The favourite pastime of the chattering classes in Pakistan is blaming corruption for all the ills in our society. It is not poverty. Not illiteracy either. It is not terrorism or regional peace or climate change or scarcity of water. Neither is it over-population and unemployment. The discourse becomes exceptionally heated when charges of corruption – real or imaginary – are heaped at civilian politicians. It is not fashionable to discuss the corruption associated with the Holy Cows, the military and judiciary. Even the laws prohibit any investigation against them. Several civilian governments have been dismissed and the politicians hounded for life by the military and judiciary on charges of corruption.
Intense debates on the media, anti-corruption campaigns and establishment of bodies to curb corruption have all failed to produce results. Corruption is skyrocketing in all spheres of public life and has increased over time by all accounts. Surprisingly, undeterred by the false propaganda machine, the public at large considers unemployment and inflation to be far bigger issues than corruption as per multiple opinion surveys.
Motivated by narrow vested interests in the context of civil-military rivalry, the permanent establishment has been able to propagate a superficial false narrative, which tries to camouflage systematic institutionalised corruption in the State by focusing on the individual acts of certain individuals and a class of people, which often happens to be politicians. This simplistic narrative has consumed the civilian elites, with support from a sizeable chunk of the upper-middle-class, so much that they fail to see the systematic corrupt practices deeply rooted in the structure of the post-colonial state.
These elites have mostly flourished during the British Raj through loot and plunder of public resources, appointments in colonial administration, issuance of preferred trade licenses and grant of land to colonial loyalists. Unlike India, the areas comprising Pakistan had a relatively weak industrial base. Muslim League was dominated by feudal interests and instead of developing and strengthening parliamentary democracy and focusing on industrialisation and ending feudalism, it soon gave up power to a corrupt overdeveloped post-colonial administrative structure dominated by civil and military bureaucrats.
The military and civil bureaucracy, that had excelled in serving their colonial masters, did not take much time to establish themselves as the sole arbiters of the distribution of national wealth. Subsequent martial laws saw the military occupying all important positions in the state and even the civil bureaucracy was relegated to a subordinated position. Things did not change much after the departure of the British rulers. The disdain and contempt for ordinary citizens and their political representatives was equally prevalent after partition.
As a reciprocity to the landed elites relinquishing power to the bureaucracy, large landholdings were kept untouched without any real land reforms as witnessed in neighboring India.
The Pakistani elite’s obsession and fascination with dictators and dictatorial regimes is rooted in that early period of independence. While the world had moved on the democratic path in the quest for knowledge, inventions in science and technology, rapid industrialisation, focus on health and education and resultant prosperity of their people, we remained stuck with archaic ideologies glorifying dictators and practicing religious bigotry to keep the masses ignorant.
Since time immemorial, like other parts of the world, India has witnessed the appropriation of communal lands and its transfer to the ruling classes over the centuries through coercion, intrigues, naked power and wars. From Rajas and Maharajas and their nobility to the Mughal rulers and their Jagirdars to the Zamindars under British rule, land was granted to a tiny elite for various services provided by them to the rulers. These services included recruiting soldiers for the army, provision of labour for irrigation canals and other public works and collection of revenue for the rulers. Grant of land ownership rights had remained a principal instrument for corrupting and manufacturing elites, who betrayed their own people and communities to protect the interests of the ruling classes.
It should not come as a surprise that land has remained a central plank in the genesis and roots of corruption in Pakistan’s early history and the period preceding it. The plunder in a real sense started with the grabbing and allocation of evacuee rural and urban properties left by the migrating Hindu and Sikh communities soon after Partition to the refugees coming from India on the basis of property claims that were left behind in India by them. The use of money and influence in accepting both real and fictitious claims by bureaucrats and Muslim League politicians is a well-known and documented fact, and remains the biggest scam in the history of Pakistan.
Soon after independence, control over tribes and tribal areas became an urgent task. The state decided to follow the policies of the colonial administration not to interfere in tribal affairs and Pakistani laws were not extended to these areas. No development schemes were launched here. Tribal chiefs were given the control of the areas with state stipends, bribes and the freedom to conduct all illegal businesses like cultivation and trade of narcotics, manufacturing and smuggling of arms etc. These drugs and arms eventually found their way into the cities and were instrumental in the increase of drug addiction and crime in Pakistan and in the countries of the former colonial masters. Law enforcement agencies became their partners in facilitating this trade.
