Contents

Chapter – 4.....................................................................................................................................................1
ROLE OF THE PARLIAMENT IN ACCOUNTABILITY OF THE EXECUTIVE IN PAKISTAN: 2013-
2018................................................................................................................................................................1
4.1 Legislation for Processing of Complaints, Enquiries and Investigations............................................2
4.2 Jurisdiction and Powers of Anti-Corruption Agencies........................................................................5
4.3 Efforts to amend the accountability systems during PML-N (2013-2018)..........................................6
4.4 The Cost Management Accountants (Amendment) Act, 2017............................................................7
4.5 The Benami Transactions (Prohibition) Bill, 2016..............................................................................8
4.6 Indifferent Attitude of NAB in Mega Cases and Intervention of Supreme Court...............................9
4.7 Role of Public Accounts committee (PAC) IN ACCOUNTABILITY OF EXEUCTIVES..............11
4.8 GENERAL OBSERVATIONS OF PAC AUDIT REPORT.............................................................13
4.7 Role of Political Parties.....................................................................................................................18
4.74.2 The Hudaibya Paper Mills Case...............................................................................................23
4.4.3 Fake Accounts Cases..................................................................................................................24
4.8 Productivity of Plea Bargain and Voluntary Return..........................................................................26
4.8.1 Counter-Productivity of Voluntary Return and Plea Bargain.....................................................27
4.8.2 Protection of Economic Reforms (Amendment) Ordinance, 2018.............................................29
4.9 Tax Amnesty Schemes.......................................................................................................................33
4.10 Assets Declarations Schemes...........................................................................................................34
Chapter – 4
ROLE OF THE PARLIAMENT IN ACCOUNTABILITY OF THE
EXECUTIVE IN PAKISTAN: 2013-2018
As a result of effective action by NAB following growing public demand for accountability in
the last few years, Pakistan has inched up in the CPI ranking of Transparency International
from 139th out of 174 countries in 2012 and to 120 th out of 180 countries assessed in
2018. In terms of CPI score, Pakistan’s performance has also improved. One
fundamental reason for relative ineffectiveness of the present approach is its heavy
reliance on laws and their enforcement. Realizing the limitations of this approach, the
National Anti-Corruption Strategy(NACS),2002-a comprehensive document accentuated the
need for adopting a more holistic and long term approach to prevent corruption than ‘merely
relying on enforcement of anti-corruption laws
NACS had also identified some major areas to be addressed through a strategic
policy framework to address systemic causes of corruption. These included wide
discretionary power vested in the public office holders, incompetence, incommensurate
remuneration in the public sector, lack of transparency, absence of adequate
internal/external controls, cumbersome judicial processes, impertinent control of
influential class and their interest in status-quo, imperfect markets, limited knowledge
about and use of right to information, social acceptability and justification of corruption,
instead of awareness and prevention, etc. A recent study ,which examined policy context
and anti-corruption strategies in 26 Asian countries, has concluded that the most important
pre-requisite and effective control is existence of political will. Moreover, a perception created
by certain sections that the establishment and subsequent actions of NAB have been
politically motivated16also adversely effects support for anti-corruption effort.

PROCESSING OF COMPLAINTS, ENQUIRIES AND INVESTIGATIONS

Various regulatory and oversight bodies such as parliamentary public accounts

committees, regulatory bodies such as, State Bank of Pakistan (SBP), Security and
Exchange Commission of Pakistan (SECP), Oil and Gas Regulatory Authority (OGRA),
National Electric Power Regulatory Authority (NEPRA), audit departments, federal and
provincial ombudsmen and internal accountability mechanism in various departments
have an important role to play in addressing some of these causes.
FIA and ACEs under Section 160 of CrPCand NAB under section 19 of NAO can
summon any accused, witness or any other person associated with enquiry for the
purpose of giving evidence or producing documents relevant to the investigation. Under
section 19 of NAO, NAB can also call for record from any financial institution, while, FIA
and ACEs have to first get the permission from the competent court under section 94 of
CrPC for this purpose.44Additionally, section 27 of NAO empowers the Chairman NAB to
get assistance for collection of evidence, from the federal government, provincial
Governments, local authorities, banks and financial institutions.
Search and [Link] cases where the ACIAs have reasons to believe that certain documents
or records, relating to the commission of an offence under investigation, are in the
possession of the company and/or its employees and that those documents or records are
not forthcoming. They may obtain a search warrant from the relevant court under section 96
CrPC to seize the required documents from a particular place with or without any
force or assistance. However, in cases where any document or record cannot be obtained
without undue delay, sections 165 & 166 CrPC permit the officer conducting the investigation
to, after fulfilling codal formalities, enter into and search any building or place and seize any
such documents or records which are found therein.
Freezing, Seizing and [Link] and ACEs have general powers of freezing,
seizing and confiscation under sections 94, 96,102, 103,165,166, 516A, 517 and 550 of
CrPC. In cases of money laundering FIA and NAB have powers of freezing and attaching a
property under section 6 (6), 8, 9, 14 and 30 of Anti-Money Laundering Act (AMLA),
2010. In addition, section 5 (5) of FIA Act 1975, authorizes its officers of the rank of Sub-
Inspector and above to issue orders in writing to the possessor of a property required in
an investigation or enquiry, not to remove, transfer or dispose of that property without the
permission of that officer.
During investigation stage formal statements of accused persons as well as witnesses are
recorded. In case accused persons avails the option for Plea Bargain (PB) (under Section 25
(b) of NAO), it is sent to the court for approval. Otherwise, the investigation officer
prepares final investigation report and places it before the Regional/Executive Board along
with legal opinion for filing ofreference or for closure. If the Board approves filing of a
reference it is signed by the Chairman or the Regional Director General and filed in the
Accountability Court. In FIA, when a complaint is received, it is first verified by a Verification
Officer who has to only establish if the complaint is not fake and particulars mentioned
in complaint are genuine and authentic. During inquiry phase the investigator gathers
evidence, interviews the victim and other witnesses. A suspect cannot be arrested at this stage.
Inquiry proceedings have to be completed within 90 days which can be extended, in
exceptional circumstance and only with the permission of the competent authority,up to a
maximum of 2 years. At end of the inquiry, the inquiry officer submits a Confidential
Final Report (CFR) to the Assistant or Deputy Director Law who places it before the Zonal
Board consisting of senior officers for approval. The Board, after examining CFR
may either recommend the registration or closure of enquiry. If the Board decides that
further enquiry needs to be undertaken, it will direct the Investigation officer to carry
out these enquiries and then submit a Supplementary Confidential Final Report (SCFR).
Once further enquiry is completed to the satisfaction of the Committee, a report is
submitted to Director of the Zone who is the competent authority for ordering registration
of a First Information Report (FIR). The Director reviews the report and can either agree
or disagree with the Board’s recommendations. The Director then conveys permission to the
Deputy Director of the Circle for registration of an F.I.R/case. At this stage the
investigation commences, and suspects may be arrested.
Violation of freezing order can entail seven years imprisonment under NAO.46The NAB
Chairman or his authorized officers have exclusive powers to seize and access bank records
without a court order (NAO Sections 20 and 27). Moreover, NAO (section 12) also
provides for non-conviction-based (NCB) confiscation, which is peculiar to NAB with FIA and
ACEs having no such power under relevant laws.
In relation to the powers of arrest, if a public servant has to be arrested under PCA, 1947,
the ACEs have to get permission of concerned authority under relevant rules.
However, under NAO (section 24) the Chairman NAB may direct the arrest of the accused, if
not already arrested.
Under ordinary laws, courts allow FIA and ACEs up to fifteen days to detain an accused in
their custody, while under NAO such custody may be given for 90 days for the purpose
of an inquiry and investigation.
If an accused is charged and arrested by FIA or ACEs, he may get pre-arrest or post-arrest bail
from the anti-corruption courts. The procedure for bail is governed under section 496,
and 497(2) of CrPC. However, NAO is completely silent about bail, whetherpre-arrest or
post arrest. Since no right to bail is granted under the Ordinance, therefore, the accused
has to invoke the constitutional jurisdiction of High Courts under article 199 of the
Constitution of the Islamic Republic of Pakistan 1973.47As only the special courts of
NAB are legally mandated for conducting trials, therefore, the High Courts take up the bail
pleas.
To discourage usual delaying tactics employed by accused persons through their
lawyers during trial, NAO (Section 31) makes an act which may deliberately hamper
enquiry, investigation, or trial punishable up to 10 years. Witness Protection. Witnesses’
statements, even in white collar crimes, play a vital role in successfully prosecuting
persons facing trial under corruption charges. However, traditional criminal laws, under
which FIA and ACEs largely carry out their investigation and prosecution functions,
do not provide any mechanism for witness protection. Resultantly, witnesses remain
exposed to threats and NAO (Section 31E), therefore, empowers the Chairman NAB and
the courts to take necessary measures for the safety, security and protection of witnesses and
their families. Under existing laws only NAO, Sections 25 & 26 empower Chairman NAB
grant a full or conditional pardon in exchange for information and cooperation as well as
return of the assets or gains acquired in return for a full discharge of criminal liability.
International Cooperation: Under general criminal law there is limited scope for
international cooperation but NAO (Section 21) empowers the Chairman NAB to make a
request to foreign state for collecting evidence and seeking information relating to an
enquiry or investigation and freezing of assets.

