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Uprooting Corruption: Lessons from China

While it may be impossible for Pakistan to adopt China's lawfare model completely- given they have a one-party system, learning from their experience, we can follow a roadmap empowering the state to counter corruption successfully through creating a powerful watchdog called 'Pakistan Financial Crime Monitoring Bureau,' to catch what President Xi Jinping calls "tigers and flies" (influential higher-ups as well as lower rank public servants)

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After taking oath as the 22nd Prime Minister of Pakistan on August 18, 2018, Imran Khan has visited China three times (2018-2020, once every year) during his 33 months in power. After the first visit to Saudi Arabia, which is customary for all new entrants, the Prime Minister showed the importance Pakistan attaches to its most trusted friend, China, by visiting it next.

The much talked about issues in his speeches in China and elsewhere has been his “firm” (but without any roadmap) commitment (verbally) to uprooting corruption and alleviating poverty. On both issues, he vowed to learn from China.

After 70 years of our cherished diplomatic ties with China, it is an appropriate time to evaluate what Pakistan has not learned from China despite clichés and slogan mongering to counter financial crimes.

In an op-ed, coauthored with Hassan Aslam, it was opined: “Although Pakistan and China are poles apart in terms of the constitutional framework, forms of government, and state structure, Pakistan should undertake a detailed study of the Chinese anti-corruption lawfare model from all perspectives.

Some questions that Pakistan needs to address include (but are not limited to) the following: Does Pakistan require stand-alone superagencies to separately regulate the public and private sectors? To answer this question, Pakistan may need to take a holistic view at the National Accountability Ordinance, 1999 (NAO) with a new set of legal eyes.

Another important question that Pakistan needs to ask is what are the different forms of corruption that are rampant in Pakistan that require laws, and whether the existing anti-corruption laws are adequate to tackle existing corruption and corrupt practices”.

The oft-repeated top agenda of Imran Khan as head of Pakistan Tehreek-i-Insaf (PTI), which literally means “Pakistan Movement for Justice,” was across the board accountability and making Pakistan a prosperous and egalitarian society. According to his close aides, it is his unwavering “belief” that “prosperity of people is not possible without punishing the corrupt, irrespective of their party affiliations.”

Read More: Corruption engulfs whole system into socio economic turmoil: NAB Chairman

Inconclusive accountability

The arrest of two senior civil servants, alleged as front men by Imran Khan, of thrice-elected disqualified Prime Minister and former Chief Minister of Punjab, preferred to be called Khadim-e-Aala (‘most humble servant’) – and later their bails for want of credible evidence by a high court, has confirmed one thing: any process of accountability lacking credibility and transparency is bound to fail, and may even boomerang.

However, sending men from Federal Investigation Agency (FIA) after his once most-trusted-political-wizard (master of winning ‘electables), Imran Khan is ostensibly countering allegations of selective accountability using “corruption” as a pretext.

On April 23, 2021, Khadim-e-Aala was also granted bail by the larger bench of Lahore High Court, constituted after a split decision of double bench, confirming “inability” of the prosecution to produce executable evidence required in criminal cases.

According to a report, “In a rare development, the Federal Investigation Agency (FIA) in [April] admitted before a banking court judge that it had “mistakenly” accused PTI disgruntled leader Jahangir Tareen of money laundering in one of the first information reports (FIRs) it lodged against Tareen.”

The Lahore High court, which had earlier announced a granting of bail, later conveyed there was a split decision, and the matter will go to a referee judge. It now raises questions about the politicization of the judicial system, while such doubts already existed for the accountability institutions.

The proponents of Imran Khan say that his rock-solid determination to uproot corruption is evident from the fact that he is even not afraid of “electables” still associated with the “magic sugar man” (for the premier, he is now a ‘sugar baron’) that can topple him.

The premier managed a second vote of confidence with the help of the same man say his critics, saying that this is opportunism at its worst! The issue of countering corruption and what we can learn from China after 70 years of ties with our most trusted friend in these circumstances appear bleak.

Read More: China’s Xi seeks to enforce Strong will against corruption at Communist Party meeting

Politics of barbs and slurs

My mentor and teacher in journalism, the great Ibn Abdur Rehman, before his death, in his last column, aptly described the prevailing maladies: “The common practice in Pakistan is to condemn the opposition groups as thieves and receive an identical response in return.

This was not always the practice in this country, and political rivals were treated with due courtesy. The change for the worse is the contribution to political discourse by characterless upstarts. The usual practice these days is to raise one’s stature by demeaning the other, and this often without the requisite information.

