How does one even begin to respond to sheer absurdities emerging out of myths that were thought dead and buried a long time ago? The press release by the National Accountability Bureau (NAB) is one such absurdity, according to which the authority had “ordered complaint verification against former Prime Minister Muhammad Nawaz Sharif and others for allegedly sending $4.9 billion to India through money laundering as per media report.”
First, some background. In 2007, Dilip Ratha, a World Bank economist wrote a working paper titled South-South Migration and Remittances, in which he drew estimates of global remittance flows based on migration data with the assumption being: migrants send money back home. Mistakenly, Ratha confused the 1947 migration between India and Pakistan with labour migration. As a result, his model showed heavy inflows from India to Pakistan and heavier inflows vice versa. Lesson #1: Assumption is the mother of all goof ups.
But that lesson was not learnt. Ratha, individually, and the World Bank was told repeatedly by Pakistan’s central bank to fix the mistake. But even until 2014, the mistake was not fixed, which is why World Bank’s data (in its publicly available file: Bilateral Remittance Matrix 2014) shows $2 billion remittance flow from India to Pakistan and about $4.8 billion remittance flow vice versa.
This was a matter mostly known to economic geeks and hardly made it to public discourse until sometime in the first week of October 2015 Pakistan’s electronic media got a whiff of it and started getting hysterical about it in their usual way. The business desks of electronic media should have studied the report and the assumptions behind it. But they didn’t, and the TV press kept on running tickers. Lesson #2: Electronic media needs to invest in human capital and go easy on the getting-it-first mindset.
Responding to that hype, BR Research published a piece on October 9, 2015 titled The curious case of remittances to India. Back then, the State Bank of Pakistan (SBP) also refuted World Bank’s claims via a press release. But some myths are sticky.
In February 2016, the Wall Street Journal (WSJ) gave mileage to Ratha’s faulty analysis under its piece titled Why Does the World Bank Say Pakistanis Sent $5 billion to India Last Year? That piece only cited Ratha (who was still bent on proving his point) and did not take the point of view by Pakistan’s or India’s central banks. As a result, some foreign and Indian commentators had a field day by linking that report with allegations that Pakistan is funding militant threats inside the Indian territory. Lesson #3: Get both sides of the story. The WSJ should know better.
As a rebuttal to WSJ piece, BR Research wrote another piece on this subject on March 3, 2016. Titled Indo-Pak remittances: World Bank found wanting, that piece presented a detailed analytical account why Ratha’s and World Bank’s still have got it wrong. It also urged the World Bank to “run a corrigendum to help ensure that people are not misled in the future”.
The World Bank’s subsequent data published in Bilateral Remittance Matrix 2015 & 2016, do not report the absurdly high Pak-India remittance flows, and instead reports the numbers taken from the SBP. However, it didn’t run any such corrigendum or clarification until May 8, 2018, when it clarified that its “report does not include any mention of money laundering nor does it name any individuals”.
Lessons #4 and #5: A stitch in time saves nine; and don’t brush things under the rug. When the World Bank could change its data in 2015 & 2016 datasheets, it could have also come out in the open and accepted its flawed assumption based on which it was releasing previous datasets.
If any of the brilliant investigators at NAB had bothered to look beyond ‘media reports’ before ordering inquiry on allegations against Nawaz Sharif for laundering money to India, there would not have been any need for you to read this comment. The unintended consequence of NAB’s faux pas is that a non-issue has become an issue; who knows how many people are now discussing something whose very origins are absurd when, in fact, they should be spending their time on something better.
The intended consequences are something that conspiracy theories are made up of. There are those who claim that NAB did it to deliberately malign the reputation of former prime minister because everyone knows that the proverbial common man focuses on the headlines and doesn’t bother as much with clarifications and analysis. Then there are some theorists who claim that some pro-Nawaz insiders in NAB got this press release out to deliberately disrepute NAB as an organization that has personal vendetta against Nawaz.
Given the charged political environment in Pakistan, NAB would do well to give boots to those responsible for this blunder, and explain the true picture to the citizens of Pakistan. Lesson #6 & #7: NAB should not be exempt from public accountability, and it should train its staff to improve their intelligence faculties.
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