1

WHITE COLLAR CORRUPTION: With Reference to Role of Anti-Corruption Agencies

in Politics

Presenter: Mirza Sultan M. Saleem,ExC-NAB

DIRECTOR INVESTIGATION NAB

103rd NMC

CURRENT ISSUE PRESENTATION

Dated: 2.9.2015

2SEQUENCE OF PRESENTATION

Currency of Topic.Statement of ProblemScope and Justification

White Collar Corruption(WCC)- Jinnah’s View White collar corruption and politics –DefInstitution and LawsGenesis and history of corruption Whether NAB a political tool?

Why anti corruption efforts not successful-Analysis?ConclusionRecommendations

3White Collar Corruption: Currency Punjab CM Shahbaz Sharif in a press Conference grills NAB

for corruption report mentioning Sharif brothers in the list of 150 cases against bigwigs submitted to the Supreme Court;1

1. Sajid Zia, “Shahbaz grills NAB for corruption report” The Nation, 9 July 2015; last accessed: 24.08.2015.

Intro-White Collar Corruption?? Is conscious act of reciprocation of undue

benefits in respectable class and has impact on the governance/politic.

Plays havocs against public merits, development and peace process ,devastates credibility ,integration and writ of the State. Its time less phenomenon, bearing more correlation with the socio-economic conditions and accountability mechanism in place in that particular society.

When anticorruption agencies1 are otherwise, used as tool against the opponents, political leadership loses confidence of Public and credibility of governance .

4

1. 1. Imtiaz Ali, “Federal agencies unnecessarily in Sindh, Qaim tells Nawaz”, Dawn, 20 August 2015; last accessed: 24.08.2015.

5 Statement of the Problem

Is white collar corruption a dynamic and persistent factor of politics of

Pakistan and anti corruption agencies are tool of ruling establishment ?

6Scope And Justification-WCC It is global and perennial issue of all societies and

has assumed horrendous proportion in dispensation of political and governance process.

Corruption funds - sounds now the backbone of terroristic activities, challenging the structure and writ of the state.

Since Pakistan inherits the corruption pattern from the governance model of Britons carried forward from the Mughal’s ;therefore scope of this research will remain within the domain of these periods travelling towards the current situation .

7White Collar Corruption Jinnah’s view on 06th May, 1945:

“Corruption is a curse in India and amongst Muslims, especially the so-called educated intelligentsia. Unfortunately, it is this class that is selfish and morally and intellectually corrupt. No doubt this disease is common, but amongst this particular class of Muslims it is rampant.”

Promulgation of Prevention of Corruption Act on 11th March, 1947

1. Zavvar Hussain Zaidi (ed), M.A. Jinnah—Ispahani Corrrespondence, 1936-1948, Forward Publications Trust, 1976, p.69, d. 6 May 1945.

8White Collar Corruption: Definition:

Edwin H. Sutherland: “... crime in the upper or white-collar class, composed of respectable or at least respected business and professional men”.1

FBI: “The term—reportedly coined in 1939—is now synonymous with the full range of frauds committed by business and government professionals.”2

PCA 1947 & NAO 19991. 1940, White Collar Criminality, American Sociological Review, 5:1-12, p.1.2. https://www.fbi.gov/about-us/investigate/white_collar; last accessed 21.08.2015.

9Prevention of Corruption Act,1947Received the assent of Governor-General on

11th March,1947

Applicable to all citizens of Pakistan and persons in service of Government.

Public Servant means “a person falling under every category of government officer .

Criminal misconduct categorized in five types

Punishment of the crime with imprisonment upto 7 years or with fine or with both.

10

National Accountability Ordinance -1999

Promulgated in 1999 and revised in 2002 for affecting recoveries of government dues, bank loans, and cases involving misuse of power, misappropriation of properties, and public cheating .

Applicable to all citizens of Pakistan and the public office holders in both provincial and central government other than the persons, member of armed forces and judiciary.

