Brazen corruption

There is absolutely no way that any government official should have been able to invest any amount into TIBL.

In 1999, former State Bank of Pakistan governor Dr Ishrat Husain published a book titled Pakistan: Economy of an Elitist State. Most Pakistanis would agree with both, the title of the book and Dr Husain’s main thesis: that Pakistan’s economy is a rigged game, structured to serve a privileged few, who preserve their power through corruption. The revelations that some government officials were able to invest the proceeds from privatisation transactions illegally into a bankrupt investment bank will only serve to perpetuate that image.

The PML-N is the one political party that purports to believe in economic liberalism: the idea that the best way to end this cabal of oligarchic corruption is to reduce the role of the state in the economy and eliminate opportunities for corruption. We applaud the sentiment and the notion that the government’s primary responsibility is to create a level playing field, but the government does itself a disservice if it allows privatisation transactions to be seen as only further increasing the power of the oligarchs, not decreasing it. In this particular case, there is absolutely no way that any government official should have been able to invest any amount, let alone Rs500 million, into Trust Investment Bank (TIBL). TIBL has defaulted on its own corporate bonds and has no credibility within Pakistan’s financial markets. That Rs500 million deposit is effectively a government bailout of a bankrupt financial institution and not even one that is essential for the financial system.

Investment banks in Pakistan do not even take deposits from ordinary citizens. They cater only to high net-worth individuals and corporations. There was clearly no public interest in assisting this financial institution. And given that TIBL defaulted on its obligations to the government, it was not a good investment either. We applaud the government’s attempts to create a more level playing field. But in doing this, it should take care to avoid doing so at the expense of further empowering the corrupt oligarchs.

Published in The Express Tribune, October 29^th, 2013.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.