Category Archives: Development

Why Transparency International’s 2020 corruption ranking of Pakistan is structurally flawed?


Syed Sharfuddin

On 25 January, 2021 Transparency International (TI), the Berlin based global watchdog on corruption issued its Corruption Perception Index (CPI) for 2020 in which Pakistan ranked 124 out of 180. This came as news to Pakistanis who had come to believe that the Pakistan Tehrik-e-Insaaf (PTI) government of Prime Minister Imran Khan was the ‘cleanest’ of all the governments Pakistan has seen since the restoration of civilian democracy in Pakistan in 2008.  In that year, when General Musharraf left power and Pakistan People’s Party (PPP) formed a representative government following a free and fair election, TI’s CPI ranking for Pakistan was 134 out of 180. In 2013 when PPP lost the general election and Pakistan Muslim League (Nawaz) came to power, Pakistan’s CPI rank was 127 out of 177. In 2018, when PTI won the general election and formed government, Pakistan’s CPI rank was 117 out of 180. In 2019 it slipped 3 points to 120 out of 180. In 2020 it came down another 4 points to 120 out of 180. This contrasts sharply with Pakistan’s CPI rank during 2015-2018 in the PML (N) government when it fluctuated between 116 and 119. Pakistan’s 2020 rank stands close to the 2014 CPI index of 126 out of 180. This is despite the fact that the PTI leadership has zero tolerance for corruption and TI has not taken it into account in scoring Pakistan’s ranking in its global index.

TI uses thirteen different databases from twelve international and private institutions, which provide perceptions of business people and country experts about the level of corruption in the public sector of a country under scrutiny. Their databases focus on a specific theme on which the concerned institution collects data and shares with TI. The institution also asks specific questions in its area of specialization to assess whether corruption exists in the political system and public sector. For assessing Pakistan’s ranking in 2020, TI relied on the data provided by the following nine institutions.

Bertlsmann Stiftung Transformation Index (BFTI). The questions were: 1) to what extend public office holders who abuse their positions are prosecuted or penalized? 2) to what extent government successfully contains corruption?

Economic Intelligence Unit (EIU). The questions were: 1) are there clear procedures and accountability governing the allocation and use of public funds? 2) do ministers/public officials misappropriate public funds for private or party political purposes? 3) are there special funds for which there is no accountability? 4) are there general abuses of public resources? 5) is there a professional civil service or are large numbers of officials directly appointed by the government?  6) is there an independent body auditing the management of public finances? 7) is there an independent judiciary with the power to try ministers/public officials for abuses? And, 8) is there a tradition of a payment of bribes to secure contracts and gain favours?

Global Insight Business Conditions (GI). Their questions were: 1) do individuals/companies face bribery or other corrupt practices in carrying out business, or securing major contracts or being allowed to import/export a small product or obtaining everyday paperwork? and, 2) if so, is there a threat to the ability of individuals / companies to operate in a country, and do they run the risk of facing legal or regulatory penalties and reputational damage?

IMBD Yearbook 2020. The question asked was: do bribery and corruption exist?

The PRS Group International Country Risk Guide 2020. The questions were: 1) does financial corruption exist in the form of demands for special payments and bribes connected with import and export licenses, exchange controls, tax assessments, police protection or loans; and, 2) is there actual or potential corruption in the form of excessive patronage, nepotism, job reservations, exchange of favours, secret party funding and suspiciously close ties between politics and business?

World Bank Country Policy and Institutional Assessment 2019. The questions were: 1) is there transparency for accountability and corruption of the executive to oversight institutions and of public employees for their performance? 2) does civil society have access to information on public affairs? and, 3) is there State capture by narrow vested interests?

World Economic Forum (WEF) Executive Opinion Survey 2019. Questions put to business executives were:  1) how common is it for firms to make undocumented extra payments or bribes connected with the following:a) imports and exportsb) public utilitiesc) annual tax paymentsd) awarding of public contracts and licenses, and,e) obtaining favourable judicial decisions? and, 2)how common is diversion of public funds to companies, individuals or groups due to corruption?

