The Government of Pakistan has declared intentions to continue to actively pursue a course of implementing economic reforms that include privatisation, liberalisation and deregulation aimed at making the economic system more investor-friendly and less bureaucratic. However, despite years of booming economic growth, Pakistan's attempts to develop investor confidence and attract investments have been hampered by dramatic political events and continuing instability and violence.

As corruption is omnipresent in Pakistan, business is also seriously impeded by it. According to the World Bank & IFC Enterprise Surveys 2007, 59% of companies surveyed identify corruption as a major constraint to doing business, and 48% of companies in Pakistan expect to give gifts to public officials 'to get things done'. The same view is also shared by the World Economic Forum Global Competitiveness Report 2011-2012, in which companies point to corruption as the second most problematic factor for doing business in the country, after government instability. Business executives surveyed by the same source report that public funds are fairly regularly diverted to companies, individuals, or groups due to corruption. Companies should also note that, the police are perceived as the most corrupt institution in the Transparency International Pakistan National Corruption Perception Survey 2010. Companies involved in import-export activities are affected by corruption in tax and customs and according to the US Commercial Service 2010, foreign investors often use local agents in order to facilitate distribution and to provide market intelligence. However, investors are legally liable for the corrupt behaviour of agents acting on their behalf and, therefore, companies are generally advised to develop, implement and strengthen integrity systems and to carry out extensive due diligence prior to committing funds and when already doing business in the country.

The army's stake in continuing to influence both commercial and political decision-making processes deepened over Musharraf's time in office. While it is well-known that Pakistan's military has engaged in corruption in relation to defence procurement, the military has also made significant inroads into other sectors of the economy, including land, construction, property, manufacturing, fertilisers, agriculture, infrastructure development, transportation, health, education, insurance and banking, as reported in Transparency International Global Corruption Report 2008. The same source also reports that the military controls an enormous private business empire. The Defence Housing Authority, the five main military foundations, and the thousands of small and large companies that they control benefit from hidden subsidies from a national budget controlled by their ultimate beneficiary - the military elite - and can plead national interest as a way of justifying their activities. According to the Transparency International Global Corruption Report 2009, corruption in privatisation in Pakistan is endemic and manipulation of the process can be found at all stages. A case in point is the privatisation of Pakistan Steel Mills (PSM), which was sold by General Musharaf to a consortium for PKR 21.58 billion when it was estimated to be worth PKR 72 billion. The Supreme Court ruled against this privatisation, citing disregard for the mandatory rules and information necessary for arriving at a fair sale price. In addition, a June 2009 article by Pakistan Trade Union Defence Campaign reports that the privatisation of Karachi Electric Supply Corporation resulted in thousands of workers being sacked from their jobs, led to the collapse of the power supply infrastructure and caused outages for nearly 18 hours a day. The military's penetration of such a broad range of private sector industries creates heightened corruption risks involving public procurement for companies competing against military interests. According to World Bank & IFC Enterprise Surveys 2007, a little over 14% of companies expect to give gifts to secure government contracts. Therefore, companies are recommended to use a specialised public procurement due diligence tool in order to reduce corruption risks related to public procurement in Pakistan.

Although steps towards establishing a more efficient business environment have been taken, operating a business can be a cumbersome and slow affair in Pakistan. According to the World Economic Forum Global Competitiveness Report 2011-2012, business executives identify inefficient government bureaucracy as one of the most problematic factors for doing business in Pakistan. Furthermore, the same report assesses the burden of government regulations, transparency of government policy-making, and policy stability as a ‘competitive disadvantage’ for doing business in the country. In an effort to curb corruption and excessive red tape, Pakistan is attempting to eliminate several bureaucratic measures. For example, the government has introduced a simple 5% customs duty on imported machineries for the manufacturing sector. Furthermore, according to the World Bank & IFC Doing Business 2011, the government has introduced new equipment and improved electronic communication between the Karachi Port authorities and the private terminals, thus shortening the time needed to export goods. According to the World Bank & IFC Doing Business 2012, starting a company in Pakistan is relatively easier than it was in the previous years, requiring 10 procedures and taking an average of 21 days. The cost of GNI per capital however, has increased by 5.4% compared to 2010. Nevertheless, no minimum capital is required to start up a company.

Furthermore, the tax regime in Pakistan is much more complex and time-consuming compared to the regional averages, as illustrated in the World Bank & IFC Doing Business 2012. The US Department of State 2011 also notes that foreign investors have complained that when operating in Pakistan, they are faced with a complex set of taxes and control measures, both at federal and provincial levels. These taxes have been assessed with significant administrative discretion, resulting in discrimination amongst taxpayers, inefficiency and corruption. Companies face a situation of uncertainty regarding economic policies and their implementation as public officials enjoy a high level of discretionary power that enables them to interpret laws as they see fit and encourages corrupt practices and favouritism. Business executives surveyed by the World Economic Forum Global Competitiveness Report 2011-2012 report that government officials usually favour well-connected companies and individuals when deciding on policies and contracts. Corruption is also rife in the process of obtaining licences and documents. The results of the above are time-consuming procedures and increased costs. For example, according to the World Bank & IFC Doing Business 2012, dealing with a construction permit require a company to go through 11 procedures and takes an average of 222 days at a cost of 262.5% of per capita income.

According to the US Department of State 2011, although Pakistan's legal framework and economic strategy do not discriminate against foreign investment, protection of property rights and contract enforcement is perceived to be problematic because of the irregularities and corruption in the judicial system. Moreover, the US Department of State 2010 reports that the judiciary is often subject to external influences, such as fear of reprisal in terrorism cases. In non-political cases, the media and the public generally consider the high court and the Supreme Court credible. However, lower courts continue to be plagued by corruption, inefficiency, and under pressure from prominent wealthy, religious, and political figures. The business community generally has a low degree of confidence in the Pakistani legal system, and do not consider the legal framework for settling disputes and for challenging regulation to be efficient, as illustrated in the World Economic Forum Global Competitiveness Report 2011-2012. Pakistan has been a member of the New York Convention of 1958 since 2005, but the ordinance implementing the Convention expired in August 2010. A bill to rectify this was passed by the National Assembly in November and is now waiting for an final approval from the Senate. Pakistan is a member of the International Centre for the Settlement of Investment Disputes (ICSID); thus, in principle, arbitration should be secured. Access the Lexadin World Law Guide for a collection of legislation in Pakistan.

Individual Corruption

According to the Transparency International Pakistan National Corruption Perception Survey 2010, corruption in the judiciary has increased compared to 2009. The majority of the households surveyed who interact with the judiciary have encountered corruption, and court employees and public prosecutors are cited as the two most frequent actors involved in corrupt practices. Similarly, according to the Transparency International Global Corruption Barometer 2010, the surveyed households perceive the judiciary to be relatively corrupt, while nearly one out of ten perceive it to be ‘extremely corrupt’.

According to the US Department of State 2010, lower courts remain corrupt, inefficient, and subject to pressure from prominent wealthy, religious, and political figures. The Bertelsmann Foundation 2010 further reports that the general public has largely lost their confident in the legal system due to widespread corruption, severe backlog of cases and inefficiency.

According to Transparency International Global Corruption Report 2007, the official language in Pakistan's justice system is English despite that ninety-eight percent of the population does not understand the language. People regard the courts as a place where only wealthy and influential individuals can afford to pay for, and thereby obtain, fair trials. The majority often uses informal dispute resolution mechanisms (panchayat), rather than getting themselves involved with the official court system, and this is particularly the case in rural areas.

Business Corruption

According to Freedom House 2011, the judiciary in Pakistan is regarded as one of the institutions most plagued by corruption, particularly in relation to the lower courts. Enterprise Surveys 2007 data reveals that less than one-fifth of companies surveyed believe the court system is fair, impartial and uncorrupted. Furthermore, business executives surveyed in the World Economic Forum Global Competitiveness Report 2011-2012 indicate that the judiciary is subject to political influences of members of government, citizens and companies. 

