ARTICLE: Generally, white collar crimes are difficult to solve. In fact, it becomes almost an insurmountable challenge when one tries to prove these cases beyond a shadow of doubt in a court of law, no matter how strong the evidence. It is like trying to follow the footprints of someone who had walked on ice.
That is perhaps mainly why the performance of the National Accountability Bureau (NAB) has remained so shoddy since it was set up in early 2000s by the Musharraf regime. The low quality professional standards of the Bureau's prosecution and investigation personnel have also added considerably to the Bureau's shoddiness.
One saw the Bureau go into an overdrive since around 1917 after having remained dormant for more than a decade. Still the outcome has not been any better.
Because of the elusive nature of such crimes it has been universally recognized that preemption rather tackling them after the fact was perhaps a more prudent approach to control the occurrence of white collar crimes.
Indeed, social controls rather than legal controls are said to be basic minimum that is required to keep a tight leash on the occurrence of all kinds of corruption incidents, including white collar crimes, in a society. These social controls constitute a strong parliament, an independent judiciary and a fearless press.
At the same time effective regulatory bodies are required to further minimize the incidence of white collar crime. But for these bodies to be legally effective, they would need to be functionally autonomous of the ministries whose working they are supposed to regulate. At present in Pakistan, all the 20-odd regulatory bodies are part of the ministries they are supposed to regulate (Pemra is under Information& Broadcasting Ministry, Nepra under Power Ministry etc.), which makes them totally impotent when it comes to preempting white collar crimes in their respective ministries.
According to a wide-ranging research paper prepared by Yuen Yuen Ang (Unbundling Corruption: Revisiting Six Questions on Corruption), white collar crime (which she calls access money) is distinct from three other varieties (petty theft, grand theft and speed money).
Yuen Yuen Ang is an Andrew Carnegie Fellow and Associate Professor of Political Science at the University of Michigan. She is the author of an award-winning book, How China Escaped the Poverty Trap (2016).
It would help our political parties, both those in government as well as those in opposition to have their think tanks to go through this research paper with a fine toothcomb. This will help them come up with the right kind of ideas for keeping the incidence of white collar crimes to the minimum. Eradication of corruption as such is almost impossible. It is part of human nature.
The author distinguishes between corruption involving two-way exchanges between state and social actors, including but not limited to bribery, and corruption involving theft, such as embezzlement or extortion. This distinction is said to be important because whereas corruption with exchange generates at least some benefit for transacting parties, state actors who rob citizens and public coffers provide no benefit in return, generating a net loss for society.
Petty theft refers to acts of stealing, misuse of public funds, or extortion among street-level bureaucrats. Grand theft refers to embezzlement or misappropriation of large sums of public monies by political elites who control state finances. Speed money means petty bribes that businesses or citizens pay to bureaucrats to get around hurdles or speed things up. Access money (white collar crimes) encompasses high-stakes rewards extended by business actors to powerful officials, not just for speed but to access exclusive, valuable privileges.
In reality, the four categories often mix and overlap. For example, corrupt police officers may set up speed traps to extract bribes from drivers, which is both an act of extortion (manipulating speed limits) and exchange (bribes in exchange for skipping fines). In addition to obviously illegal forms of corruption (petty theft, grand theft, and speed money), it encompasses elite exchanges of power and profit in the category of access money. This can manifest in both illegal (large kickbacks to government officials for procurement deals) and legal, institutionalized ways (offering politicians' aides future jobs in the private sector, for example).
A clear distinction has been drawn by the author between two types of bribery (or transactional corruption) that are frequently conflated in the literature: "speed money" as opposed to "access money." Whereas speed money, a commonly used term in corruption studies involves paying bribes to overcome excessive red tape or delay, access money buys special deals and lucrative perks.
All corruption is damaging, but according to the author not all types of corruption impede capitalist activities, nor do they cause the same kind of harm. The best analogy used by her is that of drugs. Petty theft and grand theft are said to be equivalent to toxic drugs; they are the most economically damaging as they drain public and private wealth. Worse, such corruption subverts law and order, deterring investors, local businesses, foreign aid donors, and tourists.
On the other hand, speed money is like painkillers; although they lessen pain, consuming them in excess is harmful. Some argue that speed money (petty bribery) enhances efficiency by allowing citizens to overcome administrative hurdles and delays. But this kind of corruption still imposes a cost-and thus constitutes a tax-on citizens and businesses. Petty bribes are especially burdensome to the poor.
Access money is said to be the steroids of capitalism. Steroids are known as growth-enhancing drugs, but they come with serious side effects: by enriching capitalists who pay for privileges and rewarding politicians who serve capitalist interests; access money perversely stimulates transactions and investment, which translates into GDP growth.
Yet this does not mean that access money is "good" for the economy-on the contrary, it distorts the allocation of resources, breeds systemic risks, and exacerbates inequality. The harm of access money only blows up in the event of a crisis: for example, America's first great depression of 1839 (triggered by risky public financing and state-bank collusion), the 1997 East Asia financial crisis, and the 2008 US financial crisis. In the case of developing countries like Pakistan access money (white collar crime) spells a never ending short boom and long burst cycles confining the economies of these countries in perpetual bondage of rich countries.
The main advantage of Unbundled Corruption Index (UCI) as opposed to the usual Corruption Perception Index (CPI), according to the author, is that it reveals that some wealthy countries with low aggregate levels of corruption may have moderately high levels of access money. The United States is mentioned as a case in point. According to the CPI in 2017, the United States is ranked among the least corrupt countries in the world. Yet the US score on access money is above average in data set of 15 countries, higher than Thailand, South Korea and even Ghana.
Corruption is conventionally defined as the abuse of public office for private gain. Most studies interpret this to mean illegal abuses of power, including graft, embezzlement, and vote buying, which are most rampant in poor countries.
This conventional scope of corruption omits non-illegal exchanges of power and profit among elites that do not involve bribes or breaking laws, which do exist in wealthy democracies (and among a handful of the elite that capture the economy in developing countries, like Pakistan). Examples include cultivating political connections, campaign finance, revolving-door practices (moving between leadership posts in private and public sectors), making offers of future lucrative positions, and "undue influence" (defined by legal scholars as "a distortion of political outcomes as a result of the undue influence of wealth").
Access money is the dominant type of corruption among the five high-income cases (United States, South Korea, Japan, Taiwan, and Singapore). Within this group, the level of access money in the United States is the highest.
Yet, functioning like steroids, this corruption also produces distortions and risks. For example, it channels excessive investment into speculation in real estate, widens inequality in society and between connected and non-connected capitalists, and generates strong vested interests that block liberalization.
Generally, the risks of access money increase with the "financialization" of the economy, where politically connected players can rig complex, opaque financial schemes for astronomical gains, with minimal or no checks. This story of collusion and loose regulations leading to excessive speculation and finally a collapse of the financial system dramatically played out during the 2008 US financial crisis. And as it is being played out in countries like Pakistan all the time.
Petty theft, speed money, and even embezzlement can be mitigated through capacity building (for example, cashless payments can reduce petty bribes; e-governance can reduce leakage of public funds and make embezzlement easier to detect). But to escape access money practices require long term qualitative reforms like replacing free market economy with social market economy in which it is the public sector that calls the shots and the private sector is effectively denied its 'greed is good' mantra.
Copyright Business Recorder, 2020