Sunday, May 31, 2015
KP LG elections Local Government (LG) polls were held after a gap of a decade in Khyber Pakhtunkhwa (KP) on Saturday. The scale of the exercise can be imagined from the fact that 13.1 million people voted to elect 41,762 village, neighbourhood, tehsil (sub-district) and district council representatives. An unprecedented 84,420 candidates were in the running for the general seats and 7,681 women candidates for 6,678 women’s seats. Many of these women candidates were returned unopposed. Women’s participation was higher than in the last general elections, reflecting their interest in electing their representatives at the grassroots level. There were reports of women not being allowed to vote yet again in parts of Lower and Upper Dir and in some other areas of the province. No polls could be held in Kohistan as the bifurcation of the district is under challenge in the Peshawar High Court. Each voter had to cast at least six, if not seven votes in areas having reserved seats for religious minorities. That proved too confusing for some of the electorate, particularly women, many of whom returned without casting their vote as the arrangements at many polling stations were found less than satisfactory. Complaints were heard aplenty on the day and after regarding mismanagement, poor security, and clashes between rivals. Pakistan Tehreek-e-Insaaf’s (PTI’s) Chief Minister Pervaiz Khattak was quick off the mark in shifting the entire blame for the mismanagement and violence on the Election Commission of Pakistan (ECP), claiming that the provincial government had handed over security arrangements and the police force to the ECP. Reports said 11 people were killed and over 48 injured during polling, 30 of the injured being contributed by Peshawar alone. A majority of the polling stations saw voting marred by electricity blackouts (in the stifling heat), lack of trained polling staff in sufficient numbers, voters’ lack of awareness of the polling procedure (complicated by the number of votes to be cast by each voter), lax security and the time-consuming process of casting votes. None of this, according to KP Minister for LG Inayatullah Khan meant the legitimacy of the elections could be questioned. This statement makes an interesting contrast with the way the PTI castigated similar anomalies and mismanagement in the 2013 general elections, which the PTI declared ‘rigged’ and launched a ‘container revolution’ against that held the whole country and democratic system hostage for months before petering out. In fact the anomalies, weaknesses and mismanagement in the KP LG elections gave ammunition to the PTI’s political rivals, including former president and co-Chairperson of the PPP Asif Ali Zardari to poke fun at how the LG polls in KP under Imran Khan’s PTI government had ‘demonstrated rigging’. Sarcasm at PTI’s expense and the complaints here and there of ‘rigging’ aside, the ECP seems satisfied by the conduct of the whole exercise. However, before the ECP gets carried away patting itself on the back, it would be better served if it summed up and learnt some lessons from the KP LG elections, particularly since two remaining LG elections in Punjab and Sindh are looming. Clearly, based on the KP experience, the ECP needs to focus on better coordination with the incumbent provincial governments on security and preventing violence amongst rivals and their supporters; train its polling staff better to help and facilitate voters in what is a more complicated exercise even than voting in general elections; ensure a reasonable degree of management and facilitation of voters against the elements and unnecessary delays that tax their patience, and prove that it is serious in helming an improved system of elections at all levels to rid the country of the unending game of rigging accusations that bring the whole democratic edifice’s legitimacy into question after virtually every election. As to the results of the KP LG elections, at the time of writing these lines, counting of votes was in progress. Preliminary unofficial results however from 183 district councils out of a total 978 showed the PTI leading with 53 seats, ANP 31, JUI-F 21, PPP seven, PML-N 17, JI 22. Only when the official results are fully in will it be possible to judge whether these trends reflect the overall results or not. Having said that, KP and the country deserve congratulations for adding one more brick to the grassroots foundations of the democratic edifice.
Friday, May 29, 2015
Consensus at last There is no gainsaying the fact that the China Pakistan Economic Corridor (CPEC) is vital for the development of Pakistan. Unfortunately, a great deal of misgivings and reservations had been voiced by various political parties after the CPEC was announced during the visit of the Chinese president. The main bone of objection was the growing perception that of the three alignments along which the corridor would be built, the western, central and eastern, the last may be developed first. This, the critics objected, would privilege Punjab, already the country’s most developed province, and deprive the underdeveloped provinces and areas of the country, particularly along the western alignment, of the golden chance of pulling themselves out of the stagnant development hole in which they had languished since independence. The stakes were so high that the controversy threatened to stymie the Chinese investment of $ 46 billion for the entire project even before it had got off the ground. It is a matter of great satisfaction therefore that the All Parties Conference (APC) called by Prime Minister Nawaz Sharif on Thursday arrived at the badly needed consensus after he announced during his address at the APC that the western alignment of the corridor would be the first to be built, linking Kashgar in China with Gwadar on Balochistan's coast. This route will pass through some of the most underdeveloped regions of the country, all lying essentially west of the Indus River. The benefits need no advocacy. The route is not just road and rail connectivity north-south, it also envisages the setting up of energy projects and industrial zones, thus bringing the advantages of modern economic activity to these least developed parts of the country and likely to prove a transformatory phenomenon for the people along its path. It remains to be seen just how these regions will change from a tribal/subsistence agriculture region into a powerhouse of modern industry and commerce, linked through the corridor with the outside world. The impact within and externally can only be imagined and there is cause to celebrate the extraordinary lift it will provide to the lives of Pakistan’s western provinces/regions. While the ownership/consensus approval of the CPEC and its initial western alignment by all the parties represented in the APC brings a sigh of relief to Pakistanis as well as our Chinese friends who are poised to begin work on the corridor, the government has wisely decided to constitute a parliamentary committee and a working group with representation of all the provinces to address any remaining reservations regarding the entire project and decide the location and nature of industrial zones, etc. Planning Minister Ahsan Iqbal must be lauded for his untiring efforts in the past few weeks to meet the criticisms and reservations head on and expend a great deal of time and persuasion on bringing the party heads on board, including background one-to-one meetings with party heads before the APC, which prepared the ground for the consensus that finally emerged. Some incorrigibly suspicious minds are still cogitating the idea whether the PML-N is undertaking the CPEC for political advantage in the next elections. Factually, the contention makes little if any sense. For a start, the CPEC will not be completed till 2030 (if then). It is therefore a long-term project that will transcend not just this government’s remaining tenure but perhaps many more. By the time the next elections roll round in 2018, the CPEC in all its complexity will probably be a work-in-progress, and that too one in the initial phases. Second, the attitude of Prime Minister Nawaz Sharif in appreciating the role of all parties in arriving at the consensus in terms that congratulated all of them and was generous with credit to all political forces is admirable and in conformity with the real nature of the mega project. It is a national endeavour, and therefore should be ‘rescued’ from any attempt to paint it in partisan political colours. The game changing CPEC will transform not only Pakistan toward modernity, including its least developed western regions, it will prove transformatory for the region and, by extension, the world. Carping criticism therefore runs contrary to the lofty aims of this national project.