World Justice Project (WJP) Rule of Law Index. The question asked was: to what extent government officials, employed in public health system, regulatory agencies, the police, military and judiciary use public office for private gain. Pakistan scored low in this data collected from experts.

Varieties of Democracy Project. The question asked was: how pervasive is political corruption? Pakistan scored low in this data collected from experts.

The other four institutions that supplied data to TI did not cover Pakistan. These were: 1) Freedom House which, in this context, deals with counties in democratic transition; 2) African Development Bank, which deals with counties in Africa; 3) Bertismann Stiftung which deals with countries in the EU, and 4) Political and Economic Risk Consultancy which deals with specific countries in the Asia Pacific region and the US.

There are gaps in the methodology used by TI to rank countries on corruption. Firstly, not all the thirteen data providing institutions assess all 180 countries, which raises a question about the quality of information used to make an assessment for each country. Secondly, with the exception of a few, most of the institutions collecting data are private risk assessment firms, which sell country reports to governments and foreign investors on commercial terms. Interestingly, although TI website provides information about the url sources of its data, the private institutions providing the data to TI do not make their reports open to public without registration. This raises the next question about transparency of data collection and country ranking.

TI Pakistan website does not give information about who was approached in the business and expert sector to provide specific answers to the data collecting institutions. In a country like Pakistan where opinions are so openly divided between pro government and pro-opposition lobbies, it is hard to rank perceptions.

Thirdly, TI methodology does not explain how weightage is assigned to different data sources. For instance, Pakistan scored low in the questions asked by two institutions: the World Justice Project and Varieties of Democracy Project but its scoring in the answers to questions by other seven institutions did not prevent its slippage by four points in 2020.

The World Justice Project is a US based database covering the views of households, legal practitioners and experts. WJP assesses countries in eight specific areas, namely, constraints for government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice and criminal justice. TI’s selection of this institution to assess the level of corruption in a country is inaccurate because WJP does not specialise in corruption. Its focus is on rule of law and the factors that impede respect and enforcement of rule of law. Unlike TI’s coverage of 180 countries, WJP covers only 128 countries.

The Varieties of Democracy Institute is an academic Sweden-based democracy-rating project, which studies the state of democracy in a country in five specific areas. These are: electoral democracy and its liberal component; government manipulation of media, civil society, rule of law and elections; polarization of society and use of hate speech by political leadership; spread of disinformation in the cyber age; and political, executive and public sector corruption. The institute relies on the work of about a dozen researchers, a similar number of managers and 2000 country experts. Its core work is democracy and not corruption. TI’s use of this institute to rank counties in the CPI index is therefore not convincing.

Even if it is conceded that Pakistan fails almost all the criteria of V-Dem Institute on democracy benchmarks and has a large democracy deficit in the rule of law index of WJP, it cannot be attributed to the level of corruption in the country in 2020 compared to the corruption levels in the previous years.

To provide evidence of improvement in anti-corruption in a country, one needs to look at the commitment of the government for eliminating corruption at political, executive and public sector levels. One also needs to see if the regulatory bodies in a country are willing and able to translate the political commitment into action. In 2020, Pakistan met the requirement of having such a political commitment at the highest level. Its anti corruption bodies also delivered on this commitment. The country’s main anti corruption agency, the National Accountability Bureau made tremendous efforts in 2019 to 2020 to recover Rs. 390 billion of embezzled public money. The Public Accounts Committee also made recoveries worth Rs 300 billion. In 2020 the public fundraising drive launched as the Prime Minister’s COVID Relief Fund did not fall prey to public corruption in the collection of donations or distribution of funds to the poor.