Thus, exchanges between political opponents quite often become weird exercises in search for the most vulgar labels for adversaries. The present government in Pakistan, for instance, chooses to describe its political opponents as ‘thieves’ and ‘looters,’ the last word being our subcontinent’s contribution to the English language…”

In his very first speech, after taking a vote of confidence, the prime minister used the exact words late I.A. Rehman highlighted and said, “I will not give NRO to anybody but
retrieve the looted funds.” This narrative of the premier persists even after taking a second vote of confidence in the wake of the defeat of Dr. Abdul Hafeez Shaikh in Senate elections.

It has created a situation of no rapprochement with the opposition parties that call him “selected.” The rift in Pakistan Democratic Movement (PDM), now almost erstwhile, shows accountability is not anyone’s concern nor is reforming the institutions as China did.

However, the tug of war and constant mudslinging has become an accepted political culture. China never faced such a situation in its lawfare (it is a portmanteau of terms ‘law,’ and ‘war’ is the use of law as a weapon of war to achieve legal, financial, and economic objectives) against corruption in private and public spheres.

The menaces of corruption, horse-trading, and various financial crimes have persisted unabated in Pakistan for decades, and the PTI Government since 2018 has failed to uproot them.

The issue is not mere acceptance that there is widespread corruption, misappropriation of public funds by state functionaries with or without the connivance of political masters, as said by the premier, but how to end these menaces?

In the wake of the Senate election on March 3, 2021, and allegations of corruption by rival politicians against each other, citizens are further disillusioned with the conduct of
party leaders and elected representatives.

They are stunned when the prime minister, in his televised address on March 4, 2021, admitted: “Many PTI members were bought.” This statement during Senate elections and leakages of videos of 2018 and 2021 pertaining to horse-trading has discredited the entire system.

After confession by the premier of electoral corruption and available evidence, the culprits should have faced criminal proceedings. Mere expulsion of defiant or allegedly corrupt members from PTI by the premier in 2018 has proved ineffective. Perpetuation of corrupt practices by some elected politicians defies all norms of democracy.

These undesirable practices are not confined to any particular political party. In theory, Pakistan is a constitutional democracy, but in practice, it is an embodiment of kleptocracy. Favoritism, nepotism, corruption, and using money or other tactics to secure change of political loyalties have been part of our political culture/governance under both military and civilian rules alike.

Read More: China court sentences ex-banker to death for $260m bribes, bigamy

Fragmented legislation and institutions

The agencies responsible for combatting corrupt menaces, the National Accountability Bureau (NAB), provincial anticorruption departments, Federal Board of Revenue (FBR), FIA, and Election Commission of Pakistan (ECP), have all failed to perform their duties.

They have never bothered to establish a joint task force to counter financial crimes posing a severe threat to our internal security, hampering economic growth and entry in the grey list of Financial Action Task Force (FATF) since 2018. Even after many years, ECP has failed to decide the complaints and counter-complaints of alleged foreign funding by the political parties.

FBR has failed to get tax returns from 125 out of 127 registered political parties with ECP. NAB, ECP, and FIA have a poor record of successful prosecution of public office holders though it is an open secret that their declarations do not justify their sources shown in tax returns.

In these circumstances, Pakistan needs to look at how China combatted financial crimes. China, like us, faced rampant corruption but waged effective lawfare, not to say that China’s lawfare model is perfect as ongoing reforms are essential. According to international standards, the measure of success of any criminal justice system is the certainty of punishment and impartiality.

The main problem of Pakistan is a formidable resistance from all politicians for the establishment of an independent watchdog authority. Pakistan is a signatory to the 2003 United Nations Convention against Corruption, but the existing fragmented legislation and institutions to implement the same, lack capacity and skills to investigate and successfully prosecute the culprits.

The Convention signed on December 9, 2003, ratified on August 31, 2007, is still not fully implemented. This speaks volumes about our institutional weaknesses in all three important pillars of the state—legislature, executive, and judiciary and the necessary coordination between them while retaining their separate functions.

At the time of ratification, Pakistan opted out of Article 44(6) of the Convention for cooperation on extradition with other State parties. There is a need to reconsider this as many convicted politicians and others are taking refuge abroad.

All international treaties and conventions have to be incorporated in the domestic laws of Pakistan to become effective that derive sanction from the Constitution of the Islamic Republic of Pakistan and Sharia laws.

