Daily Times Editorial Dec 24, 2009

Nemesis overtakes kleptocracy

The rejuvenated Supreme Court (SC) is hearing a suo motu case of 2007 involving the write-off of Rs. 54 billion in bank loans since 2002. The case has proved the proverbial tip of the iceberg, as the proceedings reveal the depth and extent of the practice of bank loan write-offs in the country’s history. The State Bank of Pakistan (SBP) submitted a 1,251-page report listing 19,771 borrowers whose loans worth Rs. 193.4 billion were written off between 1997 and 2009. The institutions distributing this ‘largesse’ to the lucky few in the country include 33 commercial banks and four development finance institutions. The list indicates that newer banks, or banks taken over by new management, tended to lead the pack. Whether the reasons for this are the anxiety of newer banks to retain their clientele at all costs or their greater vulnerability to political and other pressures, is not clear at this stage. However, what is obvious is that although the original suo motu case covered the period when Musharraf was in power, the expanded list spans three successive governments: Nawaz Sharif, Musharraf and the present PPP-led government. That indicates a deeply rooted practice that has become entrenched in the economic and financial affairs of the country, whereby the rich and powerful not only have access to bank loans, they can also wangle write-offs because of their powerful connections. Perhaps it is this pattern of write-offs beyond the tenure of one government that persuaded the SC to call for a list from the SBP of all bank loans written off since 1971, when a truncated Pakistan emerged from the ashes of the Bangladesh fiasco.
The SC seems in determined mood after its NRO verdict to take on all the powerful vested interests that loom over our political, economic and social firmament. For too long, the honest borrower has been discriminated against by being forced to pay back on pain of foreclosure, whereas the rich, powerful and well connected could get away literally with blue murder. The SC has asked the SBP to submit its Circular 29 of 2002, which set in motion the train of loan write-offs during the Musharraf dispensation. The list of Musharraf’s beneficiaries will come as no surprise to insightful observers of the national scene. The heavyweight worthies of the PML-Q, the hothouse party Musharraf created from the ruins of the PML-N, top the rogues’ gallery of beneficiaries. The SC has felt constrained in the face of what appears to be the exposure of the thin edge of the wedge to ask for all SBP circulars of similar content relating to loan write-offs over the years since 1971.
The SC has warned all those who have been kleptocratic beneficiaries of this scam to write off bank loans to the high and mighty that they will be given one chance to repay the looted money. Failure to do so will be severely punished. The Chief Justice reflected the mood of the court when he said that vested interests’ expected resistance would not deter the SC, while criticism that the court had gone beyond its purview is a risk the SC is prepared to take in the national interest. In no uncertain terms, the SC has asked the SBP to make plans for the recovery of the looted public money. The SBP’s recommendations in this regard will be scrutinised by the SC itself and, if necessary, a commission would be set up to oversee the process. The SC has also summoned the 1980 HU Baig Commission report on bank loan waivers and write-offs and would examine the whole issue on the touchstone of Article 25 of the Constitution, which establishes the equality of treatment of all citizens without discrimination.
The kleptocracy’s days are numbered. Some may attempt to escape justice by fleeing the country, a prospect that must be nipped in the bud through the exit control list. For all the bank loan beneficiaries, the best advice would be to cough up or face the wrath of justice on the march.