The corruption imperative

September 20, 2017, Corruption is now widely discussed and condemned in Pakistan. There seems to be a growing realization that corruption isn’t just about kickbacks, embezzlement, and fraud, but that with its complex fiscal, intellectual and ethical ramifications, it has far-reaching consequences. From endangering life, hurting prospects for development and economic growth and widening inequalities to weakening the social fabric, fostering terrorism, imperiling the environment, risking national sovereignty and threatening peace and security, corruption’s dangerous footprint is everywhere.

Pick up any problem and trace its threads back to corruption. In the worst cases, it costs lives. Corruption has been at the core of deaths due to building collapses, fake drugs and food adulteration. Thousands of lives have been lost due to the interplay of financial crimes with the existing security challenges in our country.

Hundreds of millions of Pakistanis are deprived of quality healthcare and basic education and get excluded from state benefits due to tax evasion, systemic pillage, diversion of funds and mistargeting of resources. When regulators and state oversight bodies collude with monopolies, hoarders and special interest groups, commodity prices hike, hitting each one of us. We have all tasted the nature of corrupt practices in law enforcement, land and revenue management systems. Institutionalized procurement rent-seeking has diverted trillions away from the needy over the decades and power generation public-private collusion will haunt generations in the form of utility bills. Even the roots of the devastation caused by flooding, thought of otherwise as a natural disaster, can be traced back to illegal logging of trees and pilfering in irrigation departments.

It is not just individuals, but the national system that suffers as well with dire economic and societal consequences. Studies have shown that corruption increases poverty and income inequality and negatively impacts growth. By clouding the business environment, impeding development of fair market structures and distorting competition, corruption creates obstacles for investment and trade. Regimes, governments, institutions and leaders lose their legitimacy due to corruption and peoples’ trust is undermined. Corruption also damages the country’s international reputation, as certain forms which drive smuggling, trafficking and other financial crimes, fueling the informal and black economies, are not confined within national borders.

Deeply entrenched corruption has a chicken-and-egg relationship with “state capture”, a broader phenomenon in decision-making where the laws and regulations of a country are made to favor a select few and where decision makers use state leverage to either gain personally or benefit their cronies. The interplay of weak governance of state institutions, vested interests of the powerful elite, strong monopoly power, wide discretion for officials and weak accountability mechanisms lead to state capture.

In such settings, systemic manipulation and circumvention of procedures becomes the norm. Corruption is then no longer the exception. It is no longer the “cost of business”, it actually becomes the system itself. Illicit rents are extracted and distributed to respective hierarchies on well-established shadow “rules” which govern the de facto functioning of ministries and departments. As an outcome, resources get channeled to the well-connected, institutions lose their ability to deliver on their original purpose, the gap between rich and poor widens, governance becomes exploitable and reforms are held hostage.

The causes of state capture cannot be addressed by reform within an isolated sector, and entails creation of checks and balances, upholding rule of law, impartial and independent media and judiciary. As a starting point, any anti-corruption national reform must aim to build the right institutional architecture: a national strategy, freedom of information laws, key accountability institutions for public redressal, oversight and investigative work. The issue is that Pakistan has much of that already in place, but with corruption still thriving.

This is because we tend to opt only for punitive action as a policy tool when tackling corruption. This does not provide a sustainable solution. The key is to focus on building systems that limit opportunities for collusion and corruption in the first place.

In addition, we must recognize that over the years, serious loopholes have been created in respective laws and regulations dealing with various institutions and sectors. There is also shocking tolerance for failure to comply with laws and regulations, their weaknesses, notwithstanding. This allow space for maneuverability, when combined with unchecked powers of discretion, a culture of arbitrariness and circumventing procedures and a near-absence of accountability for rule and evidence-based decision making. Combine this with a bureaucracy with political leanings, and a tendency to disregard integrity, disclosure and conflict-of-interest in appointments, and a toxic brew is created to erode the principles of governance, fostering corruption. Any serious anti-corruption attempt must address these systemic fault-lines as a starting point. Rule-based control on government functioning, respect for merit, integrity, ethical conduct, accountability and transparency and oversight of discretionary powers and safeguards against conflict of interest are the basic foundation stones of any anti-corruption measure. The good news is that progress in this direction can be made by setting the “tone at the top”. In Pakistan’s centralized system of decision-making, a true, visible and active commitment at the leadership level to zero tolerance towards corruption in all its forms can cascade downwards and into implementation very quickly. I believe that despite all difficulties, that can be the silver lining to our problem. @Sanianishtar


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