Monday, May 25, 2015
Sons of the fathers Former prime minister Yousaf Raza Gilani talked to his kidnapped son Ali Haider Gilani on the phone on Sunday from Multan for the first time since his abduction two years ago. The contact was the first direct interaction, previous contacts having been indirect, which also ceased one year ago. Ali Haider Gilani, according to his father, seemed in good spirits and hopeful of his release soon. He spoke to some family members and Shah Mahmood Qureshi too, who was accompanying the elder Gilani. The contact was initiated through a message that gave a number in Afghanistan where the young man is believed to be held by his Taliban kidnappers. It may be recalled that Ali Haider Gilani was abducted from Multan on May 9, 2013, two days before the elections for which he was campaigning, in a hail of gunfire by his kidnappers riding motorcycles that led to the deaths of his secretary and a bodyguard and injuries to four others. Finding kidnapees has never been easy once they fall into the clutches of these evil men, and this proved to be the case with Ali Haider Gilani too. Reports speak of the kidnappers’ demands, including Rs two billion ransom (subsequently reduced to Rs 500 million) and the release of some detained terrorists. Speaking to media, Yousaf Raza Gilani said he had been trying to get his son released all this time and when the demand for the release of some militants was conveyed to him indirectly, he had expressed his helplessness to meet such a demand but had appealed to the kidnappers to take a reasonable amount of ransom money for the release of his son. However, that too failed to transpire. Now Ali Haider Gilani, who suffers from asthma and had a liver transplant in 2011, says he is being better treated and in a safer place than where he was previously being held, which was subjected to many drone attacks. On May 7 this year, Yousaf Raza Gilani had accompanied former president Asif Ali Zardari to Afghanistan and there pleaded with President Ashraf Ghani to help him recover his son as sources indicated he was being held in Afghanistan. Reports say it is because of the Afghan president and authorities’ efforts, which piled pressure on the kidnappers, that they have initiated contact to strike a ransom deal. Yousaf Raza Gilani was due to meet high authorities in Islamabad yesterday to follow up on the telephonic contact and intensify efforts to resolve the impasse. While any parent would sympathise with Yousaf Raza Gilani’s plight, there is also the matter of the kidnapped son of slain late governor of Punjab and founder-publisher of this paper Salmaan Taseer to bring to a closure. Shahbaz Taseer was abducted from Lahore in August 2011 and despite speculative reports about his health and whereabouts over the years since, no movement towards his recovery is in evidence. Yousaf Raza Gilani emphasised that he had also spoken about Shahbaz Taseer’s release, but the longer running kidnapping of Shahbaz has yet to offer the kind of even tenuously hopeful signs that Ali Haider Gilani’s case appears to now present. Salmaan Taseer may no longer be with us, but the agony of his family continues unabated. Rumours about Shahbaz’s location cannot be verified, but if logically the pressure brought to bear on the Taliban because of Operation Zarb-e-Azb has forced them to relocate across the border in Afghanistan, the tantalising possibility exists that Shahbaz Taseer too may have been moved out of Pakistan. While the authorities make efforts to free Ali Haider Gilani, they are morally bound not to forget the sufferings of Shahbaz Taseer and his family and to make equal if not greater efforts to trace him out and have him released. For a parent, even the slightest hurt to a child is beyond tolerance. Imagine then the pain of parents and families waiting for their progeny for years on end with no end to the nightmare in sight. In the name of humanity and the sufferings of the families, all people of good sense appeal to the kidnappers to let their prisoners go and allow them to be reunited with their loved ones.
Interest rate cut The State Bank of Pakistan (SBP) has slashed the discount rate by an unexpected 100 basis points to seven percent, the lowest interest rate in 42 years. The new rate will continue for two months, with the SBP carrying out its review of monetary policy bi-monthly. The relatively radical cut is clearly intended as a stimulus to economic growth in the presence of slowing inflation. GDP growth has improved marginally to 4.2 percent from 4.0 percent last year. The SBP has been incrementally slashing interest rates since November 2014 from 10 percent to seven percent now, with cuts of a 100 basis points in January and 50 basis points in March this year. The incremental approach was informed by watchful anxiety about inflation. The SBP seems more confident now, based on the latest inflation data. The Consumer Price Index is at 4.8 percent for the first 10 months of FY15, reflecting the average of the steep fall from 8.2 percent in June 2014 to 2.1 percent in April 2015. Adding to the SBP's confidence is the positive direction the macro-economic situation is moving in, halving of the Current Account deficit to $ 1.4 billion during July-April FY15 compared to the corresponding period last year due to contraction in imports led by sharp decline in oil prices and strong growth in remittances, overshadowing lower surplus in capital and financial account and weak foreign private investment. The SBP also announced a narrowing of the interest rate corridor from 250 to 200 basis points, which means a floor rate of five percent, keeping the 'SBP target rate' 50 basis points below the ceiling rate, and ensuring the overnight rate remains close to the target rate, which would now be called the 'Policy Rate'. The SBP obviously hopes to boost economic growth, promote large scale manufacturing, and use the opportunity afforded by economic improvement to implement reforms that would ensure sustainable growth. Although the SBP bolsters its claims of economic improvement by reference to Pakistan's upgraded international credit ratings and investors' confidence, by its own admission private foreign investment remains shy. Despite its incremental easing of the tight monetary policy over the last seven months, the SBP cannot deny the failure of bank borrowing to rise. In fact it fell sharply from Rs 292 billion last year to Rs 161 billion this fiscal year. Part of the explanation for this fall may lie in the discouraging factors of terrorism, law and order, and the availability and prices of gas and electricity, as pointed out by the SBP itself. The SBP can find satisfaction in the build up of the net foreign exchange reserves with it from $ 9.1 billion on June 30, 2014 to $ 12.5 billion on May 15, 2015, but for the ordinary citizen, all the 'good' news from the economic front means little. For one, slashing the interest rate may or may not prove an adequate stimulus to economic growth, based on global experience during the ongoing recession. At the same time, it will reduce the return on savings, including bank deposits, to one percent or even less above the inflation rate. The only saving grace may be the undeniable reality that avenues for safe investment with adequate returns remain few and far between, with the notable exception of the evergreen real estate sector. The economy's macro indicators may indeed be showing signs of improvement, but this has yet to translate into employment and other benefits for the ordinary citizen.
