Dr.

Sania Nishtars Speech at the International Anticorruption Day Celebration, held on 09 December 2013, ADB Headquarters, Mandaluyong City

Mr. President, ladies and gentlemen, a very good morning. Let me begin by congratulating the Asian Development Bank for their focus on anticorruption and transparency. You need to be congratulated for observing this week so seriously, for the institutional arrangements and policy frameworks that have been put in place for the work that your missions and countries do to promote transparency, and for focusing on transparency not just in letter, but also in spirit. I noticed on your website that you have debarred 780 firms and 515 individuals for collusive practices and I congratulate you, Mr. President, for demonstrating this. Today Id like to focus on transparency and anticorruption through the lens of a family, because we always talk about anticorruption in technical jargon. Corruption means deeply to impoverished families, and today Ive brought you insights from the life of a family that lives in a developing country. The family lives in a rural area. The family comprises 13 members; they subsist on a monthly income of 70USD for 13 people. There are many women of child-bearing age in that family, but none of them have been to an antenatal clinic. None of them have had the privilege of birthing in the presence of a skilled birth attendant because the health facilities in the joining areas are perpetually closed. There are budgets earmarked for the health facilities, but they are systematically siphoned off. The situation is similarly (sic) for schools; they remain closed despite the existence of budgets. As a result of this, children are perpetually out of school because their parents could not afford the fees of private institutions. Outside their homes, sewage and water pipes remain untended because local government officials have created systematic channels of pilfering resources from the system. The children in the house suffer repeatedly from vaccine preventable diseases, despite the fact that the country has an immunization program in place. Many a times, they recruit vaccinators which do not have the capacity, and a lot of times this includes children. The infrastructure for vaccination, in addition, is not maintained, and here I show you on the slide, an illustration of a cold chain equipment and icebox, inside of which shows the temperature of 26 degrees. The grandmother in the house, which has, by the way, 13 individuals in the household, has lost a limb in a bomb blast in the northern areas, in a suicide attack. But every time she goes to the local social protection agency to claim a constitutionally mandated social protection allowance, her files are either lost in piles of paper, or she confronts an entrenched system of rent-seeking that excludes the true deserving. The breadwinner of the house has been swindled by a local agent that fools people and leads them to believe that they will be sent across the gulf, to countries where they can have a better livelihood. As a result of this fraud, the family is indebted to the tune of a thousand dollars, which really has an impoverishing effect on them and this cycle of poverty has been perpetuated even further. One of the nephews of the family has been killed as a result of gang and mafia activity in the southern province and these gang and mafias operate with the connivance of local political officials. The girl in the family, whos a beautiful girl, was sexually molested where she worked as a domestic servant. But unfortunately, the police will not file a case, because theyre in connivance with the local officials. One uncle in the family is behind the (sic) bars, for alleged petty theft. Every time the family goes to see him, they have to pay a bribe, which they cannot afford. The other uncle in the family, the only one who did well, was a clerk in a telecommunications agency. But when the country privatized that telecommunications agency, they did not cater to the rights of the pensioners, and therefore he, along with thousand

others, are on the street demanding their right, but having denied that. And finally, that impoverished family of 13 individuals sometimes has to endure up to 10 hours of load shedding in the country, where public officials responsible for energy security cannot be held accountable for what they were unable to deliver. I wanted to narrate this true story of a family, because this is not a story of one country. Many aspects of this story transcend boundaries. It can resonate with what poor people suffer across the globe in developing countries, but also in many developed countries. The story of this household, in many ways, is an illustration of what the technical jargon in corruption means. So whether it is ghost schools, ghost health facilities, crony privatization, informal payments, institutionalized rent-seeking, regulatory failures, theft and pilferage, an embezzlement, illegal fees and bribery, they are all illustrative of how corruption touches the life of poor individuals. But for me, they are all symptoms of a problem; just as fever indicates infection and unexplained rains and flash floods herald climate change. Corruption denotes deep-seated systemic failures of governance. At the core of it, is a triad: weak governance, thriving black markets, and a legacy of patronage. When these things get systemically institutionalized within systems, systemic manipulation becomes a norm, misuse of authority becomes the name of the game, and vested interest groups flourish. When they get deeply engrained, political links are furthered by patronage and, over time, institutional erosion sets in, the rich-poor divide is augmented, governance becomes exploitable, and reforms, which is something that all of you focus on, are held hostage. The result is that human security and national security is both compromised. But we often do not recognize that. Id like to read out an excerpt from a study that the Norwegian Development Agency did some time ago to illustrate how entrenched these practices are in many countries, and I quote them: corruption is no longer the exception, but actually becomes the system. Here, each functions (sic) of the government evolve mechanisms to illicit rents at every level of the administrative structures. The higher tiers, are executive levels of departments, often secure their illicit rents by apportioning a percentage of rents generated by lower levels where the public interface takes place. These illicit rents are distributed to the respective hierarchies on well-established shadow rules that govern the de facto functioning of departments. This basically goes to show that corruption seizes to be the cost of business, it becomes the business. Indeed in my own work with analysis which I published in Choked Pipes, which is an Oxford University Press Publication two years ago, I picked out these massively entrenched systems of pilfering resources from the state system, and my frame of reference here was the healthcare sector. I think there is no doubt we have evidence that corruption disproportionately hurts the poor. But it is not just the poor it hurts, it also hurts the economies, it hampers inclusive growth, and it intensifies fiscal pressures in context where resources are already constrained. Id like to reflect back on my own country now. Pakistan is a country of great potential. Its a country with hardworking entrepreneurial and resilient people. Its a society which is massively giving and supportive. Its a country where the demographic dividend exists and where natural resources are abound. There are some strategic, but untapped strengths within the system, in particular the databases, the poverty databases, the archives of identity, the pervasiveness of telecommunication, the technology backbone, and it is a large market. But yet, there are several problems.

