Nov 28 - Dec 4, 2011

Corruption is perhaps the biggest issue in today's Pakistan. Whether it be state-owned enterprises (SOEs), tendering or bidding process or even spot-fixing in sports, serious corruption scandals and financial scams have come to surface. Corruption has plagued major SOEs, which have virtually gone bankrupt, both financially and functionally. The recent verdict of a British court against three Pakistani cricketers in the spot-fixing case amply expose that even sports are not free of corruption. The players were found guilty of corruption in the infamous spot-fixing scam at the Lord's Test last year.

Corruption flourished as a culture in the country over the past many years, though it got a peak level under the present government. The country has consistently performed poorly on the Corruption Perception Index (CPI) of Transparency International, and is among the countries with the most perceived corruption each year. The present government set records in corruption in last three years. Successive surveys of Transparency International of Pakistan (TIP) have reported the present government as one of the most corrupt government in the world. Last year, the overall corruption increased to the level of 223 billion rupees from 195 billion rupees in 2009, according to the TIP's national corruption perception survey (NCPS) 2010. The survey declared 'tendering' as the most corrupt sector, which has eaten away 40 percent of the country's development budget.

The people have to offer bribes in their dealings with government institutions to access basic public services, while many financial scams and scandals involving billions of rupees corruption by authorities have been unearthed. Removal of Pakistan's Federal Investigation Agency (FIA) Director Hussain Asghar following the issuance of the notice to Prime Minister Yousuf Raza Gilani's son asking him to record his statement before the FIA team investigating the Haj (pilgrimage) scam, may be cited as one example of political interference, nepotism and corruption at higher government level in the country.

A series of financial scams and frauds costing the public exchequer billions of rupees in losses have been detected in the Commerce Ministry. An alleged multi-billion rupees fraud in the National Insurance Company, an attached department of the Commerce ministry, is under investigation.

Rental power plants (RPPS) scandal exposes corruption in RPPs deals. Huge sums of money are being paid to the firms contracted by the government to set up RPPs but the country is still facing acute shortages due to lower power generation.

The economic inequalities are sharply growing in the strife-torn country. Unemployment rates surged to 10 percent in the country amid culture of kickbacks, rampant corruption and government interference in weak institutions vital to prosperity. Severe poverty with higher inflation rate is fomenting unrest in the country. The deepening economic crisis may convert into a political crisis leading to social chaos and political anarchy in the nuclear-armed country

Corruption has become the key issue, which will be used by the opposition parties during electioneering. Already wary of the corruption and mismanagement of the 'tried and tested' political parties, the people look to new comers in politics for change in status quo.


Major SOEs including Pakistan International Airlines (PIA), Pakistan Railways (PR) and Pakistan Steel mill (PSM) are showing huge losses and seeking bailout packages to stave off their imminent closure. Corruption in the SOEs is the major cause of financial mess. Financial scams and scandals in SOEs is a well established phenomenon in the country.

Corruption has turned PIA, the country's flag carrier, from once prestigious carrier in South Asia into a burden on national exchequer. PIA recently grounded its nine aircrafts for want of spare parts adversely affecting the airline flight operations. The grounding of aircrafts is the result of a controversial business deal the PIA signed in September with Transworld Aviation, a Dubai-based US firm, which failed to supply aircraft spare parts to the PIA at a time when more than 109,000 Hajj pilgrims were expected to travel with PIA last month.

The PIA awarded a multi-billion-dollar contract for five-years to Transworld Aviation for purchase of aircraft spare parts, consumable material and chemicals with aggregated value of not less than $40 million annually. Under the deal, the company undertook to provide a $700 million credit line to PIA for 90 days and got the sole purchase rights barring the PIA from purchasing spare parts from its 700 registered enlisted vendors. The PIA grounded its nine planes because of non-availability of spare parts before the start of PIA's Haj operations. The national flag carrier had to acquire aircrafts from a Greek airliner, on dry lease after cancellation of several Hajj flights.

State-run Pakistan Railways is another white elephant whose deficit has presently increased to the level that it has no money even to disburse salaries and pensions to its employees. Image of Pakistan Railways is tarnished by widespread corruption of its top officials who have allegedly been involved in pocketing millions of dollars in kickbacks from foreign firms in procurement deals.

In a recently unearthed scam, the top railway officials reportedly made an attempt to pocket millions of dollars in kickbacks in procurement of 150 locomotives through a "tailor-made" tender, which favors Electro-Motive Diesel Company (EMD), an Illinois-based American firm. It was the second such attempt by Railways high-ups to allegedly mint money causing a huge loss to the national exchequer, as a Pakistani court earlier scrapped a similar tender favoring General Electric (GE), another American manufacturer.

Established in the early 1970s with the techno-financial assistance of the defunct Soviet Union, PSM is the country's largest and only integrated steel manufacturing plant in southern port city of Karachi. The PSM is incurring huge losses due to inefficiencies in its procurement and supply chain management policies. It has been submerged in corruption of its management. Its production has declined to 18 per cent of its capacity due to shortage of raw material and financial crisis. It is also on the verge of collapse due to increasing liabilities.

The country faces acute shortage of steel products for construction activity, while cash-strapped PSM is not in a position to meet the current steel demand of around 6 million tons per year in the country. Based on 100 per cent imported ore, PSM with outdated machinery is producing expansive steel.