4.2 JURISDICTION AND POWERS OF ANTI-CORRUPTION AGENCIES

The jurisdiction of Anti-Corruption Establishments at the provinces as well as the Federal

Investigation Agency at the federal level is basically restricted to and revolves around public
servants. These agencies can only investigate the scheduled offences which include section 161-
165A PPC and the offences under Prevention of Corruption Act, 1947. There is another
impediment in the exercise of jurisdiction by the Provincial Anti-Corruption Establishments as
well as the Federal Investigation Agency and that is the prior approvals of competent authorities
for initiation of inquiries, registration of criminal cases and arrest of public servants depending
on their respective grades. Even the jurisdiction of the special judge anti-corruption at the
provincial level and special judge central at the federal level for prosecution of public servants is
barred unless sanction is granted in this regard by the appropriate government.284 The said
restriction is not only imposed by the Criminal Law Amendment Act, 1958 but also by the Code
of Criminal Procedure, 1898. At the federal level, the FIA (Inquiries and Investigation) Rules,
2002 provides for procedure for initiation of inquiries as well as arrests of public servants under
the federal government. Under the rules, no inquiry can be initiated against a public servant in
BPS-20 and BPS-21 without prior approval of Secretary Interior and in case of a public servant
in BPS-22 or equivalent, permission is required from FACC which is established under Rule 9
and headed by Secretary Interior as Chairman of the Council.286 Similarly, no criminal case can
be registered against a public servant in BPS-20 and BPS-21 without approval of Secretary
Interior and in case of a public servant in BPS-22 or equivalent, by FACC.287 Under rule 8, the
Secretary in case of public servant in BPS-18 and BPS-19 and FACC in case of a public servant
in BPS-20 to BPS-22 can drop a case against the said public servants and recommend
departmental inquiries. Similarly, under rule 10, sanction is required from the federal
government for prosecution of a public servant.
The National Reconciliation Ordinance (NRO) was considered a controversial ordinance as it
constrained the authority of NAO and compromised the anti-corruption efforts in Pakistan
(Ahmed, 2013). Ironically, the NRO was enacted just a couple of months after ratifying the
UNCAC, reflecting the seriousness of commitments (Transparency International Pakistan (TIP),
2014, p. 161). The NRO opened new doors for legalizing corrupt practices, benefitting the
politicians, bureaucrats, and armed services personnel suspected of corruption. In October 2007,
the NRO was promulgated, by President Musharraf by exercising his powers under Article 89(1)
of the Constitution (Agha, 2020), granting amnesty to politicians and bureaucrats allegedly
accused of corruption etc., between the period of two martial law regimes in Pakistan, i.e.,
between January 1, 1986, and October 12, 1999. The anti-corruption efforts had to deal with the
biggest legitimacy crisis in the history of Pakistan after the said promulgation, as it developed
constraints to the anti-corruption strategy and its implementation. The Supreme Court of
Pakistan (SCP) declared this act of the President unconstitutional and without lawful authority on
December 16, 2009 (TIP, 2009), when it had already benefitted about eight thousand allegedly
‘tainted’ people. During the next elected government’s term (2008-13), the NAB was told to
wrap up its investigations against almost sixty leaders of the ruling coalition.
A few powerful bureaucrats and federal ministers arrested during this tenure were primarily due
to the suo moto notices of the Chief Justice of Pakistan. The same situation was witnessed during
the next regime (2013-18 and 2018-22) and the current coalition government (2022-present), as
one can hardly find a conviction and a lack of will of the ruling parties to punish the corrupt.
Hussain (2009) quoted the chairperson of TI Pakistan accusing the judiciary of validating martial
law regimes from 1951 to 2007 while applauding the efforts of the then Chief of Army Staff for
taking bold initiatives to uproot corruption from its ranks.

4.3 EFFORTS TO AMEND THE ACCOUNTABILITY SYSTEMS DURING

PML-N (2013-2018)

Different attempts were made by the democratic governments, especially in the last decade, to
bring about amendments to accountability laws, repeal them, make new laws, wind up
accountability institutions or establish new anti-graft bodies. However, insufficient political and
parliamentary support did not make this a reality. The prevailing laws and the bodies continued
working despite the huge criticism (Mehboob, 2020). In this regard, a majority of laws or bills
presented in the Senate, the National Assembly or the provincial assemblies are discussed below:
 Table 1: Amendments in Accountability Laws (2013-2018)
# Law Bill Title Year Description
1 NA The National Accountability 2016 Amendments in NAO
O (Amendment) Act
2 NA National Accountability 2017 Amendments in NAO
O (Amendment) Ordinance
3 NA Holders of Public Exchequer 2015 To repeal the NAO, 1999, abolish all anti-
O (Accountability) Act corruption Establishments and enact new
law of accountability
4 ACE Repeal of the Anti- 2014 ACE in KP was absorbed into KPEC, but
Corruption Establishment later the government took back the decision
Ordinance 1961 through an amendment in KPECA
5 KPE The KP Ehtesab Commission 2016- Amendments in KPECA
C (Amendment) Bill 17
6 KPE The Khyber Pakhtunkhwa 2018 To repeal KPECA and dissolve KPEC
C Ehtesab Commission
(Repeal) Act 2019

4.4 THE COST MANAGEMENT ACCOUNTANTS (AMENDMENT) ACT,

2017

This bill further amended the Cost and Management Accountants Act- 1966 whereas it is
expedient further to amend the Cost and Management Accounts Act 1966 (XIV of 1966) for the
purposes hereinafter appearing that this act views of the international practices and it is evident
that no other country is using the word "chartered". The Federal Minister for Finance, Revenue,
Economics, affairs. Statistics & Privatization has been please pleased to approve the withdrawl
of proposed amendments to change the name from the “Cost Management Accountants” to
“Chartered Management Accountants”. Furthermore, the expertise of the member of the institute
in cost account can be utilized by allowing sector / industry specific specialization in cost
accountant necessitating introduction of enabling provisions under the Act authorizing institute
to offer certification in cost accountant for specific sectors of the economy / industry.
4.5 THE BENAMI TRANSACTIONS (PROHIBITION) BILL, 2016