Hence, companies should take note that contract enforcement can be problematic due to an inefficient court system and a lack of transparency, as reported in the US Department of State 2011.

Political Corruption

The Bertelsmann Foundation 2010 reports that the legislative and judicial branches of Pakistan have been repeatedly compromised by executive interference. Parliament has usually been bypassed in the formulation of laws, and the higher courts of the judiciary have frequently been coaxed to pass politically motivated judgements. The procedure for selecting national level judges is required to be transparent by law; however, according to Global Integrity 2010, the procedure is not always transparent in practice. In order to improve transparency in the selection process, the 19th Constitutional Amendment was passed by the National Assembly in December 2010 to further strengthen the role of the chief justice and other senior judges in the Judicial Commission, and the procedure of appointment of judges, as reported in Freedom House 2011.

According to the Transparency International Global Corruption Report 2009, the Chief Justice Iftikhar Muhammad Chaudhry was dismissed by then President Musharraf in March 2007 after the Supreme Court ruled against the privatisation of Pakistan Steel Mills to private investors. Several observers, such as Freedom House 2010, report that President Zardari and the PPP have been slow to reinstate Chaudhry and the other judges removed by Musharraf, because the party fears that they will challenge the award of immunity from corruption charges to Zardari and other party leaders.

Frequency

The World Bank & IFC: Doing Business 2012:
- Enforcing a commercial contract requires a company to go through 46 procedures, taking an average of 976 days at a cost of nearly 24% of the claim.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the independence of the Pakistani judiciary from influences of members of government, citizens, or companies a score of 3.9 on a 7-point scale (1 being 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 3.1 and 3.4 respectively on a 7-point scale (1 being 'extremely inefficient' and 7 'highly efficient').

Transparency International: Global Corruption Barometer 2010:
- Citizens give the judiciary a score of 3.6 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

- 28.2% of households surveyed consider the judiciary to be 'extremely corrupt'.

- 27.4% of households who had contact with the judiciary in 2009 report to have paid a bribe.

Transparency International Pakistan: National Corruption Perception Survey 2010:
- Nearly 69% of household respondents who interacted with the judiciary encountered corruption.

- Of the factors perceived by household respondents to be responsible for corruption in the judiciary sector, 20% replied lack of a simple legal process, 18% replied lack of accountability and 14% replied power of influential people. 

- The average bribe per act paid by household respondent was PKR 31,592.

Transparency International: Bribe Payers Index 2008:
- Business executives give the judiciary a score of 3.9 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2007:
- Close to 19% of companies surveyed believe that the court system is fair, impartial and uncorrupted.

Individual Corruption

According to the Transparency International Pakistan National Corruption Perception Survey 2010, the police continue to be considered the most corrupt sector in Pakistan. In fact, the police have been ranked the most corrupt institution in the country for the fourth time in surveys conducted by Transparency International in 2002, 2006, 2009 and 2010. Respondents identified lack of accountability, low salaries and discretionary power as the three main factors responsible for corruption in this sector. In a similar vein, the police are also ranked as the most corrupt institution by the surveyed households in the Transparency International Global Corruption Barometer 2010. According to the same survey, approximately three out of five respondents who have had contact with the police in 2009 reported to have paid a bribe.

According to the US Department of State 2010 and Freedom House 2011, corruption is particular widespread amongst the low ranking police. Some police charge fees to register genuine complaints and accept money for registering false complaints. The police are routinely engage in crime, extort money from prisoners and their families, and accept bribes to file or withdraw charges. Moreover, some minority religious groups continue to be subject to false blasphemy charges by corrupt police officials.

Business Corruption

Corruption by the police in Pakistan results in a lack of confidence in authorities and a culture of lawlessness. According to the World Economic Forum Global Competitiveness Report 2011-2012, companies lack confidence in the reliability of police services to protect them from crime. This is corroborated by the World Bank & IFC Enterprise Surveys 2007 data which reveals that nearly half of the companies pay for security in Pakistan, while more than one in three companies identify crime, theft and disorder as major constraints to doing business in the country. Complaints over unlawful police methods are not confined to poor people. According to the U4 Anti-Corruption Resource Centre 2008, companies also complain that they meet police extortion, e.g. in the form of fake traffic fines. In addition, the police are perceived by the surveyed business executives to be the most corrupt institution in Pakistan, according to the Transparency International Bribe Payers Index 2008

Political Corruption

According to Global Integrity 2010, appointments of law enforcement officers are not always based on professional criteria, but instead, on personal preference and the status of the individual seeking appointments. Global Integrity 2008 also reports that the police department does not always receive sufficient funds to carry out their duty professionally, and therefore, contribute as one of the reasons for widespread corruption in the police force.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the reliability of Pakistan's police services to enforce law and order a score of 3.2 on a 7-point scale (1 being 'cannot be relied upon at all' and 7 being 'can always be relied upon').

Transparency International: Global Corruption Barometer 2010:
- Nearly 60% of households who had contact with the police in 2009 report having paid a bribe.

- Citizens give the police a score of 4.5 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

- 66.5% of households surveyed consider the police to be 'extremely corrupt'.

Transparency International Pakistan: National Corruption Perception Survey 2010:
- 84% of household respondents that interacted with the police encountered corruption.

- Of the factors perceived by household respondents to be responsible for corruption in the police sector, 23% replied a lack of accountability, 16% replied low salaries and 14% replied discretionary power.

- The average bribe paid by a household respondent was PKR 7,542.

Transparency International: Bribe Payers Index 2008:
- Business executives give the police a score of 4.7 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2007:
- More than 35% of the interviewed companies identify crime, theft and disorder as a major constraint to doing business.

Individual Corruption

Bribing public officials is common to gain access to public utilities. According to Transparency International Pakistan National Corruption Perception Survey 2010, the power sector is perceived to be the second most corrupt department after the police. The survey shows that of the households respondents surveyed who had an electricity connection, more than one-third reported to using an ‘alternative process’ in order to obtain electricity such as to pay bribes to office employees in the power sector. Furthermore, a substantial part of the respondents report to having encountered corruption in the previous year even after getting an electricity connection. The Transparency International Global Corruption Barometer 2010 also reports widespread corruption in connection with citizens' efforts to obtain permits and registrations.

The health care sector in Pakistan is reportedly filled with corruption. According to the Transparency International Pakistan National Corruption Perception Survey 2010, of those who visited hospitals in 2009, approximately two out of five used ‘alternative processes’ in order to get medical care by using contacts with influential relatives/persons or paying direct fees to hospital doctors. Read more about corruption in Pakistan's health sector at the U4 Anti-Corruption Resource Centre.

Business Corruption

Companies operating in Pakistan experience considerable red tape and slow procedures when trying to obtain licences and permits. There are often demands for facilitation payments in order to speed up the process. For example, according to the World Bank & IFC Enterprise Surveys 2007, a substantial amount of the companies surveyed are expected to give gifts in order to obtain utilities such as an electrical connection or a water connection. Companies should also note that business inspections by government officials to ensure public safety standards are not always carried out in a uniform and even-handed manner, as bribery and influence are some of the reasons that allow many businesses to operate under lax public safety standards, according to Global Integrity 2010.

According to the World Bank Pakistan Infrastructure Implementation Capacity Assessment 2007, the business environment is characterised by corruption and a lack of contract enforcement, which makes proper risk management difficult. The study estimated that corruption within infrastructure projects accounts for more than 10-15 percent of total project values. Furthermore, according to the survey, the projects reviewed took three times as long and cost twice as much as originally planned to complete due to extra contractual processes, such as external verifications (by the National Accountability Bureau, parliamentary committees, chief ministers inspection teams and others), government procedures related to audit and payments, local government procedures (in mining, land acquisition, forest department and removal of utilities), law enforcement agencies and corruption.