This is not to say Pakistan has scored better in tackling corruption and must be placed somewhere close to 90 in the CPI ranking. As stated earlier, corruption cannot be eliminated in a short period of one or two years. There are democracy and corruption related issues that will take a while to remove such as the constitutional requirement of organizing a general election under a neutral caretaker government, because the incumbent government whose electoral term comes to an end after five years cannot be trusted to hold a free and fair election. Or take for example Prime Minister Imran Khan’s suggestion to pass a constitutional amendment to conduct the Senate election by a show of hands instead of a secret ballot, because the electoral college, comprising elected representatives in the Provincial Assemblies cannot be trusted to be honest due to the past record of large scale horse-trading in Senate elections involving political bribes of millions of Rupees.

There is also moral and intellectual corruption in public office, which does not count in TI’s PCI criteria. Political leaders have repeatedly made promises they have never fulfilled. They publicly claim to resign if they are proven wrong, but when events or evidence prove them so, they look the other way. Accepting an error of judgment or tendering resignation from public office for failure to perform or act responsibly is not part of the political culture of Pakistan. Many investigation reports are never made public.  The government reacts to public outrage against corruption not by strengthening existing institutions but by ordering judicial enquiries (such as the most recent Commission on Broadsheet) or establishing additional committees (such as the joint investigation committees).  In staying in a reactive mode all the time, the important lesson learning is lost in the details. Political leaders file counter cases in courts when challenged with allegations of corruption against them. These issues do not feature in the criteria of IT. Its annual data is based on assessments provided by a limited pool of business executives and experts, not exceeding a few hundred in each country.

There is a difference between the actual state of corruption on the ground and the perception of corruption reducing or getting worse. What reinforce such perceptions are statements of political leadership from both the government and the opposition and the views of businessmen, academics, civil society and media.  The PTI government has harmed its anti-corruption agenda by keeping the rhetoric of corruption high at every national and international forum. In his bilateral meetings with leaders of other states, including meetings at the UN and WEF, the Prime Minister has talked about his country’s past leaders being corrupt and dishonest. In most of his domestic speeches he has also attacked them repeatedly for stealing public money and keeping secret bank deposits and real estate assets overseas. This narrative has sent a wrong message to the world that the present Prime Minister may be an honest and upright gentleman, but his country is the land of the corrupt and crooks. With this message, when representatives of international institutions meet Pakistanis, they don’t hear a contradiction. When they speak to government functionaries or PTI supporters, they hear stories about the corruption of opposition leaders. When they speak to the opposition parties and their supporters, they hear stories of scandals and corruption in public office by government ministers and advisers, with the result that the image they came with in the country about corruption is amplified and reinforced.

A damaging impact of this unhealthy narrative is that it feeds the view that the anti corruption agenda of the government is nothing more than a political stunt to keep the opposition on the defensive. It is also a matter of who one talks to in the business community and civil society. The polarisation of he society is so stark that an opinion on reduction in corruption is cancelled by a counter-opinion against it.

It is about time that the Prime Ministers and his ministers and advisers change their narrative and stop witch hunting the opposition on corruption. They should instead speak about other important issues, which have to do with strengthening democracy and achieving real growth and development. Improvements in social safety networks, human rights, criminal justice system, the rule of law, independence of judiciary and freedom of media are ultimately going to be the winners for Pakistan in its fight against corruption without beating the drum loud. There is also no need to take TI’s 2020 CPI ranking seriously because it does not deserve the importance it should be given in all fairness because of the shortcomings in its data collection methodology and applying it realistically in framing the annual global index.

The author is a former Special Adviser, Political Affairs in the Commonwealth Secretariat, London, UK. He can be reached at sharaf.sharfuddin@gmail.com

Coming of a Prophesy?