Corruption defined in 12 categories and concept of Plea Bargain.

Punishment up to 14 years(RI), fine, forfeiture of property.

11

Politics

In Pakistan, Like other developing countries politics means and synonyms to Protocol Undue Favor to Favorites - Nepotism Seeking obedience of enforcement agencies Burdening public exchequer with foreign loans on non-public projects Punishing opponents Targeted Appointments in Public Institutions – non deserving Plundering of Public Funds Borrowing Competence from non local forums

Cognizable under PCA 1947 & NAO 1999

1. Oxford Online Dictionary, last accessed: 24.08.2015

Definition:“the activities associated with the governance of a country or area, especially the debate between parties having power.”1

12

Institutions and Laws for Anti-Corruption in Pakistan:

Police State Bank of Pakistan under Anti-Money Laundering Act

2010/FMU FIA Customs under the 1969 Act Provincial Anti-Corruption Establishments Intelligence Bureau (IB) and Inter-Services Intelligence (ISI)

in support for gathering intelligence information (low-downs)

Wafaqi & Provincial Mohtasibs Provincial Ehtisaab Commission KPK. NAB - both federal and provincial for cheating public at

large and loan recovery

13International View of

Corruption

14

Historical Impulse- At Regional Level Corruption in public projects – Railway, Irrigation

system, new secretariat construction, new capital New Delhi and provinces.

“[The SE at CPWD office -1903]... gave us a map of the roads to be laid around the temporary Secretariat building on Alipur Road. No tenders were invited... The next day my father handed over the estimate to the overseer with a thousand rupee note. The following day the overseer came to see us. He had scaled down our estimates very marginally... My father gave him another thousand rupee note and a bottle of scotch.” Delhi, A Novel by Khushwant Singh, p.323.

15

History of W.C.C. In British Period– Clive’s Strategy and personality

Started career as merchant/writer in the East India Company;

Entered into power politics through military channels; Chased the available political gap; Skillfully purchased opponents’ insiders to dominate

over opponents Knew the art of obtaining funds for his administration

and himself through bribes; Amassed power and wealth through valor; Laid foundation of new era (British Empire); Removed from power politics but returned back with

increased hunger for corruption; Strong and survived administrative model.

16

Genesis of White Collar Corruption British Period:

Victory of Robert Clive as a result of corruption deal of Mir Jafar;

Robert Clive faced charges of corruption on his return to England.1 Lord Clive meeting with Mir Jafar after the Battle of

Plassey, oil on canvas (Francis Hayman, c. 1762), Source: https://en.wikipedia.org/wiki/File:Clive.jpg

1. Capital Plight: What Drives Corruption in India, Knowledge @ Wharton, 2 December 2010, last accessed: 21.08.2015

Clive’s Side Army

Siraj ud Daula’s SideArmy

2000 (Indian

62,000 (Indian

1,000 (British)

Mir Jaffar Army Chief of Nawab

9 (French)

17

History of W.C.C. under East India Company

British Period:

Corruption culture carry forwarded from the Mughal governance

structure;

Robert Clive faced corruption charges on returning to England.1

The first Governor General of India — Warren Hastings — faced

impeachment proceedings before the UK House of Commons.2

Reforms by Lord Cornwallis 1786-1793

1. Capital Plight: What Drives Corruption in India, Knowledge @ Wharton, 2 December 2010, last accessed: 21.08.2015

2. Ibid.

18

History of W.C.C. in Mughal Period

Governance Style of MughalsProvince, Sarkar/district, Mansabdar, Pargnah“Generals were paid cash according to the size of the

force they commanded. But by fielding a smaller army than the one they billed for, it was possible to skim off a sizeable sum every month.”1

“In the Mughal era, if you wanted anything done, your application would have to be accompanied by a Nazrana, or gift.”2

1. Irfan Hussain, More thoughts on Corruption, Dawn, 8 September 2012. 2. Ibid.3. A Treatise on the Civil Service of Pakistan by Kiran Khurshid.

