The Mechanics of Accountability
After months of cajoling the PPP regime to check the rising tide of corruption engulfing the country, the President finally decided that enough was enough and sent a message to the two Houses of Parliament to enact effective measures for accountability. Instead of welcoming the initiative by a person who had not only remained a respected leader of their own Party but was their nominee for President in the first place, the PPP reacted like a wounded animal. In a rather silly ploy, the ruling Party went on a filibustering defensive, calling for a “select committee” to decide on the parameters. Since all of us know that select “commissions” and “committees” are safe euphemisms for relegating things into the waste-paper basket, the PPP reaction was very suggestive that the rulers had something definitive to hide. The general public perception is that PPP have someone they want to protect, at the cost of their conscience, at the cost of the credibility of their Party and at the cost of the economic hopes of the nation.
The US Permanent Representative to the UN, Ms Madeleine Albright, was extremely supportive of a UN Resolution on the eradication of corruption which would make it incumbent upon member States to monitor the financial dealings of citizens of other countries in their respective territories, particularly politicians and bureaucrats, maintaining large bank deposits or real-estate holdings, making it illegal and thus impossible to get away hiding their ill-gotten gains with the same impunity they do now. If such a UN Resolution should become binding, it would strike a tremendous blow for the poor, downtrodden masses of the developed world whose leaders feed them with endless rhetoric while shamelessly stealing at will from their country’s coffers. For starters we could possibly circulate among member countries the famous list of 20 which has caused considerable apprehension in bureaucratic circles and see whether it is really true that some of them are billionaires (even if they are not, some of them at least live and act like it).
One of the things to remember when dealing with corruption is that all government departments, irrespective of their efficiency and neutrality, are subject to influence and coercion by the factors of power, money and relationship. At the end of the day, delivery of justice is subjective, not objective. This makes any accountability process suspect. Money obtained from corruption cannot just disappear into thin air, it has to go to either (1) some bank account or locker and/or (2) into real estate or other such investment. Obviously the person who is taking the bribes, kickbacks, service charges, etc cannot handle all the transactions himself, these have to be done through a trusted person, in effect a conduit for money-laundering is necessary to whatever he chooses to be his secure haven, it cannot be done in isolation. Of course, some people not used to wealth will always choose to flaunt their nouveau wealth in vulgar fashion and should be comparatively easier prospects for the exercise of accountability.
Nobody keeps money in foreign accounts/lockers in his/her own name, these are mostly in numbered accounts but since all banks are required to keep identification documents for withdrawal, usually copies of the national passport, a UN Resolution on corruption becomes invaluable in locating previously hidden accounts. Over the past three years, various cronies have been put in charge of nationalized commercial banks (NCBs) and public development finance institutions (DFIs). They not only made loans/credits to other cronies, they helped in facilitating illegal transactions of the mentor-in-chief. Since most of them cannot pass the test of professionalism or that of necessary experience and have been raised to exalted heights purely because their lack of honesty and integrity as well as a total lack of loyalty to the institution or the State, they are considered ideal material with respect to the factor of “loyalty” to their mentor only. Owing their appointments and security to their mentor, this loyalty is focussed to the exclusion of everything else. Unfortunately nepotism has not been confined to the public sector institutions only but also to many financial institutions, private and/or foreign, which stand to derive any benefit from the government, particularly in “consultancies” for the privatisation exercise, lead bankers in a consortium etc. It is sickening to see executives of foreign banks falling over themselves to please those who matter, only Idi Amin’s symbolic lifting in a chair by four Europeans was more demeaning. Some senior banking executives, who had never lifted a cricket bat, became members of cricket committees for the World Cup, others became environmental specialists, etc. This is not only a shameless exhibition of opportunism but gives a seal of approval on corruption. Not all foreign banks have done this but they have paid for it in getting less from this government than others. Third World banks are regularly accused by the first world of money-laundering, etc, in fact many banks in the western world are not only money-laundering illegal wealth with impunity through their local employees in branches in the developing countries but are keeping them as fixed term deposits, no questions asked. These people and their parent institutions, who preach what they do not practice, are beneath contempt, though one dare says all this is covered ethically in the name of “business promotion” according to their holier-than-thou Corporate HQs in New York, London, Paris, Zurich, etc.