Political Corruption

According to the World Bank Pakistan Infrastructure Implementation Capacity Assessment 2007, infrastructure construction and administration is marred by corrupt practices. It is common knowledge that top bureaucratic positions are sold at high prices. After paying huge sums to obtain senior government positions, officials need to recoup their expenses. This is best achieved by supporting projects that serve construction companies involved with expensive infrastructure projects and with wealthy land owners who want to pay extra to secure their water supply. These types of projects provide officials with the opportunity to obtain large kickbacks.

Pakistan Railways (PR), the state-owned rail transport service in Pakistan, has been suffering huge deficits for years. According to a December 2011 news release by Transparency International Pakistan, which refers that the Chief Justice, who observed that corruption had caused PR to be at the brink of collapse, and stated that corrupt officials will be sentenced to prison for their actions. Another two 2011 news articles published by The Express Tribune also report that in 2010 alone, PR lost around PKR 5.6 billion due to misappropriation of funds and embezzlement. One of the aforementioned articles also cites that Haji Ghulam Ahmad Bilour, the Federal Minister for Railways, openly has accepted that there is corruption in the PR.

Frequency

The World Bank & IFC: Doing Business 2012:
- Dealing with a construction permit in Pakistan requires a company to go through 11 procedures taking an average of 222 days at a cost of 262.5% of per capita income.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give government administrative requirements (permits, regulations, reporting) in Pakistan a score of 3.2 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').

Transparency International: Global Corruption Barometer 2010:
- 48% of households who had contact with registry and permit services in 2009 report having paid a bribe.

- 47% of households who had to obtain utilities in 2009 report having paid a bribe.

- 19.5% of households who had contact with medical services in 2009 report to have paid a bribe.

The World Bank & IFC: Enterprise Surveys 2007:
- 48% of companies expect to give gifts to public officials 'to get things done'.

- 21% of companies expect to give gifts in order to obtain a construction permit.

- 12.7% of companies expect to give gifts in order to obtain an operating licence.

- A little more than 71% expect to give gifts to obtain an electrical connection and 62% for a water connection.

Transparency International: Bribe Payers Index 2008:
- Business executives give the permit and registry services a score of 4.3 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

Individual Corruption

The Pakistani land administration is rife with corruption. According to the Transparency International Pakistan National Corruption Perception Survey 2010, respondents considered land administration as the third most corrupt government department. A majority of the respondents reported having faced corruption when dealing with land administration officials, and this problem is also reflected in the Transparency International Global Corruption Barometer 2010, in which more than half of the surveyed households report to have paid a bribe to land services in 2009.
 
According to the US Department of State 2009, bureaucratic delays and extortion of bribes are obstacles that religious minorities routinely face when attempting to build houses of worship or obtain land.

Business Corruption

According to the Bertelsmann Foundation 2010, private property is protected by law, and private companies are able to act freely. However, the acquisition of private property, as well as the awarding of contracts, is still affected by very high levels of corruption and nepotism. According to the World Economic Forum Global Competitiveness Report 2011-2012, companies report that property rights are not adequately protected in practice. An International Federation of Surveyors study, Corruption and Land Administration 2006, concludes that all forms of corruption occur in land administration. The study refers to several examples of corruption cases, such as that of a land revenue officer in Pakistan accused of having illegally accumulated personal assets instead of facilitating land transactions amongst members of civil society and who was sentenced to five years in prison.

Political Corruption

Corrupt practices within real estate commissions, industrial allotment commissions and land revenue offices are not uncommon. According to the Transparency International Global Corruption Report 2008, the Defence Housing Authority regularly encroaches on private and provincial lands to replenish its stocks without negotiation or payment. One example of property rights violation was the suppression of the farmers' movement by the military when tenant farmers protested against military land-grabbing initiatives. The protesters were detained for weeks, and some were unlawfully arrested and tortured.

Freedom House 2011 reports that land-seizure criminal gangs operate on the margins of the federal and provincial bureaucracy to seize land from private citizens. These criminal gangs bribe officials responsible for maintaining land records to create new documents that can withstand a common sequence of litigation in the courts. Some of the profits associated with these actions are then passed on to locally elected representatives who in return agree to relax their oversight of the bureaucracy.

According to a July 2011 article by Pakistan Today, Pakistan Railways (PR) owns prime real estate in almost all localities in Pakistan; however, many places have been illegally encroached upon or taken for many years by some people. It is also reported that some land plots have been given for free or sold at below market values with knowledge of PR officials.

Frequency

The World Bank & IFC: Doing Business 2012:
- To secure rights to property, companies must go through 6 procedures, taking an average of 50 days at an estimated cost of 7.7% of the property value.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the protection of property rights in Pakistan, including financial assets, a score of 3.4 on a 7-point scale (1 being 'very weak' and 7 'very strong').

Transparency International: Global Corruption Barometer 2010:
- 59% of the households surveyed who had contact with land services in 2009 reported to have paid a bribe.

Transparency International Pakistan: National Corruption Perception Survey 2010:
- 82% of household respondents that interacted with the land administration encountered corruption.

- Of the factors perceived by household respondents to be responsible for corruption in the land administration, 24% replied lack of a lack of accountability, 13% replied lack of transparency and 13% replied discretionary power.

- The average bribe paid by a household respondent was PKR 46,414.

Individual Corruption

According to the Transparency International Pakistan National Corruption Perception Survey 2010, tax administration is ranked as the eighth most corrupt public sector, out of ten assessed public sectors in Pakistan, and its ranking has improved in comparison to the previous surveys. Nevertheless, still more than half of the household respondents to the survey report having encountered corruption when dealing with the tax department. This corruption includes paying bribes to reduce tax assessments and to reduce tax.

According to another survey, Global Corruption Barometer 2010, released by Transparency International, two out of five surveyed households reported having paid a bribe to the tax revenue authorities in 2009.

Business Corruption

According to a September 2011 article by Dawn, loopholes in e-tax refund are costing Pakistan PKR 15 billion per month. The article states that problems such as the issuing of fake invoices and flying sales tax invoices have been widespread in Pakistan in the last many years. For example, it has been observed that bogus companies were issuing fake invoices on raw materials that they did not pay for, and some registered taxpayers have been selling surplus invoices to people who wanted to claim undue tax refunds, with connivance of tax officials.

According to a 2010 news article by Paktribune, some major causes of tax evasion are widespread corruption and a lack of trust in the revenue collection institutions and other relevant departments. Foreign investors have complained that when operating in Pakistan they are faced with a complex set of taxes and control measures, both at federal and provincial levels. These taxes have been assessed with significant administrative discretion, which leads to discrimination among taxpayers, inefficiency and corruption, as reported in the US Department of State 2011.

Political Corruption

Freedom House 2011 reports that tax evasion is the most prevalent form of corruption, and this has increased since 2008, mainly because of the lack of up-to-date land revenue surveys and the fact that agricultural income is scarcely being taxed. The same report also refers to a finding by the auditor’s office, which uncovered that the Federal Board of Revenue (FBR) aided tax evasion by underestimating tax liabilities and accepting false claims of losses. According to another Freedom House 2011 report, many of the country’s wealthiest individuals, including the MPs, avoid paying taxes through legal loopholes.

Frequency

The World Bank & IFC: Doing Business 2012:
- Companies must pay 47 different taxes and spend an average of 560 hours a year administering the payment of these taxes at a total tax rate of 35.3% of profits.

Transparency International Pakistan: National Corruption Perception Survey 2010:
- 59% of household respondents that interacted with tax administration encountered corruption.

- Of the factors perceived by household respondents to be responsible for corruption in the tax administration, 26% replied lack of a lack of accountability, 19% replied lack of transparency and 12% replied discretionary power.

- The average bribe paid by a household respondent was PKR 9,430.

Transparency International: Global Corruption Barometer 2010:
- 40% of households surveyed reported having paid a bribe to the tax revenue authorities in 2009.

Transparency International: Bribe Payers Index 2008:
- Business executives give tax revenue authorities a score of 4.2 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2007:
- 59% of companies expect to give gifts in meetings with tax officials.

