Friday, June 18, 2010

We Hang the Petty Thieves and Appoint the Great Ones to High Office.

When Asif Ali Zardari became president of Pakistan, I was reminded of the famous ancient philosopher Aesop who is quoted to have said, "We hang the petty thieves and appoint the great ones to high office". While Zardari's rise from a convict in Swiss corruption case to the highest office in the land of his birth is among the most egregious, it is by no means unique. There are many examples of kleptocracy in Pakistan's neighborhood, as recently outlined in a piece by Mohan Murti, former Europe Director of the Confederation of Indian Industry (CII), published by the Hindu. Here are some excerpts from it:

It is a fact that the problem of corruption in India has assumed enormous and embarrassing proportions in recent years, although it has been with us for decades.

In a popular prime-time television discussion in Germany, the panelist, a member of the German Parliament quoting a blog said: “If all the scams of the last five years are added up, they are likely to rival and exceed the British colonial loot of India of about a trillion dollars.”

One German business daily which wrote an editorial on India said: “India is becoming a Banana Republic instead of being an economic superpower. To get the cut motion designated out, assurances are made to political allies. Special treatment is promised at the expense of the people. So, Ms Mayawati who is Chief Minister of the most densely inhabited state, is calmed when an intelligence agency probe is scrapped. The multi-million dollars fodder scam by another former chief minister wielding enormous power is put in cold storage. Prime Minister Manmohan Singh chairs over this kind of unparalleled loot.”

An article in a French newspaper titled “Playing the Game, Indian Style” wrote: “Investigations into the shadowy financial deals of the Indian cricket league have revealed a web of transactions across tax havens like Switzerland, the Virgin Islands, Mauritius and Cyprus.” In the same article, the name of one Hassan Ali of Pune is mentioned as operating with his wife a one-billion-dollar illegal Swiss account with “sanction of the Indian regime”.

A third story narrated in the damaging article is that of the former chief minister of Jharkhand, Madhu Koda, who was reported to have funds in various tax havens that were partly used to buy mines in Liberia. “Unfortunately, the Indian public do not know the status of that inquiry,” the article concluded.

“In the nastiest business scam in Indian records (Satyam) the government adroitly covered up the political aspects of the swindle — predominantly involving real estate,” wrote an Austrian newspaper. “If the Indian Prime Minister knows nothing about these scandals, he is ignorant of ground realities and does not deserve to be Prime Minister. If he does, is he a collaborator in crime?”

The Telegraph of the UK reported the 2G scam saying: “Naturally, India's elephantine legal system will ensure culpability, is delayed.”

This seems true. In the European mind, caricature of a typical Indian encompasses qualities of falsification, telling lies, being fraudulent, dishonest, corrupt, arrogant, boastful, speaking loudly and bothering others in public places or, while traveling, swindling when the slightest of opportunity arises and spreading rumors about others. The list is truly incessant.

My father, who is 81 years old, is utterly frustrated, shocked and disgruntled with whatever is happening and said in a recent discussion that our country's motto should truly be Asatyameva Jayete.

Europeans believe that Indian leaders in politics and business are so blissfully blinded by the new, sometimes ill-gotten, wealth and deceit that they are living in defiance, insolence and denial to comprehend that the day will come, sooner than later, when the have-nots would hit the streets.

In a way, it seems to have already started with the monstrous and grotesque acts of the Maoists. And, when that rot occurs, not one political turncoat will escape being lynched.

The drumbeats for these rebellions are going to get louder and louder as our leaders refuse to listen to the voices of the people. Eventually, it will lead to a revolution that will spill to streets across the whole of India, I fear.

Perhaps we are the architects of our own misfortune. It is our sab chalta hai (everything goes) attitude that has allowed people to mislead us with impunity. No wonder Aesop said. “We hang the petty thieves and appoint the great ones to high office.”

Here is video of the poor Indian children ignored by the kleptocrats:

Related Links:

Haq's Musings
BRIC, Chindia and the Indian Miracle
Zardari Corruption Probe in Switzerland

From Bureaucracy to Kleptocracy
India Targets Rights Groups as Maoists Insurgency Grows

India Deploys 100,000 troops Against Maoists

Taliban Digging Their Own Graves

Bloody revolution in India

Maoists Impact on India's Economy

Are India and Pakistan Failed States?
Arundhai Roy on Maoist Revolt

India's Maoist Revolution

NY Times on Maoists

Can Indian Democracy Deliver?
Grinding Poverty in Resurgent India

Pakistan's Choice: Globalization or Talibanization
The Tornado Awaiting India

Countering Militancy in FATA

Taliban or Rawliban?
Is Indian Democracy Overrated?