As the colonial British Army’s prime objective was to control and subjugate the local population, their defense infrastructure was not built against any external threats. They set up their cantonments in cities instead of the country’s borders. Prime urban properties and rural lands were allocated to the British Army, which further proliferated after partition. Periods of martial law further consolidated the military grip over the country’s resources and land became the primary target of lust. Land allocated initially for defense needs was gradually passed on for commercial purposes. The military started enjoying unparalleled powers to acquire more and more lands from the provinces and convert the cantonment areas to establish their residential societies, clubs, marriage halls and shopping plazas. In fact, the military started allotting both urban and rural land to senior military officials as rewards. Most of these officers became absentee landlords. The navy, air force and civil bureaucracy also followed suit and started building their own empires on similar lines.
Land became the primary sanctuary for accumulation of capital and attracted black money from bribes in the bureaucracy, tax evasion by traders and industrialists, illegal smuggling, contraband narcotics and illegal arms trade. The laws drafted by the ruling elites allowed the owners to show only 10-20% of the value of properties and there was very minimal tax on property transactions. Speculators could invest black money in both urban and rural land. Agricultural landholdings were altogether exempted from taxes.
So much so that there is not a single property owner who can claim to have white money invested in real estate. Now this form of stashing illegally obtained money is widespread amongst millions of owners of urban property and agricultural land, and is accepted by everyone without raising any eyebrows. The fascination for trouble-free investment in land has proven to be responsible for a weak industrial base, which is considered risky by the investors due to a complex bureaucratic structure formed to control them. Pakistanis don’t have to go anywhere for money-laundering as investments in real estate provide the perfect place to hedge black money obtained through corruption, illegal and criminal activities.
The latest phenomenon of rent-seeking being observed in the last few decades is that people close to ruling circles are privy to information about future infrastructural projects, road networks, industrial and residential societies and buy the land around these developments in order to later sell it at higher rates to these development projects or the general public (just like inside information in the stock exchange). Many politicians and military officials were found to buy land around developments like industrial parks and DHA, which was later sold to these organisations at an inflated rate.
It was a difficult task for the state of Pakistan to lure mercantile capital to invest into industries soon after independence. For this purpose, the state-sponsored Pakistan Industrial Development Corporation (PIDC) was formed to initiate industrial projects, which in the course of time were turned over as running concerns to private companies at bargain prices. The state-sponsored industrialization took place under elaborate bureaucratic controls, which made sure that the industry remained concentrated in the hands of a few influential families with ties to the military and civil bureaucracy. As a result, the trade, industry and banking all got dominated by the infamous 22 families and small businesses were squeezed out to leave the field in the hands of big business.
Bureaucratic control over industry had its origins in the pre-independence period, when the colonial administration had sought to restrict the growth of indigenous industrial capitalism to protect their own industry in Great Britain, which ensured that the bureaucracy is able to maintain a tight control over industrialists and also seek illegal gratifications and bribes on a large scale from private entrepreneurs. These bribes ultimately found their way into real estate and businesses owned by civil and military bureaucrats in partnership with entrepreneurs or in the names of their family members. To this day, bureaucratic control over industry and commerce remains one of the primary reasons for decay in these sectors. There are at least 30 separate government agencies and departments to strangulate the growth of industry and burden it with illegal gratifications.
The state-sector industry had to struggle hard to flourish under corrupt administrators and private interests despite contributing 20% to the country’s GDP. The finest examples of state-sector industry and services in transport, energy, power and water, utilities, communications and financial services fell one by one under incompetent and corrupt civil and military administrators, who ruined it for private gain. State-run entities like Pakistan Railways, PIA and Pakistan Steel were devasted by these heavy blows from bureaucrats.
The nationalisation drive of the 1970s under the Bhutto regime was misconceived and ill-planned. It added a huge number of medium and large private sector entities to the public sector, which over-burdened the civil servants, who were otherwise not competent to run such industries and grounded most of them. Profitable organisations were brought down with large scale embezzlements and corruption by the public sector bosses.
The railways, which were developed under the British rulers to primarily carry commodities from India for the European markets and was quite developed, had to suffer decline during the Ayub era as cargo movement through the road was given preference and the railways were neglected. Road transport licenses were mostly given to Ayub’s Hazara constituency, which still dominates this sector. Railways as an institution was ruined in the process.