19

History of W.C.C. in Mughal Period

“The invention of bakhshish as a practice of rewarding government employees even for routine tasks and favours legitimized corruption in the Mughal era. In the post-Akbar period, the civil service became highly corrupt.”1

Photo source: www.tajmahal.gov.in

1. Arora and Goyal, Indian Public Administration: Institution and Issues, New Age International, 1995 p.596.

2. Farhat Hussain, State and Locality in Mughal India, Cambridge UP, 2004, p.116.

20

Corruption in Pakistan-Periods

1947-1970: Rehabilitation and resettlement;1

1970-1977: Licensing, permits, and allotment of plots and land for political favourites;2

Selective Land Reforms1. Sikandar Aslam, White Collar Crime in Pakistan: Causes and Remedies, 95th National

Management Course, 2011-2012.2. General (r) Khalid Mahmud Arif, Corruption, Supreme Court website, last accessed: 21.08.2015.

21

Increased Corruption under Zia Regime (1977-1987)

Excessive American aid for Afghan war; Promotion of jihadi (Kalashnikov) culture, and

investment on non-state actors; Increased role of intelligence agencies in jihad

and politics; Increased smuggling of arms & drugs New political actors introduced to fill political

gaps; Writing off loans of politicians, appointments

for favourite politicians, election rigging.

Corruption Culture in Politics (1980-1999)

Emergence of the Mian Sharif family in politics; Emergence of structured corruption and horse

trading system for MPA/MNAs in competition with PPP;

Increased interventions and funds to agencies for election rigging resulting, inter alia, in creation of IJI in 1990;

Premature toppling of governments on charges of corruption, Zardari in jail, 1997 – Ehtisab Commission;

Benazir in self-exile, and Nawaz Sharif behind the bars, martial law imposed accusing politician, of corruption, in 1999.

22

HH

23

Zulfiqar Commission (1989) on Role of Agencies in Politics

“Arrogating to themselves the exclusive right to patriotism, it is understood that they [intelligence agencies] tried to manipulate the results [of 1988 general elections] in favour or against certain political parties by threats and coercion, persuasion and offers of bribe. Subsequently, efforts were made to destabilize the government duly established by law and these agencies tried to act as virtual king-makers.”

Zulfiqar Commission’s Report, 27 March 1989, quoted in Azhar Suhail, Aijensiyon Ki Hukoomat, Vanguard Books, 1993, attached as annexure.

24

Role of anti-Corruption Agencies in Politics – Establishment of NAB

Musharraf’s first speech 11 Oct 1999, accusing politicians of corruption;

Reasons of martial law Loan recoveries; Recovery of government dues; Misuse of authority;

Nawaz Sharif PM and other leadership in Jail Establishment of NAB under NAO on 16 Oct 1999.

Source: http://s2.dmcdn.net/HdzAc/1280x720-8v9.jpg; last accessed: 21.08.2015

25

NAB – A Political Tool Formation of PML-Q and LFO 2002

Validation Political re-alignment for substitute leadership: Muslim League Q formed out of N-League and

PPP members accused by NAB for corruption; Case of politicians under investigation like

Faisal Saleh Hayat, Manzoor Wattoo, Ch. Pervaiz Elahi, Ch. Shujaat, etc.;

No new case instituted against Musharraf Regime; Cont..

26

NAB – A Political Tool Formation of PML-Q and LFO 2002

Validation Mian Sahiban on exile under the agreement; Benazir out of scene, Zardari in jail; New local government system introduced Election 2002, compromised under NAB

influence; NRO issued in 2007 Political Leadership returns home

29 Addl. NAB Cases presented to SC on 27th July 2015

Nawab Aslam Khan Raeesani Ex-CM Balochistan;

Aftab Ahmed Khan Sherpao, Ex CM KP, sitting MNA;

Shah Nawaz Marri, Minister Sports, Balochistan;

Firdous Ashiq Awan Ex MNA; Raja Pervaiz Ashraf, Shahid Rafi, Shaukat

Tareen; Ch. Shujaat Hussain and Ch. Pervaiz Ellahi; Mian Nawaz Sharif, PM and Shahbaz Sharif,

CM; Hussain Haqqani; Asif Ali Zardari; Ishaq Dar, Finance Minister.