The Benami Transaction (Prohibition) Bill, 2016 was tabled by Rana Muhammad Afzal Khan of
PML-N. This Bill basically deals with the problems of tax evasion and black money especially in
the real estate sector. Basically, the idea was to put an end to benami transactions, prohibit all
persons from entering into such transactions. In fact, it seeks to ensure that if any person enters
into a benami transaction in order to evade tax or avoid payment to creditors, the ultimate
beneficial owner and persons who abet or induce any person to undertake such transaction, shall
suffer imprisonment. When the bill laid down Sahibzada Tariqullah argued that why this bill
would not enforce at once. As the bill include that “it shall come into force on such date as the
federal government may be, notification in official gazette”. He added that it should be at once
impose. PTI’s member Shireen Mazari from opposition benches also asked that why the
flexibility has given in this bill. Zahid Hamid from treasury benches responded that it would be
imposed very quickly, however, the clause incorporated just to give flexibility to the
government. He maintained that such type of clauses are present in several other bills also. The
bill was passed with majority by the NA. The government did not consider the suggestion of the
opposition benches. Nonetheless, in the committee meeting, Asad Umar of PTI proposed that the
bill must contain current benami assets also. It was accepted to modify the language and
maintain that such type of assets would also be dealt as crime in the bill. In the Senate, the bill
was moved by Zahid Hamid of PML-N. Before, presenting in the Senate, the bill was discussed
in the Standing Committee on Finance and Revenue of Senate where more than twelve changes
were proposed in the bill. Senator Aitzaz Ahsan, opposition leader in the Senate, proposed
amendment that the law would be enforced at once after the bill passed. Earlier, there was no
clause in relation with the enforcement of the bill. Senator Muhammad Mohsin Khan Leghar of
PTI told the House that we recommended 14 amendments in the bill (Shah, 2021).
Seven of them relate to the substitution of the headings of the caption of different clauses
because they were using the term “etc.” which we thought were very vague. I think it is not in
practice anymore globally to be using these vague terms. So, the word “etc.” has been removed
from them. The Committee also recommended insertion of a new clause 62 in the Bill which
relates to granting reward to the whistle blower (Hauk & Saez, 2018). In clause 32, the
Committee enhanced the age limit of the Chairperson and the Members of Tribunal from sixty
two to sixty five years so that more diversified and experienced people can be put on that board.
The opposition leader in Senate Aitzaz Ahsan proposed a suggestion in sub clause-3 of Clause-1
of the draft law that it should be enforce as the bill would passed (Lema et al., 2020).
This proposal from the opposition leader was accepted through voting in the Senate as eighteen
votes casted in its favor and 16 votes against it. One of PML-N Senator, from treasury benches,
Salahudin Tirmizi abstained from the voting. The act of Salahudin Tirmizi was hailed by the
opposition benches. PPP’s Farhatullah Babar acclaimed the act and bravery Salahudin Tirmizi
and saluted his choice for not voting on the clause. The amendment by the opposition leader was
proposed by different opposition member in the NA, however, the government did not consider
it. As in the Senate the opposition has majority, therefore, they succeeded to incorporate its own
alternatives to the bill (Shah, 2021). Consequently, the bill was passed unanimously by the
Senate. However, the bill would be send back to NA for re-approval as there are several
amendments incorporated in the bill. Hence, the bill was again presented in the NA and passed
with majority by the support of opposition parties. To sum up, the role of opposition in Senate
were strong because the opposition had more seats than the treasury benches. The government
accepted most of the amendments of the opposition in the Upper House. However, ignore most
of the suggestions of the opposition benches in the NA as the government had the required
number to pass any legislation with simple majority (Public Accounts Committee. 2023).

4.6 INDIFFERENT ATTITUDE OF NAB IN MEGA CASES AND

INTERVENTION OF SUPREME COURT

The NAB was established as a new organization with deterrent enabling provisions and broader
scope to investigate corruption of big wigs which was missing in the previous regime. However
instead of focusing on mega corruption cases the NAB by and large focused on less important
and relatively small and petty corruption cases while the big corruption mafias freely operated in
the country without feeling any deterrent from the apex anti-corruption law. This indifferent
attitude was also surfaced and highlighted by the Supreme Court of Pakistan by observing that
NAB focus on petty cases while the mega corruption cases for which NAB was established
remained out of the priority list of NAB.
The Supreme Court has observed that the Bureau observes a policy of pick and choose of mega
corruption cases by taken up some of them and leaving others regardless of the fact that such
financial scams were of massive proportion and despite the fact that NAO 1999 mandated
expeditious investigations and trial, the cases taken up by the Bureau are delayed and prolonged
unnecessarily. The Court attributed lack of expertise, sincerity and lack of professionalism to the
Bureau which resulted in abysmally low conviction rate. The Court observed that NAB is not
serving national interest due to its said conduct rather it is causing irreparable harm to the
country.
The Broad Sheet Commission Report also observed that the NAB has a history of dealing high
profile cases halfheartedly and the darkest period in this regard was the last tenure of PPP and
PMLN governments when no high profile cases of politicians and top government officials were
taken up the organization and only low profile cases were targeted. The Commission also
observed the ability of different political parties coming in powers through revolving policy
which enabled them to easily manipulate the operations of NAB in their favor one way or the
other including lack of filing of appeals against acquittals or letting it become time barred while
in other cases due to implied policy of passive pursuit of investigations and prosecution the
accused were able to be acquitted. The most obvious examples of these instances are Hudaybia
case and SGS Cotecna cases which benefited both the said governments of PPP and PMLN as
the cases were against their party heads.
The Supreme Court further observed that instead of focusing on mega cases the Bureau waste
public resources on petty cases. The Supreme Court observed that the prime objective of the
NAO 1999 was to counter mega corruption scandals but the enquiries and investigation
conducted by NAB are of petty matters which is against the wisdom behind the ordinance. The
Supreme Court termed such conduct of NAB as misuse of authority on part of NAB. The
Supreme Court has observed this indifferent attitude of anti-corruption agencies in general and
NAB in specific in a number of cases before the Court while many corruption scandals were not
taken up by the Bureau and other agencies or were dealt with inefficiently which ultimately came
to the notice of the Supreme Court one way or the other while exercising original constitutional,
appellate and extra ordinary jurisdiction. Some of these cases are discussed below.

4.7 ROLE OF PUBLIC ACCOUNTS COMMITTEE (PAC) IN

ACCOUNTABILITY OF EXEUCTIVES

In Pakistan, it is widely believed that the existing institutions associated with ensuring
accountability, especially the NAB, are responsible for political instability and the worst
economic conditions in the country. Apart from its poor performance, the media, politicians, and
even the judiciary have observed that the NAB is involved in selective accountability, political
victimization, political engineering, and misuse of authority (Iqbal and Mustafa 2022). The
Parliament of Pakistan executes the public sector financial accountability function through the
Public Accounts Committee (PAC) and parliamentary committees. Motions, resolutions, call
attention notices, and points of public importance are raised in the House, and parliamentarians
ask questions accordingly. In parliamentary democracies, the committees are considered the
“eyes, ears, hands and even brain of the Parliament.”
The Parliament of Pakistan and provincial assemblies have three key functions: legislation,
representation, and oversight, or to monitor the performance of the elected government through
plenary and ministry-wise committees. The Rules of Procedure and Conduct of Business in the
National Assembly, the Senate, and provincial assemblies contain special provisions that
empower the standing committees to monitor the performance of the Ministries and their
associated public bodies and forward their recommendation reports to the Ministry, which then
submits its response to the Committee (National Assembly of Pakistan n.d.). The committees
deal with a large part of the business of the House because many parliamentary tools that include
legislation, motions, resolutions, call attention notices, question hours, and points of public
importance are raised in the House but may eventually end up in the committees.
The role of the PAC includes the examination of the government’s annual financial accounts, the
report of the AGP, and other matters that the Minister of Finance refers to it. Similar rules in the
provincial assemblies regulate PAC working within them. The Controller General of Accounts
compiles the annual accounts, which the AGP audits. Under Article 170 of the Constitution of
Pakistan, the AGP then submits its annual audit reports to the President, who lays them before
the Parliament. After this, the Parliament refers these yearly audit reports to PAC for scrutiny
(Cheema 2020).
Performance
During the period of 2013-2018, 38 standing committees of the National Assembly convened
806 meetings and presented 319 reports, while 37 Senate standing committees convened 801
meetings and presented 440 reports to the House between 2019 and 2022.
On the other hand, between December 18, 2018, and December 2022, PAC held 503 meetings,
including meetings of sub-committees. PAC discussed 10,278 paras and referred 78, 31, and
3,821 paras to NAB, FIA, and DAC, respectively. Moreover, PAC settled 617 grants and 2,984
paras. However, 1,029 grants and 21,217 paras are still pending. During this period, 999,013.06
million rupees (Rs.) were recovered.
Unfortunately, parliamentary committees in Pakistan at both the national and provincial levels
have not been very active or effective despite their powers. There is no constitutional, legal, or
institutional limits of the legislative branch to check the executive branch sufficiently. For
instance, the Finance Bill does not get referred to any of the standing committees of the National
Assembly. Under Article 73 of the Constitution, it is mandatory that the Senate provide its
recommendations on the Finance Bill, containing the Annual Budget Statement, within fourteen
days after its referral by the National Assembly of Pakistan. The National Assembly can pass the
Finance Bill with or without the recommendations of the Senate. Similarly, PAC has limited
provisions as it only scrutinizes inputs and compliance audits. Moreover, dealing with the
previous year's reports consumes most of the PAC's time. Its recommendatory nature is also not
taken seriously by government officials. For example, on April 2, 2015, the Islamabad High
Court (IHC) set aside its directives when it restored 68 previously dismissed employees from the
Pakistan Agricultural Research Council (PARC). Additionally, the political nature of PAC
membership also influences its ability to work, as the members of treasury benches are not keen
to hold their government accountable to the legislature.
The immense backlog of cases in the courts is also a significant problem. Even the superior
judiciary has not been able to deal with case pendency effectively. Besides this, the alleged
encroachment by the judicial branch on the executive domain is criticized widely in the media.
Some examples of these encroachments include the opening of shopping malls by the SC in
2017, which were previously closed down by the government due to the coronavirus; a penalty
of $6 billion imposed by the International Centre for Settlement of Investment Disputes (ICSID)
in 2019; and the removal of Prime Ministers Syed Yousuf Raza Gillani and Mian Muhammad
Nawaz Sharif in 2012 and 2017, respectively (Bhatti and Iqbal 2023).
Political victimization is a primary issue of NAB. The courts and honorable justices have not
only questioned the performance of NAB but have also criticized the NAO. Therefore, while
hearing cases of the NAB, Parliament has been advised to make suitable amendments many
times. Furthermore, the subject of accountability always remains controversial in Pakistan as it
challenges the dominant sectors of society, which then respond with their full powers, resulting
in immense controversy. The accountability system itself is also responsible for creating doubts
and complaints about the credibility of the accountability process. In addition to political
victimization, establishment interference is a major factor in civilian governments.