Saturday, May 23, 2015
Saudi chickens In an unfortunate and tragic development, an Islamic State (IS) suicide bomber struck a Shia mosque in al-Qadeeh village in eastern Saudi Arabia, a predominantly Shia region. The blast targeted more than 150 worshippers offering their Friday prayers. The death toll was 21, injured over 90. Few escaped the carnage unscathed. One of the deadliest attacks in Saudi Arabia, it is also the first claimed by IS on Saudi soil. Sectarian tensions had already frayed as a result of the almost two month long Saudi-led bombing campaign in neighbouring Yemen against the rebel Houthis and their allies. This incident is likely to make that even worse. IS said in a statement that one of its suicide bombers, Abu Ammar al-Najdi, carried out the attack with an explosives-laden belt that killed or wounded 250 people. It vowed not to rest until all Shias, whom it considers heretics, are expelled from the Arabian Peninsula. In November last year, IS leader and self-styled caliph Abu Bakr al-Baghdadi had called for attacks on the Sunni rulers of Saudi Arabia, which has declared IS a terrorist organisation, joined international airstrikes against it, and mobilised the clergy to denounce it. Last week al-Baghdadi issued another speech laden with derogatory comments about both the Saudi leadership and the Shia minority. Shias were targeted in November last year when gunmen fired at a religious celebration in al-Ahsa, again in the preponderantly Shia eastern part of Saudi Arabia. Last month, Saudi Arabia was on high alert for possible attacks on oil installations, shopping malls, etc. Condemnation of the latest IS atrocity was heard from Hezbollah of Lebanon and Iran, but both placed the responsibility for the attack squarely on the Saudi leadership and its policies. Pakistan’s prime minister, president and foreign office also condemned it, as did UN Secretary General Ban ki-Moon. Meanwhile, undeterred by such condemnatory statements, IS also bombed a mosque in Sanaa, the Yemeni capital, and consolidated its hold on the Iraq-Syria border. After the capture by IS of Ramidi and a border crossing in Iraq and the historic city of Palmyra in Syria, IS virtually controls the entire Iraq-Syria border except for the north, where the Kurds have managed to hold out against it and even repel its advances. IS continues to kidnap and execute people in the areas it controls in both countries. These areas, plus the offensive launched in Syria’s northwestern province of Idlib by the Al-Nusra Front mean that the regime in Damascus now controls only 22 percent of Syria’s territory. However, given the seesaw trajectory of the struggle against Bashar al-Assad’s government, it may be premature to go along with the wishful thinking of his enemies predicting his imminent downfall. Unfortunately, the US is still floundering in its self-created anti-Assad bog and unable to see the wood for the trees. US President Barack Obama called the IS advances in Ramidi, which arguably threaten Baghdad itself, as a temporary setback. This would be laughable if the situation were not so dire. Unable to wean itself off its anti-Assad obsession, Washington is till putting all its eggs in the so-called ‘moderate’ Islamist opposition’s basket, without realising that this stance is helping no one except IS. The latter is taking full advantage of the fighting between objectively potential allies against it to push ahead with its territorial gains and consolidation of its antediluvian rule in the territories it controls, spanning two states. If Washington and its regional allies such as Saudi Arabia do not wake up and smell the coffee, they may soon find the situation irreversible and a self-proclaimed Islamic caliphate cleverly using the fractures in the forces actually arrayed against it to romp home to victory. And as the mosque bombing shows, Saudi Arabia too needs to wake up the to the threat the presence of IS in its neighbourhood and on its soil poses to the rule of the Saud dynasty. With the greatest respect and sensitivity to the Saudis for the latest tragedy, all these developments could be considered the Saudi chickens of funding and supporting Islamist proxies in the neighbourhood for decades finally coming home to roost. Time for Riyadh and Washington to change course and fight the real rising enemy: IS.
