corruption causes and effects in pakistan’s case

International Journal of Business and Behavioral Sciences Vol. 2, No.6; June 2012

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Corruption: Causes and Effects in Pakistan’s Case (A Review Research) *Dr. Muhammad Tariq Khan1, Dr. Naseer Ahmed Khan2, Sheraz Ahmed3, & Khalid Mehmood4

1Assistant Professor, Department of Management Sciences University of Haripur, PAKISTAN 2Postmaster General, Pakistan Post, Rawalpindi, PAKISTAN, 3Lecturer, Department of Management

Sciences University of Haripur, PAKISTAN, 4Lecturer, Department of Management Sciences Hazara

University, PAKISTAN

*[email protected]

Abstract

There is a growing worldwide concern over corruption at the present time. The increasing public

interest and concern over corruption have resulted in a large amount of scholarly research on the

subject. The concept of economic rent is important in corruption. In Pakistan, the corruption is deep

rooted and has many dimensions. There are several causes and remedies for the public policy makers

to root out corruption in Pakistan.

Key Words: Corruption, Economic rent, Developmental obstacle. Social evil, Remedies

Introduction

Corruption is a universal curse around the world and exists in all the countries as a common

phenomenon, both in developing or poorer countries and developed countries. The difference is

only of the degrees of corruption. In the last five years, leading politicians in U.K., Belgium, France,

Spain and Italy have been convicted of corruption and in fact, the entire European Commission

resigned because of it. U-Myint (2000); World Bank (2001); Law Commission of Government of India

(2001); Anupam Das et al (2011) have traced that concept of corruption has roots in the ancient

world and although its form may have shifted through the centuries, it is still alive and rampant in

the modern age especially, in the developing world. U-Myint (2000) asserted that corruption is

universal and it exists in all countries.

World Bank (2001) has revealed that corruption around the world is believed to be endemic and

pervasive and a significant contributor to low economic growth, to stifle investment, to inhibit the

provision of public services and to increase inequality. Corruption is identified as ‘the single greatest’

obstacle to economic and social development. Anupam Das et al (2011),by squeezing from several

studies, have theorized that corruption can lead to the destruction of democracy, the violation of

human rights, the collapse of markets, lower quality of life, and increased threats to social welfare.

The impact of corruption in the developing world is thought to be particularly damaging, as it is

believed to hurt the poor disproportionately. World Bank (2004) has estimated that more than US$ 1

trillion is paid in bribes each year and those countries, which tackle corruption, improve governance

and the rule of law could increase per capita incomes by a staggering 400 percent.

U-Myint (2000) reported that public sector corruption is the most severe obstacle confronting the

development process. Countries in the Asia and Pacific region are also very worried about this

problem and they are in substantial agreement that corruption is a major constraint that is hindering

their economic, political and social development, and hence view it as a problem requiring urgent

attention at the highest level. U-Myint (2000) expressed by quoting some researches (i.e. Gray and

Kaufmann 1998) that, this greater recognition that corruption can have a serious adverse impact on

development has been a cause for concern among developing countries.

Javaid (2010), extracting from many studies (Chene, 2008; Vittal and Mahalingam, 2004), opined

that the level of corruption in the society ultimately depends on the values and morals of that


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society and about Pakistan reported that two types i.e. petty and grand corruptions are prevalent in

the country the common man is more interested in the petty and middle level corruption that he

encounters in the daily dealings in the government offices.

Concepts and Definition of Corruption

Law Commission of the Government of India (2001) is of the opinion that there is no universal

definition of corrupt behavior, corrupt practices and corruption and it varies from country to

country. The World Bank and other multilateral institutions refer to it as:

“the abuse of public office for private gain. It involves the seeking or extracting of promise or receipt

of a gift or any other advantage by a public servant in consideration of the performance or omission

of an act, in violation of the duties required of the office”.

