It was the 8th of July, 1996. That global newspaper of record, The New York Times, was running a review in the aftermath of a report that had rattled Islamabad and Benazir Bhutto’s second – and last – government.
The writer, Raymond Bonner, was introducing the then three-years old and relatively unknown anti-corruption watchdog, Transparency International, whose annual report, the “Corruption Index”, had slammed Pakistan, Nigeria and Kenya at the bottom of the global graft scale. Unsurprisingly, Bhutto was under fire in parliament and the local press because of the rankings, which had been leaked to the Hamburg-based magazine Der Spiegel. But the Times was telling a bigger story than just Pakistan’s corruption.
“Moral opprobrium toward bribery is nothing new,” reported Bonner. “It goes back some 4,000 years, with prohibitions found on Babylonian tablets.”
The corruption of modern Babylon, Bonner would explain in his piece, “The Worldly Business of Bribes: Quiet Battle Is Joined” was being fought in a new, non-confrontational way by TI, the brainchild of Peter Eigen, a former World Banker who had seen too much corruption during his work in South America and Africa to not do anything about it, thus founding his NGO in 1993.
“Unlike Amnesty International and Human Rights Watch, which have discovered that their effectiveness in combating abuses comes through issuing reports criticising governments,” Bonner would explain, “Transparency International practices ‘quiet diplomacy’”.
This ‘easy-does-it’ approach had been charted by TI founder Eigen “in an effort to win favour with governments and companies, whose policies and practices it [TI] hopes to change, the organisation stresses that it does not investigate or even expose reports of bribery.”
Bonner and the Times probably didn’t know how much this non-confrontational organisation they were reporting on would eventually morph. Years later, for example, by the time another Pakistan Peoples Party administration was in power (the Asif Ali Zardari regime, of course), TI’s Pakistan Chapter would perfect the art of going to war with the government and its representatives, using studies, letters, reports, leaks, media hype, political arm-twisting land the attention of, and favors from, various public institutions. Eigen’s old and effective ‘quiet diplomacy’ would be shelved by the contemporary TI Pakistan.
Back to 1996 when, as the global trade regime was being reborn, Bonner would question how about a third (just over $500,000) of TI funding was being provided by businesses, making it “open to criticism that its independence is compromised, that its watchdog’s teeth may not be so sharp.”
That’s when the most telling comments from TI’s founder Eigen would be quoted: “We worry more about taking government money,” he would say, as that’s where the majority of TI’s funds came from, not private corporations.
Today, in 2014, life has changed. Governments are slashing donation budgets and TI, largely dependent on governmental funding, has been forced to embrace corporations more tightly for sponsorships. Some of the corporations Transparency International is cozying up to for cash are a multinational engineering conglomerate and an Italian energy giant, ENI.
Recently, TI has applied to the multinational engineering conglomerate’s anti-corruption initiative for millions in funding. This is ironic, considering the conglomerate pled guilty in 2008 to bribery charges and paid more than $1.6 billion in penalties, implicated in corruption in Greece, Norway, Iraq, Vietnam, Italy, Israel, Argentina, Venezuela, China and Russia and admitted in its recent filings to the US financial regulator, the Securities and Exchange Commission, that there are ongoing and recent corruption investigations into activities of the multinational engineering conglomerate in Kuwait, Central Asia, the Caribbean, Brazil, Argentina, Greece, Switzerland, Austria, Venezuela, South Africa, Thailand, and Bangladesh – as well as at the Inter-American Development Bank and European Investment Bank. Moreover, the conglomerate itself has declared “additional criminal or civil sanctions could be brought against the company itself or against certain of its employees in connection with possible violations of law. In addition, the scope of pending investigations may be expanded and new investigations commenced.” That’s according to the ace American corporate news watchdog, Corporate Crime Reporter, and the Security and Exchange Commission, the US’s primary financial regulatory authority.
But here’s Transparency International, which, besides queuing up for the conglomerate’s tainted handouts, has not made any statements nor taken any preventive measures against its accredited local chapters that have been accepting cash from the conglomerate, with TI USA accepting $660,000 for three years, TI Italy taking $600,000 for three years, TI Bulgaria taking $450,000 for three years, and TI Mexico taking $230,000 for three years.
