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Athar Mian-US-Pakistan bribery scandals: IPPs will follow Microsoft

Athar Mian-US-Pakistan bribery scandals: IPPs will follow Microsoft

The waiter, the cook’s son, the confidante and other characters

 

By Athar Mian.  

 

Pakistan is yet fingered again in another, global scandal of corruption.

 

Ordinarily we all know about all the various scandals in the homeland but regularly dismiss them because they are just too many, with the same actors, in the same old “muk-muka” (under the table deals) that make even ex-intelligence chiefs like Gen. Pasha admit that Pakistan is a “failing, if not failed” state.

 

The story, quietly circulating for months, was broken in The Wall Street Journal Aug 21st, (paywall, try Google search for a free read), when WSJ described ongoing investigations by both the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) into whistleblower reports of Microsoft bribes to government officials in China, Russia, Ukraine, Pakistan and others. From Pakistan there were reports of a senior Punjab official being paid by Microsoft to tour Egypt business class along with his spouse, then Punjab IT Board (PITB) approving a $9 million no-bid contract for purchasing software and services within two months. Local versions have appeared, with PITB itself touting expensive, unnecessary and second-rate Microsoft services that are otherwise almost free as open source or from other firms!

 

As chief strategy officer of Punjab IT Board at the time reporting directly to the chairman, I remember well the date, Jan 29, 2010, of that ill-fated and hotly contested approval, which became my reason for departure from PITB by May 2010. This mid-April, I had authored an article about IT entrepreneurship in Pakistan, mentioning this corrupt episode and the IT Tower one at PITB while I had moved on.

 

I never thought I'll see such article in the Wall St. Journal where I myself was involved. So what's new about elite corruption, with all those Oxbridge and Ivy degreed scions helping out illiterate generals and politicians all line their pockets without much trace? Well, most of the time.

 

But this time it is different, because of the prosecuting authority involved and the political ramifications which are going to turn out to be tectonic. The proverbial smoking gun(s) is very much now in sight of those authorities, and unless the culprits can run to the Taliban (highly unlikely given their anti-corruption mission), they will be prosecuted with Uncle Sam’s very long arm of the law.

 

Ironically, these corrupt elite themselves spare no effort to kowtow to the Washington sahibs, who, clearly pissed off by their duplicitous behavior, resulting in aid cut-offs and no meaningful aid or trade/ development deals from any major country (Saudi Arabia, UAE, Turkey, China, even India has been begged), have a chance to strike back with full documentary evidence. Uncle Sam is not going to miss this. Now that the real sahibs are onto the case, whose heads will roll? Where would they run?

 

Now what do you expect from a country where a confidante cashed out of this deal, money being pumped into his Partner company, with the son of the cook of a PM presiding over, and a saintly figure making hay as well? But hey, this is the same country where the hotel servant of a certain PM can become president as well. Isn’t this what equal opportunity means?

 

Hilarity aside, the serious ramifications are both short and longer term. First it is very unusual to have both DOJ and SEC investigate corrupt practices, much less under the FCPA (Foreign Corrupt Practices Act) where US firms engaged in bribes can get hefty fines with jail for executives as well as bans or jail for local officials. (Gujarat’s economic reformist Chief Minister, Narendra Modi, role model for many our insecure elite, has been banned from US visits given the 2002 Gujarat muslim massacres, even though US interests were not primarily at stake.)

 

The fact is that the Obama administration, in its second term, with more freehand, is now engaged in a vigorous campaign to rebuild US credibility abroad, while under gun from loud domestic protest about US job losses to corrupt foreign interests. It also doesn’t hurt to put pressure on its main trading partners to extract concessions. Most likely then, China and Russia will get a slap on the wrist, with smaller, especially already troubled countries, getting the brunt.

 

Such DOJ and SEC investigations are grinding and long. Over many years, dozens if not hundreds of personnel involved are interviewed, made witnesses, or prosecuted under various laws including RICO, the Racketeer Influenced Corrupt Organization Act, used liberally by Rudolph Giuliani in NYC in the 1980s/90s to bring down the international mafia, winning him several elections and a coveted status in US society. Already district attorneys from the Southern Manhattan district in NYC (of Robert Morgenthau fame who brought down Pakistan’s BCCI bank, with multi-billion dollar fines in the 1970/80s) have been very active with Wall Street and international money laundering cases- Raja Ratnam, the insider trading hedge fund owner from Sri Lanka, Robert Cohen of SAC, and JPMorgan London “whales” stand out.

 

While many Wall St. firms will simply pay big fines with executives variously sentenced, the fate of lesser, international convicts will be much harsher. Even Conrad Black, a billionaire media mogul from very friendly neighbor, Canada, who was also a member of the British House of Lords, served two years in US jail. To imagine what will happen to Pakistani elite caught in this inexorable dragnet, waxing and waning over time, and also hounded by the Taliban with whom the US is trying its best to cut a peace deal while accusing Pakistani elite of interference, is your guess.

 

And let’s not forget our media-vanished IPP power payments scandals. As I, among many others, wrote (Largest scandal yet? ), our Noora regime simply decided to pay 500 billion rupees ($5 billion) to its cronies without any public inquiry, while begging for another $5.8 billion IMF loan to repay the last one. The cold, hard truth is that many US, UK, Turkish and other firms are involved, while the Supreme Court has dithered on the Nandipur case.

 

The IPPs are a much bigger fish for DOJ or SEC compared with the tiny IT sector in Pakistan. And we haven’t even talked about the Lahore Expo, the Khosa family project, or ADB/MetroBus ($1 billion/ $300m) and many others, just from Lahore. The Urdu proverb, Sher Aya (the Tiger comes) was never truer.

 

 

The author is a Silicon Valley entrepreneur with an MS and MBA from Columbia.

 

Last modified onFriday, 14 February 2014 16:27

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