Friday, May 22, 2015
Central Asian tour Prime Minister (PM) Nawaz Sharif embarked on a tour of Central Asian countries in a belated effort to make up for all the lost time, opportunity, etc, that had presented itself after the implosion of the Soviet Union in 1991. In that sense, welcome as this belated attention is, the tour seems more an afterthought rather than one aforethought, with the necessary preparation before hand to make the PM’s time and effort worth it in terms of results. So far at least, the visit to Turkmenistan yielded little apart from homilies about friendship, cooperation and acceleration of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project that has lain in cold storage for many years. And not solely because of the slow pace of doing things at our (and arguably their) end. Rather, there are inherent difficulties in the path of getting the project off and running. Turkmenistan has the world’s largest gas reserves but is not able to take full advantage of this bounty of nature so far because of infrastructural blockages to getting this gas out of the country and to the world. Attempts in the past to avoid the troubled soil of Afghanistan and use the Iranian route have fallen foul of the sanctions in place against Iran over its nuclear programme (just as our Iran-Pakistan gas pipeline is frozen at the Iranian side of the common border). Traversing Afghanistan in the midst of the war going on in that country poses formidable obstacles and offers no guarantee of safety of the pipeline even if it is somehow built through what is essentially a war zone. Although the joint communiqué from Ashkabad was long on rhetoric in this regard, giving these wishes concrete existence in reality never was and is still doubtful until and unless Afghanistan settles down. If a tour of Turkmenistan seems a waste of time, the visit to Kyrgyzstan that followed makes even less sense. Apart from clichés about political relations being excellent and enhanced cooperation in curbing extremism, drug trafficking, energy, connectivity, trade, the economy, people-to-people contact and tourism, there seemed hardly anything that could even remotely be described as having set the house on fire. Kyrgyzstan has underlined its desire to be linked with the economic corridor being planned for Pakistan with Chinese investment, given its advantage of accession to the Eurasian Economic Union (the alternative developed by Russia and the Central Asian states to the by now fraught relations with the European Union over Ukraine) and therefore the opportunity to act as a bridge between North and South in what would become a breathtaking revolution in the contemporary world’s affairs. However, there is many a slip between the cup and the lip. Take for example CASA-1000, the electricity export project being touted for long now. Kyrgyzstan’s neighbour Tajikistan is said to possess enormous potential in hydel power, surplus to its needs and therefore available for transmission to South Asia. However, this project too has been in the doldrums for so long that only a miracle could revive hopes in it seeing the light of day any time soon. It too suffers from the same drawback as TAPI, i.e. the need to traverse troubled Afghan territory to get anywhere in South Asia. In the absence of movement on these two critical energy projects, PM Nawaz Sharif had to fall back on our modest help to Kyrgyzstan in training their diplomats and offering training in the banking, postal and other fields. Good, but again, not about to make anyone sit up on the edge of their seats. While any tour by a Pakistani PM, belated or not, is welcome as it signals the seeming ‘lapse’ in attention to Central Asia may be about to be overcome, one cannot but help reflect on what could have been. Had Pakistan not been so deeply involved in and committed to its adventures in Afghanistan, it may have had the spare mind and time to focus on what was tipped at the time as the great opportunity presented to neighbouring countries vis-à-vis the landlocked Central Asian states after the breakup of the Soviet Union in 1991. Instead, while our Afghan policy of long standing has finally yielded up its chickens that have come home to roost in the shape of terrorism, the opportunity lost in terms of offering Central Asia a route out to the world through Pakistan must count as one of the monumental follies of our sorry track record in the region and beyond.
Thursday, May 21, 2015
‘Amazing’ success In an ‘amazing’ turnaround, both Federal Interior Minister Chaudhry Nisar and Sindh Chief Minister Syed Qaim Ali Shah have announced in press conferences in Islamabad and Karachi respectively that the masterminds and perpetrators of the Safoora Chowk massacre of Ismailis and the murder of T2F founder Sabeen Mahmud have been arrested within days of the first incident. If so, it is an unprecedentedly rapid nabbing of terrorism perpetrators. The arrests have undoubtedly taken place, and it is entirely believable that arms and ammunition too have been found from them. However, there are some aspects of the whole affair that give pause for thought. First and foremost, the earlier claims by both gentlemen that Indian intelligence agency RAW was behind these and other terrorist incidents now seems to be nothing but an embarrassment for them, one that they are trying to distance themselves from in the best way possible. While Chaudhry Nisar was not very forthcoming on the issue, dismissing a question on the matter with a flippant remark that they are all foreign hands, why concentrate on just one name or explanation, Syed Qaim Ali Shah found it expedient to say that he had named RAW in the context of what he claims have been its activities in the past from Balochistan to Karachi. Now this is rich, but then we have already cautioned all top officials to refrain from kite flying in such serious matters, particularly where loose talk could damage relations with our neighbours. Those chickens are now coming home to roost and the RAW theory has suffered a severe blow. Having said that, it is still not clear which is the organisation the arrested alleged perpetrators belong to. Chaudhry Nisar cryptically says proscribed organisations such as Islamic State and the Taliban are linked and are collaborating in such activities. Perhaps, but then any further kite flying must also be avoided. In this respect Qaim Ali Shah at least had the sense to argue that the Joint Investigation Team set up to look into the matter should be allowed to finish its work before any pronouncements as to who or what is involved are made. What is really worrying about this ‘success’ is not only the rapidity with which the long arm of the law reached out and nabbed these alleged terrorists, but also the plethora of crimes they have confessed to, including the assassination of Sabeen Mahmud and the attack that injured Debra Lobo. Not only that, the authorities are also claiming that the accused have confessed to many other terrorist actions against civilians and security forces personnel. Now we may be forgiven some scepticism, given our police’s ‘talent’ in getting anyone in custody to ‘confess’ to any and every crime under the sun because of the ‘excellent interrogation techniques’ our police is justly famous for. The wags have it that our redoubtable law enforcers can get anyone to confess that a horse is an elephant, what to talk of responsibility for heinous crimes and terrorist actions. The problem with such confessions is whether they can stand up to scrutiny in a court of law. The accused cannot be stopped from rejecting their confession before the court as having been extracted through torture. Unless then, the authorities have evidence and proof beyond the confessions and circumstantial details, a possible bigger embarrassment awaits in whatever judicial forum the case may eventually be brought before, provided of course it is a proper judicial forum and not the military courts set up recently and that have aroused so much controversy already. It may be in the fitness of things (not to mention in the interests of the self-preservation of whatever credibility they have left) for our politicians, particularly top officials, whether federal or provincial, to refrain from making tall claims and assertions even before all the evidence has been gathered after investigation, merely to show themselves in a better light than widespread public perception. This practice may yield temporary benefits, but if it unravels in the long run, it may return to haunt the claimants. Convenient it may appear to have ‘solved’ the Safoora massacre, Sabeen Mahmud’s assassination, the attack on Debra Lobo and sundry other terrorism cases in one fell blow, but the sceptics and critics may be forgiven for reaching for the salt cellar.