Why is this important? Because TI – which reminds the world how corrupt it is, and publishes reports that slam Pakistan as one of the most corrupt countries in the world, year after year – is supposed to fight corruption, not take cash from organizations it knows and has reported as tainted.
Consider: Last October, just around the time the first of my investigative pieces about TIP was published in The News, Transparency International itself reported in an internal document (titled “Private-Sector Donors Approval and Due Diligence Processes”, first obtained by Corporate Crime Reporter) that the executives of ENI, the Italian oil and gas behemoth, and the company itself were under investigation for suspected bribes in Algeria and Kazakhstan, respectively. Before that, in a 2012 reported titled “US Ruling On Oil, Gas And Mining Companies Will Make Them More Accountable”, TI itself gave ENI the fourth lowest score out of 20 energy companies, measuring the Italian firm’s financial transparency, or lack thereof. In 2013, a TI Financial Transparency Coalition partner, Global Wellness, published a damning report alleging that ENI and the tainted Anglo-An oil firm made an illegal $1.1 billion payment that ended up in the accounts of a company controlled by a corrupt former Nigerian energy minister. In 2010 ENI and its Dutch subsidiary Snamprogetti paid a $240 million criminal penalty to settle a Foreign Corrupt Practices Act (a unique US law) case connected to Snamprogetti’s role in a shady TSKJ-Nigeria natural gas joint venture. And recently, last May, ENI failed to implement an ethics clause to its own bylaws that would have forced managers indicted of certain financial crimes to resign (credit to CCR for first reporting this); and this is the company that is funding Transparency International.
The same Transparency International that gave an award to American whistleblower Edward Snowden for risking all and disclosing the US government’s espionage policies last year, but then shied away from a resolution demanding his freedom and protection when vested interests – major corporations and defense firms that support TI USA, according to the Huffington Post – ensured that nothing too encouraging of Snowden’s actions makes it to the record from TI’s official letterhead.
No doubt, TI has worked hard over the year for its most valuable asset, its reputation, telling the world how to be corruption-free. But in the ‘will-overlook-corruption-for-donations’ reality that it is facing, it has managed to divert from its own guidelines, listed clearly in its own internal “Private-Sector Donors Approval and Due Diligence Processes” document: “If any corporate donor is accused of having been involved in corruption, the donor can expect no protection from TI…TI would not accept a donation from a company that was found to have engaged in corruption unless the company could demonstrate that this was a violation of the company’s policies, and that breach of these policies was being addressed in an appropriate manner.”
Little surprise, then, that TI has not disclosed its due diligence reports on the conglomerate or the Italian energy giant. There is no greater good argument applicable here; when you’re Transparency International, you have to practice transparency.
Thus, its accredited chapters, unleashed, morph from watchdog to interest group mode. These would include Transparency International Bangladesh (TIB), which practices partisan politics as it plays into pro-Dhaka/Sheikh Hasina regime hyper-nationalism by openly and officially demanding and supporting the implementation of the death penalty against those it slams as “war criminals”. In fact, TIB has published a whole document on its definition of what a “War Crimes” are, especially keeping in context Bangladesh’s traumatic 1971 breakup from Pakistan). This is not just TIB, an anti-corruption watchdog, abandoning its post and playing politics; this is also an ethical breach of TI’s standards, as most of TI’s governmental sponsors connected to the European Union and Canada abhor the death penalty.
Then, closer to home, there’s TIP, which wantonly backed the clampdown on Jang/Geo after the Hamid episode, the reasons for which author and political observer Raza Rumi surmises succinctly: “TIP was quite happy with the Jang group until it was given coverage. With the latter falling out favor with the establishment, TIP quickly started to dig up dirt on the group and its affiliates proving that fighting corruption remains a political instrument and not a genuine way to improve national governance and value systems.”