Political, Economic and Social Reforms in Pakistan

Fixing Sanitation Crisis in India
Western Myths About "Stable, Peaceful, Prosperous" India

Taliban Target Landed Elite

Feudal Punjab Fertile For Terror

Caste: India's Apartheid

The Three Dangers Facing India


Mayraj said...

To add insult to injury the first article was republished in Kabul press...
India a "weak democracy" because of corruption: study
‘Goa police slow in probing corruption charges against their own’
India: Bribery & Corrupt Police
Blog on Murti article:—are-you-coma

Mohan Murti, former Europe Director, CII, writes in “Is the nation in a coma?” that Europeans believe our leaders are too blinded by new wealth & deceit to comprehend that India is heading towards a dead end.

Yes, Mr Murti, we are a nation in coma. We have no doubt about that. We are already witnessing anarchy and bloodshed in the hinterlands. Yet after one speech to fool the public and another to feed the news-hungry press, it’s always business as usual in 'The Great Indian Hall of Shame.' Jaago Re!

Billions pour in for India's insulated superclass

The subcontinent's elite have a huge market all to themselves – and a vast gap is opening up between rich and poor

Mayraj said...
Israel-India Arms Talks Dogged By Scandal
Media allege corruption in massive Israel-India arms deal
By Yossi Melman

Allegations of possible illegalities in a massive arms deal between Israel and India have surfaced over the weekend in the Indian media. The size of the deal between the Indian Ministry of Defense and Israel Aerospace Industries, estimated at $1.5 billion, had grown to allow for the payment of commissions, which is illegal in India, said the press there.

The deal in question, signed in late February between Israel Aerospace Industries and the Indian Defense Ministry, is for the delivery of 2,000 Barak Mark VIII missiles, which were originally designed as sea-based weapons.

According to the deal, a third of the value of the deal will be spent in India, where the IAI will make offset purchases from Tata, a local consortium.

An Indian daily from New Delhi, DNA, says it has information showing that $120 million of the overall deal is described as "business expenses." According to Josy Joseph, a journalist, officials familiar with the deal told him that an IAI representative explained these costs are meant to cover insurance, bank and transportation costs.

However, the newspaper hypothesizes the actual payments are for commissions, or even bribes, for senior Indian government officials who approved the deal.

IAI refused to comment on Saturday, but Israeli sources familiar with the deal said the entire process followed regulations and was clean.

Last week IAI filed a report with the regulatory authorities here that it had concluded a $1.4 billion deal but did not specify the country. Indian sources said New Delhi had requested the deal be kept secret.

The newspaper notes (although does not offer details) that Elul, a subsidiary of Elul Asia, belonging to David Kolitz and Israel Yaniv, was also involved in the deal. According to the report, Elul is known for its ties to Tata.

Nine years ago, Yaniv retired from the weapons development authority Rafael, where he worked in marketing, and then joined Elul, setting up a subsidiary where Elul is a co-owner.

Rafael is also involved in the deal, as a subcontractor in the manufacturing of the Barak missiles, but the extent of its role in the project is not known.

The links between Elul and Indian business activities are, according to the daily, based on ties with the Indian businessman Sudhir Chowdhary, who resides in Britain.

"The Israelis joined up with Chowdhary for him to manage their contacts in India with officials in government and the army," according to the newspaper.

Kolitz said in response that he is not involved in any arms deal and has no ties with Chowdhary. "I wish I could benefit from a 6 percent commission," he said.

The daily maintains that Chowdhary has family connections with a senior minister in the Indian government and with senior army officials.

His name had previously been linked by the Indian media to another Israeli arms company, Soltam, in relation to a deal for an upgrade of artillery, in which there were suspicions of wrong doing.

The report in DNA raises questions about the new arms deal, including the actual approval of the deal by the government, which is currently led by the Congress Party; its head, Sonia Gandhi, is under investigation for her role in an earlier deal for Barak missiles, from the 1990s.

The newspaper article questions how it was possible to approve the deal on the day parliamentary elections (for the lower house) were declared, when Indian governments are forbidden from doing so since the deals will be binding on the incoming government.

Anonymous said...

Power corrupts obsolutely. It applies everywhere even in advanced countries like usa. FED has not given details of deployment of only few trillion even to the senate in the name of national security. This is in the country with high education and awareness.

India is a country where 30 live below poverty level. Rich, politicians and bureaucrats live on their blood is the true reality. Middle class is insensitive as it is aspiring to join the rich and are fighting for thier own survival as the wants are ever increasing. That is precisely what rich and mnc want as it turns into market for them.