Wednesday, May 20, 2015
Shameful scandal As the storm around The New York Times revelations regarding Axact’s business of fake degrees gathers force, the paper has come out with an editorial on the issue. The most damaging assertion in the editorial is that it is difficult to believe the Pakistan government knew nothing about the scam. Although The New York Times may be laying too much stock in our government’s capabilities, raising the question itself could prove disastrous for Pakistan and its businesses, especially IT, which Axact asserts is its main business. The report outlined an extensive network of fake university, college and high school websites issuing fake degrees for cash without the recipients required to attend any study courses. Coercive marketing using a wide array of ‘persuasion’ techniques helped Axact milk innocent or willing customers out of millions of dollars. Some sources say it is the biggest such scam in the history of the IT business. While the interior ministry and the Federal Investigation Agency have belatedly swung into action against Axact, reportedly on the instructions of Interior Minister Chaudhry Nisar, their efforts are being described in mixed terms. For example, the initial ‘raid’ on the company’s Karachi office yielded little except a polite exchange with its officers. In Islamabad however, latest reports say 42 servers and other record was seized and 27 employees arrested for further investigation. Notices to appear and assist the investigation have been issued to the directors of the company. The Federal Bureau of Revenue has been asked to provide the tax records of the company since there are reports about its absurdly low reported income and tax, considering the amounts it was scamming out of people worldwide through its fake education degrees rip off. Chaudhry Nisar in a press conference on Wednesday said it would need technically competent people to conduct a forensic investigation of the company’s servers/computers, etc, a task that could consume at least a month. Other cyber crime experts think Pakistan will need the help and services of international experts to unravel this complex web. Meanwhile the Chief Operating Officer and head of Axact, Shoaib Sheikh, has been put on the exit control list and possibly all the directors will suffer the same. Axact’s response to the allegations and accusations against it has shifted the responsibility for the scandal onto rival media houses but failed to answer any of the charges. To the other charges has now been added the additional charge of possible money laundering. The New York Times report did point to cash transactions through dubious and circuitous routes all over the world, which could attract such an investigation. The embarrassment that has been heaped on Pakistan’s head because of this scandal echoed in the Senate on Monday when Leader of the Opposition Chaudhry Aitzaz Ahsan drew the attention of the house to the issue, calling it a matter that made every Pakistani’s head hang in shame. He asked rhetorically why Pakistanis seemed to be so expert at such frauds. Chaudhry sahib may not know or remember the milieu that has emerged in Pakistan over the years. A society in which the corrupt are no longer thought of as bad people, in some instances even admired for their wealth, is not a society in which such scandals should cause one to wonder at them. The other side of the coin is the obvious incapability of our law enforcement agencies to keep abreast of the latest technologies, including IT, and therefore be in a position to monitor and clamp down in timely fashion on such crimes. Even the belated Cyber Crimes Bill currently under discussion in parliament betrays its misdirected thrust against dissenting opinions rather than cyber crimes. Such being the state of knowledge and expertise in these contemporary fields, The New York Times’ wondering how the Pakistan government could remain unaware of the scam turns into a rhetorical question. If anything, had the government been aware and acted against the scam earlier, that would have been the surprise. What has actually transpired is exactly according to the script and capabilities of our governments and the law enforcement institutions under them. The ignominy that will now be heaped on Pakistan and its citizens’ heads could end up isolating perfectly honest citizens along with the crooks in our society and reducing us all to pariah status in the world. A sad day indeed.
Saturday, May 16, 2015
Finally on Everyone in Pakistan knows the importance of the Zimbabwe cricket team’s tour of Pakistan. Since the 2009 attack on the Sri Lanka cricket team in Lahore, no international side has considered it safe to tour Pakistan. As a result, Pakistan has had to make do with ‘home’ series played on the ‘borrowed’ grounds of the UAE. Useful as these ‘home’ series have been in keeping the Pakistan cricket team engaged in international cricket (apart of course from foreign tours), these makeshift arrangements cannot be said to have added much to Pakistan’s stock. The decline in the standards of Pakistan’s cricket can be traced at least partially to the absence of home advantage. Zimbabwe may be considered by now to have been reduced because of their own Board’s problems to one of the minnows of international cricket, but as the forerunner of what was hoped would become a turnaround in the fortunes of Pakistan, their tour assumed both a symbolic as well as practical importance. Symbolic because a team had actually taken on the risks, practical because if the tour went off without incident, it would help to alleviate other cricket playing countries’ anxieties. It came as a big shock therefore to cricket fans to hear that Zimbabwe had had second thoughts after the massacre of Ismailis in Karachi the other day. The incident of course reflects the ongoing terrorism threat in Pakistan. All the hard work of the Pakistan Cricket Board (PCB) to persuade Zimbabwe therefore seemed doomed to disappear down the same sinkhole without a trace. However, if the latest reports and PCB chairman Shahryar Khan are to be believed, Zimbabwe, after lots of hesitation and reported extensive discussions, conveyed verbally to Shahryar Khan that the tour was definitely on. The latest reports also speak of a written confirmation having been received from the Zimbabwe Cricket Board (ZCB). All cricket lovers would earnestly hope that the news of salvage of the Zimbabwe tour despite the latest atrocity that shocked Pakistan and the world are true. And if indeed that is the case, the Pakistani cricket and law enforcement authorities better get their act together to ensure a trouble-free tour. The security team of the ZCB that visited Pakistan recently seemed fairly satisfied as to the arrangements for security made by our PCB and the authorities. Let us hope they too have not changed their minds. It should be noted that the PCB agreed with the ZCB that all the matches, T20 as well as ODIs, would be played in Lahore. This has produced ire amongst the cricket fans in other centres, but presumably our PCB thought it could better control things in the Punjab capital, despite the fact that it was Lahore where the fateful attack on the Sri Lankan cricketers took place six years ago. Now if the reports of the tour finally being on are correct, the authorities must ensure tight security for the visiting team. The future of Pakistan cricket hinges on it.