Individual Corruption

According to the Transparency International Pakistan National Corruption Perception Survey 2010, a majority of the household respondents had faced corruption when dealing with customs administration, such as the inspection and evaluation of goods. This is also reflected in the Transparency International Global Corruption Barometer 2010, in which more than two out of five citizens surveyed who had contact with customs administration in 2009 report to have paid a bribe. 

According to a January 2010 article by Business Recorder, Munir Qureshi, a member of the Federal Board of Revenue (FBR), stated that the estimated annual value of smuggled goods was around USD 4 billion to 5 billion, resulting in loss of nearly USD 2.5 billion in revenues due to illicit trading. It was revealed that restoration of anti-smuggling checkpoints and mobile squads have substantially raised the quantity of goods seized by the customs department. The FBR seized approximately PKR 2 billion worth of goods between July and December 2009 compared to approximately PKR 804 million worth of goods seized during the same period the previous fiscal.

Business Corruption

According to the World Bank & IFC Doing Business Reformer's Club Case Study 2007, customs clearance time at the Karachi international container terminal dropped from 10 days in 2004 to 4 hours in 2007. Also, despite a reduction in tariffs, customs revenues also went up from PKR 115 billion to PKR 138 billion. However, customs clearance generally continues to be cumbersome and slow. This is also illustrated in the World Economic Forum Global Enabling Trade Report 2010, in which business executives report that exporting and importing require much time and paperwork to clear goods at the border, and the process is plagued by corruption and bribery.

Several indices, including the Transparency International Bribe Payers Index 2008, reveal that the customs authority is one of the most corrupt institutions in Pakistan. Companies should note that the amount of red tape related to customs results in lengthy processes, and that irregularities in upholding regulations give rise to corrupt practices.

Updates of customs regulations and tariff information are available at the Federal Board of Revenue website in Pakistan.

Frequency

The World Bank & IFC: Doing Business 2012:
- A standard export shipment requires 7 documents and takes an average of 21 days at a cost of USD 660 per container.

- A standard import shipment requires 8 documents and takes an average of 18 days at a cost of USD 705 per container.

World Economic Forum: Global Competitiveness Report 2011-2012:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Pakistan a score of 3.6 on a 7-point scale (1 being 'extremely inefficient' and 7 'extremely efficient').

World Economic Forum: The Global Enabling Trade Report 2010:
- Business executives give the transparency of border administration (pervasiveness of undocumented extra payments or bribes connected with imports and exports) a score of 3.1 on a 7-point scale (1 'extremely inefficient' and 7 'extremely efficient').

Transparency International Pakistan: National Corruption Perception Survey 2010:
-61.5% of household respondents that interacted with customs administration encountered corruption.

- Of the factors perceived by household respondents to be responsible for corruption in the judiciary sector, 22% replied lack of a lack of accountability, 17.5% replied lack of transparency and 17.5% replied discretionary power.

- The average bribe paid by a household respondent was PKR 23,760.

Transparency International: Global Corruption Barometer 2010:
- 44% of households surveyed reported having paid a bribe to customs administration in 2009.

Transparency International: Bribe Payers Index 2008:
- Business executives give the customs a score of 4.2 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2007:
- No companies surveyed expect to give gifts to obtain an import licence.

Business Corruption

According to the US Department of State 2011, the procurement process in Pakistan is improving but still cases of corruption are reported. For instance, the Transparency International Pakistan National Corruption Perception Survey 2009 reports that the cost of corruption in procurement is about 15%. The competitive bidding process sometimes excludes many potential bidders by last minute publicity or by prequalification criteria that exclude bidders and thereby limit the competition. A major flaw in the public tender bidding process is the absence of an independent complaint handling system. According to Global Integrity 2010, companies found guilty of irregular practices are often not effectively stopped from participating in future bids.

Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate corruption risks related to public procurement in Pakistan. See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

Corruption is widespread in the public procurement process in Pakistan. According to a July 2010 news article by Sify, the chairman of Transparency International Pakistan claims that more than USD 4 billion is lost due to corruption in procurement alone and can be saved annually, if the Pakistani government implement the Public Procurement Rules 2004 in the federal government, armed forces and all the four provinces, corporations and authorities.

The World Bank, DFID, and the Asian Development Bank are involved in modernising the procurement system in Pakistan, and although transparency is improving, the system still exhibits irregularities. These flaws include inadequate bidding documents, insufficient response time for bidders, prequalification used as a measure to limit competition, price negotiations and a lack of an independent complaint handling system, as reported in the US Department of State 2011.According to the same report, in the past two years, public procurement in Pakistan has been plagued by political influence, corruption, non-transparency and long delays in bureaucratic decision-making.

According to the Transparency International Global Corruption Report 2008, in August 2000, charges were made against several army, naval and air force chiefs on allegations of accepting kickbacks in several defence contracts. Consequently, the naval chief was required to repay USD 7.5 million.

Pakistan Steel Mills (PSM) was privatised in 2006, however, the sale was non-transparent and suspicious because it was sold by General Musharaf at PKR 21.58 billion, despite that it was estimated to be worth PKR 72 billion. Later in 2006, the Supreme Court of Pakistan declared that the privatisation of PSM was void because of major irregularities in the process, as reported by Transparency International Global Corruption Report 2009.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 3.0 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials when deciding upon policies and contracts a score of 2.6 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

Transparency International Pakistan: National Corruption Perception Survey 2010:
- The tendering and contracting sector is ranked as the least corrupt public sector, out of ten assessed public sectors in 2010.

- Of the factors perceived by household respondents surveyed to be responsible for corruption in the tendering and contracting sector, 15.5% replied lack of a lack of accountability, 13.5% replied lack of transparency and 12% replied discretionary power.

- The average bribery per act paid by a household respondent was PKR 39,143.

The World Bank & IFC: Enterprise Surveys 2007:
- 30% of companies expect to give gifts to secure a government contract.

Individual Corruption

According to the Transparency International Global Corruption Report 2008, farmers downstream on irrigation systems become fourfold losers due to rampant corruption in the water sector: 1) they pay water fees whether or not they get water; 2) they pay bribes to get their rightful quota; 3) their productivity suffers due to erratic water supplies and; 4) they pay more to support the irrigation system than those who use their influence to avoid paying fees.

Business Corruption

According to Global Integrity 2010, the regulations covering basic health and environmental standards in Pakistan are transparent, but are rarely enforced equally for all companies. Government officials conduct inspections, but the process is marred by corruption and nepotism.

Political Corruption

In response to growing water scarcity, more farmers are engaging in informal negotiations and extra-legal transactions with irrigation agency officials to obtain water beyond their legal quotas. According to the Transparency International Global Corruption Report 2008, usually a small group of farmers favourably located in the upper reaches of the irrigation system receive extra water at the expense of their downstream counterparts. Farmers use political influence to win favour with irrigation officials. Farmers also ask local elected politicians to pressure irrigation staffers. In turn, politicians receive political support from these farmers to stay in office and irrigation officials benefit from promotions and favourable postings. The system of legal water quotas is generally no longer enforced. Functioning for decades now, this interlocking incentive system is considered by many a well-established 'working rule'. Corruption also undermines incentives to improve the system; for example, de-silting and reducing flow variability - as this would reduce the power of irrigation officials and influential farmers.