Id like to quickly focus on the analysis of Professor Klitgaard who based his analysis on the World Economic Forums Global Competitiveness Reports Indices to illustrate why that was the case. Pakistan, in certain indicators, is doing reasonably well. For instance, in Labor Market, it ranks 21 out of 144 countries on the Global Competitiveness Index. In Capacity for Renovation, its 60; in Judicial Independence, 57; Company R&D, 51; Strength of Investor Protection, 29; the Size of the Domestic Market, 26 (better than many countries). Cumulatively on these indices, Pakistan scores better than many countries which have a median GDP per capita of $35,000. But yet, Pakistan only has a GDP per capita of just over a thousand dollars ($1,000). Why is that the case? Why the gap? And the gap is because there are a whole other set of indicators which, and Im just going to show you the ranking on the competitiveness ranking which are way at the bottom, all of them are related to collusion and corruption. Property rights, 116; Irregular payments and bribes, 119; Favoritism in Decisions of Public Officials, 129; Transparency of Government, 109 (and fortunately its on the way to improvement now); Business Cost of Terrorism, way at rock bottom, 143 out of 144; Organized crime, 136; Reliability of Police, 127. Unfortunately, the country is worst in these parameters than even some Sub-Saharan African countries. Fortunately, things seem to be changing. We have a progressive judiciary, a vibrant civil society which frequently takes to the streets, and recently, we have had a free media, and our transparency rankings are on the way to improvement. But a lot more needs to be done, not just in Pakistan but all over the world. Anticorruption involves action at two levels at both ends of the spectrum. At one end of the spectrum is what you would like to call subsistence corruption and many examples of that were given in the address of the President here this morning. At the other end of the spectrum is state capture which has to do with predatory behaviors of policy institutes. Its critical that whilst focusing on anticorruption, we should not just hone on punitive action but also focus on building systems that deter the institutionalization of these practices, in the first place. The framework for anticorruption is certainly very wide ranging. From strategy formulation to the development of institutions that work around redressal, oversight in investigative work, to integrity promoting measures in the bureaucracy, to focusing on disclosure and safeguards against conflict of interest, theres an interplay of how the market, harnessing means of regulation can act, and the list goes on and on and on. But I think what is most important in an environment such as ours, in developing country environments, is to create the demand. Unless there is going to be the demand for transparency, things are not going to be moved and reform will be held hostage to predatory behaviors of policy entities. Today we live in a digitally interconnected world where technology is widely available, even in the developing countries. Our children today watch Facebook before they brush their teeth in the morning. We have soap operas changing societal behaviors. The pervasiveness of technology has created systems and structures which can root out arbitrariness and rentseeking, and there are indeed examples from around the world where singular interventions can have a mass knock-on effect throughout the value chain and I projected this slide of mass utilization in the pharmaceutical chain as an example of that. And I think it is these kinds of things that need to be part of the conditionalities that you put on the table when you speak to countries and when you negotiate loans with them.

I just want to say that corruption is not a problem confined to my country, it is not a problem confined to the developing world, it is a global problem. We know that in a global survey, one in four individuals globally, has paid a bribe. We know that from informal markets, to collusive services, to collusive contractual arrangements, to local governments that are inefficient and rent-seeking, to stolen assets worldwide. Corruption does not know any boundaries. The costs to the society at every level are massive. Corruption could even lead to massive debt. We also know that, as I said earlier, it is not just the developing countries. Transparency International has even alleged that police in the United Kingdom could possibly have fallen prey to these practices. The international focus on corruption is extremely auspicious. What is My drop in the ocean? Throughout my life, I have campaigned for anticorruption and the institutionalization of transparency. I have did (sic) that as a civil society actor, as a person running a small organization, and I also embraced it when I had the opportunity of being in public office. I have continued to campaign through my op-eds, through peer-reviewed publications, and to other major publications. When I set up a charity, I made visibility to donors- a hallmark of its operations. And when I was sworn in as a Minister, I was appalled to find out that an area in an office, as critical as the key policy making role, there was complete lack of accountability for actions. For me, accountability and transparency was critical. I honestly believe that without that in the equation in the public office structure, governance can be disastrous. And hence, I pledged when I took office of oath as Minister, that I would like to voluntarily submit myself for accountability. I wanted to set a precedent by being the first Minister in my country to open my decisions and conduct in public office for accountability. Whatever I did in those months and as the Interim Minister, I documented in a set of notes, and I used the handover process as a means of putting my decisions in public office, in the public domain. The day I left, I emailed a wall paper message to thousands of individuals in the government of Pakistan, reminding them that government is a sacred trust and that accountability and transparency is your avenue to realizing that. Id like to thank you all for having me here and for sharing my experiences. And Id like to congratulate you once again for the work that you do, for the value that you bring to our countries. Thank you very much.