The lack of continuation of democratic rule, lack of accountability of public servants, non-transparent transactions beyond public scrutiny and governmental over-regulation are responsible for most of the corruption done by the government servants in Excise and Customs, Income and Sales Tax, Police, Irrigation, District Administration, Building Control, Municipal services, Health and other government departments. Politicians and military officers in power during civil and military rules are notorious for kickbacks in the award of government procurement and contracts, granting of loans and later writing them off, bribes for transfer of civil servants to lucrative posts, cuts in development projects, taxation laws to suit their businesses etc. Here again corruption in awarding contracts in defense related procurements remains a no-go area for the public. Media and various anti-corruption agencies are reluctant to probe the corruption scandals associated with serving and retired military officials on lucrative positions. On the other hand, politicians are periodically held accountable not only to the electorate through elections, but also hounded by media, various anti-corruption watch dogs and agencies. It is hardly surprising that the media and agencies, which are supposed to be exposing corruption, become equal partners in the game.
While the government expenses are still subject to various controls and oversight from the Parliament and its audit agencies, media and the electorate itself, the Defense budget is still a no-go area for anyone. This concerns not just the combat side of the defense budget, but also the perks, privileges and facilities given to upper levels of officers, which are way above similar privileges in other countries and other services.
The Afghan war and the flow of US and Saudi money to the jihadis added another significant source of corruption amongst the military rulers, who trained and armed mujahideen and later Taliban, provided sanctuaries to the militants and educated them in the madrassas. It gave rise to the power of religious parties and its leaders, who enriched themselves with foreign funds and gave birth to multiple extremist organizations. Under the rule of General Zia-ul-Haq, the military top brass further got richer and also expanded its commercial activities, which now is believed to control a whopping US$ 20 billion business empire. Some of the people related to the nuclear program were even found to be transferring nuclear technology for private gain.
Epilogue:
Corruption is the epitome of injustice in an unjust society, just like poverty, illiteracy, and unemployment are. It is a form of elite capture, through which public resources are siphoned off for private gain by those in authority and power. It is endemic and pervasive. Just like other evils in our society, it won’t be eliminated by some miracle. It is a long-drawn-out battle, which is gradual and incremental and can only be successful if waged across the board, with accountability and transparency. Signaling out individuals to settle political scores obscures its institutional character and its deep roots in all sections of society. There are too many skeletons in the cupboards of our elites, and they will resist any attempt to dig out the past. A truth and reconciliation process may be initiated under a democratic government, which can dig out historic injustices done by elites with the resolve not to let it be repeated.
In the words of economist Asad Sayeed “It is important to be mindful of the fact that excessive moralising on corruption does not generate substantial dividends. As with much else, it is advisable to create institutions that will reduce the incidence of corruption over time.”
Intense debates on the media, anti-corruption campaigns and establishment of bodies to curb corruption have all failed to produce results. Corruption is skyrocketing in all spheres of public life and has increased over time by all accounts. Surprisingly, undeterred by the false propaganda machine, the public at large considers unemployment and inflation to be far bigger issues than corruption as per multiple opinion surveys.
Motivated by narrow vested interests in the context of civil-military rivalry, the permanent establishment has been able to propagate a superficial false narrative, which tries to camouflage systematic institutionalised corruption in the State by focusing on the individual acts of certain individuals and a class of people, which often happens to be politicians. This simplistic narrative has consumed the civilian elites, with support from a sizeable chunk of the upper-middle-class, so much that they fail to see the systematic corrupt practices deeply rooted in the structure of the post-colonial state.
These elites have mostly flourished during the British Raj through loot and plunder of public resources, appointments in colonial administration, issuance of preferred trade licenses and grant of land to colonial loyalists. Unlike India, the areas comprising Pakistan had a relatively weak industrial base. Muslim League was dominated by feudal interests and instead of developing and strengthening parliamentary democracy and focusing on industrialisation and ending feudalism, it soon gave up power to a corrupt overdeveloped post-colonial administrative structure dominated by civil and military bureaucrats.
The military and civil bureaucracy, that had excelled in serving their colonial masters, did not take much time to establish themselves as the sole arbiters of the distribution of national wealth. Subsequent martial laws saw the military occupying all important positions in the state and even the civil bureaucracy was relegated to a subordinated position. Things did not change much after the departure of the British rulers. The disdain and contempt for ordinary citizens and their political representatives was equally prevalent after partition.
As a reciprocity to the landed elites relinquishing power to the bureaucracy, large landholdings were kept untouched without any real land reforms as witnessed in neighboring India.
The Pakistani elite’s obsession and fascination with dictators and dictatorial regimes is rooted in that early period of independence. While the world had moved on the democratic path in the quest for knowledge, inventions in science and technology, rapid industrialisation, focus on health and education and resultant prosperity of their people, we remained stuck with archaic ideologies glorifying dictators and practicing religious bigotry to keep the masses ignorant.