Education and reduction in population can only slowly remove this problem in the indian economy. Why miss uninon carbide. Conveniently congress let go the chairman and the company from any great damages [ bp has to pay billions of dollar ]. There must have been some consideration somewhere. It can be gift, bribe accomodation etc...

Riaz Haq said...

anon: "Why miss uninon carbide. Conveniently congress let go the chairman and the company from any great damages [ bp has to pay billions of dollar ]. There must have been some consideration somewhere. It can be gift, bribe accomodation etc..."

I agree!

More than 25 years after the Bhopal gas leak killed and injured tens of thousands of people while they slept, an Indian court has finally convicted seven former managers at the plant.

They have received minor fines and brief prison sentences.

It's clearly a case of too little, too late, and symptomatic of India's failed judiciary and failed democracy.

It's the same judiciary that lets corrupt politicians to continue to occupy positions of power for decades while their cases and appeals remain pending.

Contrast the Bhopal gas leak with the oil spill in Gulf of Mexico where less than a dozen people died.

The US government has already forced BP to set up an escrow fund of $20 billion to compensate for potential losses to the people in the Gulf region from loss of earnings.

satwa gunam said...

Congress is trying to find a scape goat. further it is reconciling not out of fear for the press or opposition but it want the nuclear bill to be passed.

Further ahmed patel has request all not to drag sonia gandhi into it and modi is making most of the political capital out of the tragedy in bhopal.

Whether it is congress or bjp government in mp they were not bothered about the removal of the toxic waste. All politicians are partner is crime to loot the society, flags and name could be different.

In that aspect, i respect the ratan tata move to say that the corporate india would start the cleanup. But today all are caught in the game of one upman ship or blame game for political mileage.

Riaz Haq said...

Recent survey by Transparency in Pakistan show that the corruption in Pakistan has dramatically increased, according to report in Dawn. Here are some excerpts:

The overall corruption has increased by around Rs28 billion in a year, and more than 70 per cent of Pakistanis say the present government is more corrupt than the previous one, said a Transparency International Pakistan official.

Releasing the findings of the National Corruption Perception Survey 2010 at a press conference at the Karachi Press Club on Tuesday, TIP chief Adil Gillani said that over Rs195 was misappropriated during 2009 while more than Rs223 billion — an increase of Rs28 billion, or about 15 per cent — has been misappropriated during 2010.

He said the survey — jointly financed by the USAID and the Swiss Agency for Development and Cooperation — reveals the perception levels and frequency of corruption faced by the common Pakistanis on a daily basis.

He said an average expenditure on bribery per household this year was Rs10,537, based on a population of over 169.58 million and eight members per family, the cost of bribery comes to Rs223 billion.

Mr Gillani said the departments of police and the power sector had retained their first and second positions, respectively, since 2002. Other corrupt sectors during 2010 were the land administration, education, local government, judiciary, health, taxation, customs and tendering and contracting.

Pakistan at 42nd position

He said Pakistan shared the 42nd position among the most corrupt countries in the world with Bangladesh. India, though located in between and despite being more populous, was less corrupt than both its neighbours and was placed on the 95th position on the chart of corruption.

He said the TIP had developed a 24-page questioner that was put to 5,200 people from all the four provinces. Students of the Institute of Business Administration Karachi carried out the survey in Sindh; Gujranwala University, Gomal University and Sarhad University carried out the survey in Punjab, Balochistan and Khyber Pakhtunkhwa, respectively.

He said the survey found that only the present Punjab government was cleaner than the previous one, while the rest of the governments — federal and three provincial ones — were considered to be more corrupt than their predecessors. The Khyber Pakhtunkhwa government was the most corrupt of the provincial governments, he said.

The TIP chief said the credibility of the country was at the lowest level as almost no funding had been released in the last two years from the Friends of Pakistan fund being managed by the World Bank.

Riaz Haq said...

Here's Newsweek calling for overhaul of India's judicial system after the ludicrous Bhopal verdict:

More than 25 years after a pesticide plant in the central Indian city of Bhopal spewed a toxic cloud that killed as many as 25,000 people, an Indian court last week finally sentenced seven former executives involved in the disaster. They’ll receive two years in prison (pending appeal) and pay fines equivalent to $2,100—the maximum punishment allowed under current law, but one considered so lenient that many in India are demanding far tougher corporate liability laws.