27

1. NAB website, last accessed: 24.08.2015

28Status of Corruption in Pakistan

In December 2012, Chairman NAB Admiral (r) Fasih Bukhari estimated daily corruption to be around Rs. 10-12 billion;1

1. Asim Yasin, Daily Corruption Hovers Around Rs 12 bn: NAB Chie, The News, 14 December 2012

29

Comparator corruption perception index Pakistan-TIP

Year Rank in CPI Year Rank in CPI

1996 53 2005 1441997 48 2006 1421998 71 2007 1381999 87 2008 1342000 - 2009 1392001 79 2010 1432002 77 2011 1342003 92 2012 1392004 129 2013 127

2014 126Source: https://www.transparency.org/country/ Visited on 30th Aug2015

30Comparator corruption

perception index Pakistan-TIP

1997199819992000200120022003200420052006200720082009201020112012201320140

20

40

60

80

100

120

140

160

48

71

87

0

79 77

92

129

144 142 138 134 139 143134 139

127 126

Source: https://www.transparency.org/country/ Visited on 30th Aug2015

31

Why anti-corruption not successful

Reconciliation ,mutual, on political pitch; Appointment of heads of ACAs at the discretion

of ruling regime. Weak Prosecution and follow up; Excessive discretion both political/bureaucratic; Lack of political will and priority; Social system and governance design not

aimed at public service and corruption eradication;

Salaries of bureaucracy not market competitive and unsecure posting tenure.

32

Findings

Social design not aimed at creating a corruption free society;

Political leadership not committed for corruption free governance;

Anti-corruption agencies and white collar corruption used as a tool for achieving the political motives of the ruling elite.

33

Conclusion White collar corruption cases against

untouchable elite including political leadership are kept dormant by anti-corruption agencies on the directive of ruling regimes.

Every government uses the dormant case as the Sword of Damocles against the opponents for political alignment through anti-corruption agencies.

34

RecommendationsReformation of Anti Corruption Mechanism

 Heads, Regional Heads, Investigation and Prosecution Chiefs to be appointed through “Parliamentary Anti Corruption commission.

Administrative scrutiny of applications invited, on the line ,against add. on touch stone of prescribed qualification;

Open Public scrutiny and through Media-reports of performance

Each attribute of qualification to be numerically quantifiable, without any discretionary marks, to finalize the appointment on merit;

Market competitive remuneration ,tenure secure, delegation defined and performance indicator decided packages.

35

Recommendations -contd No duplication of agencies at provincial and federal level ;

one provincial and other at central govt. ACAs to be autonomous Financial -Administrative Complaints against ACAs employee to be decided by

Parliamentary Anticorruption Committee(PAC) All process of taking cognizance, initialization of

inquiry ,investigation proceedings and closure at any stage be decided by the ACA Board, whose member should be notified by PAC; and media to sit as observer in preceding.

No acting charge, current change or additional change be allowed by head for qualifying others a substitute member of the board.

36

RecommendationsReformation of Political System Election with in the party to be every two years and through election

commission Autonomous Election commission on the pattern of ACA

Governance and Cultural Transformation(International) Government Structure for regulation only – slim Wages market competitive Better emphasize on proactive service delivery of Health, Education,

Housing, internal security-basic needs Cross cultural and reciprocal education program at universities –Pakistan

Education Hub Exploitation of natural resources/ reserves and distant urban centers and

new business of opportunities for poverty alleviation.

37

THANK YOU