Since time immemorial, like other parts of the world, India has witnessed the appropriation of communal lands and its transfer to the ruling classes over the centuries through coercion, intrigues, naked power and wars. From Rajas and Maharajas and their nobility to the Mughal rulers and their Jagirdars to the Zamindars under British rule, land was granted to a tiny elite for various services provided by them to the rulers. These services included recruiting soldiers for the army, provision of labour for irrigation canals and other public works and collection of revenue for the rulers. Grant of land ownership rights had remained a principal instrument for corrupting and manufacturing elites, who betrayed their own people and communities to protect the interests of the ruling classes.
It should not come as a surprise that land has remained a central plank in the genesis and roots of corruption in Pakistan’s early history and the period preceding it. The plunder in a real sense started with the grabbing and allocation of evacuee rural and urban properties left by the migrating Hindu and Sikh communities soon after Partition to the refugees coming from India on the basis of property claims that were left behind in India by them. The use of money and influence in accepting both real and fictitious claims by bureaucrats and Muslim League politicians is a well-known and documented fact, and remains the biggest scam in the history of Pakistan.
Soon after independence, control over tribes and tribal areas became an urgent task. The state decided to follow the policies of the colonial administration not to interfere in tribal affairs and Pakistani laws were not extended to these areas. No development schemes were launched here. Tribal chiefs were given the control of the areas with state stipends, bribes and the freedom to conduct all illegal businesses like cultivation and trade of narcotics, manufacturing and smuggling of arms etc. These drugs and arms eventually found their way into the cities and were instrumental in the increase of drug addiction and crime in Pakistan and in the countries of the former colonial masters. Law enforcement agencies became their partners in facilitating this trade.
People close to ruling circles are privy to information about future infrastructural projects, road networks, industrial and residential societies and buy the land around these developments in order to later sell it at higher rates to these development projects or the general public (just like inside information in the stock exchange)
As the colonial British Army’s prime objective was to control and subjugate the local population, their defense infrastructure was not built against any external threats. They set up their cantonments in cities instead of the country’s borders. Prime urban properties and rural lands were allocated to the British Army, which further proliferated after partition. Periods of martial law further consolidated the military grip over the country’s resources and land became the primary target of lust. Land allocated initially for defense needs was gradually passed on for commercial purposes. The military started enjoying unparalleled powers to acquire more and more lands from the provinces and convert the cantonment areas to establish their residential societies, clubs, marriage halls and shopping plazas. In fact, the military started allotting both urban and rural land to senior military officials as rewards. Most of these officers became absentee landlords. The navy, air force and civil bureaucracy also followed suit and started building their own empires on similar lines.
Land became the primary sanctuary for accumulation of capital and attracted black money from bribes in the bureaucracy, tax evasion by traders and industrialists, illegal smuggling, contraband narcotics and illegal arms trade. The laws drafted by the ruling elites allowed the owners to show only 10-20% of the value of properties and there was very minimal tax on property transactions. Speculators could invest black money in both urban and rural land. Agricultural landholdings were altogether exempted from taxes.
So much so that there is not a single property owner who can claim to have white money invested in real estate. Now this form of stashing illegally obtained money is widespread amongst millions of owners of urban property and agricultural land, and is accepted by everyone without raising any eyebrows. The fascination for trouble-free investment in land has proven to be responsible for a weak industrial base, which is considered risky by the investors due to a complex bureaucratic structure formed to control them. Pakistanis don’t have to go anywhere for money-laundering as investments in real estate provide the perfect place to hedge black money obtained through corruption, illegal and criminal activities.
The latest phenomenon of rent-seeking being observed in the last few decades is that people close to ruling circles are privy to information about future infrastructural projects, road networks, industrial and residential societies and buy the land around these developments in order to later sell it at higher rates to these development projects or the general public (just like inside information in the stock exchange). Many politicians and military officials were found to buy land around developments like industrial parks and DHA, which was later sold to these organisations at an inflated rate.
It was a difficult task for the state of Pakistan to lure mercantile capital to invest into industries soon after independence. For this purpose, the state-sponsored Pakistan Industrial Development Corporation (PIDC) was formed to initiate industrial projects, which in the course of time were turned over as running concerns to private companies at bargain prices. The state-sponsored industrialization took place under elaborate bureaucratic controls, which made sure that the industry remained concentrated in the hands of a few influential families with ties to the military and civil bureaucracy. As a result, the trade, industry and banking all got dominated by the infamous 22 families and small businesses were squeezed out to leave the field in the hands of big business.