But what India really needs is an overhaul of its judicial system. The Bhopal case is hardly unique in its length: the country’s trial courts have a backlog of close to 30 million cases, and Delhi alone has more than 600 pending civil cases and 17 criminal ones dating back 20 years or more. The Delhi court’s chief judge estimates that it would take 466 years to work through the backlog. A major reason for the pileup is that there are simply too few people on the bench: India has only 11 judges per million citizens (America has 110 per million). India likes to call itself a nation of laws. But as the Bhopal verdicts prove, having laws is one thing—delivering justice is quite another.

Anonymous said...

Transperency International is a Berlin based propoganda tool.I am surprised why South Asians are so awed by its ratings of corruption.These ratings are based on 'perceptions and opinions' NOT hard facts.

The Indian government sued TI for defamation iven the adverse effects its totally unscientiofic ratings can have on investments in countries on the receiving end of its unscientific opinion based surveys.
I am surprised why other governments didn't join in ?

Riaz Haq said...

Poverty is one of the factors that drives child marriages in India. It's cheaper to marry off a girl child than an adult woman.

A recent ODI report highlighting India's progress toward MDGs and putting India in the top 20.

Looking at the detailed report, however, it clearly highlights Pakistan along with China in the top 10 in achieving poverty reduction goal MDG1, the most important of MDGs. There is no mention of India on this list in table 4.

Riaz Haq said...

I encourage every one to read and draw inspiration from Nadeem Akram's article "From Umarkot with Love" on, particularly the following paragraph that inspires hope in the future of Pakistan:

Our driver took us as close to the building as he could and we walked rest of the way. To our surprise we were greeted by a Sindhi teacher of Balochi persuasion and the hut was jam packed with over thirty students of the adjoining goth studying under the tutelage of the Mr. Ghulam Ali, the teacher.

It was an inspiring story. The teacher had, on his own initiative and of course with the help of the community, built this hut some twelve years ago and since then he has been imparting primary education to thirty-five students every year. Several of his students have gone on to attend the high school and some of them made it to the college. He has had little or no support from Sindh Education Department, and all these years he has managed to operate this school with the help of the village elders. My eyes welled up as he concluded his narration duly supported by a village elder that conveniently appeared and joined us. All my pre-conceived ideas about patriotism, bureaucratic inefficiencies, and lack of civic will were taking their last breaths in the puddle next to the school as we bade farewell to the teacher, the students and the benefactor!

People like Ghulam Ali sahib are lighting candles to show the way to a brighter future...rather than cursing darkness as many do here on Chowk and elsewhere!

Riaz Haq said...

There have been widespread allegations that Pakistani feudals, including many powerful politicians, deliberately flooded the poor peasants villages to protect their own crops and farms in recent monsoon rains. Here's a BBC report that says Pakistan's US ambassador is calling for an investigation.

A senior Pakistani diplomat has called for an inquiry into allegations that rich landowners diverted water into unprotected villages during the floods to save their own crops.

UN ambassador Abdullah Hussain Haroon said there was evidence that landowners had allowed embankments to burst.

This led to waters flowing away from their land, he said.

More than 1,600 people have died in the floods, which have affected about 17 million people.

"Over the years, one has seen with the lack of floods, those areas normally set aside for floods have come under irrigation of the powerful and rich," Mr Haroon told the BBC's HardTalk programme.

"It is suggested in some areas, those to be protected were allowed, had allowed, levies to be burst on opposite sides to take the water away. If that is happening the government should be enquiring."

At the height of the floods, it is estimated that one-fifth of the country - an area the size of Italy - was underwater.

The flood waters are beginning to drain away to the Arabian Sea but inundations continue in parts of Sindh province.

Riaz Haq said...

Here's a BBC report saying "the world is a more corrupt place now than it was three years ago".

Some 56% of people interviewed by Transparency International said their country had become more corrupt.

In Afghanistan, Nigeria, Iraq and India more than 50% of people said they had paid a bribe in the past year - many of them paying off the police.

Meanwhile, a BBC poll suggests that corruption is the world's most talked about problem.

About one in five of those polled for the BBC by GlobeScan said they had discussed issues relating to corruption with others in the last month, making it the most talked about concern ahead of climate change, poverty, unemployment and rising food and energy costs.

In the Transparency International survey, political parties were regarded as the most corrupt institutions with 80% of people regarding them as corrupt.

Political parties also topped the list in Transparency's 2004 barometer, with 71%.

Religious bodies experienced a sharp rise in people regarding them as corrupt - 28% in 2004 increased to 53% by 2010.

Some 50% of people believed their government was ineffective at tackling the problem of corruption.

Transparency flagged up bribery as the major problem highlighted by the survey, with one in four of those polled saying they had paid a bribe in the past year.

