The Tip of the Iceberg

Musa Gilani returns to Pakistan today to face charges of in the ephedrine quota case after his father, the Prime Minister, directed him to cooperate in the investigation, which has now added to the list of cases now being monitored by the Supreme Court. This is just the latest in a series of high profile cases of corruption and governance failures that prominent members of the current government have been associated with.

Even in their entirety, all of these so-called “scandals” are probably just the tip of the iceberg and the true extent of the losses that the country has suffered due to corruption, tax evasion and bad governance is likely to be closer to the Transparency International estimate of Rs 8,500 billion over the four years of the Gilani regime. To put it into context, this average of Rs 2,125 billion each year is almost the same as the total tax revenue for the country (including all direct and indirect taxes) targeted in the 2011-12 Federal Budget. In other words, the country’s income could be DOUBLED if these losses are eliminated.

A few weeks ago, President Zardari made a record fifth address to the joint session of parliament, marking the completion of four years of the current government. As the Head of State, the President represents the unity of the federation of Pakistan and is above any party political affiliations. The address to the joint session is meant to be a review of the government’s performance, highlighting areas of achievement and those that need improvement. Given the corruption scandals that his government has been involved in and the state of governance in Pakistan, it would not have been unreasonable to expect the speech to have been an indictment of the government.

However, what transpired was that President Zardari painted a rosy picture of a Pakistan that was beyond the recognition of its citizens. Some of the things that he conveniently overlooked, or “forgot” to mention included that barely a dent has been made in the problems facing the country, that we continue to rely heavily on foreign aid to survive and that mismanagement and corruption have been the hallmarks of Prime Minister Gilani’s administration.

The economy has been mishandled and the projected growth rate of 4% is not nearly enough to provide the employment opportunities needed and is far slower than other south Asian countries such as India and Bangladesh. High inflation coupled with a crippling energy crisis resulting in chronic electricity and gas shortages have left the lower and middle classes floundering in misery over the past four years.

During the tenure of the Gilani administration, the currency has collapsed, with the Rupee falling in the last four years from Rs 63 to a US Dollar to Rs 93, a devaluation of a massive 48%. As a result, families have struggled to make ends meet in the face of massive inflation in food prices, with the prices of staple food items skyrocketing. Flour has increased from Rs 22 per kilogram to Rs 36, an increase of over 60%. Sugar has more than doubled in price from Rs 25 per kilogram to Rs 55, and milk has gone up 94% from Rs 36 per liter to Rs 70.

If that was not sufficient, the entire burden of increases in international oil prices rises plus related indirect taxes, particularly in the form of petroleum levies, have been passed through to consumers and subsidies have been removed. The price of petrol has jumped from Rs 53 per liter at the start of the Gilani term to over Rs 100 and diesel has gone up from Rs 38 per liter to Rs 107, an unbelievable increase of 181%. The resultant increase in basic bus fare is from Rs 8 to Rs 15.

To add to industrial woes and the misery of citizens, Pakistan faces a massive energy crisis. Power cuts to domestic and industrial consumers in the form of daily load-shedding is an accepted norm, with average durations without electricity increasing from 4 hours at the beginning of the current government to more than 10 hours daily. Add to that, load-shedding of natural gas supplies and it will not be difficult to understand why industrial investment and output are in their current state.

The government is funding its massive budget deficit through borrowing. Public debt is up from Rs 5.7 trillion in 2008 to Rs 11.7 trillion in 2011, nearly doubling in 4 years, an increase of Rs 4.2 billion DAILY! Just between July and December 2011, public debt increased by Rs 1.1 trillion or Rs 6 billion DAILY!

State corporations are not exempt from this mismanagement and leakages. In 2008, the deficit in PIA was Rs 40 billion; not a great position for a corporation that was a national asset for so long. This now has trebled and stands at Rs 120 billion, with 15 out of 39 aircraft – a crippling 38% of the entire fleet – not operational.

Pakistan Railways has not fared any better. Its deficit has doubled from Rs 19 billion in 2008 to Rs 40 billion, with 120 passenger trains & ALL cargo trains now not operational. In 2008 Pakistan Steel had Rs 11 billion in bank deposits. It now loses Rs 1.2 billion monthly, and has debts in excess of Rs 110 billion.

It is almost hard to imagine how it was even possible for these corporations to reach the state that they are in. Even if no improvements were made, even if corruption continued unabated at previous levels, even if no new checks and balances were introduced, it would not have reached this state. These figures are indicative of systematic and deliberate looting and plundering of national assets on an unprecedented scale.

If you look at the volatility in senior positions in the bureaucracy, that tells its own story of how management instability has been deliberately created to facilitate corruption. Five different people have held the position of Governor, State Bank in four years. There are no examples in Pakistan’s history of such instability in such a critical position. In the last four years, there have been eight changes in the position of Federal Petroleum Secretary and six changes in the position of Finance Secretary under Prime Minister Gilani. Other Federal Secretaries that have changed include those for Housing (five times), Religious Affairs (five times), Establishment (four times), Cabinet (four times) and Trade (four times).

Mega corruption scandals have been brought to light in Prime Minister Gilani’s 4 years in office, which the President omitted to review. These include the infamous Hajj corruption case, in which the central character, Rao Shakeel, was appointed in September 2009 at the express orders of Mr Gilani and is alleged to have given a car worth Rs 9.9 million to the Prime Minister’s son. One of his cabinet ministers, Hamid Saeed Kazmi, is still in custody for this case.

Corruption in excess of Rs 50 billion has been alleged in deals related to Rental Power Plants. Advance payments of Rs 21.8 billion were made for which borrowings were secured on state assets. One of the key figures in this scandal, Raja Pervaiz Ashraf, has now been nominated as a federal minister despite there being serious corruption allegations on him for receiving kickbacks and buying property overseas with corrupt payments.

Ayaz Khan, a former nightclub manager, was appointed head of the National Insurance Corporation and when the FIA tried to investigate, the Prime Minister ordered the transfer of the main investigating officer, Zafar Qureshi, from the case. Matric pass Adnan Khwaja appointed Managing Director of the Oil & Gas Development Corporation, a premier national corporation, at the direct orders of Prime Minister Gilani.

Despite all of these allegations, the President and the Prime Minister are able to bring themselves to stand up in front of the people of Pakistan and claim to be defenders of democracy, bearers of the torch of the Bhutto ideology and innocent victims of a campaign of deliberate persecution by the courts and the military. How they can go to sleep at night with this weight on their conscience, I will never be able to understand.