The corruption challenge

The Federal Board of Revenue (FBR) issued regulations granting banks access to asset declarations of high-level federal civil servants for purposes of AML/CFT compliance of customer due diligence in February 2023. The task force to review the anti-corruption institutional framework has commenced its work.

This comprehensive review will include the participation of independent experts with international experience and civil society organizations but will see a delayed publication (along with proposals for legislative amendments, as appropriate). Staff encourages the authorities to seek capacity development support for identifying further critical institutional governance reforms—IMF Country Report No. 23/260 Pakistan dated July 18, 2023

Revamping state apparatus for countering corruption in Pakistan has been a longstanding demand at home and abroad. It was even included in US $ 6.5 billion Extended Fund Facility (EFF) programme signed by the coalition government of Pakistan Tehreek-e-Insaf (PTI) with the International Monetary Fund (IMF) in July 2019, extended by the alliance government of Pakistan Democratic Movement (PDM) that expired on June 30, 2023 due to remaining incomplete.

Pakistan was on the radar of global watchdog, the Financial Action Task Force (FATF), working to fight against money laundering, terrorist and proliferation financing, due to deficiencies in its Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime. FATF placed Pakistan on the list of jurisdictions under increased monitoring handing over a complete plan to address it.

As part of the agreements made with the IMF and due to its placement on FATF’s grey list, Pakistan was obligated to implement the agreed agenda and adhere to all 40 recommendations considered global standards for countering AML/CFT. These recommendations aimed at fostering transparency, and streamlining detection, investigation, and prosecution in case of corruption, money laundering, and stolen assets, emphasizing the importance of safeguarding integrity of public sector while protecting private sector from exploitation.

Despite committing to global monitoring bodies, no significant improvement was observed in revamping corruption countering system during PTI’s tenure. Pakistan’s ranking on the global perception index released by Transparency International dropped significantly from 118 to 140, indicating a decline of approximately 22 points. Interestingly, this ranking remained unchanged during the PDM government, even after 16 months of assuming power.

Resultantly, in the recent IMF country report released on July 18, 2023, the IMF has emphatically mentioned that corruption and red-tapism but notably excessive regulation is one of the obstacles Pakistan is encountering in achieving the desired economic growth requiring the authorities to review anti-corruption measures in the country.

Despite the existence of Prevention of Corruption Act of 1947 and various other laws dedicated to combating corruption, it is unfortunate that we could not improve our rating on the global index.

From military dictators to civilians, all used corruption as a primary tool to suppress dissenting voices and consolidate their power during their regimes notwithstanding that under the Pakistan Public and Representative Office Disqualification Act of 1949 (PRODA), individuals found guilty of corruption could face a fifteen-year ban from holding public office.

During his tenure, the military dictator Field Martial Muhammad Ayub Khan implemented the Elective Bodies Disqualification Order (EBDO) in 1959, which authorized special tribunals to try politicians for “misconduct”, a term that was not explicitly defined. It also offered relief from prosecution for those who agreed not to run for any assembly election for a period of approximately seven years.

Following in the footsteps of Ayub Khan, General Muhammad Zia-ul-Haq adopted similar measures. He curtailed all political activities and declared Martial Law Order (MLO) in June 1978. Additionally, disqualification tribunals were established to investigate charges of misconduct against politicians who contested the 1977 elections.

After imposing martial law, General Musharraf employed the same tactic of alleged corrupt practices against dissenting voices. He introduced the National Accountability Ordinance, 1999 and made it applicable retrospectively from January 1, 1985. This was in violation of Article 12 of the Constitution of Islamic Republic of Pakistan that specifically provides protection against retrospective punishment.

In 2002, under the supervision of Lieutenant General Munir Hafiz, the Chairman Steering Committee/Project National Anti-Corruption Strategy was launched.

The objective of this strategy project was to conduct a comprehensive review and assessment of the causes, nature, extent, and impact of corruption. The goal was to formulate a broad-based, high-level, and integrated strategic framework to combat corruption and develop an implementation plan.

Unfortunately, despite the involvement of prominent foreign and local experts, as well as high-level public officials, in the process of drafting the National Anti-Corruption Strategy, desired outcomes could not be achieved, nor has a clear definition of corruption been provided.

Foreword by the chairman of National Anti-Corruption Strategy indicates a greater interest in discrediting politicians rather than genuinely understanding root causes of corruption and formulating effective measures to combat it. The entire strategy report lacks specificity and fails to highlight technical flaws in the legislative and implementation framework.

Successive governments, civilian and military alike, adopted the same approach. They introduced person-specific laws and amendments to target opponents with corruption charges. However, none of the governments ever tried to provide a clear vision and definition of the term “corruption”.

The Prevention of Corruption Act of 1947 underwent several amendments, primarily concentrating on extending the duration of punishment. Section 3 of this Act categorizes offenses mentioned in sections 161 to 165 as cognizable offenses about gratification. On the other hand, section 5 explains criminal misconduct. However, the definitions and explanations provided in these sections do not align with the contemporary understanding of the terms “corruption” or “bribery”.

Similarly, the National Accountability Ordinance of 1999 has undergone multiple amendments over time, the latest in 2023, introducing section 14A. This newly added section seemingly deals with the presumption of the accused accepting illegal gratification.

Unfortunately, it contains language resembling the sections that pertain to offences mentioned under articles 161 to 165 of the Pakistan Penal Code but under the provisions of section 14A, a person found guilty of any such act would be presumed to be involved in corruption or corrupt practices.

The legislature’s approach appears to be focused on refining the existing wording in the new section instead of incorporating constructive language that specifically defines the offense related to contemporary methods of corruption and addresses its various forms and sources, including its scope.

As a signatory to the United Nations Convention against Corruption, Pakistan is bound to develop laws and regulations that align with the criteria specified in the convention, aimed at combating corruption. The Convention outlines five key areas that each country must prioritize: preventive measures, criminalization and law enforcement, international cooperation, assets recovery, technical assistance, and information exchange.

However, it appears that Pakistan’s performance is lacking in all these areas. Moreover, there is a pressing need to prioritize capacity-building exercises for law enforcement agencies, particularly at the lower and upper levels of the judiciary, to ensure a better understanding of the true implications of corruption.

Pakistan is in dire need to introduce and implement comprehensive legislation concerning international cooperation, facilitating the process of seeking mutual legal assistance. Additionally, staff and judicial officers should receive training on both formal and informal channels of international cooperation, as well as on asset recovery methods based on conviction and non-conviction.

In addition to these efforts, Pakistan must work towards enhancing its extradition laws to streamline this process. Improving case management system is equally crucial, enabling agencies to effectively track and apprehend individuals involved in corruption cases and bringing them back to the country for appropriate legal action.

The mutual evaluation report released by the Asia Pacific Group in 2019 strongly criticized Pakistan’s inter-agencies cooperation. To address this concern, it is imperative to establish a comprehensive and efficient mechanism for cooperation among agencies, ensuring that corrupt elements are swiftly traced and brought to justice without unnecessary delays. Taking these steps will undoubtedly contribute to our goal of creating a corruption-free Pakistan.

(Huzaima Bukhari & Dr. Ikramul Haq, lawyers, and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of the Pakistan Institute of Development Economics (PIDE). Abdul Rauf Shakoori is a corporate lawyer based in the USA and an expert in ‘White Collar Crimes and Sanctions Compliance’)

Copyright Business Recorder, 2023