Some 29% of bribes went to the police, 20% to registry and permit officials, and 14% to members of the judiciary.

Robin Hodess, Transparency's policy and research director, said police involvement in such transactions was "really worrying".

"It's a figure that's grown in the past few years. It's nearly doubled, in fact, since 2006. Nearly one in three people who had contact with the police around the world had to pay a bribe," she said.

While people from Cambodia (84%) and Liberia (89%) were the most likely to have to pay a bribe, the Danish respondents reported no bribery.

By region, people in sub-Saharan Africa were the most likely to have paid a bribe (56%).

Bribe-taking was least common in EU countries and North America (both 5%) - although these were the two regions seeing the biggest increase in concern about corruption.

Analysts blame this rising concern on the global financial crisis for undermining people's faith in government, banks and economic institutions.

The lobby group interviewed 90,000 people in 86 countries to compile its corruption barometer.

The opinion poll commissioned by the BBC sampled 13,000 people in 26 nations.

One question asked people to rate which issues they saw as most serious.

Corruption was ranked as the second most important topic behind poverty.

Respondents in Brazil, Egypt, Colombia, the Philippines and Kenya were especially likely to view corruption as a very serious issue.

In Europe, Italians were the most concerned about bribe-taking.

Publication of the BBC poll coincides with anti-corruption day held by the United Nations.

Riaz Haq said...

India's corporate mafia is fuelling corruption, says Prashant Bhushan, according to

"The corporate mafia has come to control every institution of power and governance, be it politicians, bureaucracy, police and, to an extent, judiciary also," Bhushan told IANS in an exclusive interview.

"The corporate houses have become monstrously large and a law unto themselves. They get the law and policies made and decision taken including judicial decisions," he said, adding "very often they decide what the media will report or not report".

Bhushan, the son of eminent jurist and former law minister Shanti Bhushan, said any fight against corruption and for redeeming democratic institutions had to commence with transparency.

"The situation today is much worse than what it was in the early 1970s. At that time we did not have the corporate mafia controlling all the institutions. That was a situation when a powerful prime minister temporarily choked off democracy. Today, this corporate mafia is accountable and more dangerous," Bhushan asserted.

"This system is so bad. There is no point in preserving the illusion of functional democracy when it is clear that most institutions of democracy have crumbled or are non-functional. We need to restore proper democracy in the country and not preserve an illusion of democracy."

The lawyer said the only prescription for rescuing Indian governance from "corporate mafia" was "transparency" and people's right to know about the functioning of the state apparatus.

"Unless we wake up and start engaging in public issues and affairs, we are heading towards disaster," said Bhushan, who is facing contempt of court proceedings for highlighting the alleged misconduct of an apex court judge.

It was Bhushan who convinced the Supreme Court to monitor the Central Bureau of Investigation (CBI) probe into the allocation of 2G airwaves to telecom companies. He also spoke on his fight against corruption and allegations against Central Vigilance Commissioner (CVC) P.J. Thomas.

He said India was in a "very serious situation" and the "biggest threat was corruption that had spread in every vital sphere of the state's functioning".

The crumbling democratic institutions could be "repaired and restored" provided there was a "very strong people's movement in the country that would bring pressure on the institutions".

"Though the judiciary can play a useful role in that process", in the final count it needed the backing of a strong people's movement, he said.
"I think all problems have to be dealt with simultaneously. You cannot shut your eye to a problem in one institution in order to highlight it in another institution. This is a shortsighted policy which does not pay in the long run," he said.

Advocating an independent media, he said that the media should not be controlled by corporate houses or those who have a direct or indirect interest in other business.

Riaz Haq said...

Here are some excerpts from an interesting Op Ed by Prof Lev Ginsburg on democracy in developing world, as published in Aljazeera English:

The basic reason for democracy's lack of solutions to such problems (poverty, economic disparity) is that its principles have been formulated in industrialised capitalist societies characterised by considerable cultural homogeneity and relatively small economic gaps.

Democracy is a set of formal principles developed in Western Europe with the aim of facilitating the representation and articulation of the middle and working classes and designed to contain peacefully the conflicts between them and the upper class.

In the absence of a balance of power between classes, and a consensual unifying national identity, the automatic installation of formal democratic principles might only make matters worse.
When there is a systematic link between cultural identity and economic status, democracy becomes a problem, rather than a solution. It exacerbates cultural conflicts to the point of violence, because it provides a formal opportunity for the majority to force their will on the minority.