4.8 GENERAL OBSERVATIONS OF PAC AUDIT REPORT

While examining the Draft paras of audit report 2013-17, the Committee noted that stereotype
comments were offered by Audit and Finance Departments on the Working Paper which seems
to be just an eye wash. Had both the Departments offered realistic comments with regard to latest
position, the PAC would have been in a better position to examine the issues involved and
precious time of the Committee would have not have been wasted in finding out petty issues.
The officers deputed were also not fully prepared.
The Finance Department being the Manager of the Kitty of the Province has the responsibility to
record its realistic comments on the Working Paper and avoid recording stereotype comments as
these comments do not serve the purpose rather wasting the time of Departments. The PAC
directed the Finance Secretary to warn the concerned to avoid such practices in future. In case of
non-compliance, he should initiate departmental proceedings against the responsible.
Non-conducting of DAC Meetings. While examining the accounts of Health, Energy & Power,
Science & Technology, Higher Education and Food Departments, it was noted that DAC
meetings were not convened by the Departments in some of Draft Paras despite the reminders of
Audit. The Committee was also reminded that the previous and present PAC has also time and
again stressed upon convening of DAC meetings regularly but majority of the Departments
usually turned deaf ears upon the directions of PAC, as a result on one side the Departments
make it difficult for themselves to convince the Committee during the meeting in short time and
on other side the Committee also could not reach to a just conclusion, hence, non-conducting of
the DAC meetings affects both the Departments and the PAC. Directions were issued time and
again to the Departments to ensure conducting of DAC meetings in time but in vain. The
Committee stressed upon the importance of DAC and shown its displeasure over the non-serious
attitude of the Departments in convening DAC regularly, non-recording of its detailed minutes
and non- implementation of its decisions, resultantly the PAC is overburdened. The Committee
directed all the vi Principal Accounting Officers (PAOs) to avoid such lapses in future otherwise
the officers sitting at the helm of the affairs would be held personally responsible.
Illegible working paper: While examining the accounts of Health Department, the Committee
noted that the working papers were not legible. Neither working papers were page marked nor
were Draft Para numbers mentioned. Moreover, index was also not provided. In such
circumstances most of the time was wasted on finding out required page. The Committee
directed the Department to avoid such practice in future.
Illegal dispossession proceedings. The Committee while examining the accounts of Cereal Crop
Research Institute Pirsabak, Nowshera noted with grave concern that 437 kanal of Government
holding at the said institute has been occupied by the illegal occupants with the connivance of
Revenue and District establishments. The Department was directed to initiate “illegal
dispossession proceedings” against the occupants. The Department was also directed to convey
the displeasure/concern of the Committee to Revenue and District Administration of Nowshera.
In case, the land could not been recouped, it will encourage other people to encroach the
Government lands.
Projects/Schemes left incomplete by the Federal Government after the enactment of 18 th
Amendment. While examining the accounts of Agriculture Department the Committee noted that
the Projects /Schemes were left incomplete by the Federal Government after the enactment of
18th Amendment and no arrangement for the balance works were made by either Governments
hence, huge amount already spent on the said projects is being wasted. The Committee directed
the Department to initiate summary of all projects to the Finance Department for arrangements of
funds, in the Public interest so that the balance work of the Projects/Schemes could be completed
and the already spent amount could be saved from wastage.
Weak Financial Control System: The Committee noted that the Government was spending
billions of rupees on Health Sector but on the other side, weak rather nil internal financial control
system within the Department exists. In case, status quo was not removed and serious efforts
were not made to improve the internal check, it was apprehended that the entire vii funds would
go in waste and the people would not get the desired benefit from such huge spending. The
Committee was optimistic that the Department would seriously look into the matter and ensure
that public money would be saved from wastage in future.
Non implementation of PAC Directives: While checking the implementation status of the PAC
directives it was noticed that the compliance is very weak and almost nil in certain Departments,
resultantly the same irregularities are repeated each year, the Committee shown its grave concern
over such attitude of the Departments and Directed the PAOs to mend their attitude, take the
PAC directives seriously and implement the same in the allocated time frame, and to submit
implementation report to the PAC Cell for placing it before the House.
Non implementation of DAC decisions: The Committee observed that the decision of DAC are
not being implemented by the Departments itself despite the fact that the DAC are being chaired
by the Secretary/Head of the Departments or senior most Officer of the Department. This state of
affairs is deteriorating the Internal Administrative controls within the Government Departments
day by day. The Committee while examining the Paras of Environment Department observed
weak rather nil financial controls within the Department. In case the Control was in place such
Audit Paras would not have been framed against the Department. The Committee while
examining the Accounts of Environment Department noted that the field staff of the Department
has usually not produced the requisite record to Audit during the time of conducting audit.
Moreover, the officers sitting at the helm of affairs of the Department also did not bother to take
any departmental action against its field staff due to which the administrative control of the
department over its field formation is gradually weakened. The Committee noted that after
completion of the projects its assets were not being properly handed over to the quarters
concerned, especially the projects vehicles were being allotted either to the non entitled officers
or allotted to those officers who had already been allotted with Government vehicle. The
Committee, in this respect, directed all the Administrative Departments to invariably surrender
project vehicles to the Administration Department and in case any Department needs
Government vehicle for their official use, they should requisition vehicles as per prescribed
manner.
While examining the accounts of Home and Tribal Affairs Department, the Committee observed
that records were usually not provided for verification at DAC or Pre-PAC level and all of the
sudden the same were being produced in PAC for verification. The PAC is not the forum where
huge record could be verified. Therefore, the PAC directed all the Administrative Departments to
invariably got their record verified from Audit before the PAC meeting. The Committee noted
that every day new Officer is being nominated by the Departments to PAC meetings due to
which they could not understand the mood of Committee. Therefore, the Committee directed that
only one and the same Officer should be nominated for the entire series of PAC meetings by
every Department and especially by Law and Finance Departments. The Committee noticed with
grave concern that the working paper provided by the Department was incomplete and not on the
prescribed format, neither was it signed by Administrative Secretary nor fresh comments of
Finance and Audit Departments were obtained, such lapses showed that the Department paid no
heed to the directions given by the PAC time and again. The Committee directed the Department
that due importance must be given to the PAC affairs, complete working papers on prescribed
format duly signed by the Principal Accounting Officer (PAO) alongwith supporting documents,
commented ix upon by the Finance and Audit Departments must be submitted to the PAC to
facilitate its job.
While examining the Accounts of Home and Tribal Affairs Department, the Committee observed
that most of the payments were made on cash basis which was gross violation of rules.
Therefore, the Committee directed to circulate instructions to all the Administrative Departments
to stop forthwith cash payments and a copy thereof to Accountant General, Khyber
Pakhtunkhwa. The PAC while examining the accounts of Public Health Engineering Department
observed that the DAC meetings were not conducted in time. Had the DAC meetings conducted
in time and the decisions taken therein were implemented, many petty nature issues would have
been settled and the precious time of PAC would not wasted. Therefore, the PAC directed that
the DAC meeting must be convened within three (03) months. The Audit was directed that in
future keep sending a copy of those letters to PAC also which are issued to the Departments for
summoning of DAC meetings. During examination of the Accounts of Communication & Works
Department the Committee noted that the executing Department usually obtaining [Link] after
completion of works which is against the provisions of CPWA Codes as well as rules invogue.
The Committee directed that the Planning & Development Department should strictly confined
its self to the Planning Commission rules/guidelines so that the executing Departments could
follow the codes/rules applicable to them. The PAC while examining the accounts of
Communication &Works Department astonished to note that all the record involved in the Para
was readily available with the Department but was not only produced to the Audit during the
time of conducting audit but even the same was also not produced to Audit during DAC meeting.
Lastly, on the direction of Pre-PAC forum, the requisite record was produced to Audit for
verification. The PAC could not understand the logic behind this state of affair of the x
Department however, it warned the Department to avoid such practice in future otherwise action
under Section 14(3) of the Auditor-General’s (Functions, Powers) Ordinance, 2001 would be
initiated against the responsible.
The PAC noted that in most of the Paras, the minutes of DAC were found unclear as to which
document it refers to therefore, the PAC directed that in future the name of specific document
must be put in writing in the DAC minutes. The PAC observed that despite knowing the
importance of soil test before starting any construction work, the Contractors starts construction
works without conducting prior soil tests which later on cause the buildings and bridges etc
unsafe. The PAC directed that in future payments to the Contractors be made conditional to soil
tests. In case of violation, the officer/official concerned would be personally held responsible.
The PAC while examining the accounts of C&W Department noted that most of the cases comes
to PAC involve verification of record despite the fact that the DAC or Pre-PAC had already
given directions thereon to carry out verification but the Department turn deaf ear on such
directions. The PAC directed that in future where verification of any record is required must be
carried out there & then and not be brought before the PAC for verification.
4.7 ROLE OF POLITICAL PARTIES