An Anonymous (n.d.) writer has defined corruption as the abuse of public position for personal gain

or for the benefit of an individual or group to whom one owes allegiance. U-Myint (2000) has

defined corruption as the use of public office for private gain, or in other words, use of official

position, rank or status by an office bearer for his own personal benefit. Taghavi et al (2011), while

explaining administrative corruption, concluded that in all definitions, corruption is a transfer of

interests between the public and private sectors in which the pubic interests are directed towards

private interests. According to Langseth (1999); Law Commission of Government of India (2001) and

Gadit (2011), the most functional definition adopted by various international organizations such as

the World Bank, Transparency International (TI), and Asian Development Bank (ADB) is the “misuse

of public office for private profit or political gain” because, by and large, it covers all types of

corruption/corrupt practices and abuses of public office. As such, it involves the improper and

unlawful behavior of public-service officials, both politicians and civil servants, whose positions

create opportunities for the diversion of money and assets from government to them and their

accomplices. According to Anonymous (n.d.), the corruption occurs when a public official accepts,

solicits, or extorts a payment, or when private agents offer a payment to circumvent the law for

competitive or personal interest. Corruption is a two-way process, involving members of both the

public and private sector, or a “giver” and a “taker” who are engaged in illegal, illegitimate and

unethical action.

U-Myint (2000) has put forward the concept of ‘Economic Rent’. The concept of economic rent (or

monopoly profit) occupies a central place in the literature on the subject of corruption. Economic

rent arises when a person has something unique or special in his her possession, which can be a

luxury condominium in a posh neighborhood, a plot of land in the central business district of the city,

a natural resource like an oil well, or even some pleasing personal traits such as beauty and charm. A

person who owns such a special asset can charge a more than normal price for its use and earn

economic rent or monopoly profit. U-Myint (2000) and Law Commission of Government of India

(2001) drawing upon the concepts, quoted a corruption equation (set by Klitgaard, 1998) as:

Corruption = (Monopoly) + (Discretion) – Accountability or in abbreviated form as:

C = R + D – A

In the above equation, C stands for corruption, R for economic rent or monopoly, D for discretionary

powers, and A for accountability. The equation states that the more opportunities for economic rent

(R) exist in a country, the larger will be the corruption. Similarly, the greater the discretionary

powers (D) granted to administrators, the greater, will be, the corruption. However, the more

administrators are held accountable (A) for their actions, the less will be the corruption, and hence a

minus sign in front of A. So, “the opportunity for corruption is a function of a public official’s control


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(M), the discretion that official has (D), and the accountability that this official faces for his or her

decisions”.

About Pakistan, Javaid, (2010) comprehensively expressed that corruption defined as misuse of

entrusted power for private benefit is unfortunately endemic in Pakistan. No structure, no tier and

no office of public sector, is immune from it. Its spread is enormous. It has reached every organ of

state — beyond executive it has put its claws on judiciary and legislature even. It would be no

exaggeration to say that the whole body of the state of Pakistan is suffering from this malaise and

wailing under its dead weight. Its incidence is so enormous that Pakistan is ranked 139th in the

community of nations on the scale of corruption free governance. This ranking is not at all enviable

or acceptable.

Histort of Corruption in Pakistan

Maqbool (2000) wrote that traditionally, the South Asian countries have been pluralist societies;

however, the legacy of colonial rule was a fragmentation of loyalties through corruption and bribery.

That is why corruption and nepotism continue to exist. Loyalties to a particular group; family; caste

or ethnic, religious, or linguistic community invites corruption in the form of nepotism. The culture

of nepotism was further promoted in the colonial system of administration by the awarding of land,

titles, and jobs to groups supporting colonial objectives. Since independence, the nationalization of

bank and industries in the 1970s, the use of foreign aid, and the infusion of drug money into the

economy, corruption has become even more systemic. Moreover, the informal structure of the

economy has created abundant opportunities for corruption malpractice for the private sector, the

tax authorities, and government officials. Corruption grew as links were forged between legislators

and businesses, and a new class of business owner politicians emerged.

Similarly, Qadir (2003) expressed about genesis of corruption in Pakistan that the culture of

corruption was promoted in the colonial system of administration by the award of lands, titles and

jobs to a specific group supporting colonial objectives as part of political bribery. In Pakistan white-

collar crime had its roots in the 1950s, starting from settlement of refugee claims, industrial

sanctions, allotment of agricultural lands, although the mechanics of money making giving rise to

rampant corruption. Till the Second World War, corruption was prevalent in considerable measure

amongst Revenue, Police, Excise and Public Works Department officials, particularly of the lower

grades while the higher ranks were comparatively free from this evil. By the time of Independence in

1947 increase of corruption by public officials became much noticeable.