By Syed Sharfuddin

عَنْ عَبْدِ اللَّهِ بْنِ عُمَرَ أَنّ رَسُولَ اللَّهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ قَالَ يَا مَعْشَرَ الْمُهَاجِرِينَ خَمْسٌ إِذَا ابْتُلِيتُمْ بِهِنَّ وَأَعُوذُ بِاللَّهِ أَنْ تُدْرِكُوهُنَّ لَمْ تَظْهَرْ الْفَاحِشَةُ فِي قَوْمٍ قَطُّ حَتَّى يُعْلِنُوا بِهَا إِلَّا فَشَا فِيهِمْ الطَّاعُونُ وَالْأَوْجَاعُ الَّتِي لَمْ تَكُنْ مَضَتْ فِي أَسْلَافِهِمْ الَّذِينَ مَضَوْا وَلَمْ يَنْقُصُوا الْمِكْيَالَ وَالْمِيزَانَ إِلَّا أُخِذُوا بِالسِّنِينَ وَشِدَّةِ الْمَئُونَةِ وَجَوْرِ السُّلْطَانِ عَلَيْهِمْ وَلَمْ يَمْنَعُوا زَكَاةَ أَمْوَالِهِمْ إِلَّا مُنِعُوا الْقَطْرَ مِنْ السَّمَاءِ وَلَوْلَا الْبَهَائِمُ لَمْ يُمْطَرُوا وَلَمْ يَنْقُضُوا عَهْدَ اللَّهِ وَعَهْدَ رَسُولِهِ إِلَّا سَلَّطَ اللَّهُ عَلَيْهِمْ عَدُوًّا مِنْ غَيْرِهِمْ فَأَخَذُوا بَعْضَ مَا فِي أَيْدِيهِمْ وَمَا لَمْ تَحْكُمْ أَئِمَّتُهُمْ بِكِتَابِ اللَّهِ وَيَتَخَيَّرُوا مِمَّا أَنْزَلَ اللَّهُ إِلَّا جَعَلَ اللَّهُ بَأْسَهُمْ بَيْنَهُمْ

Translation: Ibn Umar reported: The Messenger of Allah, peace and blessings be upon him, said, “O Muhajeroon, there are 5 things with which you will be tested with and I seek refuge in Allah that you will live to see them. I) Promiscuity will become widespread among people and for that, they will be afflicted by plagues and diseases that were unknown to their forefathers. 2) They will cheat in weights and measures and for that they will be struck with famine, calamity, and the oppression of rulers. 3) They will withhold charity from their wealth and for that rain will be withheld from the sky, and were it not for the animals, there would be no rain at all. 4) They will break their covenant with Allah and His messenger and for that Allah will enable their enemies to overpower them and take away what is in their hands. 5) Their leaders will not rule according to the Law of Allah and derive no benefit from what Allah has revealed, and for that Allah will cause them to become enemies of each other.” [Source: 1.KItab Al-Fitan, Sunan Ibn Majah 4019. 2. Al Muhaddis Al Bani Khulasa Hukum Al-muhaddas Sahih fi Sahih Al Jame: 7978].

This Hadith is supported by Surah-Al-Suaara in the Quran where the social habits and commissions of eight different nations have been narrated which were akin to the above transgressions in different measures. Allah’s sent His Messengers to guide each nation, but most of them refused to accept the divine guidance and instead chose to face the consequences which led to their destruction and end.

It is not a secret that in the global Muslim community all of the above signs exist with such great clarity that no explanation is required to elaborate on the condition of the Muslim community living in Islamic countries. Ironically this community has the world’s greatest manpower, natural and mineral resources and a rich cultural heritage. Yet, nearly all the on-going conflicts in the world involve Muslims, either as aggressors or partners of aggressors, or as victims of conflicts, whether as refugees or communities caught in the crossfire. Intra-Islamic conflict costs Muslims thousands of lives and dollars every year with no end in sight. Leaders in the Islamic world remain autocratic or are terribly inefficient when elected in democracies. The economic condition of these countries, despite abundant resources, is dependent on external forces.

