Miscellaneous

Corruption Imperative and the Systemic Approach to Anti-Corruption

Corruption is now widely discussed and condemned in Pakistan. There seems to be a growing realization that corruption isn’t just about kickbacks, embezzlement, and fraud, but that with its complex fiscal, intellectual and ethical ramifications, it has far-reaching consequences. From endangering life, hurting prospects for development and economic growth and widening inequalities to weakening the social fabric, fostering terrorism, imperiling the environment, risking national sovereignty and threatening peace and security, corruption’s dangerous footprint is everywhere.


Pick up any problem and one can trace its threads back to corruption. In the worst case scenario, it costs lives. Corruption has been at the core of deaths due to building collapses, fake drugs and food adulteration. Thousands of lives have been lost due to the interplay of financial crimes with the existing security challenges in our country.


Hundreds of millions of Pakistanis are deprived of quality healthcare and basic education and get excluded from state benefits due to tax evasion, systemic pillage, diversion of funds and mistargeting of resources. When regulators and state oversight bodies collude with monopolies, hoarders and special interest groups, commodity prices hike, affecting all of us. We have all tasted the nature of corrupt practices in law enforcement, land and revenue management systems. Institutionalized procurement and rent-seeking has diverted trillions away from the needy over the decades and power generation public-private collusion will haunt generations in the form of utility bills. Even the roots of the devastation caused by flooding, thought of otherwise as a natural disaster, can be traced back to illegal logging of trees and pilfering in irrigation departments.


It is not just individuals, but the national system that suffers as well with dire economic and societal consequences. Studies have shown that corruption increases poverty and income inequality and negatively impacts growth. By clouding the business environment, impeding development of fair market structures and distorting competition, corruption creates obstacles for investment and trade. Regimes, governments, institutions and leaders lose their legitimacy due to corruption and peoples’ trust is undermined. Corruption also damages the country’s international reputation, as certain forms which drive smuggling, trafficking and other financial crimes, fueling the informal and black economies, are not confined within national borders.

Finally, studies have shown positive results when measures aimed at promoting high ethical standards across the public sector through conflict of interest regulations and asset declarations were combined with another set of initiatives aimed at promoting public scrutiny to hold public officials accountable. This can be enabled through systemic approaches to citizens’ empowerment, which have been part of various iterations of local government frameworks in Pakistan but have never been fully implemented.


Deeply entrenched corruption has a chicken-and-egg relationship with ‘state capture’, a broader phenomenon in decision-making where the laws and regulations of a country are made to favor a select few and where decision makers use state leverage to either gain personally or benefit their cronies. The interplay of weak governance of state institutions, vested interests of the powerful elite, strong monopoly power, wide discretion for officials and weak accountability mechanisms lead to state capture.


In such settings, systemic manipulation and circumvention of procedures becomes the norm. Corruption is then no longer the exception. It is no longer the “cost of business”; it actually becomes the system itself. Illicit rents are extracted and distributed to respective hierarchies on well-established shadow “rules” which govern the de facto functioning of ministries and departments. As an outcome, resources get channeled to the well-connected, institutions lose their ability to deliver on their original purpose, the gap between rich and poor widens, governance becomes exploitable and reforms are held hostage. 
The causes of state capture cannot be addressed by reform within an isolated sector, and entails creation of checks and balances, upholding rule of law, impartial and independent media and judiciary. As a starting point, any anti-corruption national reform must aim to build the right institutional architecture: a national strategy, freedom of information laws, key accountability institutions for public redressal, oversight and investigative work. The issue is that Pakistan has much of that already in place, but with corruption still thriving.


This is because we tend to opt only for punitive action as a policy tool when tackling corruption. This does not provide a sustainable solution. The key is to focus on building systems that limit opportunities for collusion and corruption in the first place.


In addition, we must recognize that over the years, serious loopholes have been created in respective laws and regulations dealing with various institutions and sectors. There is also shocking tolerance for failure to comply with laws and regulations, their weaknesses notwithstanding. This allows space for maneuverability, when combined with unchecked powers of discretion, a culture of arbitrariness and circumventing procedures and a near-absence of accountability for rule and evidence-based decision-making. Combine this with a bureaucracy with political leanings, and a tendency to disregard integrity, disclosure and conflict-of-interest in appointments, and a toxic brew is created to erode the principles of governance, fostering corruption. Any serious anti-corruption attempt must address these systemic fault-lines as a starting point. Rule-based control on government functioning, respect for merit, integrity, ethical conduct, accountability and transparency, oversight of discretionary powers and safeguards against conflict of interest are the basic foundation stones of any anti-corruption measure. The good news is that progress in this direction can be made by setting the “tone at the top”. In Pakistan’s centralized system of decision-making, a true, visible and active commitment at the leadership level to zero tolerance towards corruption in all its forms can cascade downwards and into implementation very quickly. I believe that despite all difficulties, that can be the silver lining to our problem.