Reasons of Corruption in Pakistan

Shah and Schacter (2004) and Langseth (1999) expressed that corruption is country-specific and

varies from country to country and its causes also vary from one country to the next, but it is

possible to identify some its key drivers based on in-depth country studies Among the main

contributing factors are policies, programs and activities that are poorly conceived and managed,

failing of accountability and transparency and. public servants, lacking a service mentality. While

fixing factors affecting corruption an Anonymous (n.d.) writer endorsed it by adding that in general,

it can be said that corruption flourishes where the institutions of government are weak, where a

government’s policy and regulatory regime provide scope for, where oversight institutions

(parliament, judiciary, civil society) are marginalized or they are corrupted themselves. It must be

stressed that the causes of corruption are highly contextual, rooted in a country's political

development, legal development, social history, bureaucratic traditions, economic conditions and

policies.


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Taghavi et al (2011) are of the view that corruption or any misuse of governmental power for

personal benefits is a phenomenon prevailing in administrative and political systems of different

countries. This results from different factors. Some of the most important factors of it includes: over-

interference of government in economy, inappropriate administrative system, excessive bureaucracy

and complexity, governmental and private monopolies, expansion of rent, non-transparent

regulations, weak management, unequal distribution of incomes, interference of high-ranking

politicians and governmental authorities, lack of accountability of government and different issues

like this which provides a ground bed for the expansion of corruption at micro level (administrative

corruption) and macro (political corruption) level.

Maqbool (2000) has expressed that one indication of the extent of corruption in Asia is that

whenever a political regime has crumbled in Pakistan and some other countries in South Asia, a

major and often decisive cause has been the prevalence of official misconduct among politicians and

administrators and the concomitant spread of corruption among business people. According to

Qadir (2003) in Pakistan some of the main reasons for post independence corruption are:

a) Land Awards: Settlement of millions of homeless through allotment of lands resorting to

corruption. Fake claims were approved for the allot-tees.

b) Bloated Public Sector: Nationalization Program in the 1970s being a poor economic option

brought a new form of nepotism of corruption. Bureaucracy inducted into the public corporate

sector for collusive mode of corruption both at individual and organizational level.

c) Private Sector Cooperatives: In the decade of 70s, 80s and even up to 90s a large sum of the

public was misappropriated by private sector Cooperatives, Housing & Finance Corporations. As a

result public money to the tune of Rs.13 - 14 billions went into the accounts of these Corporations.

d) Drug Money: Pakistan saw the entry of drug money in the early 80s inducing corruption and

strengthening the underground economy.

e) Foreign Aid and Investment:

f) The utilization of foreign funds was not properly perceived. The public sector utilization of foreign

funding was not done prudently thus scaring away investments as well as tying up the country in

heavy foreign debts.

g) Informal structure of National Economy: An informal and undocumented economy coupled with

lax procedures provided considerable opportunities to the business community for un-fair practices.

h) Institutional Erosion: The institutions of legislative, executive and judiciary failed to establish a

system of check and balances. Institutional failure is one of the main causes of corruption in

Pakistan.

Forms of Corruption in Pakistan

Anonymous (n.d.) wrote that corruption takes a variety of forms: bribery, nepotism, patronage, theft

of state assets, evasion of taxes, diversion of revenue and electoral fraud. The theft of state assets

by officials in charged of the stewardship, and manipulation or violation of electoral laws regarding

campaign finance and voting is also considered as corruption. About Pakistan, Javaid (2010) wrote

with reference to Transparency International Pakistan that corruption manifests itself in various

forms in Pakistan, including widespread financial and political corruption, nepotism, and misuse of

power. Corruption clouds almost all tiers of government; it is all pervasive and deeply entrenched.

