Arshad Shaikh examines how corruption in high places leads to an irreversible trend in income inequality and nurtures a system that keeps corroding the moral fibre of our nation resulting in utter disregard for respecting the law and trusting those upholding it.

There is a Hadith that “the Prophet Muhammad ﷺ cursed the one who bribes and the one who takes a bribe.” (Musnad Ahmad, Abu Dawood and Tirmidhi) There is also an ayat in the Holy Qur’ān that explicitly prohibits the seeking of illegitimate benefits by bribing or “doing corruption”. “Do not usurp one another’s possessions by false means, nor proffer your possessions to the authorities so that you may sinfully and knowingly usurp a portion of another’s possessions.” (The Qur’ān – 2:188) The meaning of the ayat is that one should not try to seek illegitimate benefits by bribing judges or those in positions of power.

Another instance would be a claim to and subsequent appropriating of another person’s property through false evidence and other illegitimate means. The Prophet ﷺ said: “I am merely a human being and you bring to me your disputes. It is possible that some of you will be more impressive in argument than others, so that I may give judgement in favour of one based on what I hear. Beware that if I award to someone what belongs to his brother, I will have assigned to him a lump of Fire.” (Sahih Bukhari and Muslim). It means that it is quite possible to grab the rights of others and indirectly commit an act of theft or fraud using perfectly legitimate means like a court of law or the regular award of a contract or a licence or purchase order.

When we talk of weeding out corruption from society, our attention is usually directed at the policeman on the street or the shop-act inspector or the ‘babu’/government clerk who needs a small bakshish (gift) to move your file and get the certificate/approval you are seeking. Rarely do we think of corruption in high places where the stakes are so high and the amount of money changing hands is beyond the realm of imagination and common usage. Yet, this ‘high-level’ corruption is not only well entrenched in our system but is also expanding at a dangerously rapid rate. The most recent exposé by the International Consortium of Investigative Journalists (ICIJ) called ‘Pandora Papers’ is a “a leak of almost 12 million documents that reveals hidden wealth, tax avoidance and, in some cases, money laundering by some of the world’s rich and powerful” (BBC-Panorama).

THE PANDORA PAPERS

On 4 October (Monday), the Indian Express splashed the following headline – ‘Pandora Papers – part 1, After Panama, its Pandora’: ‘facing heat, elite Indians find new ways to ringfence wealth in secret havens. Top businessmen to corporate defaulters, CBI-, ED-accused to celebrities; an investigation by the Indian Express finds how complex offshore trusts are used to park assets and evade detection’.

The ICIJ is a global network of 280 investigative journalists in more than 100 countries who collaborate on in-depth investigative stories. The Indian Express was the Indian partner for the ICIJ in the Pandora investigation. The ‘Pandora Papers Leak’ contains a huge cache of information in the form of 11.9 million files containing documents, images and emails from 14 sources stored in 2.94 TB data. The wealthy are often inclined towards trying to reduce their tax liability through means – fair and foul. Typical methods deployed for ‘tax-evasion’ include understating the taxable income or inflating expenses.

Other ways are to stash your funds in tax havens, which are countries that offer little or no tax liability and share limited or avoid the sharing of financial information to foreign tax authorities. The challenge for the owners of huge firms is to save their wealth when their businesses go bust and they file for bankruptcy. When a company declares bankruptcy, all its assets are measured, evaluated and then liquidated to repay a portion of outstanding debt.

The Pandora Papers leak shows that “over 300 Indians have set up such offshore structures. While there is a distinction between tax avoidance and evasion, such structures are typically used to not pay taxes, to launder money gotten through illegal means, and to sequester assets. The Express investigation reveals that businessmen who have declared themselves bankrupt before recovery tribunals, hold billions through such offshore entities. Some have set up offshore trusts to hold assets or have transferred assets through an impenetrable maze of offshore companies in order to insulate themselves from their creditors. While the use of such structures may not necessarily be illegal, they do raise questions over the nature of the transactions. As the investigations have also shown, many of the individuals concerned are under the glare of the investigative agencies in India. Some of them are in jail, others are currently out on bail”. (Indian Express Editorial dated 6 October).

THE PERILS OF CORRUPTION

Transparency International is a global movement working in over 100 countries to end the injustice of corruption. It comes out every year with a Corruption Perceptions Index (CPI) that scores and ranks countries/territories based on how corrupt a country’s public sector is perceived to be by experts and business executives.

India ranks 86 among 180 countries according to the latest CPI report. India’s ranking on the World Bank’s Ease of Doing Business Index – which is part of its ‘Doing Business’ report was 63 (among 190 countries) in 2019. Our ranking could have been higher but our scores on some key issues pulled us down significantly. For example, our ranking among 190 nations for (a) Starting a business is 136 (b) Registering property is 154 (c) Paying taxes is 115, and (d) Enforcing Contracts is 163.

The least corrupt countries according to the CPI are New Zealand, Denmark and Finland. Among the low rankers are Syria, North Korea and Russia. Experts point out that corruption acts as an obstacle to free and fair competition that results in skewed prices and substandard products and services. This has a direct impact on economic growth, accountability of those who hold office and deteriorates the rule of law. The efficiency of companies decline and the government revenue that could have been deployed for welfare diminishes significantly. Crony capitalism gains a foothold and it drives politics towards majoritarianism and polarisation.

Guatemalan Nobel Prize laureate Rigoberta Menchú, said: “Without strong watchdog institutions, impunity becomes the very foundation upon which systems of corruption are built. And if impunity is not demolished, all efforts to bring an end to corruption are in vain.”

One impunity-killer is the concept of accountability before God on the Day of Judgment. Laws and legal processes are just a small part of the prevention of corruption. Unless we develop the faith that our Creator is watching over us and will punish us for our misdeeds, it is difficult to end corruption, leaks and exposés notwithstanding.

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