The laws dealing with “corruption” are numerous, e.g., National Accountability Ordinance, 1999 effective from January 1, 1985, Anti-Money Laundering Act Law, 2010 amended hastily and poorly in recent months to unsuccessfully meet requirements of FATF and its affiliate Asia Pacific Group, Federal Investigation Agency Act, 1974, Prevention of Corruption Act, 1947, Pakistan Penal Code, 1960, Code of Criminal Procedure, 1898, Extradition Act, 1972 and Law of Evidence (Qanoon-e-Shahadat) Order, 1984.

However, due to political and elite capture and fragmented laws, Pakistan has been unsuccessful at tackling the daunting challenge of countering financial crimes in public and private spheres, tax evasion, and crimes like money laundering (ML) and countering the financing of terrorism (CFT).

It is strange that in a country where tax evasion still exists after four tax amnesties from 2008-13, five from 2013-18, and twice from 2018 to 2021, not a single person is convicted for tax evasion.

Read More: Pakistan’s rank drops in Corruption Perception Index 2020

China’s success story

How China uprooted corruption through lawfare is elaborated in detail in my article “China’s lawfare against c o r r u p t i o n — l e s s o n s for Pakistan—I and II” published in the Daily
Times. The crux of the two articles was that in March 2018, two new “superagencies” were
established by China to regulate both the public and the private sector.

For the public sector, National Supervisory Commission (NSC) replaced all previous agencies. Its scope was extended, covering the investigation and acting as a watchdog for all state-owned enterprises, public health care, research, and educational institutes. The NSC secures executable evidence and recommends cases for prosecution.

For the private sector, a superagency called ‘State Administration for Market Regulation (SAMR) acts as the regulatory body while the Anti-Unfair Competition Law (AUCL) deals with commercial bribery by individuals and companies.

It is pertinent to mention that under SAMR, political heavyweights who were previously considered untouchables were punished, e.g., General Xu Caihao (former vice-chairman of the Central Military Commission) and Bo Xilai (2007-2012, Secretary of CPC Chongqing Municipal Committee and member of the Political Bureau of the CPC Central Committee).

Recently, on April 9, 2021, Alibaba, China’s biggest online retailer, faced a fine of four percent on its 2019 domestic sales, that is three times higher than the $975 billion fine China imposed on US chip company Qualcomm back in 2015.

Whatever the motive may be, the evidence stood the test of judicial prosecution. Our successive governments are more interested in media trials of opponents using “corruption” (unproved) as a tool for victimization. This is the main difference between our ineffective system and China’s lawfare against corruption.

Uprooting Corruption

Empowering state to uproot corruption

We cannot strictly follow China’s lawfare model as they have a one-party rule. However, based on their experience, we can follow a roadmap to empower the state (a term that is
different from ‘government’ as people usually think), defined in Article 7 of the Constitution, to counter the menace of corruption successfully.

Read More: A country marred by corruption

Firstly, we should dismantle the existing alliance between robber barons and state functionaries, ensuring that nobody is above the law. Secondly, construct a single “Regulatory Entity” through special enactment with an independent board, resources, and operations.

This entity [say Pakistan Financial Crime Monitoring Bureau (PFCMB)] should work as a watchdog for all financial crimes and passing incontrovertible evidence to a competent and independent National Prosecuting Agency (NPA) to take the offenders to task in special speedy trial courts where judges have expertise in laws relating to financial crimes to deliver judgments swiftly but strictly following Article 10A of the Constitution. The proposed structure of PFCMB should be: The PFCMB, with multi-source financial intelligence and analysis network, will help to detect, investigate, analyze and prosecute corruption by any citizen as per Article 5(2) of the Constitution.

It will accomplish the following objectives: implement financial crimes-related laws and regulations; ensure reporting of high-end financial data/information for expert analysis and utilization to counter corruption and ML/CFT, and provide training to the law enforcement officials and financial sector and prosecutors.

As an autonomous body, PFCMB would be responsible for ensuring timely collection, preservation, examination, and transmission of information necessary to counter corruption and ensure the reporting regime by introducing legislative, operational, and technical changes in the existing laws. This centralized agency with skilled manpower in all areas of financial crimes alone can ensure uprooting of corruption under the Convention and meeting the FATF mandate.

Dr. Ikramul Haq is Chief Partner at Huzai- ma & Ikram, Advocate of Supreme Court of Pakistan, and a visiting Professor at Lahore University of Management Scienc- es (LUMS). He holds a doctorate in inter- national tax. He is also author of several books on taxation issues.

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