Over the period acceptability of corruption has rather increased in the society and there is little

evidence that people feel guilty about their own role in corruption. The scale of corruption is highest

in development projects and procurement (including defense and public sector corporations) and

the bank loan write offs. The mega corruption is mainly in development projects, bank loans and


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procurements. According to one estimate the loss made to the national exchequer is of over Rupees

200 billion per annum, this loss is caused collectively by all the government departments but the

most prominent amongst them as per the Perception Survey carried out by Transparency

International Pakistan are: 1- Power Sector, 2- Tax and Customs, 3- Police and Law Enforcement, 4-

Judiciary and Legal Profession, 5- Health and Education and 6- Land Administration

Besides this, Qadir (2003), explaining Nature, Causes and Extent of Corruption has also mentioned

the following major issues which have been the main cause of corruption in Pakistani society:

1. Public Utilities In terms of the amount of corrupt money changing hands, taxation department,

state-owned banks and DFIs, power sector utilities like WAPDA, Sui-Gas etc., and other public works

departments account for the large scale institutional corruption.

2. The Tax Regime Characterized Pakistan’s Taxation system by widespread tax evasion, lack of

documentation, existence of large untaxed sectors and weak administrative capacity to collect taxes

resulting in as much as 50% of the total urban income going unreported. As per recent estimates,

annual tax evasion stands at Rs.218 billion.

3. Public Sector Banking Public Sector Banks, which have dominated the financial sector since the

nationalization of the Banks in the 1970s, have experienced serious deterioration in their loan

portfolios mainly because of political interference in their lending and loan recovery decisions. About

90% of the defaulted loans and bad debt concentrated among a small number of influential people

(top hundred defaulters). Recently, the system protected such defaulters. In many cases, loan

amnesties were granted. Loan recovery efforts by officials of public sector banks were undermined

by fear of politically motivated retribution.

4. Public Sector Expenditures Due to a non-transparent process and weak accountability system, the

public sector expenditures are officially misused, thereby, kickbacks and pilferage of revenue is in

connivance with the public officials.

5. Underground Economy The burgeoning under ground economy and smuggling in large part are

symptoms of wide spread corruption in Pakistan’s economy. This underground economy has

expanded at an annual rate of 20% over the last 23 years as compared to the average annual growth

of 17% under normal GDP.

Two researchers have pointed out corruption in health sector and it is a matter of deep concern

because health is very sensitive sector where people are already in severe trouble. Gadit (2011)

wrote that hospital medical superintendents are known for financial mismanagement, favoring bids

that could provide personal benefits, hiring people without merit and not paying heed to corrupt

practices of the office staff. The medico-legal certificates are issued upon payment of bribes; medical

staff and their relatives use medications. Favors accepted by doctors from pharmaceutical industry,

even in the form of cars, wedding receptions, foreign trips, land and other luxurious items. Private

medical colleges selling seats, government posting and transfers by either payments or using the

influential connections, not attending patients in time, ignoring emergency calls, consumption of

drugs or alcohol while on duty and much more. Under the context, in 2001, 2.8 billion prescriptions

were filled in the United States for an average 9.9 prescriptions per person. It is said that the

philanthropy that was once present in modern medicine has been replaced by love of money, which

gave rise to an elaborate system of bribery, conflict of interest and deception.

According to another researcher, Haque (2010), corruption in government hospitals is very common

particularly in third world countries. Corruption starts from the top places. Corrupt elements in the

Governments of powerful countries, World Health Organization (WHO), Local Governments, Ministry

of Health, Multinational Companies, Non Governmental Organizations, Secret Organizations and


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powerful Media; all play their role in misdirecting the health budget of government hospitals toward

rich and powerful and away from the poor and weak. They snatch away the big chunk of whatever

little health budget is destined for the poor patients. Corrupt society leads to the appointments and

assignments of corrupt, incompetent and impotent people who destroy the systems through their

actions and inactions. Corruption in the government hospitals ravages and desolates the Pathology

Department affecting its all activities! In order to have sound and blissful healthy systems there is

dire need to fight materialism and greed by all sane and honest people of the society through

instillation of high moral and ethical values at all levels and in all spheres of the society.

Issues of Corruption in Pakistan

According to Qadir (2003), Pakistan has following corruption issues:

1. Post independence settlement of refugees and allocation of properties, termed ‘Evacuee

Property, Corruption thus seeped into Pakistan society surreptitiously spreading its tentacles

everywhere.

2. The interventionist economic polices and discretionary powers (liquid petroleum gas quotas &

textile quotas. Wide discretionary powers tempted public officials into criminal acts.