There is rampant under-development, unequal distribution of wealth, enormous disparities in welfare and social safety nets, and absence of justice and opportunity for the common man. Most of the Muslim leaders are not truly independent as they depend on external powers for political legitimacy and control. And finally, in the health and food security sector Islamic countries are often hit by famines and locust swarms, rendering millions at the mercy of international aid agencies. As if all this was not enough, the coronavirus pandemic is knocking on their doors after taking nearly 100,000 lives in China, Europe and the Americas.

I am not a doomsday advocate but I can say for sure that the pandemic of coronavirus has changed our world in a way we never imagined in our wildest dreams. How could anyone predict that a tiny little virus, which does not have a life of its own, could force a global lockdown and send the economies of many developed countries nosedive into recession at a level not seen since the Second World War.

On the ethical level, the pandemic of coronavirus is the reality of the world we have constructed since the last major pandemic, known as the Spanish Flu of 1918. In our cultural advancement and technological revolutions, we are helpless when confronted with the mysteries of nature. We pay lip service to human solidarity but at the same time we like the idea of nation-state to be divided into races, faiths, ethnic identities. We just don’t stop there; we also like to classified into nationalist groups, social orders and gender types. After doing away with the Berlin wall, which symbolised division, we embarked upon the grand project of constructing walls on our national borders in order to prevent the less unfortunate come to our homes and share our cakes and ale; and we have named our project a necessary measure for national security and economic prosperity.

We have divided ourselves into groups of rich nations and poor nations; those who have veto power at the UN on matters of global peace and security and those who have to comply with the decisions made by a minority over majority; and we decide in select chambers who would have peace and who should face conflict and destruction. We have built warships and air shields to defend ourselves from nuclear threat but we have not learnt the lesson from the past hurricanes that devastated the Philippines or earthquakes which raised to ground Haiti that when disaster strikes, it does not differentiate between people: black or white, rich or poor, young or old, sick or healthy, the faithful or those having no faith. Our problem is that as long as a UFO does not hit us, it does not exist. When China was fighting the coronavirus in the end of 2019, the rest of the world did not care. Business was as usual until it became unusual on our turf three months later in 2020.

On the religious level, the Pundits, Priests, Rabbis and Imams have been saying that we should not accuse coronavirus of harshness. For the orthodox communities, coronavirus is simply following the orders of the Supreme Lord who released it to teach humanity a lesson for discarding His message of compassion, peace, mercy, kindness and good behaviour. The world had steered away from the divine script and sought to change the laws of nature by tinkering with the genetic code of life of humans and animals; developing harmful weapons and chemicals; polluting our earth and space with industrial effluent, toxic waste and dangerous gasses; installing countless satellites in space and creating infinite electro-magnetic fields and rays which penetrate human body seemingly doing no harm to it externally; rewriting the codes of social behaviour and taking end of life decisions based on economic forecasts and actuarial algorithms. In April, during the commemoration of Passover, Good Friday and the start of Ramadan, thousands of faithful begged to the Lord Almighty in individual and congregational prayers to forgive the commissions of man and save the world from further destruction and collapse.

On a scientific level, virologists and epidemiologists said this is a phenomenon which repeats itself in cycles in all epochs; more recently it was SARS, then came MERS and now covid-19. As soon as a vaccine is found, it too will become extinct. Humanity pays a price for every learning curve and the present death toll is unfortunate but an inevitable part of human advancement. As of writing this piece, several countries have begun research on different vaccines, which will enter human trials as soon as the necessary regulatory approvals have been secured.

On a political level, world leaders were focused on the coronavirus in the context of saving the lives of their nationals and reversing the steep decline of their national economies.  According to estimates, the global economic growth forecast is registering between 4 to 6% decline in the GDP of Europe and other countries by the end of the first quarter of the year threatening a global recession. Every country is counting its dead daily as if keeping a track of the goals scored at the football world cup. How long this macabre scene will last, no one knows.

