Transparency International-Pakistan organised a seminar on “Corruption in the Private Sector-Causes & Remedies” at Hotel Marriot on 10th October, 2009. It was an event that attracted a lot of attention from the private sector as well as the media, which could be gauged by the number of attendees from the corporate sector.

The seminar was chaired Mr. Shaukat Tarin, Finance Minister to the Government of Pakistan. The seminar began with an opening address by Mr. Syed Adil Gilani, Chairman Transparency Pakistan, on major issues regarding corruption and its prevalent practices in the Private Sector of the country. He emphasized the role of Transparency International Pakistan as an organization which scrutinizes corruption issues, brought to its knowledge by the public/Media and refers them to the concerned government agencies for redressel.

Mr .Gillani also spoke of the benefits of having a coalition with PPRA which has resulted in saving amount of 1.87 billion in the PQA in just one tender . He also suggested following of rules without any discrimination in FBR. He also asserted that MOF should immediately stop funds of PPRA defaulting departments. He stated that this cooperation can achieve a lot of success and assured that the savings can go up to 30% of the Development Budget of FY 2009-2010. This would amount to about $5.5 Billion.

The second speaker was Mr. Akbar Sheikh, Ex-Chairman All Pakistan Textile Mills Associations & also the Ex Chairman ,Pakistan Contractors Associations. Having extensive knowledge of the private sector he stated that apart from pure greed of the public corruption is also caused by discriminatory application of law by the public servants. He clarified that corruption is always a public-private joint venture. “Competitiveness is the soul of survival in today’s globalising world. Nothing kills it faster than unfair competition and cartelization. Our economy is full of both phenomena”. He emphasized on current issues that are becoming a source of agitation e.g. Sugar and Electricity.

He was of the view that when the day to day survival of an individual or a business is threatened, desperation leading to theft and evasion is the ultimate outcome. Finally, when people see no or insufficient benefit of compliance evasion is the outcome. Mr. Sheikh was of the view that establishment of Public Procurement Regulatory Authority in 2002 was a huge step in the right direction. He also appreciated government efforts towards improving transparency and efficiency in its expenditure.

He also said that the Award of construction or consultancy work to government and semi government agencies without fair competition should be treated as Mis-Procurement under rules. In construction sector, agencies like NLC, FWO and NC are awarded work without matching requirements of bank guarantees for Bid bond, Performance Bond, retention money, CAR Policy, insurance cover and income tax deduction. These practices are not allowed under PPRA Rules and are also unfair to the private sector competing for the same work but causes loss to national exchequer. He requested CCP to take notice of these anti competition practices.

The next speaker was Mr. Ehsan Malik, Chairman Unilever Pakistan. Mr Malik has also been the Chairman of Unilever Srilanka. He spoke on the combination of four factors that lead to corruption. First a High incentive to evade duties and taxes ;weak controls coupled with lack of willingness to implement them ,Pakistan’s porous Borders and an illogical framework these all combine together to cause a loss to the national exchequer of Billions of Rupees. Besides he emphasised the need to correct these factors to what ever extent possible as they are responsible for damaging Pakistan’s manufacturing base. He mentioned that the primary attraction of Pakistan to foreign investors is its large market of 170 million and a growing middle class. “In Pakistan it is possible to manipulate rules to suit favoured players. This is unfortunate as it makes it very difficult for Pakistani managements of multinational companies to obtain scarce investment funds from parent countries”.

Mr Malik said that, the PACCS system, under the custom’s administration Reforms (CARE), should not be allowed to be derailed. In 2002-2003, STARR was established by FBR to automate refund of sales tax by matching input and output tax of registered sales tax payers. Manual intervention should be discouraged and on Income Tax. He said an effective, independent, competent and reliable audit procedure, based on automatic computerized system should be established. The ERP Project of FBR should also be expedited.

Mr Ehsan Milik’s speech was followed by a session of Question and Answers, where questions on high pricing and Corruption in the flour market were put . Besides these several other questions were raised along with various suggestions for reducing corruption and improvement of the systems.

Mr. Sohail Ahmed Chairman FBR was the third speaker, He said that FBR has no plans to roll back any reforms. He emphasized on the Importance of under invoicing which has not been mentioned by TI-P and there is a dire need to resolve this problem as soon as possible. He explained how FBR has improved over the years but agreed that it still has miles to go to achieve its targets.

He said that a proper system is under process which will result in initiation of action against Tax payers/evaders.

Mr. Khalid Aziz Mirza Chairman Competition Commission of Pakistan also addressed on the occasion. He said that the Commission found that Trade Associations degenerated into cartels. There are mafias which are working to destroy the law or weakening the Commission. The supporters of the laws on the other hand are the weak and silent majority. He stressed on the need for the civil society, media and the government to understand the benefits of the law and give full support to ratifying the ordinance.

Chief Guest Shaukat Tarin in his key note address , emphasized that the need of the hour is an independent and corruption free Judiciary that will enable the country to be strong as according to him Corruption is a huge scourge around the world and has a direct bearing on the welfare, economic, social and often, even physical welfare of hundreds of millions of people in the world, especially in developing countries. Hence, corruption imposes fundamental welfare costs upon society.

He assured Transparency International Pakistan that the reforms so far implemented in Customs, Income Tax, Sales Tax, as well as establishment of PPRA will not be backtracked. He further said that he would examine TI Pakistan’s proposals and in case any department is found violating PPRA rules, the funding of that department will be suspended, until AGP in consultation with PPRA gives a clearance certificate.

In the end Mr. Arshad A. Zuberi, Trustee TI Pakistan, paid special vote of thanks to all speakers and participants.