3. Inadequate compensation to civil servants and ‘Demonstration Effect’ induced by the corporate

salaries and remittance from Gulf countries is another contributory factor to corruption.

4. Excessive aid flows over the years and the reluctance of international funding agencies to tackle

corruption, even the social sector projects have been victim of grafts, also social sectors program are

directed at less visible outputs. A large number of projects in the social Sectors have been mere

exercises in paper pushing.

5. In the 1980s Pakistan received a major portion of its aid in the form of grants and these funds

served to line many a pocket.

6. Rent-seeking in land acquisition and undertaking imprudent economic projects like “Green

Tractor Scheme”, “Yellow Cab Scheme”, “Karachi Mass Transit Project”, “IPPs”, “Ghazi Barotha

Hydropower Project” and “Motorway Project” have been a major source of corruption. Exorbitant

valuation led to huge increases in project outlays. 7. Crime-wise analysis revealed, financial scams

have severely damaged public trust foremost among these was the Cooperatives scandal, which has

shaken the confidence of the small depositors. In a country with low saving rates such incidents have

long-term economic implications.

8. Loan default resulted in trust breaching crimes. Trust nationalization policies of the 1970s gave

direct political controls and financial prudence gave way to political pressure and bribes. Political

clout and ability to bribe became the criteria for loan issuance.

9. Weak regulatory system. The state Bank of Pakistan was unable to prevent disasters. Financial

institutions were completely at the mercy of ruling clique of businessman, who did not waste the

opportunity to exploit the situation to their advantage. Arrival of the businessman politician

undermined the tax authorities.

10. Corruption is invariably a collusive form of activity premised on a nexus of the elites e.g.

politicians, bureaucrats, businessmen (including foreign companies) and technocrats. Colluding

Bureaucrats assisted in the politicization of the civil services thus ushering in the subsequent loss of

professionalism.

11. Delivery failures of civil institutions to greater extent are attributed, to planned political

inductions at lower levels through payment to legislators. The result was reduced efficiency and

increased corruption. Some of the daring functionaries accumulated assets worth millions.


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12. Complete breakdown of structures, including the internal accountability structure of

government departments and Anti-Corruption Organizations, thereby resulting in delivery failures

and institutional collapse.

13. Financially motivated, the sociological factors responsible for it cannot be ignored. Favors were

given on the basis of ethnic, familial, religious and other social considerations are responsible. A

large number of public office holders have failed to stand up to resultant pressures.

Consequences of Corruption

Lintjer (2000) concluded that the costs of corruption are high, and in a globalized world will become

insurmountable. Langseth (1999) revealed that corruption distorts resource allocation and

government performance. The causes of its development are many and vary from one country to

the next. According to Marsida (2011) and OECD-ADB (2000), the international financial crisis of the

late 1990s demonstrated that corruption has devastating effects on both political stability and

economic prosperity and growth. Mendes also referred IMF studies and other research work, which

revealed that countries rife with corruption have less of their GDP going into areas critical to

development, such as education, and have lower growth rates. Some experts argue that corruption

acts as a tax on foreign direct investment. Shang-Jin Wei, an economist at Harvard University, has

suggested that an increase in the corruption level from that of Singapore to that of Mexico is

equivalent to raising the tax rate by over 20 percentage points.

Qadir (2003) reported that corruption in Pakistan is so pervading in that it has destroyed the very

fabric of our society and during the last 10 years all elected Governments have fallen due to massive

political corruption. Qadir Mansoor’s report is very correct because in August 1990 president

Ghulam Ishaq Khan dismissed parliament and cabinet (government) of prime minister Benizir

Bhutto’s (exercising his power vested to him in article 58/2-b of constitution of Islamic Republic of

Pakistan) on the charges of corruption and in November 1996 again president Farooq Laghari

dismissed Benizir Bhutto government on the same charges and in January 1997 supreme court of

Pakistan acknowledged the charges correct and dismissed the Benzir Bhutto’s appeal of restoration

of her government.

