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Re-establishing Business Morality

A system of free enterprise is meant to be just that, the absolute freedom for the citizens of the country to exercise in any enterprise of their choosing, within the laws of the land, without any hindrance from any quarter. As a statement of intention, the aforegoing is quite unambiguous and needs no elucidation of any kind, the qualification being manifest in the phrase “within the laws of land”. The creation of Pakistan embodied free enterprise as a prime working principle because the Hindu economic domination was so overpowering pre-1947, in undivided India it would have been translated into economic subjugation.

Morality is not usually a strong facet of today’s business world, yet the necessity of it is underlined by the phrase about “honour among thieves”, so why not in the business world? Old-time business communities have their own singularly unspoken codes inasmuch as verbal commitments are as strong as written agreements and competition never degenerates into total persecution of one’s opponents as is the common rage in Pakistan today. That is the essence of free enterprise and anyone running down one’s opponents by means other than fair was invariably given a short shrift when business was confined to businessmen. Pakistan represented a new frontier for potential business and old business communities were shoved aside as a new breed came to centre stage and left business morality struggling behind. Peter Drucker must have had us in mind when he said that “Ethics stays in the prefaces of the average business science book”.

The agriculture community existed pre-partition as a monopoly creation of the British Raj i.e. a select few held sway over a vast majority of farmers, most of them were barely over serf level. Over the last 40 years, this imbalance has been gradually corrected by successive Governments so that a much larger number of farmers have greater say over their own affairs. Whatever one may say about political or military governments since 1947, each one of them has loosened the hold of the autocratic Zamindars to an extent, this process accelerating manifold in 1972 under the PPP regime. The present scenario may not be exactly Utopian or totally to one’s satisfaction but it is much, much better than that obtaining previously simply because the much wider redistribution of agriculture wealth has been responsible for a “green revolution” in Pakistan. Before the American Civil War, the major forces in the US economy were agriculture and natural resources with manufacturing comprising only a small sector of production, but later manufacturing became the major production force reversing the earlier roles. In a much shorter time-frame, a similar reversal in roles is taking place in Pakistan.

The more spectacular growth has been in industry which has flourished from an almost zero capacity in the last 40 years and except for a brief hiccup during 1972-77, enterprise has been manifest in new ventures based on a less than cohesive central plan laying emphasis on consumer goods rather than a base for heavy-industry. Needless to say, the percentage increase of businessmen have been much more than the increase in industrialists and landless farmers pre-1947, mainly because the Muslim business community was exceedingly small and except for honourable exceptions, subject to various trepidations born out of economic inequity. The period 1972-77 brought a halt to investment in industry because of the vast wave of nationalisation, particularly in the nascent heavy industry. The intention of PPP was to break the hold of the so-called “robber barons” and permit greater redistribution of wealth and as such some form of state control became necessary. In the words of Franklin Delano Roosevelt “Private enterprise, indeed, became too private. It became privileged enterprise, not free enterprise”. Wealth had become a monopoly of the few and as much as land reforms signified redistribution of agriculture lands, nationalisation sought to do the same as well as gain security for the workers in as much as it also sought to curb the economic power of the “robber barons” which gravitated against the small businesses. That none of these “robber barons” became destitute as a result of nationalisation is an indication of how their liquid wealth had been transferred out of industry (and out of the country). One also forgets that though most of their industries in former East Pakistan were also lost to them, other than the poor middle-level industrialists/businessmen, none of the original “robber barons” even came down a notch in their wealth level. Their loss was limited to such assets which in any case were pledged to the Banks and this left the hapless PPP Regime holding an empty bag in most cases.

However, PPP’s greatest problem after nationalisation arose out of the fact that a bunch of “professionals” (or technocrats) from the bureaucracy supplanted the industrialists, i.e the natural owners were replaced by artificial ones. The supplanted industrialists became traders and a new business elite was created, businessmen-bureaucrats, with fairly large infusions of new “businessmen” also created by political patronage bringing in a wave of new client-patron relationships. Most of these were PPP supporters in name only, being mostly sycophants, relatives, courtiers, etc anyone among a historical but slimy class which usually latches onto the coattails of any new regime. A new class of businessmen without any morality came into being and whatever was left of fair competition went out of the window. Since most of big business is still in the public sector and there was even less check than previously, bureaucracy managed total sway over the award of large contracts (where the big bucks are) through the procedure of floatation of “public” tenders and the entire modus operandi of the new business class became devoted to acting in concert with their collaborators within the bureaucracy to somehow grab these contracts by fair means or foul, mostly foul. The floating of a “public” tender in most cases is as much public as GLASNOST is to the KGB and the machinations of the businessmen and their crooked allies in the bureaucracy in the award of a contract would put even their “Dirty Tricks Department” to shame. Private enterprise became a privileged enterprise in the public sector.