It is becoming clear that in a post covid-19 world, a new international order will be redrawn by the powerful countries taking into account the lessons learnt from the performance of totalitarian regimes and free democracies in dealing with the current pandemic. But let it not be a repeat of the post world war 2 arrangement where only the victors decided an international order for the rest of the world and imposed their conventions on every state to follow without consulting their peoples. It is interesting that the Bretton Woods System and the establishment of the League of Nations, the precursor of the UN, predate the independence of many Afro-Asian countries which became independent as part of the decolonisation process and had to accept many international conventions and protocols which pre-dated their independence.

We should not forget that the country most effective in containing the coronavirus disease is not a free democracy (China) and that the democracies which take pride in their liberal institutions (the US & EU) have not done well in stopping this disease, nor the global recession that is predicted to engulf the world in the remainder of 2020. Therefore the creation of a new international order will need to take into account the fine balance between political totalitarianism and free market economy as both have shown to have different strengths. China saved its nationals from coronavirus deaths to a considerable level despite being the most populous nation on earth, while Italy, the US, Spain, France and the UK could not do so with equal haste and efficiency.

In the new international order the role of international institutions should also be critically reviewed. Rules need to be redrafted to make these institutions more credible and more democratised. The inability of the UN to prevent conflicts, refugee flows and disaster mitigation, and of the WHO to predict and prevent this pandemic have already come under strong scrutiny. Part of the reason for their underperformance is that the rich and powerful countries have stopped taking global institutions seriously. Some developed countries, notably the US, have used their high contributions as a tool to politicise multilateral decision-making in their favour.

A unipolar world will not suit the new international order. It should not be an order where a country decides to limit export of a medicine needed by its population to treat the symptoms of a disease but reverses its decision after receiving a phone call from another powerful country threatening of ‘consequences’ if the shipment of the medicine were stopped due to its national interest. It should not be an order where the owner of a natural resource in not the country where it is based, but another more powerful country which has the ability to destroy it, if its terms are not accepted. It should not be an international order where the raw material from a country is exported in cents per metric ton but after processing, it is imported by the same country in Dollars per metric ton.

Countries should put together their own protocols and policies based on thought provoking ideas and social requirements. The world has changed and especially the poor and disadvantaged will suffer most in all aspects of their daily lives. We are all in the same boat no matter where we come from and what we believe in. In a strange way, isolationism has become the key word for human survival in a globalised world.

The lesson from the coronavirus disease is poignant. It is the new mantra of “survival of the fittest” in humanity’s post-modern evolution. It implies that if you haven’t got the strength as an individual or as a nation to beat the new pressures that confront you, the lease for your survival in a highly competitive world will soon run out. Is the world prepared for this grim scenario? Certainly not, because humanity demands that in the march of civilisation we take our weak and vulnerable along with us, even if we have to pick them on our shoulders.

اللهم إني أعوذ بك من السلب بعد العطاء ومن الشدة بعد الرخاء ومن الفقر بعد الغنى ومن الكفر بعد الإيمان

Say: O God, I seek refuge in You from taking away the goodness after you have given, from hardship after prosperity, from poverty after wealth, and from unbelief after faith.

April 9, 2020.

A Solution for PIA Woes

BY: Syed Sharfuddin

This is a follow up to the article by Dr Tahseen Mahmood Aslam about PIA’s management challenges printed in the Weekender last Friday. The national flag carrier of Pakistan has reached a point where it needs to be placed under interim emergency measures. This is a bitter pill which ailing organisations run with public money are often forced to swallow when faced with serious governance issues with no signs of improvement in sight. The situation of PIA is further complicated by the fact that it is a massive organisation where if one of its operations is profitable, two others are in the red. And when PIA plans to shed off its loss making operations, it is stopped from doing so by whistle blowers who appear out the woodwork crying corruption. PIA’s employee unions are not prepared to allow any tough administrative decisions calling for massive admin and staffing cuts. The courts are also approached for protecting the rights of people affected by a major restructuring of the organisation in public interest.