Qadir (2003) rightly concluded that the role of money in politics in Pakistan has brought in a new

class of wealthy businessmen turned politicians who have constantly strived for saving their business

interest over the national economic advantage. According to report of Transparency International

Pakistan (2010) Syed Adil Gilani, Chairman TI Pakistan said that Corruption is the root cause of

poverty, illiteracy, terrorism, shortage of electricity, food etc and lack of governance in Pakistan, and

that the credibility of Pakistan is almost at the lowest level, which can be seen from almost no

funding in last two years from the Friends of Pakistan trust fund being managed by the World Bank.

Transparency International Pakistan (2010)

Facts and Amount of Corruption in Pakistan

According to Qadir (2003), a new class of wealthy businessmen turned politicians who constantly

strive for saving their business interest over the national economic advantage, therefore Javaid

(2010) expressed that according to one estimate the loss made to the national exchequer due to

corruption is over rupees 200 billion per annum. Transparency International Pakistan (2010)

indicated on the basis of The National Corruption Perception Survey 2010 that the overall Corruption

in 2010 has increased from Rs 195 Billion in 2009 to Rs 223 Billion and 70% Pakistanis say that

present government is more corrupt than previous government. Most people considered the past

Federal government to be cleaner. This is quite similar if we look at the response towards provincial

governments, except Punjab. However, if we look at the results from provinces from a standalone


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point of view, Punjab is the only province where present provincial government is rated to be

cleaner than previous provincial government and Khyber Pakhtunkhawa is rated as the most corrupt

province. Police and Power maintained their ranking as the top two most corrupt sectors, and land

administration is ranked as the 3rd most corrupt sector. Corruption in Judiciary, Education and Local

Government has also increased compared to 2009, whereas FBR’s two departments, Customs and

Taxation are ranked as the least corrupt sectors.

Qadir (2003) reported that in the decade of 70s, 80s and even up to 90s a large sum of the public

was misappropriated by private sector Cooperatives, Housing & Finance Corporations. As a result

public money to the tune of Rs.13 - 14 billions went into the accounts of these Corporations. Qadir

(2003) further reported that weak administrative capacity to collect taxes resulting in as much as

50% of the total urban income going unreported. As per recent estimates, annual tax evasion stands

at Rs.218 billion. Syed Adil Gilani, Chairman TI Pakistan expressed that the most corrupt sector is

“tendering” which eats away at least 40% of Pakistan development budget, and this is confirmed

from the recent results of Transparent tendering for transportation of sugar in Trading Corporation

of Pakistan where TCP has saved at least Rs 49.3 million by implementing Public Procurement Rules

2004, which is 40% lower than cost of same work awarded last year. Violators of PPRA are BOI

(Board of Investment), WAPDA, (Water and Power Development Authority) CDA (Capital

Development Authority), NHA (National Highway Authority), CCP, SECP (Security and Exchange

Commission of Pakistan), SBP (State Bank of Pakistan), Customs, EOBI (Employees old Age Benefit),

ECP (Export Corporation of Pakistan), EPZA (Export Processing Zone Authority), FIA (Federal

Investigation Agency), MOI, FPSC (Federal Public Service Commission of Pakistan), FOS, GPA,

Islamabad HC, JPCL, MoH, MoInv, MoPA, MoIT, MoPriv, MoZakat, NIH (National Institute of Health),

NSCS, PCB (Pakistan Cricket Board), PEPA, PHF, NLC (National Logistic Cell), NIC, PID, Privatization

Commission, and Utility Stores Corporation (Transparency International Pakistan, 2010).

Maqbool (2000), referring World Bank (World Bank 1998) expressed that the public perception is

that the law enforcement agencies and government organizations are the most corrupt elements of

society. In monetary terms, the level of corruption is highest in departments dealing with tax

collection, followed by the public sector, which accounts for 24 percent of gross domestic product.

Together these entities handle transactions worth US$19 billion per year, of which as much as 20

percent may be siphoned off as kickbacks and commissions to those handling these transactions.

Samad (2008) referred some studies and reported that Pakistan has figured prominently on the list

of corrupt countries. In 1998, the World Bank estimated corruption in Pakistan close to 10% of GDP

(Khan et al., 2004). The country is being fast abandoned by its manpower because of being victims of

corruption and left with no opportunities of advancement. Pakistan’s ranking on Transparency

International’s Corruption Perception Index (CPI) has consistently been among the lowest. Samad

(2008), squeezing from Transparency International has given following year-wise ranking table of

Pakistan in corruption in comparison of other countries of the world.

