DAWN - Cowasjee Corner; 09 August, 1998
Feeding the fiction
By Ardeshir Cowasjee
AND now Leghari, in the run-up to the launch of his Millat party in Lahore on August 14, says to us that there should be accountability. Unbelievable, after the chance he had in November 1996 as caretaker president, when the judiciary, the army and his fellow caretakers were all willing to prop him up if he postponed the elections and, in line with the people's wishes, initiated Ehtesab rather than Intekhab.
But, no, he made a deal with Nawaz Sharif, and had to protect him. Besides, he was far too frightened as to what an accountability process might throw up about his own past doings. This country cannot afford Farooq Leghari. He failed in one test, and like the other second-timers will fail again.
Political beneficiary, culpable Nawaz Sharif, when he came in for his first term in 1990, similarly had no interest in accountability, in actually serving the much bandied 'national interest' by bringing to book Benazir Bhutto and her cronies. Rather, he took off on his binge, misusing his office, using his political clout to borrow beyond his means from the cooperative societies (which he and his Chaudhry pals successfully finished off), from the DFIs and the CFIs. At borrowing time, the entire vast Mian family grouped together borrowed unscrupulously. He ran his businesses on unsecured loans and by issuing at will 'Statutory Regulatory Orders', revenue SROs, to suit his schemes..
Here he is with us now, for his second round, once again using his political clout, amending the Constitution and legislating merely to suit and protect himself and his own interests. This time, he is supposedly rescheduling his loan repayments. But he is repaying nothing and has conveniently disowned responsibility for many in his defaulting family. He claims that he could have paid back had his industries been allowed to function (as they functioned during his rule with supporting SROs) during Benazir Bhutto's second round. According to the State Bank, his group owes Rs.5 billion (Rs.500 crores) to the exchequer which, though he can pay back, he maintains he cannot. At the same time, he wishes us to accept that he is not the country's Number One defaulter. His recent manoeuvre, Ittefaq's repayment agreement, drafted by the defaulters themselves which he had approved by the eight creditor banks, is but a charade. The banks were ordered to sign, and he has been sanctified in his own court of law.
Did he not foresee that other defaulters would claim the same privilege? For instance, Abid and Asif Saigol, sponsors of the Mohib Textile Mills, have claimed in an advertisement published in The Nation on July 12, that their "company has been incorrectly placed on the list of willful defaulters," and that they "have voluntarily submitted themselves to the Lahore High Court..... and are fully committed to adjust their liabilities from sale of assets, along the lines of the example set by the prime minister and his family." They will also, hopefully, find friendly sanctifiers and adjusters of their default. Other grand defaulters will emulate the fine example set, and we will be left high and dry.
Whilst all this has been happening, Benazir Bhutto, husband Asif Zardari, and their mixed bag of cronies have been hooked. This is one of the very few achievements of this government. All that remains is for the line to be drawn in. If this is not done before the present lot fall, they will never be forgiven for not completing the job. Saifur Rahman has worked hard. He has traced the alleged stolen money, traced the alleged theft to its source, and driven Benazir Bhutto to the point of contradicting herself. She accuses the Swiss and British judicial systems of being as inept and corrupt as is ours, and gullible to boot. The foreign media is being of great help - particularly the BBC in interviews that we see here. She is in the big league, with the Shah of Shahs, the Marcoses and Mobutus, the Bokassas, the Suhartos, who even though out in the cold, or dead, with all proven against them, never admitted that they robbed their countries.
On to the lesser beings. PML secretary-general Sartaj Aziz was finance minister in both Nawaz governments, in this one up to two days ago. Before exiting and handing over his portfolio, having already told us that we are in a mess and that difficult times lie ahead, he wrote his swan song, 'Why foreign currency accounts were frozen' (printed in this newspaper on August 5). He has attempted to justify the gross wrongs to which he was a party. He would have done better to go silently.
The foreign currency account facility was there in 1991. So, he should have understood two fundamental requirements. First, a government's contractual obligation is sacrosanct. Its word must be its bond. Second, if a government keeps breaking its own contracts, what credibility can it retain, what trust can the people have in it? Sartaj Aziz was finance minister in 1991 and remained in that position until 1993. What did he do to ensure that the government would not renege on its obligation? In fact, he was party to a massive squandering of public money both then and now, e.g., a billion dollar each on yellow cabs and motorway. He left the treasury bankrupt in 1993, and again, now. When the first Nawaz Sharif government finally fell in July of that year, reserves were down to 100 million dollars. This time we are in default. Apart from large debts in local currency, we owe $ 42 billion to foreign institutions. By his own account his government squandered two billion dollars of the increase in foreign currency deposits in less than 18 months, in addition to a similar amount of incremental short-term borrowing.
Sartaj Aziz claimed a shortfall in exports when the world economy was booming. Should this not be put down to poor policies and mismanagement? During both governments he allowed the effective exchange rate to appreciate, penalizing exporters. As economic czar, what did he do to clean up the financial system and privatize the banks? The only bank privatized during the first round was the Muslim Commercial Bank which went to a crony. This time around a defaulter has been made chairman of the Privatization Commission and not one large financial organization has been privatized. Loan recovery remains paralyzed. Defaulting leaders cannot force their defaulting flock, or any others, to pay up. Budget management has been abominable. Each time, the deficit has increased and none of the agreements reached with the IMF was ever completed.
The fact that a major part of the deposits belonged to residents does not give the government the licence to confiscate them. Many middle class people had to take refuge in dollars because the government's inflationary policies were continually eroding the value of their rupee savings.
Hafiz Pasha is a likeable young man who tends to the needs of two wives and manages two households. He has taken on a job, which primarily requires of him to change the mindset of Mian Mohammad Nawaz Sharif. Does he think he can do that? As the PM & FM's adviser, he is de facto finance minister. Should he not open up and tell us what the 'basket' he has taken on contains so that we may better understand his impending swan song?
The present ruling lot has no creditability. Lenders will only come for a credible government capable of fulfilling its promises. Should any lenders now come, for their own good reasons, they will squeeze us dry. Potential lenders have already seen how incapable Nawaz Sharif is of even having the economy documented. His constituents go on strike for just not having their names entered on the taxman's lists and what does Nawaz Sharif do? He gives in.
If we are to survive, the next man in must, repeat must, be a good clean man who has never sat as a member in any of our 'august' assemblies or in the even more 'august' Senate. He will have to do as the Ukranians have just done. To quote from an AFP report of August 5, "Kiev: The Ukranian authorities locked 500 local and regional leaders, as well as 1,700 business leaders, in a conference centre and told them that they would stay there until they start paying off their tax debts. The government has laid on food, water and telephones for its 'prisoners.' They had been invited by the government to discuss Ukraine's financial problems."
Our Parliament House is large enough to contain all our loan defaulters, tax evaders and plain robbers. For good measure, Rafiq Tarar can also be invited to the party.