PIA was born at a time when it was fashionable for newly independent countries in Asia and Africa to invest in sectors that required large public investments, which were beyond the pockets of national private investors. In return, these investments also gave the newly independent countries a much-needed national identity in the world. Between this self created necessity and the resulting advantage, almost all post-colonial countries either inherited or set up a national airline, a national shipping carrier, a national broadcaster, a national telecommunications agency, a national postal service and a national railway service. At that time, these projects were seen as important symbols of a sovereign state in the same way as its national flag and national anthem. In some countries such as Pakistan, these organisations also became the largest employers for the state satisfying the needs of its citizens to get jobs and get involved in the running of the country.

The CV of PIA as a commercial institution is reminiscent of a university student who got A stars throughout his primary and secondary exams; then passed his A levels with a reluctant B, but is now struggling to barely pass his university courses. Everything has been tried – tuition, external coaching, changing subjects and even taking a gap year; but nothing seems to be working. What remains is a stark choice of either closing down the national airline and privatise its domestic and international operations or place it under emergency measures with a view to reviving its past glory and profitability.

The reform of PIA should come in two stages. The first stage is a final attempt to let the organisation reform itself utilising its internal resources and strengths. The second stage should be initiated only if the first stage fails. Of course, the second stage will come with more drastic measures that will be highly unpopular with PIA employees, unions and vendors. But it is the only way to save the failing airline. A dying patient in an ICU ward cannot keep his marital, paternal or fraternal commitments. Something must give in, and when it comes to saving the corpus itself, all others can take a back seat.

The First Stage
The Government should expand the Board of PIA with 30% women Directors on the Board, which is a major omission and a clear sign why the Board is not able to overcome the management problems in PIA. Women are better managers than men, especially in corporate environment. The expanded Board should be in place in the next three months. If any Directors need to go, these should be the senior government servants represented on the Board. They are busy people and have no experience of running an airline on commercial lines.

The Government should task the Board to carry out a review of the administration and management of PIA and require from its existing senior management team to improve governance, financial management, increase airline outreach and profitability and underpin performance throughout the organisation to save it from total collapse under its own weight. The newly drawn key performance indicators (KPI’s) should include reduction of deficit in the PIA budget, 10% increase in flight operations; 10% increase in revenue from passenger and cargo carriage and 10% downsizing in admin expenditure through internal cost savings. The Board should be given a maximum of one year to produce desirable results.

The government should support the national airline in negotiating agreements with other countries on flight connections, passenger lifting, code sharing, additional aircraft acquisition on lease and other measures to help the airline’s modernisation and linkages with other international tour operators. In this stage, the government should give a clear mandate to the airline Board and senior management but should not interfere in PIA governance until the one-year deadline has lapsed.

The Second Stage
If the Board and the existing senior management of PIA fail to act with responsible care and skill, and fall short of their responsibility to oversee the affairs of the airline by improving performance against the given KPIs, the government should dismiss the Board and fire the existing management team and place PIA under the direct control of the President of Pakistan as an emergency measure. The President should be assisted by an ad-hoc all-party special committee of the parliament, appointed by the Prime Minister in consultation with the leaders of main opposition parties.

For the interim, the President of Pakistan should appoint a Change Manager in PIA who will be a national or dual national of Pakistan and an expert in salvaging ailing organisations. He/She will have full powers of the Chairman and the CEO to make whatever changes are needed in PIA to rescue it from corporate demise.

The TORs of the Change Manager should clearly define areas of PIA that need separation and self-sufficiency by maintaining integrity of funds, functions and operations. The Change Manager should identify profit making areas in PIA from within its international flights sector, domestic flights sector, cargo flights sector, chartered flights sector and non-flight real-estate investments sector,. The Change Manager should ring-fence those operations which are making persistent loss and need load shedding.

The loss making ring-fenced areas of the airline should be restructured drastically for revival on self-financing basis. Where this is not possible these should be stripped down for auction to the private sector to operate on lease.

The profit making areas of the airline should be supported with heavy IT investment, aggressive marketing, innovative operations and staff reduction strategies for increased profit turnover. In the international airlines area, PIA should adopt the model of other successful international airlines that have itemised costs for every service and added these on to flight tariffs.