Year Number of Countries Pakistan’s

Rank

Pakistan’s Score

(out of 10)

1995 41 39 2.25

1996 54 53 1.0

1997 52 48 2.53

1998 85 71 2.7


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1999 99 88 2.2

2000 NA NA NA

2001 91 79 2.3

2002 NA NA 2.6

2003 133 92 2.5

2004 145 129 2.1

2005 158 144 2.1

2006 163 142 2.2

Similarly, Javaid (2010) has also built a comparing table extracted from many studies

showing position of Pakistan in corruption.

Year Pakistan’s Rank/ Score Pak Most

Corrupt Rank

No. of Countries

Ranked

2009 139/2.4 42 180

2008 134/2.5 47 180

2007 138/2.4 42 179

2006 142/2.2 20 163

2005 144/2.1 16 159

2004 129/2.1 19 147

2003 92/2.5 42 133

2002 77/2.6 26 102

2001 79/2.3 13 91

2000 NA NA 90

1999 87/2.2 13 99

1998 71/2.7 15 85

1997 48/5.3 5 52

1996 53/1 2 54

Prevention of Corruption in Pakistan

According to Mahmood (n.d), for an anti-corruption drive to be successful anywhere, there must

exist an anti-corruption strategy to govern it, structure it, drive it and above all provide the direction

and shape that it must take to succeed. Unfortunately in Pakistan, as in many other countries, anti-

corruption strategy has historically been deemed synonymous with anti-corruption enforcement.

Pakistan inherited the Prevention of Corruption Act (PCA) at Independence in 1947. The World War

II had led to an immense increase in procurement-related corruption and the first ever anti-

corruption agency was created under the PCA called the Special Police Establishment. Corruption

was now a cognizable offence. The surge that started never really subsided. Neither did awareness

about the issue. Following the PCA 1947, laws like the Public Representatives (Disqualification) Act

1949 and the Elected Bodies (Disqualification) Ordinance 1959 were promulgated. However, they

were perceived as tools of political victimization and failed to bring about a meaningful impact in

containing corruption. Anti-corruption agencies have also been created ever since independence.

The West Pakistan Anti Corruption Establishment 1961 created the provincial Anti Corruption

Establishments (ACEs). The Federal Investigation Agency (FIA) replaced the Pakistan Special police


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Establishment (PSPE) in 1975. The Ehtesab Bureau was instituted in 1997 augmenting the Ehtesab

Commission of 1996. The Bureau was entrusted with investigation of corruption while the

Commission had to prosecute it. The above initiatives, though well-meaning, did not bring about a

meaningful improvement in the situation where corruption kept consistently raising its ugly head

and the agencies were growingly perceived to be its victims themselves. The perception of their

being tools in the hands of political masters for victimization also never subsided. These institutions

therefore, fast-lost credibility and public trust so imperative for an anti corruption drive to succeed.

Maqbool (2000) was of the opinion that Pakistan’s current regime (the then General Pervez

Musharraf’s regime 1999-2008) has rightly concluded that to achieve stability, corruption must be

eliminated from all segments of society. The government has identified this task as a priority

objective and is fully committed to its pursuit, along with that of strict accountability. Qadir (2003) in

his report on corruption control and corruption cases in Pakistan stated many shortcomings of

existing system. He stated that many governments in the past have attempted accountability drive

in some form or other but these could not materialize into potent effort to check the spread of

corruption in the society because of some reasons as given below:

1. Misuse of the Agencies by Successive Governments, for arms twisting of their political

opponents.

2. Poor investigations and lack of professional expertise, to detect and investigate crimes towards

vested interest.

3. Misuse of mandate by the Investigating Agencies, to please their political masters under social or

financial coverage.

4. Implementation of Fair and Just Accountability, lacked in successive Governments. Resultantly,

the public demand for accountability has gained momentum in the last decade. Weakness in the

accountability system, in-effective laws and the Anti Corruption Agencies’ own lack of professional

expertise to detect and investigate the white-collar crimes.

5. The Incompatible Legal Judicial System, which is widely perceived to be an obstacle to economic

efficiency. Legal institutions in Pakistan are under-staffed, lack of trained administration, defective

management system and technology.