Political sociologist Michael Mann has shown that in these cases democracy only serves to intensify conflicts among racial and ethnic groups, to which I would add, in the Middle Eastern context, the conflict between confessional groups and between the religious and the secular.
The oldest case, mind you, is the US - the cradle of the democratic constitution which announced a "government of the people" and began the massacre of the American indigenous people because they were not considered part of "we, the people" of America.
Whoever wants democracy under these conditions must first come up with a creative and consensual formula, according to which each cultural group would be free to live its unique cultural life without attempting to force its identity and customs on the entire citizen body.

In other words, demonstrating for democracy is not enough. What the countries of the Middle East require is political consensus on mutual recognition of rights and coexistence, guaranteed by a constitution and institutionalised by electoral procedures and representative institutions.

Egypt does have to worry, however, about economic inequality and the severe daily hardships suffered by most of its population. Without providing solutions to these problems, even the most democratic regime can be toppled by massive protests, possibly leading to new forms of dictatorship. A good example of such a failure of democracy was December 2001 in Argentina, when the masses flooded the streets calling for "all politicians to go home" and toppling five presidents in a row.

This happened only two years after democratic elections swept a broad leftwing front to power, which had promised to bring the country out of its deep economic crisis, but failed. The elected government pursued the policy dictated by the International Monetary Fund (IMF), which protected the interests of foreign investors against those of the local middle and salaried class. The crisis caused all holders of local bank deposits to lose 70 per cent of their money, with the blessing of the IMF.

Therefore, Egypt must realise that although democracy is essential, any formal constitution or system of government will not solve its economic problems. Immediately after the elections, Egypt's new policymakers will have to switch from the formal liberal discourse of democracy to face and discuss the fundamental questions of Egypt's economic structure. In the process, they are liable to discover that it is far more difficult to uproot a corrupt economic regime than to topple a single dictator.

Riaz Haq said...

Soutik Biswas of BBC on "Why India's big, fat weddings will never stop":

The big, fat Indian wedding returned to the front pages of newspapers this week: reportedly a $55m gig with 20,000 guests, a Bell helicopter as dowry, a 100-dish menu, a dozen TV screens showing a video feed of the proceedings, and even a $5,000 tip for the groom's barber. The groom's father - a rich Congress party politician and real estate magnet, exemplifying the intersection of politics and new money in India - wryly remarked that the media reports of the wedding were speculative.

For the Congress party-led government whose credibility is battered by a tsunami of corruption scandals, the hugely ostentatious wedding by a party member should come as an embarrassment, many here feel. One minister is reported to have said recently that nearly 15% of India's grain and vegetables is wasted through "extravagant and luxurious functions". Party chief Sonia Gandhi has pleaded with her workers to be frugal and her MPs to fly economy class. The embattled PM, Manmohan Singh, had feebly exhorted businessmen to refrain from ostentatious displays of wealth because such "vulgarity insults the poor". But what he possibly forgets is that the poor in India are actually insulted every day by many of the men and women they vote into power.

The government is apparently working on a law to curb waste at extravagant weddings and functions. No law will be able to change soon a people and society that remain deeply hierarchical, feudal and class-conscious. At one end of the scale a hapless farmer may take ruinous loans from money-lenders to host a wedding beyond his means. At the other end a billionaire unabashedly builds the world's priciest home (more than $1bn) in Mumbai where half the people live in slums. All this is symptomatic of a society which thrives on perpetuating inequity. With near double-digit growth, there's going to be more money to throw around and flaunt. So don't expect any lame law to curb India's vulgar, overblown weddings any time soon.

Riaz Haq said...

Here are some excerpts from an Op Ed in Newsweek Pakistan by Meekal Ahmed, a former IMF official:

The government hopes to generate Rs. 53 billion during the last quarter of the current financial year, which concludes on June 30. It hopes to achieve this by imposing a 15 percent surcharge on income tax paid by Pakistan’s paltry 1.7 million registered, individual taxpayers. Given the small tax base and modest yield, the surcharge seems unfair and not worth it. In a move that is regressive and potentially inflationary, depending on the market, excise duty on certain import items has been increased from 1 percent to 2.5 percent until end-June. While these measures are better than doing nothing at all—which is what happened during the first three quarters—they are far from ideal, and don’t go far enough to address the big problems with the economy.

But it’s not all bad. The elimination of tax exemptions for agricultural inputs (including tractors, fertilizers, and pesticides) was long overdue. With a strong agro-lobby preventing taxation on their handsome incomes in a sector that contributes 21 percent of GDP, the government might as well tax the inputs. Tax exemptions for export quality textiles sold within Pakistan have also been nixed despite resistance from the fierce textile lobby. The freeze on additional hiring in the public sector, and the 50 percent cut in several spending categories should also be welcomed.

