Hunting the Foxes
In his wide-ranging first ever Press Conference on Monday Nov 1, 1999, the Chief Executive (CE) of Pakistan Gen Pervez Musharraf, spelt out his aims and objectives for the nation and the priorities he has set. Without any doubt the most important issue was Accountability and how he intended to carry out a horizontal exercise at the top before a vertical one starting from top downwards. There are other problems to take care of, viz the economy, law and order, etc but accountability is the core issue. To implement his stated aim he announced the formation of National Accountability Bureau (NAB), an acronym that fits neatly with the objectives, to NAB those who have been looting the country blind.
In the words of the CE paraphrasing Winston Churchill, “never in human history has so much been plundered by so few from so many”. What remains to be seen is the will to make the powerful pay their just dues, the CE’s body language on this issue was visibly positive. About 320 families owe Rs. 200 billion as loan defaulters, only about Rs. 80-100 billion may be actually recoverable. To ensure thorough enquiry in all issues, cases against such individuals, whether it be tax, customs or excise evasion, KESC or PTC bills default etc should be clubbed together for ease of investigation and prosecution under NAB. The clout of illegal money and their move into legitimate business cannot be ignored. For example at least one cigarette manufacturer with foreign collaboration has been not only evading customs and excise duties at will but has been involved in the large scale fake manufacture of other brands. Under one head we have fake manufacture, customs, excise duties evasion, income tax default, bribing of officials to escape cynosure, etc. All this illegal money has funded other legitimate businesses, with a battery of high-powered lawyers and accountants well paid for, can he be touched? All those income and wealth tax, customs and excise department officers, in fact all government officials who were associated with such cases are collaborators and should be taken to task. A comprehensive audit is necessary. Instead of having firms to do the job, individual auditors having a good reputation should be appointed to make out a comprehensive financial picture of such defaulters, tax-evaders, etc. Direct rewards should be offered for tracing out undeclared assets of these defaulters whether at home or abroad. However, what one fears is that given all the sincerity of the CE and his “Nabbers”, entrenched bureaucracy or other motivated interest will frustrate their moves on some pretext or the other.
The Mian Nawaz Sharif regime tried to do the right thing on taking over in February 1997 but it was short-lived. A Special Task Force (STF) on “Bank Fraud, Security & Related Issues”, a cover to uncover tax-evaders and trace out assets acquired illegally, was set up. The STF was to function independently and quietly, drawing manpower resources from the private sector. Within days, Senator Saifur Rahman had taken over the whole operation and announced his intention to function from the PM’s Secretariat. Leaving aside the question of anonymity for such a task, instead of the STF developing its own list, a list of “enemies” was made. The sanctity of the STF (and its concept) vanished into thin air as the newly formed Ehtesab Bureau took over and proceeded to carry out a one-sided exercise. This resulted only in the nabbing of Ms Benazir Bhutto on one tangible issue, the SGS/Cotecna one. The rest of the programme was Saif’s personal agenda. Whenever accountability is not applied fairly or equally, its objective is side-tracked and the process loses its credibility.
A private firm was engaged by the Chairman CBR Mr Moinuddin Khan to carry out enquiries that would enhance the tax collection, with the proviso that private firm was to get 10% of whatever was collected because of its efforts. For months CBR officials resisted the signing of the agreement, all sorts of bureaucratic hurdles were set up. Within six months, the private firm had cornered Rs. 400 million directly in tax, customs and excise evasion, and was on the track of major sales tax evasion in Rawalpindi circle among stone crushers, brick manufacturers etc amounting to Rs. 30-40 billion when Mr. Moinuddin Khan left the CBR. Since the new Finance Minister Mr. Dar wanted to have his own man as Chairman CBR, the project came to a halt. Not a penny was paid to the private firm because CBR did not pursue these cases and since revenue was not collected according to the agreement why should any money be paid to anybody? CBR adopted an indifferent attitude towards collection of its dues, frustrated the private firm called it a day. How could they continue without their expenditures being met? The influence of the tax evaders remained airtight in the meantime, some of whom were even seen serving tea (as would a family member) at one of the Member CBR’s house in Karachi.
Former Chairman CBR, Mr. Moinuddin Khan tells the story of the head of a large corporate group whose son has/had an apartment in Trump Tower, easily worth US$ 10 million, who came to him with a tale about being harassed by the Income/Wealth Tax officials in Karachi despite the fact “he was paying the princely figure of about Rs. 30,000 per annum as income and wealth taxes”. As far as tax evasion is concerned let us be frank that the vast amount of money available can afford good tax consultants, accountants and lawyers. Self-employed people like very eminent lawyers and doctors, etc receive huge payments as fees. Some top lawyers who take only 2/3 cases a month i.e. 24-30 a year, getting payment in foreign exchange without receipt to the tune of Rs. 3-3.5 million per year (a figure of almost Rs. 75-100 million a year). Brilliant legal brains they may be, they are tax evaders and if such people infiltrate the CE’s inner circle, they will destroy his credibility. The CE has said two very important things, viz (1) accountability will be carried out horizontally and (2) that mistakes made will be rectified, once known. We look forward to his keeping to these solemn pledges.
PROJECT VIEWFINDER was an exercise run by the private sector to increase PTV’s licence revenues, making a difference of nearly three-fold in net earnings from Rs. 150 million to Rs. 400 million. Since a private firm was carrying out door-to-door checking for licences, Shaukat Tarin, President HBL, had a brainchild about nabbing tax-evaders. He and Mr. Moinuddin Khan, Chairman CBR went to the Finance Minister, Senator Sartaj Aziz, to take permission for the private firm to carry out a rough tax survey simultaneously WITHOUT any additional cost. The idea was to include in the door-to-door checking, other than TV, Dish Antenna, the visible facets of affluence i.e. the size of the house, its probable cost, number of cars, air-conditioners, etc all of which information could be gathered without entering the house. The evaluation was to be done on a sliding scale from 1-10 for ascertaining affluence i.e. the poor to be categorised as 1-2, the middle class from 3-5 and the rich from 6-10. Thus was PROJECT FOXHUNT born. To support and make final evaluation, electricity, telephone and gas bills were to be coalesced and collated. 11.6 million homes that had electricity were expected to be visited, it was estimated that at least 3-3.5 million people who were paying about Rs. 250,000 annually as utility bills would be capable of paying Rs. 100,000 approximately as tax revenues and could be got into the tax net. This increase from 1.6 million taxpayers presently (to about 5 million) would have added a phenomenal Rs. 300-350 billion in direct tax revenues alone. This brilliantly conceived Project had hardly started when the Finance Minister Senator Sartaj Aziz was changed and subsequently the Chairman CBR was replaced. Repeated letters and faxes evoked no further response from the new Chairman CBR or from the new Finance Minister Mr. Ishaq Dar, PROJECT FOXHUNT thus died a lonely death. The reason was not a lack of interest but rather a wrong focus on priorities. CBR made a half-hearted effort later to do the same, they floated a tender for door-to-door survey. The project never saw the light of day.
The first thing to do for NAB is to remain isolated from any influences, to record every solicitation when it cannot be avoided, to avoid any contact with the rich, influential elite, to take advice from bureaucracy with caution, etc. In short to live like monks for the duration of their incumbency, take to camp cots so to say. Which leads me to the point about public perception. Members of the NSC, the Cabinet and the Think Tank will have to lean over backwards to get away from being seen publicly with the elite. Public perception, like possession, is nine-tenths of the law. The CE or any of his principal colleagues, both military and civilian, have to be literally divorced from elite society or in the end all the sincerest motives in the world will come to naught.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment