Across the country, out of Rs 1258 billions made in various forms of transactions, Rs 333bn have been misappropriated, which have been attributed to the interventionist economic policies and wide discretionary powers, especially of the liquid petroleum gas and textile quotas, which have tempted public officials to indulge in criminal acts.
There is a desperate call to urgently develop a comprehensive, anti-corruption strategy by all the federating units, whose implementation will be the collective responsibility of all ministries and departments concerned of the federal and provincial governments respectively, especially when the public is expecting a quickened pace of accountability process. One of the primary reasons is stated to be the State Bank of Pakistan, which was unable to prevent disasters because of the weak regulatory systems. Financial institutions were completely at the mercy of ruling clique, who did not waste the opportunity to exploit the situation to their advantage.
Moreover, corruption is invariably a collusive form of activity premised on a nexus of the elites, that is, politicians, bureaucrats, businessmen (including foreign companies) and technocrats, while the colluding bureaucrats assisted in the politicisation of the civil services, which ushered in the subsequent loss of professionalism. Secondly, delivery failures of civil institutions to greater extent are attributed to planned political inductions at lower levels. The result reduced efficiency and increased corruption, while some of the daring functionaries accumulated assets worth millions.
According to stats of the Anti-Corruption Establishment, the banking sector leads the list of transactions with Rs 470bn out of which Rs 47bn have been misappropriated, while the tax evasions are second highest in the list since estimates are of Rs 436bn, while Rs 216bn are never deposited with the public exchequer. Out of Rs 116bn meant for public sector development projects, Rs 29bn are said to have been embezzled. From the POL imports worth Rs 67bn, current expenditures of Rs 94bn, and public utilities worth Rs 175bn, respectively Rs 4bn, Rs 9bn and Rs 26bn have been misappropriated.
Under public utilities, in terms of the amount of money changing hands, Taxation Departments, 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. Secondly, Pakistan's Taxation system is characterised by widespread tax evasion, lack of documentation, existence of large untaxed sectors, flip-flop policies of the government and weak tax administrative capacity to collect taxes resulting in as much as 50 per cent of the total urban income going unreported. As per recent estimates, annual tax evasion stands at Rs 218 billion.
The report maintains that the public sector banks dominated the financial sector since the nationalisation of the Banks in 1970s, which have experienced serious deterioration in their loan portfolios, mainly because of political interference in their lending and loan recovery decisions. About 9 per cent of the defaulted loans and bad debt concentrated among a small number of influential people. Moreover, system protects 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. Due to a non-transparent process and weak accountability system, public sector expenditures are officially misused, thereby, kickbacks and pilferage of revenue is in connivance with the public officials.
It has been stated that till the Second World War, corruption was prevalent to a 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, but after Independence, increase in corruption by public officials became much noticeable. It is further maintained that the Evacuee Property led to the start of corruption seeping into Pakistani society surreptitiously spreading its tentacles everywhere. Secondly, the inadequate compensation to civil servants and ‘Demonstration Effect’ induced by the corporate salaries and remittances from Gulf countries is another contributory factor to corruption. Thirdly, excessive aid flows over the years and the reluctance of international funding agencies to tackle corruption in social sector programmes was an additive factor. A large number of projects in the social sectors have been mere exercises in paper pushing.
The crime-wise analysis reveals financial scams have severely damaged public trust. Foremost among these was the cooperatives scandal (housing and finance corporations), as about Rs 13-14 bn went into accounts of these corporations. Loan default resulted in trust breaching crimes, while the nationalisation 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.
Inadequate pay, pensions and public service provisions teetering under the burden of large families have been pointed out as major reasons behind corruption in civil bureaucracy despite government reforms in governance, and there is low fear of detection or punishment.