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Articles |
NAB thriving on corruption!
BY : HUZAIMA BUKHARI AND DR IKRAMUL HAQ
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ARTICLE (March 05 2010): According to a press report, Chief Justice Iftikhar
Mohammad Chaudhry, while hearing the case of
Harris Steel Mills on February 22, 2010 "was startled to learn that the
National Accountability Bureau (NAB) had a legal
claim on money it had recovered from the accused in the Rs 9 billion Bank of
Punjab loan scam, and suggested that its
officers quit their jobs and set up a recovery agency.
Every department will come and claim money tomorrow if this practice is
allowed". The Chief Justice inquired from the NAB
about the laws that authorise it to get the money. The NAB failed to satisfy
the apex court under what law it was claiming 40
percent (up to 25 percent from the complainant and 15 percent from the
accused) of the total amount recovered in financial
crimes.
An investigating officer of the NAB, present in the court, referred to a
notification issued on July 6, 2000 for retaining
the money out of recovered amount, but the Financial Crimes Director of the
NAB expressed ignorance about any law to justify
claim over recovered money.
This shows how the NAB has been working - taking a huge commission without
any lawful authority. It is a matter of concern
that the NAB has not only miserably failed in combating corruption but also
unlawfully squandered money from public funds
looted by the crooked. One the one hand, the nation is suffering
economically due to colossal revenue losses, fiscal crimes,
corruption and financial frauds and, on the other the agency - established
to combat these menaces - is guilty of axing 40%
commission from the recovered amount!
What has NAB done to unearth and seize black money? It never seized enormous
untaxed money grabbed by public office holders
and bureaucrats. On the contrary, the NAB has been a co-sharer in the looted
public funds. The problem of money laundering
and tax evasion already poses a serious challenge to our state.
Successive governments have been shamelessly appeasing the tax evaders
through various amnesty schemes, which continue to
fail miserably while black economy keeps growing rather than showing any
decline. The top tax managers sitting in the NAB and
the Federal Board of Revenue (FBR) are hand in hand with plunderers of the
national wealth and the result is before us - the
entire state structure is fast crumbling.
The people, hooked on ill-gotten wealth, for the last many decades know for
certain that after every two or three years,
there will be an amnesty scheme giving them a chance to purge their
income/assets by paying far less an amount than what they
are required to pay under the normal income tax/wealth tax regime.
It is a tragic situation where the entire state apparatus is subservient to
those who blatantly manage to conceal their
income and wealth. It is an ugly joke with those, who have been paying their
taxes honestly at much higher rates than those
offered to tax evaders for whitening their ill-gotten wealth.
Behold the recent declaration of the members of the National Assembly-none
of them disclosed any tax paid on incomes from
which their monstrous wealth had been created. Since 1979 (courtesy General
Zia-ul-Haq's legacy of speed money culture
religiously followed by all the subsequent governments), Pakistan's
underground economy has been growing at an alarmingly
rate of 20% per annum.
There are multiple factors leading to this phenomenon, most notably the
state-sponsored corruption and deliberate tolerance
to malpractices. Pakistan, by all means has a soil, which has proved to be
very fertile for the proliferation of an
underground economy since the very early days of independence when the
allotment mafia came into existence whereby many
notorious elements turned rich overnight. They are still dominating the
ruling structures by wielding their money power,
which they have achieved without putting any effort in achieving it.
The NAB was established to provide effective countermeasures for eliminating
corruption that generates black money - its job
was to arrest and punish the wrongdoers. But it proved to be yet another
government department, minting money for self-
aggrandisement! It is well-established now that the NAB was used to
victimise political opponents of its mentor rather than
cracking down on those engaged in massive corruption, financial crimes and
tax frauds.
People of Pakistan were told that the NAB would nab the corrupt and the
influential. However, facts prove that it is just
another inefficient and corrupt state organisation that has grabbed billions
of rupees looted by the corrupt from the
national exchequer.
Tax evaders, rent-seekers, mafias engaged in organised crimes, drug barons
and smugglers, responsible for colossal revenue
loss to national exchequer, were not nabbed by the NAB and if at all some of
them were arrested, huge commission was taken by
the agency as commission.