• Legislation: Pakistan ratified the United Nations Convention against Corruption in August 2007. Pakistan's anti-corruption laws include the Penal Code 1860, the Prevention of Corruption Act 1947, which was the first specialised anti-corruption law in the country, and the National Accountability Ordinance 1999 (NAO), which is the newest one. Most importantly, the NAO contains a passage stating that unexplained assets are seen as corruption and the responsibility to present proof that the assets were legitimately obtained rests with the accused. Acts of corruption and attempted corruption in the form of extortion, active and passive bribery, bribing a foreign official, abuse of office, and money laundering are illegal. The NAO criminalises both public and private sector corruption and sets the maximum penalty for corruption at 14 years rigorous imprisonment (implying hard labour) with a fine and confiscation of assets acquired through corruption in the name of the accused or the accused's dependents/beneficiaries. Attempts at establishing transparency are also found in Pakistan's Constitution, which now also contains sections concerning declaration of assets. However, the current state of anti-corruption legislation in the country is perceived to be in a state of disorder. In October 2007, President Musharraf declared the controversial National Reconciliation Ordinance (NRO) that amended and essentially circumscribed the NAO. The NRO was controversial as it granted blanket immunity for past corrupt actions and provided for an automatic withdrawal of all corruption cases filed against public officials prior to 1999. According to several sources including a December 2009 article by BBC News and the US Department of State 2010, more than 8,000 officials, diplomats and politicians had been protected under the NRO. In December 2009, the Supreme Court (SC) annulled the NRO, and corruption charges can now once again be opened against leaders in the Zardari government. However, in January 2010, the Zardari government filed a petition to challenge the SC’s 2009 decision. In the light of the NRO being struck down, the SC requested the government to contact Switzerland regarding the re-opening of a money-laundering case against President Zardari, but according to a December 2011 article by Pakistan Today, the government in the end decided not to dispatch a letter to the Swiss authorities as President Zardaris is constitutionally immune from prosecution. Access the Lexadin World Law Guide for a collection of legislation in Pakistan.

• Government Strategies: Anti-corruption strategy in Pakistan has historically been synonymous with anti-corruption enforcement. It is only in the past decade that a strategic change towards combining enforcement with prevention occurred. According to Transparency International Procurement Handbook 2006, the National Anti-Corruption Strategy (NACS) project was launched in 2002 by the National Accountability Bureau, and was financed by the British Department for International Development (DfID). The NACS is structured around the pillars of the National Integrity System, a concept taken from Transparency International and adapted to local conditions. According to the U4 Anti-Corruption Resource Centre 2008, the strategy is noteworthy both for its analysis and diagnosis of Pakistan's corruption challenges and for the level of detail included in its contents, particularly in terms of reform proposals. Although former President Musharraf publicly stated that eliminating corruption was a priority, the NACS primarily focuses on politicians, civil servants and businesspeople, while virtually ignoring the military and security personnel. The military's presence in the civil service and anti-corruption institutions expanded during Musharraf's time in office. Although the new government has returned serving military personnel to their original assignments, this has left a vacuum in the civil service and anti-corruption institutions which still has to be filled. The implementation of the NACS has apparently been constrained by a lack of consistent political will.

• Anti-Corruption Agency: Pakistan's supreme anti-corruption agency is the National Accountability Bureau (NAB), which was created by the National Accountability Ordinance in 1999 (NAO) and replaced the defunct Ehtesab Bureau and Commission. The NAB is only required to submit annual reports to the President of Pakistan. As of December 2011, the latest annual report available on the NAB website is from 2007. Updated statistics about cases and investigations, however, can be found on the website. The NAB is in charge of corruption prevention, raising public awareness and enforcement of anti-corruption measures. According to Global Integrity 2010, the NAB is mandated to investigate and prosecute any corrupt person, except for judiciary and military personnel. However, military personnel working in government offices, corporations and elsewhere are formally not exempted from the scrutiny of the NAB. Indeed, a number of government employees, politicians and senior military officials have been prosecuted and sentenced to prison in recent years. Both the judiciary and military are meant to rely on internal mechanisms of accountability rather than be subject to the purview of the NAB. Those internal mechanisms have long been criticised as being ineffective, while the NAB itself has claimed many victories in the fight against corruption. Transparency International Pakistan criticises NAB for applying a limited focus and says that no 'substantial reduction' in corruption has occurred during the era of Musharraf, despite small improvements during his initial three years in office. Sources also note that Musharraf used the NAB to prosecute rival politicians and officials from previous governments. According to Freedom House 2011, the former NAB chief said in an interview with Dawn, the oldest newspaper in Pakistan, that he was often pressured to close cases against pro-Musharraf politicians and businessmen. Similarly, Global Integrity 2010 also notes that the NAB is not free from political interference and is subject to direct and indirect political pressure. The NAB is said to be continuing the process of internal reforms to make it more efficient and independent, and is currently going through a transition period, both legally and administratively. After the Supreme Court scrapped the National Reconciliation Ordinance in December 2009, the NAB issued travel bans on 253 people including Defence Minister Ahmed Mukhtar, in addition to suspending a top civil servant at the Ministry of Interior, a director at the Federal Investigation Agency and two inspectors, according to a February 2010 news article by Inform. It remains to be seen how the NAB will pursue corrupt officials in the current scenario when no immunity is afforded to them. 

• Accountability Courts: Accountability courts were established in accordance with the National Accountability Ordinance 1999 (NAO) to deal with the need to dispose of corruption cases involving abuse of power, misappropriation of property, and kickbacks among other corruption-related crimes in an expedient manner. At present, 21 Accountability Courts are operating in Pakistan. The purpose of the courts is to adjudicate cases of people accused of corruption and to recover the proceeds of corrupt practices. However, several high-level corruption cases have been dismissed without financial penalties being imposed on the culprits by these accountability courts under the National Reconciliation Ordinance 2007 (NRO), including those against President Zardari. Many immune or pardoned beneficiaries of the NRO have since been appointed to important ministries and include ministers and public officials. The NRO, which was annulled by the Supreme Court in December 2009, had essentially undermined the judiciary's capacity to enforce the NAO.

• Federal Investigation Agency (FIA): The FIA is a national investigative agency with a wide role in anti-terrorism, anti-corruption, human trafficking and copyright infringement policing. The FIA was established in 1975 in accordance with the FIA Act 1974 and is placed under the Ministry of Interior. According to Global Integrity 2010, the work of FIA, to some extent, overlaps with the work of the National Accountability Bureau (NAB). FIA personnel received special training in intellectual property enforcement and technologies. The FIA carries out occasional raids, which resulted in 20 new cases regarding IPR violation being filed between November 2009 and October 2010. However, the lack of successful prosecutions highlights the limited deterrent effect these arrests have had, as reported by US Department of State 2011. Some key challenges of the FIA are the insufficient manpower and training, and agency being highly politicised, as pointed out by the aforementioned sources.

• Anti-Corruption Establishments (ACEs): There are several provincial ACEs and anti-corruption laws in Pakistan, such as the Punjab Provincial Anti-Corruption Establishment and its supporting legislation. Provincial laws reportedly pose a challenge to the national anti-corruption efforts as they generally impose less severe punishments on those convicted of corruption than the National Accountability Ordinance provides for. ACEs also generally suffer from a lack of independence and autonomy that undermines their ability to effectively enforce anti-corruption laws. The National Anti-Corruption Strategy did envision the creation of linkages between the National Accountability Bureau and ACEs, but this has yet to happen. Meanwhile, the competing spheres of anti-corruption jurisdiction between the provinces and the national government remain a sensitive issue linked to debates over provincial autonomy and the right of provinces to undertake anti-corruption work in their own fashion.

• Auditor General: The Office of the Auditor General of Pakistan is the national supreme audit institution in Pakistan. The auditing of government expenditures is helped by Public Accounts Committee of the National Assembly. According to Global Integrity 2010, the agency receives regular funding, and is equipped with professional and full time employees. The head of the agency can only be removed from office by the Supreme Court’s judges. Global Integrity 2010 further reports that the auditor’s reports are available to the parliament, and citizens can request for information, but on average it can take more than 2 months for the information to be made available. According to Freedom House 2011, the Auditor General found irregularities of over USD 3.8 billion in various federal ministries and departments, particularly in the accounts of the Federal Board of Revenue. However, the auditor’s annual report is often buried in the Public Accounts Committee and forgotten, ensuring that actual prosecutions and convictions, even at the lowest levels, rarely take place. 