The specifications of the commodity/goods required in the tender notice are usually made in concert knocking out of quite a few of the erstwhile competition without a shot being fired. Specifications for commodities such as sugar and fertilizer are contrived and fine-tuned and the early warning given for the timing of the tender also allows the CHOSEN ONES to line up quantities, shipment, etc. This gives them the EDGE over the opposition. Now that the cards are suitably stacked, a date for opening of tenders is given to allow their Principals ability to corner the market for a particular period. If the CHOSEN ONES have everything tied up, the tender will be slated for a late in the week opening, leaving only Thursday as a day of decision while on the other hand if things have not been cornered by the CHOSEN ONES then Sunday openings are more likely. It is all very innocent on the surface but in actuality the undercurrents are vicious. The greatest farce is now played with all the pomp and show of innocence personified, i.e the tender offers are opened publicly. The lowest offer is usually made by an “enthusiastic idiot” who usually has no knowledge of the framing of the “rules” and who proceeds to become a sacrificial lamb to be slaughtered at the “negotiations” stage. The CHOSEN ONES stay within the pack because someone else may have a lower price (1) with all the specifications in consonance or (2) with the specifications deviating from the requirement. In either case, the CHOSEN ONES will know that it is better to quietly accept whatever the Tender Committee decides is the lowest with the correct specifications/shipment schedule, with the firm understanding that either during the drawing up of the contract and/or the delivery of goods or commodities, things can be arranged suitably and satisfactorily. If any of the others have survived the obstacle course of negotiations, then it will be “found” necessary in the “public interest” to divide the tender so as to not “depend” upon any one supplier, bid bond notwithstanding. Sometimes you get a joker in the pack i.e someone comes in with all the specifications correct, has a very low price and a mentor in Islamabad to boot. In this case, the DADAS, NANAS and/or the CHACHAS just have to take a chance and wait for the dark horse to forfeit the tender by failure to supply.
In the present system of things all this takes place whether or not the head of the Corporate Unit is an honest person or a rascal. The honest person is bound to get into trouble sooner or later because he has no motivated interest and will be indifferent to the outcome except in the fulfilling of the requirements and his undoing will be because of the machinations of his underlings. In contrast the RASCAL, steeped in years of experience of juggling accounts and note-writing on files, will create a virtual plethora of facts and figures, terrorising his underlings into collaboration in his nefarious designs, involving all and sundry into the process of decision-making, while himself remaining clear of the fracas, loudly proclaiming his honesty and honour, reminding us of Ralph Waldo Emerson’s “the louder he talked about his honour, the faster we counted our spoons”. If in fact it was confined to spoons we would consider it quite funny and leave it at that. However, the manner in which the public money has been looted would put an invading army to shame. Above all, they give the broad mass of bureaucrats, (honest, hardworking and barely surviving on meagre salaries and pre-requisites) a bad name.

This would be tragedy enough if the matter ended here. The opponents of the CHOSEN ONES are simultaneously attacked on a broad bureaucratic front. Besides character assassination by subtle use of the media and getting detailed investigations carried out by various agencies, a scurrilous whispering campaign is started by the RASCAL using the authority/seniority of his office and position to defame the recalcitrants across the length and breadth of the rest of bureaucracy and wherever else it matters. Giving the bureaucracy a bad name is not enough, they must also make the “great silent majority” among them unwilling accessories to their crimes. Thus business is left with no ethics and morality reduced to that of alley cats.

One is expected to do business in such an atmosphere in the public sector, particularly forbidding if one is new in the game. The time has come to re-establish correct norms in transactions in the business arena of Pakistan. Why not have a commercial Ombudsman to whom one could go for complaints regarding commercial transactions affecting government-owned corporations. One cannot hope to clean up the act overnight but this would be a welcome first step towards establishing some confidence in the newer and smaller businessmen that the RASCAL (and his pals) cannot get away with murder. Once people realize that the dominant power of the illegitimate elite has been curbed, their penchant to adopt unfair means for themselves will also be subdued and gradually a semblance of morality will come back to the “great silent majority” in the business world. With healthy competition, freed from the need of either attacking someone or defending oneself, with one’s economic survival at stake in each transaction, the time wasted as a result will decrease leaving the quantum of business to increase.

Pakistanis are an innovative breed, hard working and independent. They require a free rein to do business in an atmosphere unpolluted by nepotism and corruption. With morality back in the mainstream of our economic lives, no one can ever doubt that we possess the ability and potential to be self-reliant. It is incumbent on us to do something otherwise in the words of Edmund Burke, “the only thing necessary for the triumph of evil is for good men to do nothing”.


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