Keeping it local, should we then believe TI when it tells us how corrupt Pakistan is in its annual Corruption Perception Index, which the Guardian reports has an “elite bias”, the Economist labels as the “murk metre” and Foreign Policy magazine says “is a distorted reflection of the truth”?
Moreover, should we believe TI’s remarkably conflicted (as explained in Part 1 of this series and extensively elsewhere, too) when it writes to the Prime Minister, as it did last week, about “illegal appointees” in government controlled corporations, authorities and bodies? Or when it files a case in the Supreme Court, as it did the week before last, against the controversial appointment of the Managing Director, PIA? Or when it raises objections to the bidding process of the Privatisation Commission, alleging that undue favour was accorded to a particular consulting firm for financial advisory services in several projects and joint ventures the PC is handling, as it also did last week? Or when it tells the Port Qasim Authority, as it did in early July, not to buy more tug boats, as the tender doesn’t allow it? Or when it reminds PM Nawaz Sharif to follow a prudent “one-man, one-board” policy for Public Sector Enterprises, as it did earlier this summer? Or when it risks the ire of our military-industrialists as it cites a Supreme Court ruling and writes to the PM and his four chief ministers declaring that “inviting of open bids is a prerequisite, as award of any unsolicited contract even to Frontier Works Organisation, National Logistics Cell and National Engineering Services Pakistan will be contempt of court, illegal, and void ab initio”?
Again: Should we take TIP seriously when it raises hard questions, like the ones above. Sure! Why not?! A good question should be acknowledged as such: But with nuance, caution, and some healthy skepticism about TIP’s intent (for it made hay as the press shined over all of the above correspondences which, by the way, is contrary to TI’s well groomed ‘quiet diplomacy’ approach).
But, we should also ask our own questions, right back.
For example, when TIP asks the Public Procurement Regulatory Authority (PPRA) why it has not banned existing contracts – like the one for the dysfunctional yet ‘new’ Islamabad airport that never was – with 17 Chinese, seven Turkish and one Canadian firm in Pakistan, considering that the World Bank and the Asian Development Bank have blacklisted and debarred those companies, we should thank TIP for the fair question and ask it about, say, its de facto watchdog-in-chief Adil Gilani’s own well documented and dark deeds.
Like evident conflicts of interest with business tycoons, such as Aqeel Karim Dhedi; and well-sourced allegations of installing his son on the board of the Pakistan National Shipping Corporation in a ‘wont-tell-media-about-PNSC-problems-if-you-appoint-my-son deal’; or his unceremonious flight to Africa after his tenure at the Karachi Development Authority ended in a scandal involving a contract for the Finance and Trade Center. Or his unexplained and mysterious tax-statements?
But enough has already been pointed out about Gilani in previous investigations, so lets leave him aside. Instead, lets broaden the scope of our questioning to TIP’s current chairman, Sohail Muzaffar, who is a lawyer and has legally represented his client, one Adil Gilani, multiple times in litigation (for example, against Newsweek Pakistan in 2010), and ask him how he will overcome his own conflicts of interest as he presides over a TIP “ethics hearing” about his client’s questionable actions (which, by the way, I have been invited to and refused to attend due to the absurd premise of the proceedings: they will be internally-led and conducted by folk that Gilani himself has installed at TIP).
Also, this TIP “ethics hearing”, if it ever happens, could be further complicated by more conflicts of interest, not only because Gilani is a friend of Muzaffar’s, but also because the current TIP chair and the former TIP chair have shared the same boss; for it was not too long ago, just around the top of the decade, when Muzaffar was the Vice Chairman of the now defunct MyBank, reporting to its second largest shareholder, Aqeel Karim Dhedi, while Gilani was a shareholder and director for Dhedi’s real estate arm, AKD REIT Management Company, working the TIP pulpit to bully AKD’s land development competitors (like Emaar and Meinhardt) into the ground, no pun intended. Also considering that Muzaffar serves under Gilani in an abstract NGO called Whistleblower Pakistan (Muzaffar’s merely a Trustee in that shop; Gilani, that poster-boy of accountability for all but himself is, of course, the Chair), it will be increasingly awkward for Muzaffar to judge his boss/friend/client/colleague.