Monday, May 11, 2015
Collateral damage The Securities and Exchange Commission of Pakistan (SECP), the regulator of the country's stock exchanges, has finally jumped into the fray surrounding the KASB Bank's merger with BankIslami (more accurately a very hostile takeover if not swallowing whole). The SECP has written to the State Bank of Pakistan (SBP) on behalf of equity investors to review the deal. Considering that the issue of KASB Bank's future has been on a lot of people's radar for some time, including the just concluded six month moratorium on the bank imposed by the SBP pending the restructuring/merger with some other bank (BankIslami, it now turns out), it seems surprising that the SECP has suddenly woken up after the merger is a fait accompli. The legitimate question to be asked is what has roused the seemingly asleep SECP now? It appears that it is the clamour of equity investors that has compelled the SECP to finally intervene, albeit it remains to be seen how efficacious this late entry may prove. To the earlier relatively muted voices of the ignored and abandoned shareholders of KASB therefore, has been added the much louder and vociferous chorus of equity investors through the SECP, many of whom have had their fingers burnt in this whole sorry episode. The SECP wants compensation for the losses suffered by equity investors. Meanwhile the shareholders have been left in the lurch, their interests unprotected and unsafe guarded. Millions have been lost in the process. The whole merger scheme is smelling fishier than ever and the stink is growing with each passing day. The SECP says in its letter to the SBP that it was not taken into confidence by the latter regarding the moratorium or merger. The SECP reminds the SBP that it has a role to play regarding investors' interests. Ignoring equity traders' losses would engender negative comment, criticism and suspicion, all of which would inevitably combine to shake confidence in the banking sector and the economy as a whole. The SBP has placed the interests of the 150,000 depositors of KASB Bank worth Rs 57 billion as its top (if not only) priority and completely ignored and forgotten about the shareholders of KASB. If the SECP's argument regarding the interests of equity investors is valid, why can the same logic not be applied to the shareholders' interests? Consider also the sordid and unprecedented manipulation (arguably insider trading) of KASB's shares in the two days preceding the announcement of the merger. In just these two days, the normal trading volume of KASB shares went up 10 times and more and the price flipped up to twice or thrice its previous level. By no stretch of the imagination can this be considered ordinary. It is difficult to resist the conclusion that somebody made a killing based on privileged information. The cast of usual suspects is headed by the KASB sponsors/owners and the SBP since these were the only parties with knowledge at that point of the impending merger deal. If nothing else, this should be sufficient grounds for a thoroughgoing probe and investigation into the whole affair, taking into its purview the whole dubious manner of rejecting Chinese potential investors in favour of the inequitable and unjust takeover of KASB by BankIslami, the non-transparent and secretive manner (excluding totally the shareholders) of agreeing the merger, and the injustice to shareholders and equity investors. A class action suit by the robbed shareholders and hard done by equity investors could lie, while a suo motu notice by the superior courts may not be out of place in this instance.
Saturday, May 9, 2015
Bank robbery The case of the KASB Bank’s merger with BankIslami gets murkier and murkier. The saga began in November 2014 when the KASB Bank was put on a six month moratorium by the State Bank of Pakistan (SBP) on the grounds of the bank being unable to meet the SBP’s capital adequacy ratio. While various banks were invited by the SBP to carry out due diligence in order to make offers for capital injection/restructuring of the bank to put it back on its feet, a relatively late entrant to this list was the JS Bank in December 2014, whose owners/sponsors are also the major shareholders of BankIslami. In the meantime, Chinese investors who had shown an interest in acquiring the bank were shunted out without cogent reason, the SBP claiming they did not meet the SBP’s criteria of banking experience, although at least one potential Chinese investor, the Industrial and Commercial Bank of China, is one of the biggest Chinese banks. After the moratorium was imposed on KASB, it also emerged that the bank was holding Iranian deposits that could not be returned because of the risk of inviting international sanctions. A scheme of amalgamation of KASB with BankIslami was forwarded to the KASB Bank sponsors in April 2015. This was examined by the KASB sponsors but neither shared with its shareholders nor were they consulted. After reports of some initial hesitation, Finance Minister Ishaq Dar gave final approval to the merger and it has now become a fait accompli. On the first day after the moratorium was lifted, the merged bank shelled out millions of rupees to its depositors. But there is no word so far what will be the fate of the KASB Bank’s shareholders, who have been hung out to dry without any clue what will happen to their investment. The merged bank is paying depositors out of the holdings of KASB but the shareholders are still clueless how their stake will be dealt with or satisfied. For example, will they receive shares of equivalent value to their original holding in KASB in the new, merged bank? What will be the formula for determining this equivalence? In the absence of such clarifications, the shareholders of KASB naturally feel hard done by. It is not that the SBP does not have the statutory authority to do what it has done, i.e. impose a moratorium pending final decision on how to proceed with the bank or producing a scheme of restructuring/merger of the bank with some other banking entity. All this is within the purview of the SBP under the Banking Companies Ordinance 1962. However, the other law in the field, the Companies Ordinance 1984, arguably in so far as it relates to the rights of shareholders in any entity, may override the Banking Companies Ordinance 1962 to the extent of protecting the rights of shareholders. This and the aspect of non-transparency and lack of consultation with the co-owners (shareholders) of KASB regarding the merger scheme do provide grounds for a legal challenge to what appears to be an arbitrary disposal of KASB Bank for a laughable Rs 1,000 on the debatable claim that KASB’s net worth is negative, to a bank whose owners/sponsors do not enjoy an enviable reputation in banking circles or on the stock exchange. Manipulation of the price of KASB shares just two days before the merger scheme was announced, in which the normal trading volume of the shares of 0.3-0.4 million galloped to 50 million, in the process doubling if not tripling the price of the shares, smells fishy. Trading was suspended when the merger scheme was announced, raising even more questions and suspicions regarding who benefited from this extraordinary surge in trading and the price of KASB’s shares. While the KASB shareholders are perfectly within their rights to legally challenge the whole scheme on the grounds of lack of consultation and transparency and the suspicion of ‘insider’ manipulation, it also throws into relief the role of the SBP and its governor, apart from Finance Minister Ishaq Dar. It would have been in the fitness of things had the SBP ensured the whole deal was conducted transparently to avoid the fingers of accusation and suspicion now being pointed at it, damaging the credibility of the central bank and the country’s financial managers. Pakistan is no stranger to banking scandals, but this bit of legerdemain risks being described as the biggest daylight bank robbery in our history.
