Latest news

More old news flashes

Pakistan news feeds

NEWS

Older news flashes

Transparency holds Revenue Board responsible for corruption    

(Business Recorder report, Karachi, 2 June 2002)

The Berlin-based Transparency International (TI) has identified the Central Board of Revenue (CBR) as "one institution traditionally beset with most of the problems", which has led to corruption in Pakistan.

The TI mission, which was invited by the government to identify the areas of corruption, has submitted its observations to the government.

The TI observations have been widely circulated among top government functionaries by Major-General Shujaat Zamir Dar, Project Director, National Anti-Corruption Strategy, National Accountability Bureau (NAB), for perusal.

"The CBR is considered particularly corrupt by many observers," it said, and welcomed the government's reform programme, with significant donors' support.

The TI observed that Pakistan suffered from a particularly small tax base (1.2 million taxpayers in a population of 140 million is excessively low), and due to inefficient, and often corrupt, practices, the tax collection result was totally inadequate.

It stressed the need for a broad use of electronic means to catch the potential taxpayers in other activities and to reduce the personal interaction between the tax inspector and taxpayer, which could go a long way in increasing the tax intake.

The TI suggested that a code of conduct, reduction of discretion of tax inspectors, effective complaint mechanisms, strict monitoring and effective sanctions for violators should be a part of any reform programme.

The CBR might be one candidate for starting with higher salaries, coupled with strict monitoring and sanctions, it said.

The TI further observed that Pakistan's fight against corruption could benefit greatly from an almost total overhaul of the country's procurement systems, institutions and rules.

Through the public procurement, a very major share of the country's public resources was being spent - and much of it presently wasted.

The World Bank's Country Procurement Assessment Report of June 2000 painted a grim picture of the situation, and presented many suggestions for improvement.

The TI mission believed that implementation of those recommendations would help clean up the procurement scene and improve transparency, predictability accountability and quality of procurement.

The semi-official, double role of the Pakistan Engineering Council (PEC) is particularly difficult to be accepted, and "we agree strongly that the PEC should be limited to its private sector responsibilities so as to remove the obvious conflict of interest that exists under the present arrangement."

The TI mission actually went beyond the recommendations of the World Bank report, and stressed the following steps:

-- Full transparency of bid evaluation process.

-- The need to apply particularly strict and transparent procedures to the selection of consultants.

-- The desirability of using the TI developed concept of the integrity pact to a few selected major investment projects. The integrity pact concept has recently been applied to the selection of consultants for the Karachi Water and Sewerage Board (KWSB) K2 project and has brought highly satisfactory results for the KWSB, in terms of significantly lower consultant cost than had been predicted on the basis of past experience.

The TI further observed that incidentally, the integrity pact concept is equally applicable to the privatisation and the issuance of licenses, concessions etc.

Considering that the government's programme foresaw the privatisation of several very large public corporations, such as Pakistan Telecommunication Company Limited (PTCL) and Karachi Electric Supply Corporation (KES) and of all the banks, the TI recommended that the government of Pakistan should consider using the integrity pact concept in at least one of those cases to test its effectiveness.

Besides, the government should send a clear signal that it would make every effort to avoid the pitfalls of the privatisation as they could be observed in so many other countries, it said.

"Most external donors prescribe their own procurement rules, which as a minimum, increases the complexity and probably confusion of general procurement activities," the TI said, and expressed the hope that the donor community could be persuaded to agree and apply the "highest common denominator or standard" and thus help bring about uniform procurement rules.

"By the same token, the donors are not necessarily only part of the solution, but often are also part of the problem.

"Padding a project with items dear to the respective minister or secretary (cars etc), topping up the salaries of senior officials involved in executing a donor supported project, or offering consultancies to the government civil servants (often external), which are supposedly carried out during official vacations," the TI observed.

It said unfortunately such practices were done "official duties," were common and well established in many developing countries.

The TI urged the government to monitor relations between the donors and individual government departments carefully and to make sure that no such practices, which after all were a form of corruption, could be tolerated.

In several discussions, the TI mission heard that delayed releases of budget funds often contributed to procurement problems, and suggested that down or progress payments and funds, falling due throughout the year, should be made available when due.

"If principals cannot pay when the payment is due, the bidders will either pad their bids to make up for the delay in advance, or they will bribe the officials of the principal to see that they get paid over everybody else," the TI observed, and suggested a review of the release system.

The TI made the final recommendations in the procurement area.

-Bribery of Pakistani officials by external companies - whether done from abroad or through subsidiaries in Pakistan - is now a criminal act in all the 35 countries, which have ratified the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions.

If the government of Pakistan becomes aware of such bribery, or attempted bribery, in order to obtain or retain a contract with the government it should present the facts to the embassy of the home country of the bribing company, with copy directly to the OECD Working Group on Corruption in Paris. Under the legality principle, the embassy has to pass this information to its own prosecutorial authorities.

Implementation of the OECD Convention requires deterrence by effective prosecution, and the judicial machinery in the home countries cannot act unless they obtain the relevant information. It would also be advisable that the government of Pakistan informs the business community in Pakistan that it will fight corruption also by pursuing the bribers, be they Pakistani or foreigners.

Copyright 2002 Business Recorder (http://www.brecorder.com)

Finance Minister asks Transparency International to help check white-collar crime

A 3-member delegation of Transparency International led by Michael H. Wie Hen in a detailed meeting with Finance Minister, Shaukat Aziz has reviewed the impact of various reforms introduced by the government on governance and accountability in the country - for full story, visit the Business Recorder site and click on the headline.

• Download TI document, Pakistan’s Anti-Corruption Program: Observations and Recommendations (PDF format, 148 KB).