Pakistan launches campaign to fight corruption

Friday, 26 November 2010 01:04 - - {{hitsCtrl.values.hits}}

(Reuters) - Pakistan launched a new anti-corruption campaign on Thursday in an attempt to tackle the massive graft that threatens government stability and the economy of this nuclear-armed U.S. ally in the war on al Qaeda.

Interior Minister Rehman Malik, who himself has outstanding corruption charges against him that he says are politically motivated, said immediate actions would be taken against corrupt officials in Islamabad’s municipal council, the Water and Power Development Authority, the Federal Bureau of Revenue, the two national gas companies and passport departments.

“Whatever others say about our country, we should look at our own house first,” he told a news conference. “And yes, we have massive corruption in our country.”

He said an anti-corruption unit would respond to complaints received via telephone, email and short message service (SMS), and awards would be given to informers.

Rehman added agents would be deployed in departments to report corrupt practices and sting operations would be conducted.

Pakistan’s corruption has increased since the 2008 ouster of military president Pervez Musharraf, according to analysts and international organisations.

“During the early years of the previous regime, the perception of corruption was much less,” said Asad Iqbal, chief investment officer at Faysal Asset Management Ltd.

It is negatively impacting Pakistan’s regional competitiveness, attractiveness to foreign investment and access to foreign aid, on which Pakistan depends for a significant percentage of its budget, especially after the summer floods which cost $9.7 billion in damages.

International donors are also linking aid to greater transparency as many conditions of the $7.5 billion in U.S. aid under the Kerry-Lugar-Berman Law were put in place because of concerns over Pakistan’s ability to account for the funds.

It simultaneously undermines the public’s faith in the unpopular civilian government, and starves the government of revenue because of massive tax evasion and also hampers its ability to tackle Islamist militants.

A textile mill owner said that for years, he has filed for sales tax refunds from the government, but has rarely received any. Officials tell him they have no money to pay him.

Asrar Raouf, a spokesman for the Federal Board of Revenue (FBR), said his department had no financial problems but it could not pay out claims without proper documentation.

Bribes are everyday annoyances for Pakistanis, usually encountered from police, tax collectors and public utilities.

Transparency International’s local chapter estimates petty corruption costs Pakistan’s economy between 200-225 billion Pakistani rupees ($2.34-2.64 billion) a year. That’s 1.58 percent of the country’s 2009 GDP of $166.5 billion.

Pakistan’s Transparency International corruption ranking fell to 143 in 2010 from 139 in 2009 out of 178 countries surveyed.

“Coupled with that of the risk aspect, the security, law and order situation, it will obviously deter foreign investors,” said Hafiz Pasha, former adviser to the prime minister on finance and now Dean of Social Sciences, at Beaconhouse National University.