Friday, May 8, 2015
FO’s warning In his ‘opening innings’ as Foreign Office (FO) spokesman, Khalilullah Qazi told a weekly press briefing that Pakistan had warned India to refrain from interfering in its internal affairs. He went on to state that Pakistan has provided proof in this regard to India on many occasions, including the secretary-level talks in March this year. Whether this statement was prompted by the rare public criticism by the army on Tuesday that accused India’s RAW intelligence agency of whipping up terrorism in Pakistan is not known. But the fact that the army’s criticism carried the imprimatur of the Corps Commanders’ conference raises the question whether the FO is following the military’s lead in this regard. Qazi did admit, however, that he was not aware of any fresh proofs against RAW. Nor did he comment on a question whether the matter was being raised with New Delhi again. The FO spokesman dilated on the Dawood Ibrahim issue by referring to the admission by India’s Minister of State for Home Affairs Haribhai Chaudhary that India was not aware of his whereabouts as a vindication of Pakistan’s oft stated position in response to accusations from time to time by New Delhi that he had taken refuge in Pakistan. Further, that reservations expressed by the UN regarding the release of Zakiur Rehman Lakhvi, the main accused in the 2008 Mumbai attacks case, had been addressed, given that Pakistan had implemented the UN resolutions by banning his group, the Lashkar-e-Taiba. Regarding the reconciliation process in Afghanistan playing out in Doha, the spokesman reiterated Pakistan’s formula of supporting an Afghan-led and -owned dialogue process for peace and stability in that country. He welcomed the recent PPP delegation’s visit to Kabul, arguing that such political contacts would be helpful in promoting bilateral ties. Pakistan has fraught or difficult relations with all its neighbours with the notable exception of China. With India, both countries seem perennially bogged down in a mistrustful, suspicious engagement with each other, often being reduced to a tit-for-tat game rather than serious diplomacy. The FO spokesman’s remarks cannot be viewed as anything but a continuation of this long standing practice. There is no gainsaying the possibility that in response New Delhi’s South Block will once again castigate Islamabad over infiltration by militants into Indian Held Kashmir or rake up the Mumbai attacks case all over again. And so this tired and predictable script rumbles on, seemingly without end or hope of some positive developments. Both countries are guilty of disproving the old adage that in politics, there are neither permanent friends nor enemies. In the Pakistan-India case, it seems permanent enemies is what they have decided on or been pushed into by a combination of history and inimical lobbies on each side. Of course the real sufferers in this danse macabre are the people of Pakistan and India, whose ruling elites are wedded to the continuation of tension and conflict for one reason or another, and if none from the past suffice, the innovative minds in both countries’ establishments have proved more than equal to the task of inventing new reasons. This perpetual stand-off reduces the economic and fiscal space for both countries to tackle the poverty and deprivation of their peoples, traps them in an unending arms race (including the deadly nuclear one) and foregoes the obvious advantages of peace and normalisation between the two neighbours while being open to continuing dialogue on the vexed issues that divide them. In other words, a normal diplomatic engagement geared towards finding solutions to problems rather than one based on permanent enmity. Things are not much rosier to the west with Afghanistan, despite the sweet sounding phrases about supporting peace and stability in that country. So long as the Afghan Taliban continue to enjoy our ‘hospitality’, it is to be expected that Kabul will harbour resentment and suspicions about us, given the history of our interventions in that unfortunate country. With Iran, our relationship is precarious to say the least. Cross-border issues, hamstrung cooperation because of the lingering threat of international sanctions and the sectarian play in the Muslim world and our region have all combined to render relations with Tehran shadowed by deep and dark clouds. It is in the interests of any state to be at peace with its neighbours, particularly Pakistan, located as it is in an unstable region. Can the FO grope its way towards some such policy paradigm?