Then there is the profusion of what many Pakistani media outlets call “petrol bombs”—highly unpopular oil price adjustments at the start of each month. The government announces the adjustments, and then rolls them back under popular and political pressure. The fuel price adjustments are unavoidable. Pakistan is a net oil importer and can’t insulate itself from global price shocks. Oil prices have risen steeply in the last three months, and have now crossed the psychologically important 100-dollar mark. Pakistan’s fuel subsidies—at an estimated Rs. 5 billion per month that could have been spent on development—are unaffordable and unsustainable. Oil prices will remain high for a while. Pakistanis must adjust to this reality. .....
Despite the new measures, doubts remain about the revised tax-revenue targets and the state’s capacity to achieve them. The Federal Board of Revenue is notorious for its chronic underperformance. The justification that there is a tax revenue shortfall because the economy is in recession holds no water. An economy expected to grow at around 3 percent is not, technically speaking, in recession, but is growing below its potential. There is no cycle for fiscal revenues in Pakistan: whether the economy grows at 3 percent or 7 percent, whether inflation is 2 percent or 25 percent, tax revenues fail to keep up. If they did not, there would be a constant tax-to-GDP ratio, which is actually falling. This trend points to the existence of deep-rooted structural deficiencies in the tax system, which is regressive, anti-poor and plagued by too many exemptions and concessions. Then there’s also corruption, abuse of the system, and evasion. Even taxes withheld at source are not deposited in the government’s account because of alleged connivance between withholding agents and tax officials.

Riaz Haq said...

Here's an excerpt of a Reuters' report about President Asif Zardari's current troubles:

Zardari, long plagued by accusations of rampant graft, has never connected with Pakistanis in the way his wife did.

That was all too clear when epic floods raged through Pakistan in 2010, inundating 20 percent of the country and making millions homeless.

The president set off a on a trip to Europe as the disaster was unfolding and made no immediate effort to return home. While in France, Zardari visited a chateau he owns in Normandy.

The election of Bhutto's Pakistan People's Party (PPP), which has long opposed military involvement in politics, in 2008 raised hopes the nuclear-armed South Asian nation could shake off the legacy of decades of intermittent army rule and turn back a rising tide of Islamist militancy.

Zardari, however, has failed to deliver since then, dismissed as an uncaring playboy -- another feudal landlord who ignored the needs of the masses -- while Pakistan lurched from crisis to crisis, from crippling power cuts to suicide bombings.

He has always appeared to lack the political resolve to push through reforms that could help the fragile economy and make it less dependent on foreign aid.

But while his job as president has become largely ceremonial, his leadership of the ruling PPP gives him strong political influence.


Some Western officials concluded early on that he lacked the skills to lead a country seen as critical to Washington's global efforts to tackle militancy.

In a 2008 diplomatic cable carried by WikiLeaks, then chief of the British Defence Staff Jock Stirrup said Zardari was "clearly a numbskull."

The unpopularity of his government may have only served to strengthen generals after Zardari committed the cardinal sin for any Pakistani politician of alienating the military.

At one point, army chief General Ashfaq Kayani hinted to the U.S. ambassador to Pakistan that he might have to persuade Zardari to step down because of political turmoil, according to a 2009 cable released by WikiLeaks.

But luckily for Zardari, it seemed the military concluded at the time that he was a better option than other political leaders it distrusted even more.

Soon after Pakistan's ambassador to the United States resigned in November after a Pakistani-American businessman accused him of being behind the infamous memo, many wondered if the resilient Zardari's time was finally up.

He is looking more vulnerable than ever. His dwindling popularity at home is matched by the all-time low in relations with major ally the United States.

A unilateral U.S. special forces raid that killed Osama bin Laden in a Pakistani town in May reinforced suspicion that Islamabad is an unreliable partner in the war on militancy.

However, a U.S. cross-border air attack in November that mistakenly killed 24 Pakistani soldiers has given the military a chance to reassert itself after the humiliation of the bin Laden raid, leaving Zardari and other civilian leaders to be blamed for Pakistan's problems.


Criminal cases could also haunt Zardari, who earned the title "Mr. 10 Percent" while Bhutto was in power, based on allegations he demanded kickbacks on state contracts.

After his wife's government collapsed in late 1996, he was arrested and charged with corruption, such as kickbacks in deals involving a Swiss company.

Riaz Haq said...

Here's a story of misuse of counter-terror funds by Pakistan's Ex-Home Minister Rehman Malik:

Pakistani officials used a secret counter-terrorism fund to buy wedding gifts, luxury carpets and gold jewellery for relatives of ministers and visiting dignitaries, leaked documents reveal.