It would be in the fitness of things to start the accountability process by a grass-roots campaign targeting some local symbols of nepotism and corruption in the banking sector, squeezing them hard may find specific leads to some of the accused leaders of corruption. These people are the weak spots we should be looking for in the war against corruption. Such people they will generally answer constantly negatively to some test questions, viz (1) was he senior enough to be promoted to his present post? (2) is his professional experience and competence exceeding that of his colleagues? (3) is he maintaining a life-style commensurate to his pay and status? (4) is he living within the perquisites legally allowed to him by his institution? (5) does he rely on merit and competence in the choice of his staff? (6) is he looking at his own merit and competence for advancement?, etc. A short list of about dozen such people should be put to the closest scrutiny and investigation, preferably by private sector investigators, since we all know what happens to official investigations. Most senior bankers having executive decision making powers in NCBs and DFIs have been promoted out of turn, superseding much more deserving people. In almost all the cases they neither had the experience or professional competence for the posts they now fill. As regards their life-style, a simple calculation of what their institution is spending on them on a day-to-day basis, would show it to be many times their legal perquisites. Very rarely the crooked banker will choose subordinate staff who have professional competence and merit, similarly he would look to do anything to please his mentor/mentors to seek his own advancement rather than rely on his own merit and competence.
Though a close uniformed relation of a particular banker happens to be a very good friend of mine, one of the most glaring examples of nepotism gone astray with a vengeance is that of Khalid Iqbal, presently Chairman National Development Finance Corporation (NDFC). Without accusing him specifically of corruption himself or being responsible for it, one is a little amazed at the good fortune that has come his way these last five years to the exclusion of much more deserving persons. Khalid Iqbal was relatively a junior Muslim Commercial Bank (MCB) employee when he was picked out of the pack to be the Provincial Head of MCB in Punjab during the first PPP regime. In his Provincial seat he is believed to have specialised in dishing out unreturnable loans, “with the consent of the Board” and “having completed all formalities”. When that government fell in 1990, Khalid Iqbal escaped retribution and was brought to the Head Office. He cooled his heels in various innocuous posts within MCB Head Office during the Nawaz era but came back into prominence when to his good fortune the relation, wearing the uniform that matters, was posted to Karachi. That advantage was milked for all that it was worth, given the necessity of senior bankers to maintain contact with the powers-that-be. His real heyday started when the second PPP regime came to power in 1993. Thereafter Khalid Iqbal’s CV reads like a dream come true. Before leaving MCB he sought and got promotion, being deputed Chairman Regional Development Finance Corporation (RDFC). Thereafter he pushed onto greener pastures in Banker’s Equity Limited (BEL). From there he has graduated to being Chairman NDFC, all this in less than three years. The reported misuse of “officially sanctioned” perquisites aside, such as drawing rent from NDFC while still using the RDFC Guest House, Khalid Iqbal seems to have a fairy Godfather for a mentor, paving his progress with gold. So why not focus inquiry on such a person ? If he can justify all loan/credits dished out by him in these three institutions, RDFC, BEL and NDFC, we will be very happy and seek atonement for our misdeed in targeting him as a model of bad financial governance. In the meantime, let separate private investigation teams look at his wealth tax and try and co-relate his real-estate, liquid worth, etc with his real worth. The idea is that this cynosure by independent inquiries may convince this gentleman that while crime does not pay, it becomes much more easy on those who turn state’s evidence.
Even the World Bank has got into the act in the war against corruption, labelling Pakistan as the second most corrupt country in the world. But how serious they are can be gauged from the fact that they have chosen SGS to do an audit. Why not ask the World Bank about the Hub Power Project and why it has become the most expensive project in the world on a comparative power (MW)-to-money ratio? This inordinate escalation could not have happened without orchestration and/or active connivance of World Bank (WB) executives. People take the name of a gentleman by the name of Ibrahim Elawan, a WB employee, was he the beneficiary in any scam? WB would do well in doing an in-house investigation. Since SGS has a lucrative contract with the Pakistan government to check on quality and price of imports, what honesty of purpose should we expect in this “conflict of interest” situation. If we are to implement an accountability process in the country the mechanics must be clear, simple and concise. The mechanics of accountability have to focus on and attack the conduit, the person who has the most to lose with the least to show for it. Once you have the conduit singing like a bird, the evidence that is required to bring his mentor to justice will fall into place. Then, and only then, when we have an approver in place, will the accountability process become meaningful. To put it bluntly, the mechanics of accountability must be right for the process to be effective.
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