Sunday, May 3, 2015
KASB scandal Pakistan is no stranger to banking scandals. One only has to recall names such as BCCI, Mehran Bank, the cooperatives banks, et al to be reminded that something is rotten in the state of Denmark. Recently, another scandal is brewing that promises to shake the banking sector and its regulatory institution, the State Bank of Pakistan (SBP) to its very roots. Theoretically, the SBP is supposed to be independent, especially where the formulation of monetary policy is concerned. Surprise, surprise therefore when the January 2015 announcement of the base interest rate emanated not from the SBP in Karachi, whose purview it is, but from Minister of Finance Ishaq Dar sitting in Islamabad. The minister thereby unprecedentedly pre-empted the SBP, raising in the process many eyebrows. This incident and the perception that the affairs of the SBP were being run virtually by the minister earned SBP Governor Ashraf Mehmood Wathra the epithet of a ‘yes man’. No prizes for guessing whose ‘yes man’. It therefore came as a surprise to knowledgeable observers when Governor Wathra appeared to stick his neck out a mile by announcing that troubled bank KASB was being ‘merged’ with BankalIslami for the princely sum of Rs 1,000! It may be recalled that KASB had been in trouble for some time, ostensibly because it had a large depositor base (150,000 depositors, Rs 57 billion) but a largely non-performing loan portfolio. The bank had been incurring losses for many years, and this haemorrhage finally landed it in a crisis when the SBP pressed it to inject enough capital to bring its affairs in conformity with the SBP’s rules regarding banks’ capital base. However, all the efforts of the SBP in this regard failed to cut much ice with the KASB’s owners, led by KASB group of companies’ chairman Nasir Ali Shah Bokhari. In the meantime, Wathra reportedly rejected two bids by Chinese investors to take over the bank, ostensibly because the terms they offered did not meet the bank’s requirements or fulfil the criteria for banking companies of the SBP. This reportedly annoyed Ishaq Dar, given the close economic ties Pakistan is currently forging with China in the context of the China-Pakistan Economic Corridor that promises to bring in $ 46 billion of Chinese investment. Reports say the SBP may have hurried into the KASB-BankalIslami deal because the deadline of the six-month moratorium on KASB (which froze the affairs of the bank) was about to expire. However, the ‘best possible deal under the circumstances’ touted by SBP Governor Wathra has raised more than just eyebrows. Fingers of suspicion are being pointed at the owners/sponsors of BankalIslami for being behind the push to ‘acquire’ KASB. It may not be out of place to mention that the major shareholders of BankalIslami are a well known but controversial stock market mogul Jehangir Siddiqui and a major media mogul. Between them and another ‘beneficiary’ shareholder, they are said to control about 57 percent of BankalIslami’s shares. Like in any whodunit, therefore, the trail of suspicion leads inexorably to who stands to benefit from this non-transparent, highly dubious ‘merger’. The amazing part of all this manoeuvring is the transfer of KASB to BankalIslami for a mere Rs 1,000. Admittedly, KASB has huge liabilities, but no one can deny that it also has considerable assets. Is the net worth of the bank then so negligible as to attract this laughable takeover sum? The whole deal smells fishy. The government does not need another scandal/problem on its already overladen plate. Since the SBP Governor, having made his case strongly for the merger through the media has seen it fit (or wiser) to shift responsibility onto the Ministry of Finance to give final approval for the deal, Mr Dar and his government may be better served by rejecting this merger that threatens to return the depositors’ money over time after ‘restructuring’ but at the cost of the shareholders of KASB, who will be left whistling in the wind. Following the striking down of this highly dubious deal, the Ministry of Finance should order an investigation into how this whole shindig was thought up, by whom, in whose interest. And following that, perhaps the ministry should punish anyone, including the SBP Governor, found responsible for what looks increasingly like skullduggery of a level that dwarfs past banking scandals and leaves the integrity of the SBP and the banking sector in tatters. The restructuring of KASB must be conducted professionally, transparently, and while taking into account the interests of both depositors and shareholders of the bank. Let this also serve as an object lesson in how not to allow fly-by-night operators to acquire deposit-taking permission to fleece depositors and shareholders alike.
Saturday, May 2, 2015
PEMRA stirs A swirling controversy has broken out about MQM leader Altaf Hussain’s unwise choice of words about the army and its leadership in a rejoinder to Malir SSP Rao Anwar’s inappropriate press conference accusing the MQM of having links with Indian intelligence agency RAW. Altaf Hussain’s diatribe was met by strong words from ISPR and condemnations continue to flow thick and fast from political parties, some of whom have or are preparing to move condemnatory resolutions in the provincial Assemblies. Amidst all this clamour are the (usual) calls for banning the party and worse. So far, the only sensible stance has come from Prime Minister Nawaz Sharif after Altaf Hussain apologised unconditionally. The prime minister while appreciating Altaf Hussain's belated dawning of wisdom cautioned everyone, including Altaf Hussain, to think before they speak, especially where sensitive issues or state institutions like the armed forces are concerned. This latest outbreak of MQM-military tension has raised fears of conflict and violence in MQM’s stronghold of Karachi, which these days is undergoing an operation by the Rangers and other law enforcing agencies to cleanse the metropolis of terrorists, criminal mafias and the armed wings of the political parties. The federal information ministry, in a reversal of its circumlocutory attitude in the past of hiding behind the plea that the Pakistan Electronic Media Regulatory Authority (PEMRA) is an autonomous body and it does not want to interfere with its working, wrote a letter with unusual alacrity to PEMRA urging the regulator to take action against the television channels that had broadcast Altaf Hussain’s offending remarks. PEMRA has issued show-cause notices to 14 TV channels to explain why they broadcast Altaf Hussain's message that has been described as ‘hate speech’. PEMRA has also directed all TV channels to install at the earliest a mechanism for delayed broadcast of live programmes to allow censoring any offending material. The prompt response of the government (through the information ministry) in awakening the otherwise asleep PEMRA is to be welcomed. The media, and particularly the electronic media, has since it gained ‘freedom’, spiralled into a free-for-all of irresponsible journalism that makes sensible people cringe. For example, in recent days, a campaign of calumny, slander, defamation and libel has been mounted by at least three TV channels (including ironically the state owned channel) against individuals who dare to question the state of human rights in Balochistan. The issue raised its ugly head when a discussion on this topic in LUMS Lahore was forcibly cancelled by the powers-that-be. Subsequently, Sabeen Mehmud of T2F in Karachi was assassinated as she left the venue of a similar discussion on the same subject. Some of those who ‘dared’ to condemn Sabeen’s murder and support the right of academia and the people at large to discuss freely troubling questions such as the human rights conundrum in Balochistan were subjected to a hate campaign on the three TV channels, labelling them foreign agents and traitors by distorting the truth, facts and throwing to the winds all objectivity and media responsibility. First and foremost, this speaks volumes for the professional competence and integrity of the three channels’ management and their editorial policies. Second, it raises the question where the ‘autonomous’ PEMRA was through all of this. If it escaped its attention, that only reinforces the suspicion that PEMRA and its officials live in Lotus land. The issue has also emerged with a bang on the internet and social media. If PEMRA is unaware of these developments, what does it say about its so-called ‘regulatory’ role? This hate-filled campaign has put the lives of the targeted individuals at risk and raised serious questions about the dysfunctionality of PEMRA. A regulator that is incapable of regulating without being pushed by the government of the day is surely a waste of time and resources. Better to use such scarce resources on better things than a sleepwalking institution. As for the ‘free’ media, it is a sad comment to make that such hate-filled, dangerous, inciteful and irresponsible programming is allowed to pass in the name of some spurious idea of patriotism that insists on dubbing all dissenting elements ‘traitors’. When will the media, and we as a society, grow up?