• Ombudsman: The Office of the Wafaqi Mohtasib (Ombudsman) of Pakistan was established under the President Order I of 1983, and is empowered to investigate complaints and rectify injustices committed against a citizen through poor administration. The Ombudsman is mandated to investigate, redress and rectify any injustice done to a person through maladministration on the part of a federal agency or a federal government official. The Ombudsman has the same powers as civil courts to issue and enforce subpoenas, and to receive documents and evidence on affidavits. However, the Ombudsman has no power to investigate cases related to defence or service matters, nor to impose penalties to offenders. The Ombudsman Office passes on its recommendations to the concerned departments, however, the government does not always act on the Ombudsman’s findings. Furthermore, Global Integrity 2010 states that the Ombudsman is at times subject to external pressure from political forces or the executive branch, and these also reportedly influence agency appointments. Nevertheless, complaints received by the Office of the Ombudsman have increased 37 percent from 2008 to 2009. The Office of the Ombudsman makes its annual reports available to the public online. 

• E-Governance: The World Bank and the Asian Development Bank are assisting the Pakistani government in starting up e-governance in order to enhance transparency and curb corrupt practices. E-governance is gradually taking form. The Board of Investment (BOI) is publishing tender invitations, and many government departments are setting up websites in order to become more transparent. The Government of Pakistan Portal offers an online gazette, customs and tax services, utility connection and payment services as well as access to forms and information on business licensing and permits procedures. Provincial government websites, from that of the Government of North-West Frontier Province Portal to that of the Government of the Punjab Gateway, also provide information and services to companies and citizens concerning utility connections, land registration, company registration as well as licensing and permits procedures.

• Public Procurement: While the government subscribes to the principles of international competitive bidding, corruption is pervasive in public procurement in Pakistan. However, the Public Procurement Regulatory Authority (PPRA) in Pakistan has taken steps toward reforming the process by implementing the Public Procurement Rules of 2004 (PPR 2004) in all public procurement agencies. Standardisation and streamlining of procurement procedures are meant to help minimise and prevent corruption and enhance transparency. The PPR 2004 requires that tenders worth up to PKR 2 million must be published in the PPRA website, and tenders worth above PKR 2 million must be published in both print media and the PPRA website. According to International Monetary Fund 2008, the PPR 2004 is known among government agencies, but monitoring capacity is still developing. Public Accounts Committees (PACs) at the federal and provincial levels have been formed and have been holding regular reviews of audit reports; however the capacity of PACs remains subject to debate. The National Accountability Bureau is now requiring all procuring agencies for public contracts of works, services and goods worth PKR 50 million or above to complete contract evaluation forms intended to promote transparency and fairness in the procurement process. Transparency International Pakistan has played a major role in the struggle for transparency in public procurement, and made significant progress when Transparency International's Integrity Pact was adopted as an integral part of major public contracts. Integrity pacts are now mandatory for all contracts exceeding PKR 10 million. According to Global Integrity 2010, companies which are found guilty of corruption in relation to public procurement are legally barred and blacklisted from future participation in procurement processes, although some have reportedly not been affected by these regulations. Transparency International Pakistan was asked to monitor the purchase of USD 10.3 million worth of heavy earth-moving machinery and workshop equipment, and to compare the 2007 prices with similar procurement made earlier in 1994. According to the Transparency International Global Corruption Report 2008, even after a 15% devaluation of the PKR, Transparency International Pakistan was able to ensure savings of 23-42% on excavators and bulldozers compared to their costs 13 years earlier. The process complied with the World Bank's international standards and was in line with the Public Procurement Rules of 2004. There is no independent complaint handling system within public procurement. Companies may direct their complaints to the procuring agency, which is obliged to set up a review committee to handle the complaint. If the company is dissatisfied with the decision, it can proceed to take the case to court and let the judiciary review the case.

• Whistle-Blowing: According to Global Integrity 2010, no specific laws exist in Pakistan to protect civil servants and private sector employees who report cases of corruption from recrimination. However, the National Accountability Bureau (NAB) provides an anti-corruption reporting telephone service to which corruption can be reported. In theory, the NAB is supposed to provide protection to private sector employees who report corruption, but information about the complainant is revealed in most of the cases in practice. The Wafaqi Mohtasib (Ombudsman) also provides an online corruption reporting mechanism as well as access to downloadable complaints forms. However, Global Integrity 2008 reports that most people do not put much trust in the institution to follow up on complaints. Provincial Anti-Corruption Establishments also offer their own reporting mechanisms. 

• General Comments on the Public Anti-Corruption Initiatives: Despite that Global Integrity 2010 describes anti-corruption laws in Pakistan as ‘very strong’, corruption remains endemic and pervasive in politics and government. Freedom House 2011 notes that anti-corruption efforts in Pakistan have been highly politicised, as state agencies tasked with investigating corruption are subject to political interference and are consistently pressured into complying with regime directives or staffed with partisan officials. In December 2009, the Supreme Court (SC) revoked the National Reconciliation Ordinance, heralding a new phase of action against corrupt officials by the National Accountability Bureau (NAB). This has been welcomed as a positive step by activists and the public at large as it will now be possible to charge around 8,000 corrupt officials, including politicians, civil servants and military officials who were previously safeguarded by the National Reconciliation Ordinance. Despite that the SC requested the government to contact Switzerland regarding the re-opening of a money laundering case against President Zardari, but according to a December 2011 article by Pakistan Today, the government in the end decided not to dispatch a letter to the Swiss authorities as President Zardari is constitutionally immune from prosecution. All in all, a lack of political will, coupled with the perceived co-option of the judiciary and the arbitrariness of many anti-corruption proceedings, however, poses major obstacles to the fight against corruption in the country.

• Media: Freedom of the press and speech (aside from restrictive provisions made by the blasphemy law) is guaranteed by the Constitution of Pakistan (Art. 19). The Freedom of Information Ordinance 2002 provides for public access to government records, but is reported to have proved largely ineffective in practice as the government liberally restricts access to information by labelling records as 'sensitive'. Despite the fact that Pakistan has been under military rule, the media has been considered quite independent. President Musharraf's rule ushered in increased freedom for the print media and a liberalisation of broadcasting policies. Toward the end of his time in office, however, media rules were tightened under emergency rule. New legislation gave the broadcasting regulator more power to shut down television stations during the emergency rule and broadcasts of private television stations via cable were disrupted. The authorities have tried to discredit certain reporters as persons seeking to harm national interests, or as being unpatriotic. Critical reporters experience intimidation and harassment by the military intelligence service. All this pressure and interference on press freedom has resulted in many members of the press engaging in self-censorship and being reluctant to report on sensitive issues that might antagonise the military or the government, such as reports on military corruption. Nevertheless, the Transparency International Pakistan National Corruption Perception Survey 2010 illustrates a negative shift of perception towards the media, as just over half of the respondents, compared to 77% in the 2009 survey, believe that the media has played a positive role in combating corruption. Reporters Without Borders 2010 ranks Pakistan 151st out of 178 countries, while Freedom House 2011 ranks the country as 134th out of 196 countries in relation to press freedom and describes the country's press environment as 'not free'.

• Civil Society: Pakistan's civil society is characterised by a multitude of NGOs. According to the US Department of State 2010 and Global Integrity 2010, no CSO activists who worked with corruption issues were sentenced to prison in 2009, however, there were incidents of activists being kidnapped and later released, and some had received threats. Freedom House 2011 describes that the authorities normally do not interfere with NGO’s work and allow them to publish critical materials. The Free and Fair Election Network (FAFEN, see below) is one of the prominent CSOs that play a significant watchdog role in election-related issues. The Bertelsmann Foundation 2010 reports that then President Musharraf did consult NGOs and invited some of the leaders into his cabinet in the early stage of his rule, however, this lasted less than 2 years. Several incidents in the past in Pakistan illustrate the relative influence civil society has had on the political agendas. An example illustrating this is the massive protests across the country following former President Musharraf dismissal of Chief Justice Iftikhar Mohammed Chaudhry in 2007. The government later reinstated Chaudhry in 2009. Moreover, CSOs also took part in the National Anti-Corruption Strategy Project launched by the National Accountability Bureau. According to an August 2011 article by The Telegraph, one of the country’s leading human rights activists, Ansar Burney, announced that he would launch a massive anti-corruption campaign in Pakistan after the Ramadan, a month long Muslim festival. However, as of December 2011, there is no further information about the campaign. The Bertelsmann Foundation 2010 doubts that NGOs will be embraced under President Zardari.  

