Kleptocrats Rule India and Pakistan

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 clip 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


Riaz Haq said…
Here's an Op Ed by Soutik Biswas of BBC.com on India's "black money" stashed away in foreign banks:

One analyst calls "black money" or illicit money India's curse. He's not off the mark - I have been hearing of and reading about this scourge ever since I was in junior school. Several decades later, the problem has only worsened. The government reckons there are no reliable estimates of "black money" inside and outside the country - a "study" by the main opposition BJP in 2009 put it at anything between $500bn to $1.4 trillion. A recent conservative estimate by the US-based group Global Financial Integrity Index pegs illicit capital flows between 1948, a year after Independence, and 2008, at $462bn - an amount that is twice India's external debt. India's underground economy today is estimated to account for half of the country's GDP.

Strong words indeed. But they may not be enough to uncover India's biggest and longest-running scandal. This week, Finance Minister Pranab Mukherjee unveiled what critics said was a laundry list of tedious platitudes and obscure, non time-bound plans to check the "menace of black money". This includes joining a "global crusade" against it, creating appropriate legislation and institutions to deal with such funds and imparting skills to officers tasked with detecting such funds. In effect, what the government is saying is that after 63 years of independence, India has no institutions or trained people available to curb a brazen and thriving underground economy which rewards tax evaders, humiliates tax payers and widens inequity.

There is enough evidence to show that there is little political or administrative will to curb "black money". India has double taxation treaties with 79 countries. But 74 of these treaties need to be tweaked significantly to include exchange of banking information between the countries. (Letters have been issued to 65 of these countries to initiate negotiation, says the minister.) India has apparently chosen 22 countries and tax havens for negotiating and signing exchanging tax information. Last year, a law to prevent money laundering was given more teeth - but laws are often flouted with impunity in the world's largest democracy. The government says it plans to hone direct tax laws further to begin taxing deposits in foreign banks and interests in foreign trusts.

Independent economists believe that despite the government's recent noises, "black money" will continue to blight India and its economy. For one, it is a systemic problem. Those who don't pay taxes or stash away illicit money overseas comprise the political and professional creme de la creme - politicians, bureaucrats, businessmen, doctors, lawyers, chartered accountants, judges. That the government is not keen upon cracking down on illicit capital flows was evident, analysts say, when, in 2008, it refused to accept a compact disc from Germany containing names of account holders in a Liechtenstein bank. Last year, under opposition pressure, the government accepted the CD, but refused to disclose the 26 names of Indian account holders in it. Many believe that a year is enough for the account holders to move their money out of the bank. "Unless there is political will to dig out black money, nothing will happen," says Arun Kumar of Delhi's Jawaharlal Nehru University, who has investigated India's underground economy in detail. And the humiliation of the honest citizen will continue.
Riaz Haq said…
By the time he was ousted from power, Zulfikar had become so convinced of his own greatness and indispensability that he did not believe the generals would dare hang him. As I shall describe, there is good reason to believe that he only came to realise that he would actually be hanged a few hours before it happened. As for Benazir, her continued engagement in politics was not just a case of giving up the comforts of Dubai and New York so that she could fight for her ideals. Her political comeback in 2007 also enabled her to get all the legal cases against her overturned. The amnesty she secured from General Musharraf scuppered a Swiss trial in which there was a very high chance she would have been convicted of, among other things, using money from bribes to buy a necklace worth $175,000.

Bennett-Jones, Owen. The Bhutto Dynasty (pp. 14-15). Yale University Press. Kindle Edition.

Ghulam Murtaza’s experience entrenched the Bhuttos’ view that there was always a way around legal cases. It is a view that has recurred across the generations. By working within the legal system to secure acquittals, the Bhuttos were taking advantage of what many colonial administrators saw as a weakness in their judicial arrangements. If a British official such as Mayhew made accusations against someone such as Ghulam Murtaza and the court found him innocent, then Mayhew’s authority was undermined. From the point of view of the Bhuttos, however, the system meant they could behave in their locality much as they always had and then work on securing exoneration in the courts. Some landowners tried to reject the British system altogether. The Bhuttos played a subtler game of securing their objectives by working within it. For over a century now, many Bhuttos, from Ghulam Murtaza through to Bilawal, seem to have believed that making legal accusations against them is a political tool wielded by opponents.

Bennett-Jones, Owen. The Bhutto Dynasty (p. 31). Yale University Press. Kindle Edition.

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