Although PIA has already started doing this to a certain extent, it can further make progress by keeping airfares the low to remain competitive internationally, but charge separately for inflight meals, seat allocation, speedy boarding, baggage check-in, SMS or email confirmation of boarding pass and in-flight supplies such as blankets, newspapers and entertainment equipment. As part of cost cutting measures, all commissions to travel agencies, sales agents, suppliers and vendors should be stopped. Rented shop floors and offices should be vacated and shifted to cheaper rent buildings. All supporting staff should be made redundant. Technical and executive staff should be multitasked to make their own phone calls, write their own reports and correspond on their own corporate email addresses. Flight staff should receive only salary but no airline incentives nor free travel vouchers. New sectors should be opened where the airline can pay for its operations and show profit after deducting costs.

The emergency measures should be introduced with a view to reinforcing the point that the airline has reached the verge of collapse and cannot continue on ‘business as usual’ model. Any staff that cannot accept the changes to be introduced for PIA’s survival can resign and leave without compensation.

The Change Manager should be given a free hand. His term should be for a fixed, non-extendable two-year time limit to turn around the airline and improve its profitability. The Change Manager should directly report to the President of Pakistan. His salary should be capped at a level agreed by the parliamentary committee and should come from PIA budget. Should a need arise to continue the interim arrangement for another year or two years for stability and profitability of the organisation, a new Change Manager should be recruited who is capable of carrying forward the airline on the new foundation laid by the outgoing Change Manager.

During the period of emergency measures and change management, all posts in the organisation should be terminated and automatically renewed on a two-year contract, renewable against performance and KPIs. Salaries should be revised. All currently admissible facilities for housing, transport, education, medical treatment, qualification allowance, or paid leave for staff should be valued in cash and merged with one take home but taxable salary. Government should exempt PIA under law from making any new appointments on the basis of employment quotas. PIA employee Unions should be disbanded for at least five years, and any existing supply or procurement contracts should be reviewed. The Change Manager should have full powers to renegotiate them on new terms to meet the requirements of a restructured national airline.

When PIA is completely changed in a period of 2 to 4 years, a new Board should be appointed which in turn will recruit a new CEO of the airline. The new CEO will then decide which areas of the airline are to continue doing profitable business and which to be closed, if required, based on the work done by the Change Manager to carry forward the airline.

The new Board members should be Pakistanis or overseas Pakistanis and qualified in their respective fields of expertise to have successfully led or operated a large profitable organisation. They should not include any political appointees or senior officers from civil or military bureaucracy and include at least 50% women. An international recruitment firm should shortlist Board members that should do likewise in selecting the CEO of PIA through an international public advertisement.

Prior to initiating these measures, the Parliament should enact a law to place PIA under emergency measures. The act of parliament will protect PIA from any lawsuit filed by a dismissed employee or discontinued vendor or anyone else in the name of public interest and give the court the legal cover to quash such petitions.

It will be naïve to think that there are no competing interests in the restructuring of the national airline. A strong lobby of workers would resist change because it could mean an end of their perks and jobs, irrespective of whether or not the airline is able to pay for them.

There are also political and business interests that will want to see PIA go down as a national airline so that they can benefit from its dismemberment and privatisation.

There are also federal and provincial interests where loss of jobs by a large number of people belonging to one province or ethnic group may be viewed as an attempt by the federal government to disregard provincial representation in the organisation.

There will also be spoilers who would resist change in order to save their own reputation because they couldn’t improve the ailing organisation when they were in charge and when gross neglect, incompetence and corruption set the rot in the organisation.

Whatever the challenges, PIA is a national airline of Pakistan and its issues must be addressed wisely with one step at a time. If PIA was once a rising airline of Asia flying great people around, it can again become a top airline given the intention and effort to make PIA serve Pakistan and its people because they deserve better.