Elite capture

In 2006, Nawaz Sharif and Benazir Bhutto signed the Charter of Democracy that laid
the foundation for the Pakistani elite to capture the state of Pakistan (and the resources
in it). State capture is “systemic political corruption in which private interests
significantly influence a state’s decision-making processes to their own advantage”.

‘Elite capture’, a parallel phenomenon, is a form of “corruption whereby public

resources are biased for the benefit of a few individuals in detriment to the welfare of
the larger population”.

Money laundering is the “process of creating the appearance that large amounts of
money obtained from criminal activity originated from a legitimate sources”. Mega
money-laundering is a collective endeavour. For mega money laundering, the mega
money-launderers need to capture the state.

Mega money-launderers need to capture the Securities and Exchange Commission of

Pakistan (SECP) so that fictitious companies can be registered and are allowed to
operate. Mega money-launderers need to capture licensed banking entities so that
fictitious accounts can be opened and are allowed to be operated. Mega money-
launderers need to capture licensed banking entities so that suspicious transaction
reports (STRs) can be suppressed. Mega money-launderers need to capture the State
Bank of Pakistan (SBP) so that SBP’s Financial Monitoring Unit (FMU) takes no
action on STRs.

Question: Where do the funds for mega money-laundering come from? Answer:
There are five sources: At the federal level, the Rs800 billion Public Sector
Development Programme (PSDP). At the provincial level, four annual development
programmes (ADPs) of over Rs1 trillion. Mega money-launderers at the federal level
need to capture the PSDP and mega money-launderers at the provincial level need to
capture ADPs and then laugh all the way to the bank.
Over the past five decades, Pakistan’s ‘elite democracy’ has had 11 elections.
Pakistan’s elections are an intra-elite competition. Our democracy is ‘exclusive’ and
our economic institutions are ‘reverse Robin Hood’ –rob from the poor and give to the
rich.

Why do nations fail? Daron Acemoglu and James Robinson published a 546-page
book titled ‘Why Nations Fail: The Origins of Power, Prosperity and Poverty’. The
authors recommend focusing on three leadership qualities: greed, selfishness and
knowledge of history.

Pakistan’s future depends on our leaders. Why do nations fail? Are our leaders
greedy? Are our leaders selfish? How well do our leaders know history?

Of the 30 million Pakistani families, a thousand Pakistani families have managed to

capture most of the state’s resources. Elite capture has had two consequences: One,
Pakistani citizens have lost trust in the institutions of the State. Two, rampant poverty
is the direct result of the elite capture of state resources.

We are not poor, but have been conscripted into poverty because of elite capture. We
are not beggars, but have been conscripted into beggary because of elite capture. We
now produce the most expensive electricity in the world because of elite capture. We
have built the most expensive rapid transit systems because of elite capture.

According to Transparency International, elite “capture is one the most pervasive

forms of corruption”. Addressing elite capture requires “anti-corruption strategies…
enhancing state capacity and public-sector management, strengthening the
accountability of political leaders...freedom of information legislation…e-government
mechanisms…conflict of interest rules…asset declaration requirements.”

The writer is the government’s spokesperson on economy and energy issues.

Email: farrukh15@hotmail.com. Twitter: @saleemfarrukh