Every political party in Pakistan has the consensus that the main issue of Pakistan is
mismanagement and corruption. Four governments were, dissolved due to the charges of
corruption and rectified by the Supreme Court of Pakistan. The most important demand of PTI
remained across the board accountability. It stresses on the accountability of political leadership.
In Pakistani political culture, the whole politics revolve around leadership of the political party
and they do not like to present themselves for free and across the board accountability. For
example, since independence, all political parties talk about accountability but despite of this no
one took serious steps for it. Rather accountability has become a slogan, which has been, used to
threaten the opponent to get support for a particular purpose. The majority of the people talk
about administrative accountability in Pakistan, which is useless in the absence of political
accountability.
In Pakistani political culture majority of the politicians belong to elite class based on wealth or
creed. The leadership of most of the political parties belong to industrialist class, feudal class and
religious elite class. Based on such elite prestige people follow them and support them in the
general election. It looks beyond the approach of a layman to contest election in Pakistan. In
Pakistan, the system of justice is not up to the mark. People have to wait long for the decision of
their cases in courts. Most of the time there seems conflict between executive and the judiciary.
PTI included a point in its objectives that, it would ensure the independence of judiciary to
provide cheap and swift justice. For this purpose, judicial reforms would be, introduced.
Therefore, speedy justice can be, provided. Every political party in Pakistan talk about
independence of Judiciary. Although in Pakistan, Judiciary is independent but cheap and swift
justice is a dream yet to be realised.
Almost all political parties in Pakistan have pledged the same but none of them could do it. It is a
bitter fact that the mafia, which has been exploiting education sector in the name of education,
has never let any political party to become successful because the children of majority of the elite
class studying in English medium institutions and doing foreign certificates. Another serious
hurdle in the way of uniform education system is Madrassa reforms because most of the religious
political parties have been playing their politics based on students of madrassas, and they
become hurdle in the way of uniform education system.
Although all political parties include this point in the ideology and manifesto but close
observation shows that, only the women of elite class get such kind of rights. Thirty-three
percent seats are, reserved for women in the National Assembly. The majority of the women,
who are, selected by the political parties on reserved seats, belong to upper strata.
4.7.1 Panama Leaks Case
The Panama Papers Leaks scandal surfaced on April 3, 2016 when the International Consortium
of Investigative Journalists (ICIJ) publically disclosed about 11.5 million secret documents later
known as Panama Papers, taken from the database of a Panamanian law firm Mossback Fonseca
which is one of the biggest off shore law firm in the world. This data was initially secured by a
German newspaper which shared it with International Consortium of Investigative Journalists.
The ICIJ shared its report on the matter titled The Panama Papers: Politicians, Criminals &
Rogue industry that hides their cash‖ with its international partners including The Guardians‖.
The Guardians published its report on April 03, 2016 on this matter titled The Panama Papers:
How the world‘s rich and famous hide their money offshore. 628 The report revealed that how
the elite of the world including world leaders, famous politicians, criminals and celebrities hide
their wealth by using offshore tax heavens and their legal regime. In Pakistan, the story was
highlighted by journalist Umer Cheema being member of International Consortium of
Investigative Journalists through his article published in The NEWS on April 4, 2016 titled ‘Pak
Politicians, Businessmen own companies abroad. The article revealed that a large number of
Pakistanis including businessmen and politicians are also involved in hiding their secret wealth
in these tax heavens through offshore companies. These Panama Papers revealed that the sitting
Prime Minister of Pakistan at that time Muhammad Nawaz Sharif and his family members
including his brother Mian Muhammad Shahbaz Sharif, the then sitting Chief Minister of the
largest province of Pakistan, have also link with these offshore companies as the children of the
Prime Minister including his daughter Maryam Nawaz and his sons namely Hassan Nawaz and
Hussain Nawaz were either owners or were authorized persons for transaction of many such
offshore companies including Nielson Holdings Limited and Nescoll Limited.
The disclosure through these Panama Papers generated heated debate and criticism on the ruling
party head from many quarters including the opposition parties. Following this severe criticism,
the Prime Minister Mian Muhammad Nawaz Sharif announced formation of a judicial
commission headed by a retired judge of Supreme Court to investigate the allegations. However
the then Chief Justice of Pakistan declined the request with observation the formation of
Commission of Inquiry under the existing Pakistan Commissions of Inquiry Act, 1956 would be
toothless commission and will not serve any purpose due to its limited scope. Subsequent to
refusal of the Chief Justice of Pakistan to form such commission there were many efforts by the
government to get consensus on terms of references regarding new law of inquiry specific to
Panama Papers issue but no consus could be built with opposition parties.
Consequently, due to this difference between the government and opposition benches regarding
the terms of references of new proposed law, no consensus could be developed and the matter
ultimately reached the Supreme Court of Pakistan under Article 184(3) of the Constitution of
Pakistan 1973. It is noteworthy that during this whole episode, the apex anti-corruption watch
dog i.e. the National Accountability Bureau, which usually and in routine take notice of
corruption matters highlighted in media, did not initiate any action to probe or even look into
such serious allegations of corruption and remained a silent spectator throughout. The Panama
Saga also brought to limelight one important issue in Pakistan and that is the role of the state
institutions which were mandated to have a check on flight of capital, tax evasion, money
laundering, abuse of power and corruption. The lack of performance and criminal negligence
became much more visible when these state institutions not only failed to act according to their
respective mandates but also blatantly pleaded before the Public Accounts Committee of the
Parliament as well as before the Apex court in Pakistan that they can do nothing in the matter.
One of the main reasons for taking the matter of Panama Papers to the Supreme Court by the
opposition parties specifically the Pakistan Tehreeq-e-Insaf was this indifferent and biased
attitude of all the available forums including the investigation agencies like Federal Investigation
Agency, the National Accountability Bureau, the regulators like Federal Board of Revenue, the
State Bank of Pakistan, the Securities and Exchange Commission of Pakistan as well as other
available forums for redressal like the office of Speaker National Assembly of Pakistan.
However the main actor and institution responsible for the investigation of this matter including
mega corrupt practices was the National Accountability Bureau being the apex anti-corruption
body in Pakistan having widest powers of investigation than any other investigation agency in
Pakistan. Despite such powers and wider scope of NAB including suo motu powers of Chairman
NAB to take up investigation without any approval from any quarter and despite the fact that the
Supreme Court of Pakistan had been reprimanding the Bureau regarding its inefficiency and
negligence in a number of important corruption matters,
NAB didn‘t take a single initiative and kept itself totally apart from this important mega scandal.
This attitude of the Bureau put a big question mark on the impartiality and independence of the
Bureau which closed its eyes on such a big case while taking action even in matters involving
petty corruption.
The honorable Supreme Court of Pakistan also termed it an unfortunate state of affairs in it
judgment dated 20 April 2017 that all the relevant institutions including the National
Accountability Bureau, the Federal Investigation Agency, the Federal Board of Revenue, the
State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and the Speaker of
National Assembly failed to perform their duty as per law. The Supreme Court of Pakistan not
only criticized the biasness and lack of action on part of NAB but also showed lack of trust on
the institution which according to the Court made the circumstances special in nature forcing the
Court to intervene in the matter.
The Supreme Court of Pakistan while keeping in view the lack of required action by all the
relevant state institutions and forums of redressal, took up the matter of Panama Papers as a
matter of public interest litigation and assumed jurisdiction in this matter by making elaborative
interpretation of Article 184(3) and Article 187(1) of the Constitution of Pakistan 1973. The
bench hearing the Panama Leaks Case reserved its judgment on February 23, 2017 which was
announced on April 20, 2017. The Supreme Court while holding further probe into the matter as
necessary before reaching any conclusion, deviated from the ordinary course of referring the
investigation of the matter to any regulator or any other investigation agency as available for
such probe due to the apparent mala fide and indifference of the said institutions. Instead the
Supreme Court came with the idea of formation of a high level joint investigation team to probe
into the matter.
The Joint Investigation Team was constituted by three member special bench of the Supreme
Court of Pakistan which was called the JIT Implementation Bench of the Supreme Court of
Pakistan. This Joint Investigation Team as well as implementation bench was all one time
arrangement for this particular case. The Joint Investigation Team submitted its report on July
10, 2017. The JIT report proposed to file references under the National Accountability
Ordinance, 1999 not only against the Prime Minister Mian Muhammad Nawaz Sharif but also
against his daughter and two sons as they could not justify their assets which were found to be
disproportionate to their known sources of income. The Supreme Court of Pakistan after hearing
the arguments reserved its verdict on July 21, [Link] verdict was subsequently announced on
July 28, 2017.
The reason for these special arrangements was the distrust of the highest court of the country on
the accountability agencies specially the NAB. The Supreme Court clearly based and justified its
decision to make JIT by superseding the available accountability regime due to mala fide and
impartiality on part of the Chairman NAB on mainly two grounds. Firstly, that he did not take up
investigation of the Panama Case at his own initiative and secondly, he did not opted to appeal
against the Hudaibiya Paper Mills Case. The Supreme Court Bench hearing the Panama Case
vide its judgment dated 20 April 2017 not only ordered for the formation of a Joint Investigation
Team but the Bench unanimously requested the Chief Justice of Pakistan to form an
implementation bench of the Supreme Court for monitoring as well as supervision of the
investigation by the joint investigation team to be formally constituted by such implantation
bench. On the said request of this special bench of the Supreme Court, the Chief Justice of
Pakistan constituted a three member special bench of the Supreme Court. This bench was headed
by Justice Ejaz Afzal Khan and included Justice Ijazul Ahsan and Justice Azmat Saeed.
implementation bench formally constituted the Joint Investigation Team vide its order dated May
5, 2017.
The Supreme Court restrained the Chairman NAB from exercising his authority or power in the
matter. Instead all the powers, authority as well as function of the Chairman NAB regarding the
investigation of the matter by Joint Investigation Team was given to the implementation bench of
the Supreme Court. final verdict of the Supreme Court came with a new idea and that was
appointment of a supervisory judge of the Supreme Court of Pakistan to supervise the
preparation as well as filing of the references in the light of the verdict as well as the monitoring
of the proceedings before the Accountability Court. In this regard, the Court requested the Chief
Justice to appoint one Judge of the Supreme Court for the said purpose. Consequently, the Chief
Justice of Pakistan appointed Justice Ijaz ul Ahsan as supervisory judge to monitor and supervise
the proceedings not only before the National Accountability Bureau but also before the
Accountability Court conducting the trial of the cases. This special arrangement was also due to
inefficient prosecution of NAB in the Accountability Courts in routine as seen in many cases by
Supreme Court.