To counter the menace of corruption by the state functionaries and holders
of public offices, tall claims were made by the
NAB, but practically it was a tool in the hands of rulers of the day -
military and civilian alike - for political
victimisation of the opponents.
This institution only protects the mighty and grabs those who refuse to
share their ill-gotten wealth or budge before the
rulers of the day. The NAB played a very dirty role in securing "political
allegiance" for Musharraf. After coming into
power, Zardari et al - beneficiaries of the infamous National Reconciliation
Ordinance 2007 - decided to dump the NAB and
bring a new enactment in the house to replace it, but till today no tangible
progress has been achieved towards this goal.
Unfortunately, Pakistan has become a place where rampant and
institutionalised corruption has become a way of life. In tandem
with this silent conspiracy is the fact that the laws against racketeers are
not enforced and if they are, the penalties are
derisive, eg cases of Mansoorul Haq, Mian Iqbal Farid and many others
handled by the NAB in the past.
Money (of all kinds), from whatever source it comes, is the catchphrase in
our society: aid money, commission money, drug
money, American money [in exchange for fighting war against terrorism
(sic)], and 'black' money (which one can 'whiten' by
just 'remitting' through normal banking channels!). One just needs to go to
a licensed money exchange company, pay a premium
and telegraphic transfer to one's account is instantly arranged.
A very simple way of money laundering and no questions asked even by the tax
people [section 111(4) of the Income Tax
Ordinance 2001 gives full protection to such sham transactions].
And the proof of its lavish expenditure is prominent: in the ostentatious
sprawl of new urban development, in the gleaming
rows of foreign cars on the streets, in the smugglers' markets, brimming
with the latest in foreign electronic gadgetry and
in the shops crammed with foreign goods. Who says this is a poor country?
The government is poor, but the people are very
rich - see the large number of rural people going to Umrah these days,
spending lavishly after getting good support price for
bumper wheat and rice crops.
The chief preoccupation of this nation is money. Everybody is yearning for
luxurious living while their fellow countrymen are
dying of hunger and diseases (see the misery of Internally Displaced Persons
in open camps). This mad race for money and
outlandish living explains why the society as a whole has become indifferent
to corruption. The general attitude is of
helpless resignation, an acceptance of the defeatist principle that if one
is to survive, one must play the game.
The bleak side of the picture is that the persons, who are capable of
checking this distortion, the politicians and
bureaucrats, are unlikely to oblige: for it would sever their financial
lifelines. It is an incontrovertible fact that the
income gap among the Pakistanis has been gradually widening and the trend of
rich becoming richer and the poor poorer is
gaining strength.
Generally, the analysts have attributed it to economic policy, but they have
neglected the impact on income distribution of
tax revenue losses generated by the underground economy. Virtually, all
types of hidden incomes arising from vast and
widespread underground economic activities have escaped tax regulations and
this should be considered as an important cause
of the widening of the Pakistanis' income gap over the last 30 years.
Time has come that the State gives up its policies of appeasement towards
plunderers of the national wealth and tax evaders.
The foundations of corruption and rent-seeking activities of the state
functionaries and holders of all public offices have
to be destroyed with full force if we have to progress as a democratic
nation.
If the government demonstrates political will by confiscating all ill-gotten
assets for the welfare of the poor, the citizens
will certainly reciprocate by paying their taxes diligently and honestly.
This will control and eliminate corruption in
Pakistan.
If the system is to be prevented from sinking into greater chaos and
ultimate collapse, corrective actions must be taken
forthwith, the starting point being a clear recognition of the role of the
state - especially its chief organs ie
legislature, judiciary and executive to work pro-actively. The state will
have to vehemently direct its entire energies to
enforcing the laws that protect the public from cheats and racketeers rather
than reinforcing a system which protects and
encourages them.
This requires a bold and clean leadership capable of restraining the
ballooning state and proclaiming this unpalatable truth,
and setting standards for the rest of the citizenry. Unless such a
leadership emerges and acts fast with the help of masses,
no positive results can ever be achieved in fighting corruption no matter
how many institutions like the NAB are dismantled
or new ones formed on their ruins.
(The writers, tax lawyers, are Visiting Professors at Lahore University of
Management Sciences (LUMS))
Copyright Business Recorder, 2010
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