But when Muzaffar is joined in this internally led enquiry by, say, senior TIP Trustee Khurram S Abbas, things could get even more knotty. That’s because Khurrum was, till last January, the CEO of Port of Singapore Authority at Gwadar’s International Terminal, which was a joint venture with – unsurprisingly yet disturbingly – the AKD Group of Companies. Quite evidently, the stock market heavyweight has had the distinct privilege of having three of his employees on TIP’s 10-member Board of Trustees for a few overlapping years. No wonder that most of AKD’s concerns never received any warning letters from TIP for infractions and transgressions, some of which were widely reported, some litigated against, and some yet to appear on these pages.
How can we fix this? Can we restore our trust in the global watchdog and its local fief? Academics are always an option. When Ellen Gutterman, Assistant Professor at the Department of Political Science of Glendon College, York University submitted a paper titled “The Legitimacy of Transnational NGOs” to the 84th annual conference of the Canadian Political Science Association in June, 2012 in Alberta, she probably should have sent a copy to Adil Gilani and his buddies at TIP for a review: that’s because she brilliantly broke down (via a case study of France and Germany) how Transparency International gained and lost that secret ingredient required by a watchdog for ensuring its mission success: legitimacy. While it failed to establish trust in France, Gutterman claimed, TI did exceptionally well in the country of its birth simply by behaving discretely: “TI owes much of its legitimacy in Germany to its allegiance to non-confrontational, ‘consensus-building’ strategies for promoting anti-corruption among its target audiences in business and government. From the outset TI eschewed scandal, public muckraking, or the “outing” of particular firms engaged in corrupt practices.” This would be critical reading for Gilani, Muzaffar and gang, for their approach in Pakistan – scandal, public muckraking, and “outing” of particular institutions – is quite the opposite of TI founder Eigen’s well imagined “quiet diplomacy” and TI Germany’s low profile, consensus-building approach.
Gutterman critically explains: “Explicitly eschewing the investigation of alleged corruption or any attempt to “name and shame” corrupt actors, TI’s non-confrontational “inside-the-tent” approach to international anti-corruption lent it credibility and trust among the multinational corporations, governments, private foundations, and other like-minded public interest groups it engaged to build consensus and anti-corruption progress through persuasive means.”
That’s where TIP has lost the plot.
Ask Shahid Khaqan Abbasi, the Petroleum Minister, and he will trash Gutterman’s “inside-the-tent” theory about Transparency International’s modus operandi in Pakistan. As his ministry has been at media-hyped loggerheads with TIP of late (for OGDCL, PSO etc), Abbasi’s ministry has gone on to write several letters to TIP right back, asking the watchdog for proofs of its allegations.
“But we have yet to receive any solid evidence,” said the Minister at an Islamabad press conference, recently. “We just get to read articles about ourselves in the paper with empty allegations by TIP, nothing else, with no time to respond.” Or ask David Walters, the former Oklahoma governor turned energy entrepreneur, whose Walters Power LLC was made a target of a US federal probe by TIP in 2012, when the watchdog complained to the US Department of Justice about Walters Powers allegedly paying bribes in the PPP/Rental Power Plants debacle.
Eventually, Walters Power and another firm, Pakistan Power Resources, also alleged by TIP to be tainted, was cleared by the DOJ (and separately, by NAB) of any wrongdoing because nothing could be proven. In fact, in an October 31st, 2012 letter to Walters Power by the US Department of Justice’s Criminal Division Trial Attorney, John Borchert, the DOJ would clearly state that “Transparency International-Pakistan, which referred this matter to the Department of Justice, has provided no evidence of bribery in connection with the RPP contracts in response to our request for further information.”
There was a ‘blame-destroy-move on’ TIP strategy at work, according to Powers, which he described in a letter to the TI Secretariat in Berlin after being cleared of charges alleged by TIP. His assessment would sound remarkably like Shahid Khaqan Abbasi’s complaint: “We believe that being given the opportunity to be heard is a right of any party against whom such serious allegations are made. We also believe that proper due diligence and care is a requirement of Transparency international’s rule of business. However, TIP does not follow this process. Instead it resorts to writing accusatory and damming [sic] letters without any regard to the harm it causes and without any facts or evidence to support its claims…It seems that TIP’s goal is not to find actual corruption but instead to cause their commercial and political opponents expense and disruption trying to prove a negative.”