4.74.2 The Hudaibya Paper Mills Case

The Panama Leaks Case made another shocking revelation during its proceedings which further
highlighted the mala fide of NAB in pursuit of investigation and prosecution of mega corruption
cases. This mala fide was observed regarding the Hudaibya Paper Mills Case. The Hudaibya
Paper Mills Case was initiated against the ruling Sharif‘s Family in the year 2000 on the
allegation of money laundering to the tune of 1242. million dollars through fictitious accounts.
The Lahore High Court quashed the reference due to weak investigation in March 2014.
Surprisingly NAB did not challenge the said verdict of Lahore LHC thereby giving direct benefit
to the political family in power. The Supreme Court observed that he said reference was quashed
while the respondent no.1 was prime minister and the Chairman NAB was his handpicked. The
Supreme Court observed that the reference was quashed on weaker footings but despite that no
appeal was filed by the National Accountability Bureau which was otherwise a fit case for
appeal. The Supreme Court further observed that the conduct of chairman NAB regarding such a
huge corruption scam involving Rs. 1.2 billion to be quite disturbing while giving implied
observation that the chairman served the interest of his masters who appointed him as chairman
NAB.

4.4.3 Fake Accounts Cases

These cases pertains to use of more than two dozen fake accounts which were opened in the
names of poor persons who were not even aware of their own bank accounts. These accounts
were allegedly used for money laundering by Asif Ali Zardari, his sister Faryal Talpur and a
number of other accused who are somehow affiliated with Asif Ali Zardari. The cases were
initially surfaced in the year 2015 and investigated by the Federal Investigation Agency.
Subsequently, more such instances of illegal rotation and layering of huge amounts were
revealed and the Federal Investigating Agency opened investigations in around 32 cases of
money laundering being its scheduled offence allegedly committed by Omni Group Chairman
Anwar Majeed in connivance with Asif Ali Zardari (ex-president of Pakistan and co-chairperson
of Pakistan people‘s party) and his sister Faryal Talpur through creation of fictitious bank
accounts. Other accused persons and entities found involved in this case included Zardari Group
Private Limited, Parthenon Private Limited, H&H Exchange Company, Dream Trading &
Company, Ocean Enterprises, Bahria Town, Arif Habib and Nasir Abdullah Loota.
The Supreme Court of Pakistan observed slow progress of these cases and therefore it deemed
necessary to intervene in this matter. The Chief Justice of Pakistan Mr. Justice Mian Saqib Nisar
constituted a three member bench for hearing the matter and he himself headed the bench. The
Supreme Court observed that the matter required specialized expertise which is not available
with the Federal Investigation Agency. The Court vide its order dated September 5, 2018, once
again followed the precedent set in the Panama Case. The Court held that the matter involve
complicated investigations therefore the Court find it justified to make a Joint Investigation
Team in this matter. The Court constituted a six member JIT vide its order dated September 5,
2018. The order further directed the National Accountability Bureau to submit periodic reports
for supervision before the implementation bench to be constituted by the Chief Justice of
Pakistan.
The Court not only had to passed freezing orders regarding accounts and shares, marked caution
on bank accounts but also passed restraining orders regarding sale purchase and transfer of
immovable properties mentioned in the Joint investigation Report vide order dated December 24,
2018. Court vide its order dated July 12, 2018, further directed the federal government to place
the names of the accused involved in this matter on the Exit Control List. This again shows lack
of trust of the apex court on the conduct of anti-corruption agencies in the countries.
The intervention of the Supreme Court repeatedly and persistently in mega corruption scandals
over the last decade shows inefficiency of the anti-corruption agencies specially NAB on one
hand and the mala fide conduct of these agencies on the other hand. The accountability bodies
specially the National Accountability Bureau is responsible to a large extent which by its
dormant conduct created vacuum which forced the apex court to intervene in the accountability
matters again and again. This is also because the Bureau which used to intervene even in issues
of slightest corruption and even in the cases not related to corruption at all like action of NAB
Chairman on a promotion video of PIA through a model, kept its eyes closed to serve the interest
of the ruling elite whether it be the case of Swiss accounts of Zardari, non-filing of appeal in the
Hudaibya Paper Mills Case, escape of main accused in OGRA Case or the Panama matter itself.
The excuse taken by the Chairman National Accountability Bureau in Panama Case which jolted
the whole accountability structure shows a lot about mala fide on part of the individuals at the
helm of the affairs.
The Chairman NAB took the plea that he was waiting for a concerned regulator to first look into
the matter despite the fact that section 22 of the National Accountability Ordinance fully
empowered him to inquire or investigate into any suspected offence on his own accord. This
section further empowered the Chairman NAB to initiate any such investigation in conjunction
with any other agency or other person concerned with such a suspected offence which also
included any regulatory authority in Pakistan. However despite such clear enabling provisions of
the Ordinance, the Chairman NAB abstained from using any such power without any plausible
justification for the same. This indifferent and compromised behavior of the apex anti-corruption
agency in mega corruption cases and avoiding any befitting response as far as possible has
obviously resulted into reducing the deterrence against corrupt behavior. This is because the
deterrence required to curb corruption at national level cannot be attained by focusing on petty
corruption cases which are just peanuts as compared to the mega corruption scandals while
giving the powerful and the elite free space to loot the public wealth without the fear of being
caught or held accountable.