Bureaucratic control over industry had its origins in the pre-independence period, when the colonial administration had sought to restrict the growth of indigenous industrial capitalism to protect their own industry in Great Britain, which ensured that the bureaucracy is able to maintain a tight control over industrialists and also seek illegal gratifications and bribes on a large scale from private entrepreneurs. These bribes ultimately found their way into real estate and businesses owned by civil and military bureaucrats in partnership with entrepreneurs or in the names of their family members. To this day, bureaucratic control over industry and commerce remains one of the primary reasons for decay in these sectors. There are at least 30 separate government agencies and departments to strangulate the growth of industry and burden it with illegal gratifications.
The state-sector industry had to struggle hard to flourish under corrupt administrators and private interests despite contributing 20% to the country’s GDP. The finest examples of state-sector industry and services in transport, energy, power and water, utilities, communications and financial services fell one by one under incompetent and corrupt civil and military administrators, who ruined it for private gain. State-run entities like Pakistan Railways, PIA and Pakistan Steel were devasted by these heavy blows from bureaucrats.
The nationalisation drive of the 1970s under the Bhutto regime was misconceived and ill-planned. It added a huge number of medium and large private sector entities to the public sector, which over-burdened the civil servants, who were otherwise not competent to run such industries and grounded most of them. Profitable organisations were brought down with large scale embezzlements and corruption by the public sector bosses.
The railways, which were developed under the British rulers to primarily carry commodities from India for the European markets and was quite developed, had to suffer decline during the Ayub era as cargo movement through the road was given preference and the railways were neglected. Road transport licenses were mostly given to Ayub’s Hazara constituency, which still dominates this sector. Railways as an institution was ruined in the process.
The state-sector industry had to struggle hard to flourish under corrupt administrators and private interests despite contributing 20% to the country’s GDP
The lack of continuation of democratic rule, lack of accountability of public servants, non-transparent transactions beyond public scrutiny and governmental over-regulation are responsible for most of the corruption done by the government servants in Excise and Customs, Income and Sales Tax, Police, Irrigation, District Administration, Building Control, Municipal services, Health and other government departments. Politicians and military officers in power during civil and military rules are notorious for kickbacks in the award of government procurement and contracts, granting of loans and later writing them off, bribes for transfer of civil servants to lucrative posts, cuts in development projects, taxation laws to suit their businesses etc. Here again corruption in awarding contracts in defense related procurements remains a no-go area for the public. Media and various anti-corruption agencies are reluctant to probe the corruption scandals associated with serving and retired military officials on lucrative positions. On the other hand, politicians are periodically held accountable not only to the electorate through elections, but also hounded by media, various anti-corruption watch dogs and agencies. It is hardly surprising that the media and agencies, which are supposed to be exposing corruption, become equal partners in the game.
While the government expenses are still subject to various controls and oversight from the Parliament and its audit agencies, media and the electorate itself, the Defense budget is still a no-go area for anyone. This concerns not just the combat side of the defense budget, but also the perks, privileges and facilities given to upper levels of officers, which are way above similar privileges in other countries and other services.
The Afghan war and the flow of US and Saudi money to the jihadis added another significant source of corruption amongst the military rulers, who trained and armed mujahideen and later Taliban, provided sanctuaries to the militants and educated them in the madrassas. It gave rise to the power of religious parties and its leaders, who enriched themselves with foreign funds and gave birth to multiple extremist organizations. Under the rule of General Zia-ul-Haq, the military top brass further got richer and also expanded its commercial activities, which now is believed to control a whopping US$ 20 billion business empire. Some of the people related to the nuclear program were even found to be transferring nuclear technology for private gain.
Epilogue:
Corruption is the epitome of injustice in an unjust society, just like poverty, illiteracy, and unemployment are. It is a form of elite capture, through which public resources are siphoned off for private gain by those in authority and power. It is endemic and pervasive. Just like other evils in our society, it won’t be eliminated by some miracle. It is a long-drawn-out battle, which is gradual and incremental and can only be successful if waged across the board, with accountability and transparency. Signaling out individuals to settle political scores obscures its institutional character and its deep roots in all sections of society. There are too many skeletons in the cupboards of our elites, and they will resist any attempt to dig out the past. A truth and reconciliation process may be initiated under a democratic government, which can dig out historic injustices done by elites with the resolve not to let it be repeated.
In the words of economist Asad Sayeed “It is important to be mindful of the fact that excessive moralising on corruption does not generate substantial dividends. As with much else, it is advisable to create institutions that will reduce the incidence of corruption over time.”