6. Appointment of Heads of Investigating Agencies and other officers on political consideration and

not on merits.

7. In-adequacies & Institutional Weakness of the Anti Corruption Agencies. The Anti Corruption

Agencies do not have the necessary capacity for undertaking the national task.

All these shortcomings are because of deficiency of the will of both the rulers and public in

elimination of corruption. Actually government officials and politicians are corrupt in need of wealth

so they commit exploitative corruption, whereas public commits collusive corruption. This point has

well explained by following researchers:

OECD-ADB (2000) suggested that fighting corruption requires both leadership and partnership. It

requires many leaders in national and local governments, in the judiciary and security forces, in the

tax administration, in corporations, and among citizens in every community. It also requires

partnership. When we look at today’s most successful societies we find densely integrated networks

of public and private activity. Such partnerships draw on the shared interests of citizens, businesses,

elected officials, and civil servants. They all aim at breaking up the monopolies, the unchecked

discretion, and the lack of accountability that lie at the heart of corruption.

Seiichi Kondo (2000) concluded that governments could not fight corruption alone. The private

sector and civil society are critical players in the fight against corruption and since the 1997 financial


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crisis, civil society activity in Asia and the Pacific is clearly on the upswing. While this is encouraging,

much more needs to be done.

It is well explained by the example of Korea by Byoung-Woo. Byoung-Woo (2000) reported that in

Korea, corruption has been one of the primary obstacles to economic development. In response to

Koreans’ desire for a corruption-free society, in August 1999 the government set up a number of

comprehensive anti-corruption programs. These programs are based on three basic principles: the

emphasis should be on prevention rather than on punishment, the approach should be

comprehensive and systematic, and the feasibility and effectiveness of programs should be given

priority. Under these principles, the government has adopted the following three strategies to

maximize the programs’ effectiveness:

1- Establishing an anti-corruption infrastructure that will enable Korea to fight corruption

systematically and consistently

2- Promoting administrative reforms in corruption-prone areas such as law enforcement, the

construction industry, tax administration, housing, environmental management, and the food and

entertainment industry

3- Building local and international partnerships among governments, enterprises, and civil society

Conclusion

In the light of above literature, we can conclude that corruption is universal curse around the world

and exists in all countries as a common phenomenon, both in developing or poorer countries and

developed or rich countries. The difference is only of the degrees of corruption. In the last five years,

leading politicians in U.K., Belgium, France, Spain and Italy have been convicted of corruption and in

fact, the entire European Commission resigned because of it. According to U-Myint (2000); World

Bank (2001); Law Commission of Government of India (2001), corruption is significant contributor to

reduction in the efficiency on which an economy depends, to low economic growth by lowering the

potential return, to stifle investment by increasing the cost of investment and reducing the

government’s resources, to inhibit the provision of public services and to increase inequality.

Common to other South Asian countries, corruption in Pakistan is unique because it occurs up

stream, it has wings which encourage flight of capital rather than wheel which encourage

reinvestment and it often rewards rather than punishes as the legal processes to fight corruption are

weak in themselves and the lower judiciary is amenable to letting off the accused if the ‘price’ is

right (quoted by U Myint, 2000 from many studies). In Pakistan, corruption manifests itself in various

forms including widespread financial and political corruption, nepotism, and misuse of power. The

scale of corruption is highest in development projects and procurement (including defense and

public sector corporations) and the bank loan write offs. The mega corruption is mainly in

development projects, bank loans and procurements, which rocks the foundation of the economy.

Loss made to the national exchequer by corruption is of over Rupees 200 billion per annum; all the

government departments collectively this cause loss. As extracted by Javaid 2010 from report of

Transparency International Pakistan, the most prominent amongst them as per the Perception

Survey carried out by Transparency International Pakistan are: 1- Power Sector, 2- Tax and Customs,

3- Police and Law Enforcement, 4- Judiciary and Legal Profession, 5- Health and Education and 6-

Land Administration. As per U Myint (2000), in Pakistan, corruption is because of poor governance.

All the efforts made by state (governments) to eliminate corruption were failed. The state may need

to establish credibility by punishing highly visible corrupt officials but in the past the goal of such

prosecutions was to attract notice and public support and not to solve the underlying problem.


90

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