tax concessions and subsidies to cover my losses and keep “employment” opportunities. After nine years, the company defaulted on loans of billions of rupees, which were written off by the bank. During this time, I pocketed around Rs31 billion from this “industrial activity” and then moved on to another venture with a new loan from another bank. I paid around Rs1 billion to relevant officials at the bank and government agencies dealing with fiscal incentives and all of them are in the limelight for their corruption. I am just one of the hundreds of “players” like me in our team.
ii) I am owner of one of the biggest retail stores in Pakistan. I have yearly sales of around Rs20 billion, but I pay only Rs8 million as income tax and Rs13 million as sales tax. This is in addition to paying Rs15 million to tax officials who, in turn, get blamed for their corruption and save my Rs2.6 billion that was to be paid otherwise as tax due on me. I am just one of thousands of players like me in our team.
iii) My cousin became a bigwig in government and I “won” a contract for one of the biggest infrastructure projects in Pakistan. I established a “company”, hired relevant staff from other contractors, “saved” around Rs23 billion from this contract, liquidates the “company” as it was blacklisted, paid around Rs3 billion to my cousin and others, and now spending a happy life out of Pakistan. My cousin had to face investigation and inquiries on the grant of this contract. I am one of the dozens of players like me in our team.
iv) I manage a company of “corporate advisory” and help Pakistan by attracting FDI and supporting local investment and business development. Last year, with kind support of the BOI, Ministry of Finance and FBR officials, I “helped” the business, through issuance of SROs (some of these were issued and revoked within days) and other regulatory instruments, to save around Rs740 billion in the form of direct and indirect taxes. As this is high-level advisory, the “cost” of these savings was around Rs100 billion shared with different officials, including politicians, involved in this. Some of them are facing NAB and FIA investigations; good luck to them. I am one of the few big and many small players like me in our team.
Due to word limitation, I had to edit many more fantastic entries such as land grabbing, getting fake export rebates, price hoarding, manipulating energy prices and playing with the government on supply of fuel, power and other utilities.
The team is so rich, so diverse, so powerful yet so hidden that I could not give a name to it. Anyway, do I still need to tell who is the winner?
It is ironic that we, as a society, feel better by associating big names with corruption, ie mostly the politicians or the known faces in government. The real game is being played by other players who are out of sight.
The above-mentioned are just a few tiny examples from this corruption saga – one can write a book easily and if someone wants to produce a 100-episode web series (as mainstream media may not dare), it will become super hit and never short of mind-boggling stories.
Loan write-offs
It is even more ironic that a certain part of this hidden corruption is “legalised” corruption. For example, scheduled banks in Pakistan can write off a certain percentage of bad debts or non-performing loans every year.
If you calculate the total credit outlay to the private sector (other than consumer finance) and take even 3% of that figure, you would be more than amused. For reference, the non-performing bank loans were Rs768 billion in 2019. Who are the ones benefiting from such write-offs? Please try to find around you and I will be happy to take my words back if any common citizen or small and medium-sized enterprise is identified as a beneficiary.
This is just one aspect of legalised corruption and there are many others in the form of fiscal and monetary incentive schemes, temporary reliefs, subsidies and so on.
There is another form of corruption that is “facilitated” corruption, in which most of the time the facilitator, ie the politician or government official, who may have got 10-30% of the share, comes in the limelight and we ignore the rest of the 70-90%.
The winner team, of corruption trophy, is hidden as we focus on known and soft targets. It is as powerful as it is entrenched in power circles and bought influence and is deep-rooted as it is not limited to a certain sector or modality. If one is really serious about eradicating corruption, then we need to see behind the wall, go deeper down to the roots and focus wider than our defined zoom.
Talking of zoom or focus, the recent reforms of NAB may render it “Not Applicable Bureau” for most of the corruption cases, particularly the ones by the winning team. A brief point to conclude – the devil is in details but we love only headlines.
The writer is an international economist
Published in The Express Tribune, December 7th, 2020.
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