• Transparency International (TI) Pakistan: TI Pakistan is a national chapter of TI that works to counter corruption and increase accountability, both internationally and nationally. TI Pakistan has been very active in increasing public and political awareness of how corruption is obstructing development and keeping people locked in poverty. TI Pakistan has managed to engage the government in anti-corruption work, persuading them to adopt the TI Integrity Pact in public procurement among other achievements. In 2001, TI Pakistan signed an anti-bribery Integrity Pact with the Karachi Water and Sewerage Board (KW&SB) for the procurement of engineering and supervision services, and implemented the Least Cost Selection Method for the tender for the Greater Karachi Water Supply Scheme. Also, in 2005, TI Pakistan signed a memorandum of understanding with the Trading Corporation of Pakistan (TCP) for the implementation of an Integrity Pact and Transparent Public Procurement Agreement to ensure integrity and transparency in TCP's procurement systems. In June 2008, an e-complaint system through which citizens can lodge complaints regarding service deliveries was inaugurated in collaboration with TI Pakistan and sponsored by the Swiss Agency for Development & Cooperation (SDC) in the Province of Punjab (read more about the TI Pakistan-assisted City District Government Rawalpindi e-complaint centre). In February 2009 Commissioner Multan took the assistance of Transparency International Pakistan for transparent tendering. Commissioner Multan signed an MOU with Syed Adil Gilani of TI Pakistan. The Multan Division has been granted a sum of PKR 13.5 billion by the Prime Minister under the Multan Development Package. In January 2010, Pakistan International Airlines (PIA) and Transparency International Pakistan (TIP) signed a Memorandum of Understanding (MoU) to work together and enhance the element of transparency in PIA's procurement processes. It also offers free legal advice for victims of corruption at the following telephone numbers: +92 21 353 81481/90450 or +92 21 0800 84711. The latest TI Pakistan annual reports can be accessed here.

• Centre for Peace and Development Initiatives - Pakistan (CPDI-Pakistan): CPDI-Pakistan is involved in issues of transparency, such as freedom of information, rule of law, etc. The organisation works to develop awareness in the population that public participation is important for improving accountability and transparency. CPDI-Pakistan is engaged in promoting access to information and in monitoring the budget-making process, as well as the legislative process. The organisation is working to enhance transparency in the policy-making process.

• Free and Fair Election Work (FAFEN): FAFEN was established in 2006, and it is a coalition of approximately 30 leading CSOs. Some objectives of FAFEN include observing election processes, reporting on electoral fraud, violence and any other problems, and to promote fair election work. The FAFEN also publishes reports and documents on its website.

The websites listed below provide useful facts on Pakistan as well as contacts and tools for companies operating in Pakistan:

• International Finance Corporation: Pakistan SME Toolkit (in Urdu)
  Guide to sustainable business management practices for SMEs.
• Business Fighting Corruption
  An online resource centre for business on collective action to avoid corruption which contains a guide and resources for partnerships with companies and other stakeholders to fight against corruption.
• CIA World Factbook: Pakistan Profile
• World Bank: Pakistan Data Profile

Sources for further reading:

• US Department of State: Investment Climate - Pakistan 2011.
• Freedom House: Freedom in the World - Pakistan 2011.
• The Bertelsmann Foundation: Transformation Index - Pakistan 2010.
• Global Integrity: Pakistan Country Report 2010.
• Transparency International Pakistan: National Corruption Perception Report 2010.
• Transparency International: Global Corruption Report 2009.

UNCAC Status: Signed 9 December 2003. Ratified 31 August 2007.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read more about the UNCAC.

Other Relevant Conventions or Treaties:

• ADB & OECD Anti-Corruption Initiative for Asia-Pacific Anti-Corruption Action Plan for Asia and the Pacific: Endorsed 30 November 2001.
  Read Transparency International's summary and assessment of the action plan.
• United Nations Convention against Transnational Organized Crime: Signed 14 December 2000. Not Ratified.
  Read Transparency International's summary and assessment of the convention.

Transparency CPI: 2011: 134/182 (Score: 2.5)

Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.

World Bank CORR Index (-2.5 - +2.5): 2010: -1.1

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2010.

OECD Country Risk Classification (0-7): 2011: 7

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.

Data Verification:

Publication date: December 2011

Data verified by: Global Advice Network

General Information Sources

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• Freedom House: Freedom in the World - Pakistan 2011.
• The World Bank & IFC: Doing Business 2011.
• Pakistan Today: 'Govt won’t ask Swiss authorities to reopen Zardari cases', 5 December 2011.
• US Commercial Service: Pakistan Country Commercial Guide 2010.
• The Bertelsmann Foundation: Transformation Index - Pakistan 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Transparency International: Global Corruption Barometer 2010.
• US Department of State: Human Rights Report - Pakistan 2010.
• AFP: 'Pakistan Supreme Court postpones Zardari graft hearing', 12 October 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2009.
• Transparency International: Global Corruption Report 2009.
• The New York Times: 'Pakistan Strikes Down Amnesty for Politicians', 16 December 2009.
• Pakistan Trade Union Defence Campaign: 'PTUDC Conference against privatisation in Karachi', 9 June 2009.
• The Globe and Mail: 'Pakistani courts bar opposition leader, sparking crisis', 26 February 2009.
• Transparency International: Global Corruption Report 2008.
• Transparency International: Bribe Payers Index 2008.
• Lexadin: The World Law Guide - Legislation Pakistan 2008.
• U4 Anti-Corruption Resource Centre: Overview of Corruption in Pakistan, 8 August 2008.
• The Associated Press 'Pakistan restores 3 judges ousted by Musharraf', 8 September 2008.
• BBC News: 'Pakistan Sets New Election Date', 2 January 2008.
• International Herald Tribune: 'Widower of Bhutto emerges as Kingmaker' 2 January 2008.
• Transparency International: Global Corruption Report 2007.
• Transparency International Pakistan: Nature and Extent of Corruption in the Public Sector 2007.
• The World Bank & IFC: Enterprise Surveys 2007.
• Amjad Mahmood, U4 Anti-Corruption Resource Centre: Pakistan's National Anti Corruption Strategy: Background, Status, Opportunities and Challenges, 2007.
• Deutsche Presse-Agentur: 'Ex-premier Bhutto to Announce Date for Pakistan Return', 14 September 2007.
• Freedom House: Countries at the Crossroads - Pakistan 2006.
• BBC News: Pakistan Country Profile.

Corruption Levels Sources

Judicial System

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• US Department of State: Investment Climate - Pakistan 2011.
• Freedom House: Freedom in the World - Pakistan 2011.
• Freedom House: Freedom in the World - Pakistan 2010.
• Global Integrity: Pakistan Country Report 2010.
• The Bertelsmann Foundation: Transformation Index - Pakistan 2010.
• US Department of State: Human Rights Report - Pakistan 2010.
• Transparency International: Global Corruption Barometer 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• The Express Tribune: 'Unanimous approval: Senate adopts 19th amendment', 31 December 2010.
• Transparency International: Global Corruption Report 2009.
• Transparency International: Bribe Payers Index 2008.
• U4 Anti-Corruption Resource Centre: Overview of Corruption in Pakistan, 8 August 2008.
• The Associated Press: 'Pakistan restores 3 judges ousted by Musharraf', 8 September 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• Transparency International: Global Corruption Report 2007.
• Los Angeles Times: 'Pakistani Party Goes to Court', 12 September 2007.