4.8 PRODUCTIVITY OF PLEA BARGAIN AND VOLUNTARY RETURN

National Accountability Ordinance, 1999 has been considered as a stringent law as is generally
termed as a draconian law by the political parties due to its deterrent provisions including severe
punishments. However, there is one provision in the Ordinance which is neutralizing all the said
deterrent provisions and severe punishments by acting as a life line for the corrupt to escape such
severe consequences in case he is caught for his corrupt conduct. This provision is section 25 of
the NAO 1999 which provides two facilitative options to the accused i.e. Voluntary Return and
Plea Bargain. The National Accountability Ordinance 1999 was enacted with a lot of enabling
provisions and powers to curb corruption which was never provided before however even after
said legislation, there are more incidents of serious financial crimes and the role of NAB to
curtail corruption has been quite disappointing since its inception. One of the reasons for such
below the mark performance of the Bureau is the flaws in the National Accountability
Ordinance, 1999 specially regarding the Plea Bargain and Voluntary Return provisions while
most of the times the Bureau focus on Plea Bargains and Voluntary Returns wherein the accused
escaped punishment by paying meager amount out of their ill-gotten wealth.

4.8.1 Counter-Productivity of Voluntary Return and Plea Bargain

The provision of Plea Bargain and Voluntary Return were extensively used by the National
Accountability Bureau till 2016 until a two member bench of the Supreme Court of Pakistan
headed by Justice Amir Hani Muslim took notice of the extensive use of the concepts specially
the Voluntary Returns and referred the matter to the then Chief Justice of Pakistan for
constitution of larger bench in the matter. The Chief Justice of Pakistan took suo motu notice of
the matter and took up the matter by constituting a three member bench. The Supreme Court
restrained the Chairman NAB from exercising the powers of Voluntary Return. The Supreme
Court sought details of public officials entering into Voluntary Return deals which revealed that
a large number of public officials benefitted from Voluntary Return facility who were reinstated
into service without any departmental inquiry as the Voluntary Return provision of NAO does
not provide for automatic removal or dismissal from service or a public office. The Supreme
Court ordered for departmental proceedings against all such individuals and asked the parliament
to review the provision of Voluntary Return and Plea Bargain.
The Court observed that section 25(a) of the National Accountability Ordinance, 1999 is prima
facie in conflict with the different provisions of the Constitution of Pakistan as the power under
the section is exercised by Chairman NAB in his executive capacity where after an accused is
released and exonerated of the charges against him so such powers must only by exercised by a
judicial forum. The Court also observed that the facility of Voluntary Return should not be made
available to the civil servants. The Court was surprised to know that no departmental
proceedings were carried on by federal or provincial governments against the government
servants availing the Voluntary Return facility which amounted to encouraging and multiplying
corruption as these official returned a small chunk of their illegal wealth and thereafter enjoyed
their normal life with continuation of their service while avoiding stigma of conviction in
corruption cases. The Supreme Court remarked that the way the concept of Voluntary Return and
Plea Bargain is being exercised in Pakistan is unique in its form and it is encouraging corruption
and corrupt practices instead of curtailing it. The Supreme Court observed that the Bureau is
itself offering the facility of Voluntary Return to accused instead of the accused themselves
coming forward with such a request. The Court accused NAB of being partner in patronizing
corruption through the facility.
The Supreme Court held that the basic mandate of NAB is not to recover the illegal wealth but to
eliminate corruption however the frequent exercise of these facilities like Voluntary Return has
only facilitated the spread of corruption while defeating the very object and purpose of
establishment of NAB at the same time. The Supreme Court also criticized NAB on agreeing
with the accused to return illegally gotten money in installments and remarked that other
countries would laugh at such laws and practices. The Supreme Court further held that the whole
process of Plea Bargains and Voluntary Returns is shrouded in secrecy as the terms of such
bargains and returns are never made public. On the other hand the whole process of payments of
security to the payments of installments is regulated by internal process of NAB which lacks
transparency or over sight by a neutral entity.
The power to determine amounts in Voluntary Returns and Plea Bargains is always seen with
skepticism especially in Voluntary Return cases as it is a total internal arrangement of NAB
without intervention of even the Accountability Courts. This exercise of powers regarding
Voluntary Return and Plea Bargain has serious implications as after calculation of liability and
payment of amount agreed upon between the parties, any subsequent inquiry or investigation in
the same matter is barred under doctrine of double jeopardy. It is also notable that as per record
of NAB, the number of accused entering into Voluntary Returns are more than triple as
compared to the accused entering in to Plea Bargains which shows the importance of exercise of
such powers by Chairman NAB.
Another important aspect regarding the exercise of Plea Bargain and Voluntary Return which is
considered as root cause of failure of anti-corruption drive under NAO is the extensive use of
these provisions blindly and this practice has also been highlighted and criticized by the judges
of apex court in Pakistan so much so that the Court has accused NAB of colluding with the
accused by itself offering and insisting such deal specifically the Voluntary Return settlements.
This fact is apparent from the record of NAB regarding Voluntary Return and Plea Bargain
offers to accused person. As per record for the years 2006 to 2015, corruption cases were settled
by the NAB through Plea Bargain deals with the accused while more than 1700 accused entered
into Voluntary Return settlement during such period.
The arbitrary use of such facilities of Plea Bargain and Voluntary Return by the Chairman NAB
is also apparent from the fact that such powers are unnecessarily used by the Chairman NAB in a
number of cases which were apparently seen as a move to facilitate the corrupt as the basic
object to introduce such facilities was to exercise this power in cases of relatively weak evidence
while its use was not warranted in cases having strong and convincing evidence against an
accused while having bright chances of conviction of an accused in such like cases. This
arbitrary and extensive use of Plea Bargain and Voluntary Return has also been seen as opposed
to public policy as frequent use of such facilities unnecessarily will defeat the very purpose of
such provisions at the first place while on the other hand it will remove the minimum level of
deterrence against commission of corruption and corrupt practices. This would also result in lack
of public confidence on impartiality of such institutions.