The 24th governor of Oklahoma’s impassioned letter to TI would go on. He would claim that his firm being targeted by TIP was not unique. He would include local press reports questioning TIP’s ethics. He would even cite a Huffington Post op-ed (on retail giant Walmart’s irregularities) by Cobus de Swardt, the Managing Director of TI in Berlin, quoting: “A culture of bribery in a subsidiary is unacceptable, but failing to deal with it is even worse. Managers who don’t tolerate corruption in their back yards should never accept corruption in their overseas operations…Companies need a culture of integrity at the top.”
Walters would tell TI that it wasn’t practicing what it was preaching. He would also demand an inquiry against TIP. Nothing would happen.
Thus, one must keep on asking: Though they’ve done constructive work in the past, why does the disruptive TI/TIP
combine also continue to wreak havoc on the reputations and projects of certain select firms and institutions without evidence? Even when regulators and investigators clear these organizations, as was the case with Walters Power, letters admonishing the company could be accessed from links on TI and TIP websites? Why such impunity?
Furthermore, Walters isn’t alone. Jahangir Siddiqui & Co knows all about the “expense and disruption” that was caused to the firm by what spokesperson Imran Sheikh called a “defamation and slander letter campaign, as JS was never allowed to address TIP’s concerns and accusations, even though they were false” before TIP went on an 8-month-and-27-letter correspondence rampage against the Pakistani financial group to regulators like the State Bank, The Bank of England, and JS’s potential partner, HSBC Bank. No proof was presented of the allegations (which, in TIP’s imagined nutshell, was JS was paying HSBC off for an acquisition deal). Thus, a Pakistani business group lost out on an opportunity to keep a foreign-owned bank in the country.
Eventually, as JS took TI to court in Germany, TIP was forced to eat crow with a ‘yes-we-did-it-but-we-meant-no-harm’ explanation about its aggressive letter-writing campaign. Incredibly, as it accepted that none of its claims against JS were true, TIP also audaciously wondered in its affidavit to the German courts how its media hyped letters could have derailed a multi-million dollar deal for Pakistan’s banking industry. As was the case with Walters Power, the letters remained accessible on TI/TIP’s sites long after it was settled that there was no substance to them. What never made it to the record from TI/TIP’s side was that Adil Gilani may have been motivated by his financial and operational association with AKD, the natural rival to the JS group.
The list of TIP’s self-proclaimed victims – individuals and institutions – is expansive. Ask the former Pakistan Cricket Board chief and political commentator, Najam Sethi, who has sent just a legal notice to TIP for “maligning” him, and is now seeking an apology. Or ask Pakistan State Oil which, despite having signed an MoU with TIP that calls for both sides to jointly work together to help the troubled government corporation, is currently subjected to a publicized vilification campaign instead, complete with a series of “inaccurate and libelous letters” that are accessible from TI/TIP’s websites, according to a PSO insider; this is also coupled with Adil Gilani giving TV interviews just this July, publicly demanding PSO resignations on live television, complete with colorful personal anecdotes. So much for TI’s much vaunted ‘quiet diplomacy’.
Keep on asking. Ask ICI; or the Civil Aviation Authority; or the Securities and Exchange Commission of Pakistan; or the Competition Commission; or the Pakistan Army; or even NAB, and TIP’s “overzealously circulated and wrongful claims” (according to an ICI official), “selective targeting for vested interests” (according to a CAA official) and, my personal favorite, “multiple counts of conflict of interest” (according to a senior NAB executive) keep on emerging.
Is this all being imagined? Nobody’s saying that the organisations and individuals it targets are off the hook. But aren’t Transparency International and its Pakistan concern actually suffering from serious irregularities of their own? They’re watching us, but I ask again: Who’s watching the watchdog? Concluded