The revelations cast a spotlight on high-level corruption in Pakistan as the impoverished but nuclear-armed country battles a surge in Taliban violence.

They concern the National Crisis Management Cell (NCMC) of Pakistan's interior ministry, formed in 2000 to co-ordinate between the country's intelligence agencies and federal and provincial governments on national security matters.

The NCMC received about 425 million rupees (HK$53.4 million) from Pakistani government coffers between 2009 and last year, according to files obtained by Umar Cheema, a journalist for Pakistani daily The News.

During that time the interior ministry was headed by Rehman Malik, a supporter of former president Asif Ali Zardari's Pakistan People's Party (PPP).

Many of the documents deal with payments to intelligence sources, routine maintenance of vehicles and overtime for employees. But they also include receipts for gifts for US and British embassy officials, as well as flowers and sweets for journalists.

One receipt for 70,000 rupees is itemised as: "Pair of wristwatches for marriage of nephew of minister for interior".

The documents show that on a trip to Rome for an Interpol conference in November 2012, Malik took a necklace, wooden tables and a TouchMate tablet computer as gifts.

The counter-terror fund was also used to buy three rugs as wedding gifts for the son of former prime minister Raja Pervez Ashraf early last year.

A set of 21-carat gold jewellery worth US$3,000 was bought for one unnamed individual, while another was the recipient of a US$1,500 set.

Among the more bizarre items paid for from the fund was the US$800 cost of four sacrificial goats, plus butchery costs for the festival of Eid-ul-Adha.

Pakistan's present government, led by Prime Minister Nawaz Sharif, has ordered an audit of the interior ministry accounts from 2010 to last year. Ministry spokesman Danyal Gilani confirmed the audit was continuing.

Riaz Haq said...

A 2010 NY Times story on corruption in Indian cricket:

Founded three seasons ago, the Indian Premier League managed to make the sport of cricket sexy. India’s corporate titans bought teams, Bollywood stars infused matches with celebrity glamour and fans from Mumbai to Dubai to New Jersey followed the league on television as its value rose to more than $4 billion.

For many Indians, the league, known as the I.P.L., became a symbol of a newly dynamic and confident India that was expanding its influence in the world. Yet after weeks of allegations of graft and financial malfeasance, the resignation of a government minister and the suspension of the league’s charismatic commissioner, the league has become emblematic of something else: how much the old and often corrupt political and business elite still dominates the country.

“The great pity in India is that creations like the I.P.L. became a victim of their own success,” the editor in chief of the magazine India Today, Aroon Purie, wrote this month. “Where there is money involved, especially large sums, corruption is not far behind.”


Ramachandra Guha, a historian who has written a book about cricket, said the I.P.L. tailored itself to the aspirations, and alienation, of an Indian middle class disillusioned with the country’s corruption and poverty. But Mr. Guha said the organization of the league — with teams located in India’s most affluent cities as opposed to having one in every state — has effectively mirrored the deep inequality in society.

“It is the India that is doing well economically,” he said. “It shuts itself off from the other 800 million Indians who live in the hinterlands.”

Now, Mr. Modi is gathering documents for his hearing, while government officials have come under scrutiny. A junior minister of foreign affairs, Shashi Tharoor, was forced to resign because of his involvement with a consortium that won a bid for a team in his home state.

Others who seem closely linked to the league have so far stayed in power as the scandal has assumed political overtones. Mr. Pawar heads a regional political party that is part of the coalition government led by the Congress Party. As yet, investigators have not accused him of any wrongdoing.

And the country’s civil aviation minister, Praful Patel, has faced questions on whether he was involved in the bidding process for a new franchise and whether his ministry had showed favoritism to his daughter, a former model who helps coordinate the I.P.L.’s travel. In late April, the state-owned airline, Air India, canceled a scheduled flight, delaying passengers, so that Mr. Patel’s daughter and several I.P.L. players could use it as a paid charter.

Dhiraj Nayyar, a senior editor at The Financial Express, said the cricket scandal was best understood in the context of India’s economic evolution. When India’s stock exchange took off in the late 1980s and early 1990s, scandals erupted over market manipulation until regulatory structures were strengthened. Today, the same absence of transparency and regulation exists in cricket.

“The I.P.L. is a curious creature that combines the best and worst of Indian capitalism — fabulous enterprise and outcomes on the one side, riddled with cronyism, patronage and power politics on the other,” Mr. Nayyar wrote recently. “In many ways the I.P.L. is a confirmation of what India really is: an emerging economy.”