4.8.2 Protection of Economic Reforms (Amendment) Ordinance, 2018

After the Supreme Court took notice of the outward flow of cash through the use of the
Protection of Economic Reforms Act, 1992 and the Foreign Currency Accounts (Protection)
Ordinance, 2001, the federal government immediately promulgated an Ordinance i.e. Protection
of Economic Reforms (Amendment) Ordinance, 2018on April 8, 2018 while the matter was still
pending before the Supreme Court. This Ordinance was promulgated while keeping in view the
findings of the expert committee report which was to be submitted before the Supreme Court of
Pakistan. This Ordinance reshaped the Protection of Economic Reforms Act, 1992 by
introduction of major changes in the said Act. The amendments through this Ordinance were re-
enacted and protected under the Finance Act, 2018. The changes made in the Protection of
Economic Reforms Act, 1992 are as follows:
Firstly, amendment was made in section 3 of the Act and this section was reshaped as ‘3. Act to
override other laws’. This Act shall have effect notwithstanding anything contained in the
Foreign Currency Accounts (Protection) Ordinance, 2001 (L of 2001). This amendment meant
that the Protection of Economic Reforms Act, 1992 will no more have the overriding effect on
the provisions of the Income Tax Ordinance, 2001 and the Foreign Exchange Regulation Act,
1947 which was provided under the original Act of 1992. Similarly, amendment by giving
overriding effect on the provisions of the Foreign Currency Accounts (Protection) Ordinance,
2001 removed certain protections under the said Ordinance regarding foreign currency accounts.
Secondly, amendments were introduced in section 4 of the Act and section 4(1) has been
reshaped as ‘4. Freedom to bring, hold, sell and take out foreign currency’. (1) All citizens of
Pakistan resident in Pakistan or outside Pakistan and all other persons shall be entitled and free to
bring, hold, sell, transfer and take out foreign exchange within or out of Pakistan in any form.
The amendment in section 4 of the Act removed the immunity previously provided to all persons
regarding the declaration of foreign currency. Moreover, under the amended section, a person
can now be questioned about bringing, selling, transferring, holding or taking out foreign
currency. Similarly, clause (f) of sub-section 2 of section 4 was amended and reshaped as
follows:―(f) any foreign exchange purchased from an authorized dealer, money changer or
exchange company in Pakistan for any purpose; The amendment in clause (f) means that the
freedom of free movement of foreign currency as provided under the Act is no more available if
such foreign currency is purchased from a money changer or an exchange company operating in
Pakistan. Previously money changers and exchange companies were not included in this clause.
Section 4 was further amended to incorporate new clause (g) in sub-section 2 of section 4 as
follows: (g) Cross border or inland movement of foreign currencies in cash exceeding USS
10,000 or equivalent subject to such annual ceiling as may be prescribed by the State Bank of
Pakistan. The insertion of this new clause in section 4 of the Act has further restricted the free
movement of foreign currency to 10,000 US Dollars. This meant that a person cannot hold a
foreign currency in cash exceeding 10,000 US Dollars. Consequent to this amendment, the State
Bank of Pakistan issued a notification that any person carrying foreign currency notes in excess
of 10,000 USD or equivalent would be required to establish that such foreign currency is
acquired by him through an authorized source and that the acquisition of such foreign currency
was through legitimate funds. The State Bank of Pakistan has also imposed an annual ceiling of
60,000 USD or equivalent for outward movement of foreign currency.
Thirdly, section 5 of the Act was also amended. sub-section 3 of section 5 has been reshaped as
follows: (3) The banks shall maintain complete secrecy in respect of transactions in the foreign
currency accounts except as otherwise required under the Foreign Exchange Regulation Act.
1947 (VII of 1947) or the Income Tax Ordinance. 2001 (XL1X of 2001). Before this
amendment, this provision provided complete and absolute secrecy regarding all the transactions
related to the foreign currency accounts as also held by the honorable Lahore High Court Lahore
in Hudabiya Engineering (Pvt.) Limited v.. Pakistan. However under this amendment, this
secrecy has been diluted by making this secrecy subject to the provisions of the Foreign
Exchange Regulation Act, 1947 and the Income Tax Ordinance, 2001. Similarly, one major and
important amendment was also made in Sub-section 4 of section 5.
This law was not only used by its framers for the purpose of money laundering as discussed
earlier but it was continuously used by the individuals in power. One of the most prominent and
relevant example in this regard is of Mr. Haroon Akhtar who remained Special Assistant to the
Prime Minister on Revenue in the last government of Mian Muhammad Nawaz Sharif. He, as a
special assistant on revenue affairs was having the status of minister of state and he was at the
helm of the affairs regarding policy decision making to increase revenue generation and
avoidance of revenue leakages including the illegal flow of capital. However, he himself was
found involved whitening black money. The special assistant referred above and his family
members faced NAB investigation for receiving huge amount of remittances to the tune of 700
million rupees. The case was initiated when the Financial Monitoring Unit of the State Bank of
Pakistan lodged a Suspicious Transaction Report under Anti-Money Laundering Act, 2010 in the
year 2012. Astonishingly, when he was asked to explain the source of such huge remittances, he
instead of clarifying his position, took shelter under the same law i.e. the Protection of Economic
Reforms Act, 1992 and claimed immunity from explaining or disclosing the source of such
remittances.828This Case highlights the state of policy affairs in Pakistan where the policy
maker are themselves keen to protect their ill-gotten money by themselves creating loop holes in
the system. When the law enforcers are themselves corrupt then how can one expect from them
to devise strict policies and measures to stop such illegal flow of capital and whitening of black
money by others.
The recent amendments in the Protection of Economic Reforms Act, 1992 was not with the free
will and desire of the government but rather it was done at the time when the apex court had
already taken Suo Motu notice of the matter and such laws specifically came under the radar of
the Supreme Court of Pakistan. Therefore, such sudden action of the government was in response
of such notice of the Supreme Court to avoid further embarrassment for the government. The
laws like the Protection of Economic Reforms Act, 1992 had been used for decades by not only
the criminals, corrupt politicians and bureaucrats but also by the businessmen as they used to
easily send money abroad through informal channels like Hawala and Hundi and receive back
the money in the shape of foreign currency through formal channels i.e. banking channels using
the cover of such laws thereby not only avoiding documentation but also getting benefit of tax
exemptions under these laws.
These changes in the Protection of Economic Reforms Act 1992 were primarily focusing on cash
feeding of such accounts by exchanging Pakistani rupee with foreign currency in local market.
However as long as the proper measures are not taken to stop the flow of cash through informal
channels, the corrupt practices of whitening of ill-gotten money cannot be effectively countered.
This is because the government has no strict policy regarding the foreign remittances coming
from abroad due to the struggling economy and foreign reserves of the country as such foreign
remittances are one of the major sources of foreign exchange reserves in Pakistan. The corrupt
still use such implied relaxation of the successive governments by using informal channels for
out flow of capital and getting it back through formal channels in the form of foreign
remittances. This amendment in section 4 of the Protection of Economic Reforms Act, 1992 does
not affect the remittances from abroad. Similarly, under section 5 of the Act the non-residents
still enjoys the immunity as well as exemption from income tax even after the amendments in the
said section because the amendments merely targeted the resident citizens having foreign
currency accounts.

4.9 TAX AMNESTY SCHEMES

The amnesty scheme introduced by military dictator General Pervaiz Musharraf in 2000 was in
fact the continuation of the tax amnesty scheme as introduced by the civilian government in the
year [Link] is because the said amendment in Income Tax Ordinance, 1979 provided
permanent powers to the Central Board of Revenue to introduce tax amnesty schemes and the
amnesty scheme of 2000 termed as tax amnesty scheme was introduced by CBR through a
circular by exercising powers under section 59D (1) of the Income Tax Ordinance, 1979. This
amnesty scheme just like the previous one was regarding the undisclosed income of any year or
years till June 30 1999.
The amnesty scheme of 2016 introduced by PMLN is another example of obliging a particular
class of individuals at the cost of government exchequer because through this amnesty scheme,
exceptionally low tax tariffs were made available to traders enabling them to convert black
money into white by paying meager taxes. This is one of the particular examples of rewarding
tax defaulters and tax evaders instead of punishing them. This amnesty scheme was introduced
through the Income Tax (Third Amendment) Act 2016. Through this Act a new section 99A was
inserted in the Income Tax Ordinance, 2001 titled special provisions relating to traders‖. The
scheme was for traders including those who till December 31, 2015 had not filed their income
tax returns for any of the last ten tax years.899 The traders who had not filed tax returns for the
last ten years were provided with three tax slabs valid for the years 2016 to 2018. The first slab
was pertaining the traders with turnover not exceeding 50 million who were required to pay just
0.2% tax on their income. The second slab was pertaining to the traders with turnover exceeding
50 million but not exceeding 250 million who were required to pay 100,000 along with 0.15% of
amount exceeding 50 million rupees. The third slab was pertaining to the traders with turnover
exceeding 250 million who were required to pay 400,000 along with 0.1% of amount exceeding
250 million.

4.10 ASSETS DECLARATIONS SCHEMES

The Panama Paper Leaks as well as the Paradise Leaks revealed that a large number of
Pakistanis have accumulated undeclared wealth in foreign jurisdictions which fact fully exposed
the failure of the whole enforcement regime in Pakistan. The government failed to devise any
mechanism to get repatriated such assets until the Supreme Court of Pakistan took Suo Motu
notice of the matter in February 2018 regarding such illegal accumulation abroad and the failure
of the state machinery to address the issue. The Suo Motu notice of the Supreme Court once
again prompted the government to resort to another short cut strategy and that is introduction of
two new amnesty schemes. This time we saw a paradigm shift in amnesty schemes introduced in
the country so far by moving from tax amnesty schemes to assets declarations schemes.
The different between these two types of schemes was that the assets declaration schemes
provided new levels of amnesty and immunity which were not expressly available in the past tax
amnesty schemes. This is because the tax amnesty schemes only provided immunity from
penalty and prosecution under the relevant taxation laws of the country however it did not
provide express immunity from prosecution under other laws like anti-corruption laws despite
the fact that the anti-corruption agencies always avoided investigation against the individuals
taking benefit under such tax amnesty schemes. The assets declaration schemes introduced by
PMLN included foreign assets declaration scheme through Foreign Assets (Declaration and
Repatriation) Act, 2018 and domestic assets declaration scheme through Voluntary Declaration
of Domestic Assets Act, 2018.