Military Inc.

Most countries have an army; in Pakistan, the army has a country. Ayesha Siddiqa Agha, writing in Newsline, exposes the hidden economy of the armed forces. Excerpts below.

On the scale of the armed forces' commercial ventures:

"The Pakistan military is among several other armed forces in the world engaged in commercial ventures. Today, its financial empire has an approximate financial size of 200 billion rupees with military-controlled welfare foundations operating in areas ranging from banking, insurance, leasing and real estate to private security, education, airlines, cargo services, knitwear, and major agri-based industries."

On the financial cost to the state:

"These businesses denote an additional cost for the government because of the use of state assets. A number of the commercial operations of the four welfare foundations, the Fauji Foundation, Army Welfare Trust (AWT), Bahria Foundation and Shaheen Foundation, as pointed out by several reports of the auditor-general of Pakistan, use state resources without reimbursing the government. However, the military's top management continues to claim that these are purely private sector ventures that do not fall under the scope of government accountability procedures and, hence, have continued to grow as part of the military's hidden economy."

On blatant illegalities:

"Referring to the military's small and medium enterprises, one would like to cite the example of one recent venture started by the corps command/cantonment board Bahawalpur. In this case, the cantonment board erected a toll plaza on the main GT road and started to collect money, an action that is in contravention of the cantonment board/local bodies law. As per the rules, none of these organisations can impose a tax on a highway."


On support from civilian politicians:

"Some of the military's concerns have huge operating/management costs. As for the AWT, it had to ask the government for a 5.4 billion rupee bailout in 2002. According to sources, the Nawaz Sharif government bailed out the trust through helping it with one of its foreign loans. This is highly scandalous, and certainly as scandalous as the Sharifs getting unfair concessions for the Ittefaq group.

"Nawaz Sharif is not the only one who supported the military's business. A number of projects by the welfare foundations were sanctioned under Benazir Bhutto's government as well, with rumors of close linkages between Asif Zardari's close friends and Shaheen Foundation's management regarding the setting up of the Shaheen pay-TV and radio projects. None of the political governments raised any major objection to the military business complex during the 1990s."

On the impact on professionalism of the armed forces:

"(C)ommercial ventures, even if they do not use serving officers, do, unarguably, have an impact on the professional mindset. Senior officers, who are quite aware of the rewards that await them after retirement in terms of extension of perks and privileges as a result of jobs in these companies, tend to compromise on the quality of their work during service. It is important to note that there is no streamlined system for selecting people for appointment in these organisations."

Click here for more Ayesha Siddiqa Agha.

Dirty deals

"With the army at the helm, the DHA [Defence Housing Authority] is doling out thousands of acres of Karachi’s coastline for peanuts, as the Sindh government watches helplessly," Newsline reports in an expose.

Bulls and bears; foxes and eels?

Countries looking to burnish their international economic credentials crave record-breaking stock markets. So, when General Musharraf determined that economic growth would be the cornerstone of his rule, his minions went out and conjured up the shiniest stock market in the world. But emphasis on records and not regulation, on form and not substance, had wrenching consequences for the small investors, who were lured by the mirage of impossibly high returns only to have their worlds implode when the powerful and the mighty engineered a spectacular collapse in March 2005.

The then-chairman of the Securities and Exchange Commission of Pakistan (SECP), Dr Tariq Hassan, identified powerful brokers responsible for the scam, but was unceremoniously shown the door when it became apparent that he was going to take action against the brokers. Dr Hassan later publicly accused the prime minister, Shaukat Aziz, of protecting the culprits. Public pressure, however, led to a commission being formed to probe the market crash and issue a report of its findings. That report is now ready, but the government is trying to bury it by stealth and parliamentary subterfuge. The message to the people is clear: money matters; they don't.