Police

• World Economic Forum: The Global Competitiveness Report 2011-2012.
• Freedom House: Freedom in the World - Pakistan 2011.
• Global Integrity: Pakistan Country Report 2010.
• US Department of State: Human Rights Report - Pakistan 2010.
• Transparency International: Global Corruption Barometer 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Freedom House: Freedom in the World - Pakistan 2010.
• Transparency International: Bribe Payers Index 2008.
• U4 Anti-Corruption Resource Centre: Overview of Corruption in Pakistan, 8 August 2008.
• Global Integrity: Pakistan Country Report 2008.
• Transparency International: Global Corruption Report 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• The Ombudsman's Office: Annual Report 2007.

Licences, Infrastructure and Public Utilities

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• The Express Tribune: 'Pakistan Railways Special Report: A journey of neglect, incompetence and corruption', 5 December 2011.
• Transparency International: 'Corrupt railways officials to be jailed: CJ', 1 December 2011.
• The Express Tribune: 'Corruption costs Pakistan Railways over Rs4 billion: Report', 22 July 2011.
• Global Integrity: Pakistan Country Report 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Transparency International: Global Corruption Barometer 2010.
• Transparency International: Bribe Payers Index 2008.
• Freedom House: Freedom in the World - Pakistan 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• Wafaqi Mohtasib (Ombudsman): Annual Report 2007.
• U4 Anti-Corruption Resource Centre: Pakistan's health sector: does corruption lurk?', 2007.

Land Administration

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• Freedom House: Countries at the Crossroads - Pakistan 2011.
• The Express Tribune: 'Profitless venture: Railways leasing land at throw-away prices', 23 November 2011.
• Pakistan Today: 'Pakistan Railways suffers losses of Rs52b', 22 July 2011.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Transparency International: Global Corruption Barometer 2010.
• The Bertelsmann Foundation: Transformation Index - Pakistan 2010.
• US Commercial Service: Pakistan Country Commercial Guide 2010.
• US Department of State: Human Rights Report - Pakistan 2009.
• Transparency International: Global Corruption Report 2008.
• Association for Progressive Communications: 'Internet Censorship in Pakistan - Naval Chief misusing his powers', 18 August 2008.
• International Federation of Surveyors: Corruption and Land Administration 2006.

Tax Administration

• The World Bank & IFC: Doing Business 2012.
• US Department of State: Investment Climate - Pakistan 2011.
• Freedom House: Countries at the Crossroads - Pakistan 2011.
• Freedom House: Freedom in the World - Pakistan 2011.
• Dawn: 'Loopholes in e-tax refunds costing Rs15bn a month', 26 September 2011.
• Transparency International: Global Corruption Barometer 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Paktribune: 'Transparency asks FBR to probe MPs' tax returns', 16 September 2010.
• Transparency International: Bribe Payers Index 2008.
• Global Integrity: Pakistan Country Report 2008.
• U4 Anti-Corruption Resource Centre: Overview of Corruption in Pakistan, 8 August 2008.
• The World Bank & IFC: Enterprise Surveys 2007.

Customs Administration

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• World Economic Forum: The Global Enabling Trade Report 2010.
• Transparency International: Global Corruption Barometer 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Business Recorder: 'Huge quantity of smuggled goods seized', 22 February 2009.
• Global Integrity: Pakistan Country Report 2008.
• Transparency International: Bribe Payers Index 2008.
• US Commercial Service: Doing Business in Pakistan: A Country Commercial Guide for US Companies 2007.
• The World Bank & IFC: Doing Business Reformer's Club Case Studies - Speeding Up Trade 2007.
• The World Bank & IFC: Enterprise Surveys 2007.

Public Procurement and Contracting

• World Economic Forum: The Global Competitiveness Report 2011-2012.
• US Department of State: Investment Climate - Pakistan 2011.
• US Commercial Service: Pakistan Country Commercial Guide 2010.
• Global Integrity: Pakistan Country Report 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Sify: 'Pak Govt. can save four billion dollars by ridding rampant corruption in procurement', 6 July 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2009.
• Transparency International: Global Corruption Report 2009.
• Transparency International: Global Corruption Report 2008.
• U4 Anti-Corruption Resource Centre: Overview of Corruption in Pakistan, 8 August 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• U4 Helpdesk: Corruption in Pakistan.

Environment, Natural Resources and Extractive Industry

• Global Integrity: Pakistan Country Report 2010.
• Transparency International: Global Corruption Report 2009.
• Transparency International: Global Corruption Report 2008.
• Newsline: 'The Grand Steel steal?', May 2006.

Public Anti-Corruption Initiatives Sources

• Freedom House: Countries at the Crossroads - Pakistan 2011.
• US Department of State: Investment Climate - Pakistan 2011.
• Pakistan Today: 'Govt won’t ask Swiss authorities to reopen Zardari cases', 5 December 2011.
• Global Integrity: Pakistan Country Report 2010.
• US Department of State: Human Rights Report - Pakistan 2010.
• The Bertelsmann Foundation: Transformation Index - Pakistan 2010.
• Dawn: 'Auditor General's office detects Rs323bn bungling', 4 May 2010.
• The New York Times: 'Zardari Back In Spotlight in Pakistan Graft Cases', 31 March 2010.
• Inform: 'Zardari convenes Pakistan crisis talks', 24 February 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2009.
• BBC News: 'Zardari Faces resignation demands', 17 December 2009.
• The New York Times: 'Pakistan Strikes Down Amnesty for Politicians', 16 December 2009.
• Common Ground News Service: 'Pakistan's ombudsman tackles injustice and unaccountability', 27 October 2009.
• The News: 'Zardari gets tough with Musharraf', 9 February 2009.
• Transparency International: Global Corruption Report 2008.
• Freedom House: Freedom in the World - Pakistan 2008.
• International Monetary Fund: Pakistan: Report on Observance of Standards and Codes—
  Fiscal Transparency Module—An Update 2008.
• U4 Anti-Corruption Resource Centre: Overview of Corruption in Pakistan, 8 August 2008.
• Reuters: 'Pakistan's Musharraf rejects UN inquiry on Bhutto', 11 January 2008.
• Wafaqi Mohtasib (Ombudsman): Annual Report 2007.
• Amjad Mahmood, U4 Anti-Corruption Resource Centre: Pakistan's National Anti Corruption Strategy: Background, Status, Opportunities and Challenges, 2007.
• The News: 'Transparency International Report Independent Judiciary Termed Vital to End Corruption', 27 September 2007.
• Transparency International: Procurement Handbook: Curbing Corruption in Public Procurement – Experiences from Indonesia, Malaysia and Pakistan 2006.
• ADB & OECD Anti-Corruption Initiative for Asia-Pacific: Curbing Corruption in Public Procurement in Asia and the Pacific, Pakistan 2006.
• Daily Times: 'Rainbow Centre business bombs 60% in raid aftermath', 5 March 2006.
• BBC News: 'Pakistan off human smuggling list', 3 June 2005.

Private Anti-Corruption Initiatives Sources

• Freedom House: Freedom of the Press 2011.
• Freedom House: Freedom of the Press Index 2011.
• Freedom House: Freedom in the World 2011.
• Reporters Without Borders: Pakistan Country Report 2011.
• The Telegraph: 'Anna Hazare: Pakistan to follow India with anti-corruption campaign', 24 August 2011.
• The Bertelsmann Foundation: Transformation Index - Pakistan 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2010.
• Reporters Without Borders: Worldwide Press Freedom Index 2010.
• Freedom House: Freedom in the World - Pakistan 2010.
• US Department of State: Human Rights Report - Pakistan 2010.
• Transparency International Pakistan: National Corruption Perception Survey 2009.
• BBC News: 'Pakistan reinstates sacked judge', 16 March 2009.
• Business Recorder: 'Commissioner Multan signs MoU with TIP', 22 February 2009.
• Transparency International: Global Corruption Report 2008.
• Amjad Mahmood, U4 Anti-Corruption Resource Centre: Pakistan's National Anti Corruption Strategy: Background, Status, Opportunities and Challenges, 2007.
• The Nation: 'Pakistan 42nd Most Corrupt Country', 27 September 2007.
• OECD: Anti-Corruption Policies in Asia and the Pacific 2004. 
• BBC News: Pakistan Country Profile.