So what are the specific steps, which have a high likelihood of countering corruption in a national context? As a starting point, I would like to reiterate the importance of building systems that limit opportunities for corruption. In this regard, since there is no single silver-bullet, most national anticorruption strategies outline long lists. Pakistan’s National Anti-Corruption Strategy (NACS), is no different and encompasses several approaches. NACS’ “anti-corruption tool kit” includes numerous measures (access to information, legislation, integrity pledges, codes of conduct, conflict of interest provisions, assets declaration and monitoring, integrity pacts, vigilance units, random integrity testing, service delivery surveys and report cards, etc.). Each one of these is important in its own right and when combined, potential synergies exist.


At a practical level, however, it is important to identify priority policy levers, which have demonstrated success in evaluations. A review of international studies assumes importance in this regard. So, what do we know from international experiences in relation to anti-corruption reform? What has worked in other countries and why?


A large number of studies have measured corruption, but few have assessed the impact of anti-corruption initiatives. Methodological measurement issues, variations in political economy and challenges of causality and attribution notwithstanding, there are some general lessons from international experiences, which can inform anti-corruption systems building in Pakistan. Three points are outlined in this respect.


First, international studies show that the impact on corruption is strongest through strengthening Supreme Audit Institutions (SAI). SAIs are meant to have a critical monitoring and oversight role for ensuring public accountability, fiscal transparency, and financial discipline in governmental operations. Pakistan’s Auditor General's constitutional office (AG office) and Public Accounts Committees of the National Assembly are closest to an SAI. The AG office’s mandate is to ensure that funds are spent in compliance with existing laws and regulations. If it is allowed, enabled and empowered to play its role effectively, even with the existing constrains, it can serve as a strong safeguard against collusion and compel accountability, in case of deviations. From my experience serving on public sector boards and in a caretaker cabinet, I continue to be amazed by the astuteness with which the instrument of the “audit para” has capacity to dig up wrongdoing and the impunity with which the system fails to compel accountability based on its findings. One of the anti-corruption priorities should be to invest in competent and professional staff at the AG office and review its structure so that it functions as an independent and autonomous SAI. Studies have found that reforms targeted at SAIs are even more effective in reducing corruption than other anti-corruption institutions such as specialized anti-corruption authorities.


Secondly, a large body of evidence from studies has shown that pubic financial management (PFM) reforms can also significantly impact anticorruption efforts, especially when combined with procurement reforms and strengthening of budget planning and SAI. The Government of Pakistan has had a continuing agenda of PFM reform for a while. However, successive Public Financial Management and Accountability Assessments have underscored the need to align management with international standards and strengthen fiscal discipline. Emphasis has been laid on strengthening internal controls and procurement systems, which impacts almost every part of the government’s operations.


Meaningful strengthening of the AG office and PFM appear to be the two most important governance levers to compel horizontal accountability. Lack of attention to these also explains why Pakistan’s approach to corruption, largely centered on prosecution/enforcement, has failed to date. Studies have shown that strong legal constraints to anti-corruption can only work in environments where institutions are strong. In weak institutional environments, specialized anti-corruption authorities tend to be captured for the benefit of the few powerful elite. We see that happening in Pakistan. Therefore, it is important to build safeguards against the blatant abuses of power through a two-fold approach: strengthening governance on the one hand, whereas bridging weaknesses in the legal frameworks of the National Accountability Bureau and Federal Investigation Agency, on the other. This is necessary to ensure that the agencies are truly autonomous and impartial, and free from the danger of being maneuvered, in line with the international standards outlined in Article 36 of the United Nations Convention Against Corruption, to which Pakistan is a signatory.


There is also the need to review the broader legislative agenda for transparency promoting reform. Pakistan does not have laws relevant to white collar economic sabotage and explicit whistle-blower protection laws; the latter are needed to enable and encourage citizens to come forward to law enforcing agencies to report on corruption incidences.


Finally, studies have shown positive results when measures aimed at promoting high ethical standards across the public sector through conflict of interest regulations and asset declarations were combined with another set of initiatives aimed at promoting public scrutiny to hold public officials accountable. This can be enabled through systemic approaches to citizens’ empowerment, which have been part of various iterations of local government frameworks in Pakistan but have never been fully implemented. 
Anti-corruption reform is a complex political process, where a number of contextual factors (judicial oversight, right to information, free media, government openness, competitiveness, and commitment to human rights issues, etc.) matter deeply and a range of policy options have individual potential. However, it is important to prioritize a combination of evidence-based policy levers, which can drive quantum change in addressing the predatory behaviors, which have undermined the true potential of the country and its people.


The writer is a former federal minister, founder of the NGO think tank, Heartfile and Co-Chair of the WHO High-Level Commission on NCDs.

E-mail: [email protected]

www.sanianishtar.info

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