Tag Archive: Transparency International


Transparency International Pakistan has been in national news for its bold projection of public perception of corruption in Pakistan. It has been accused by the democratic government of creating chaos and unrest in the country. The government had even ordered investigations into its in-country operations. TI-Pakistan is a National Chapter of Transparency International, a civil society organization. According to its mission, it is dedicated to curbing both international and national corruption. Its primary objective is to counter corruption in business dealings and to curb corruption on a national level. It seems that taking advantage of the weak and corrupt government, the organization in Pakistan is in total blackmailing mould and has started encroaching upon the jurisdiction of executive agencies of the government and is prima facie involved in corrupt practices.

This should not come as a surprise to anyone. It is Pakistan. If Hajj operations can be corrupted, as a rule there should not be any institution escaping corruption, not even TI.

The Express Tribune has reported that the detained chairman of NICL has revealed that the top guns of Transparency International (TI), Pakistan, had offered to help him clear his name in corruption cases presently with the Supreme Court, if he signed a Memorandum of Understanding (MoU) to award all lucrative contracts on their recommendation in the future. An absconding NICL board member, Qasim Amin Dada, wanted by the FIA in this same Rs4 billion land scam, tried to convince his colleagues to strike a deal with TI representatives. TI volunteered to present a fact-finding report to the SC establishing the innocence of NICL officials. In return NICL would award contracts solely to private parties cleared by TI and advertise tenders in newspapers after referring to the agency for advice.

The Tribune report does not contain TI-Pakistan version.

NICL is also facing charges of misappropriating millions of rupees paid to a private party for office renovation. Payment to the contractor has been made in full but the job is still continuing. The allegation against TI is considered to be very serious, NICL detained chairman has given details of TI officials’ involvement in the alleged blackmail in his 30-page written statement to the FIA officials. He said he and his colleagues refused TI’s unconventional offer.

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According to some reports, telecom minister of India had to resign after Comptroller and Auditor-General (CAG) of India unearthed a telecom scandal costing a minimum of $39 billion to Indian taxpayers.  But those who know India’s black economy are of the view that this could be just a tip of the iceberg. The Indian economy, despite its claims of growth is marred by illegal flow of black money to and from India, mostly stashed in foreign banks. This also means that corruption and illegal transfer of ill-gotten wealth is not the issue of Pakistan alone.

According to Taiwan News, India has lost hundreds of billions of dollars over the past six decades as companies and the rich stashed cash overseas to avoid taxes and hide ill-gotten gains, widening inequality and depriving the poor of crucial resources. The flood of illegal cash has swelled to ever greater heights since the early 1990s, and averaged $16 billion a year from 2002 to 2006, as India’s opening of its economy created more wealth and opportunities to move it across borders, according to the study by Dev Kar, a former International Monetary Fund economist. Kar, now senior economist at Global Financial Integrity, a Washington D.C. group that researches the flow of illicit money, said India’s black money _ at least $462 billion since the late 1940s _ could have paid for its entire infrastructure needs and much else.

The gap between India’s rich elite and the poor who number in the hundreds of millions has widened amid rapid economic growth over the past two decades, adding to social tensions, and the report says the funneling of wealth overseas has contributed to that inequality. Other analysts aren’t taking issue with Kar’s research methods but question whether the blame should be pinned on companies and privately wealthy individuals. They argue the government and corrupt politicians are the main culprits.

Kar used a World Bank model to measure the gap between the nation’s recorded sources of funds, like borrowing and foreign direct investment, and its recorded use of funds, like financing the current account deficit and foreign currency reserves. Illicit outflows are considered to exist when a country’s recorded source of funds exceeds its recorded use of funds. Kar supplemented that by looking at differences between the value of what India says it exports and what other nations say they import from India. This captures practices such as understating the value of export contracts to hide money overseas.

Adjusted for inflation, that all added up to $213 billion missing since 1948, the first full year of India’s independence from British rule. Using the short-term U.S. Treasury bill rate to estimate a conservative investment return, Kar calculated that money would be worth, at minimum, $462 billion today. The figure could be understated by half, Kar said, partly because it doesn’t cover harder to track activities including smuggling and cash transfers outside of the financial system.

Nishith Desai, founder of Nishith Desai Associates, an international tax and corporate law firm based in Mumbai, argues that corrupt officials and government agencies have more to do with illicit money than tax avoidance in the private sector, which he says is more transparent than in the past. As individual tax rates dropped _ from as high as 97.5 percent in the 1970s to about 30 percent today _ the major motivation for tax avoidance evaporated. In its wake however, is a cultural habit of evasion, which is only now beginning to erode, he said.

Desai said officials, who face public scrutiny when they accumulate wealth while on a low government salary, have more motivation to stash illicit money overseas than company executives, and the government, as India’s biggest trader, likely indulges in more manipulation of export and import contracts. Much private-sector corruption is also done under government compulsion, he said. Though economic liberalization ended the so-called License Raj _ during which New Delhi kept tight, lucrative control of business permits _ many opportunities for corruption remain.

Private players pouring into sectors like telecoms and banking still need licenses. This week, the telecom minister resigned over alleged licensing irregularities that may have cost the treasury 1.76 trillion rupees ($39 billion). The government is also the major intermediary in land deals. Desai and others say bribes are common in land sales, which are proliferating as India’s growth spurs the development of mines, factories, buildings and special economic zones.

Regardless of debate about who is most to blame, the report shows the tide of money has been unrelenting even as India makes some efforts to clamp down on the hidden economy. The government has ramped up tax collection efforts and renegotiated its tax treaty with Switzerland to give it greater access to information for investigations of tax fraud. It already has good access to information from Mauritius, a major offshore financial center for rich Indians and companies. Many hope the government’s ambitious plan to give every citizen a unique identity number will also widen the tax net and make evasion harder.

And under pressure from opposition politicians, the Congress Party in recent weeks forced three high-ranking officials including the telecoms minister to step down amid corruption allegations. But critics say such gestures are cosmetic and will do little to stem growing popular frustration at India’s elite.

“Catch some of those high-profile guys, Bollywood fellows and cricket stars and make an example out of them,” Kar said. “If they don’t address this now, they’re going to be stuck with a much bigger problem which will tear at the heart of India. Mark my words. People are losing patience.”