Corruption problem: identifying loopholes and implementing solutions

LAHORE: Corruption in Pakistan follows identifiable patterns, including under-invoicing, ghost employees, fake pensioners, contract manipulation in public procurement, tax evasion, land grabbing, illegal conversions and smuggling. These corrupt practices persist due to weak governance, lack of automation and political interference.

However, leveraging data analytics, transparency and institutional reforms can help plug these loopholes. The key is to minimise human discretion, enhance digital oversight and ensure accountability through independent monitoring bodies.

A common form of corruption in trade, under-invoicing allows importers to evade duties by declaring lower values, while over-invoicing facilitates money laundering. Weak customs checks, collusion between officials and importers and a lack of digital verification enable these practices. To counter this, real-time data analytics should be used to compare declared import prices with global benchmarks. The state must implement electronic invoicing and blockchain technology to verify trade transactions, alongside increasing third-party audits and cross-checking supplier invoices.

Dishonest officials create fake employees to siphon off salaries and pensions, exploiting manual record-keeping, weak HR and payroll oversight, and the absence of biometric verification. The solution lies in implementing biometric attendance and salary disbursement systems linked to NADRA records. Frequent third-party audits of payrolls and the use of AI-powered anomaly detection can help flag suspicious payroll activity.

Public contracts are often awarded to favoured companies at inflated prices or for substandard work. This results from a non-transparent bidding process, collusion among bidders and manipulation of tender requirements. Making all government contracts publicly accessible and enabling real-time scrutiny by watchdogs is crucial. The state should introduce e-procurement platforms with automated fraud detection and establish an independent public procurement commission with strict oversight.

Businesses evade taxes by issuing fake invoices or using benami (anonymous) accounts to hide profits. Manual tax collection processes and weak financial transaction tracking enable these practices. AI-based invoice verification, strict financial monitoring through NADRA-FBR linkages, and mandatory digital payments for business-to-business (B2B) transactions can help curb tax evasion.

Powerful groups illegally occupy state land or convert industrial land into housing societies due to weak enforcement of land records and political influence over regulators. Digitising all land records and ensuring transparency in ownership can curb this practice. The government should conduct random satellite imagery audits to detect encroachments and empower independent land regulatory bodies to act without political interference.

Smuggled goods enter Pakistan without paying duties, harming local industries. Incidents of bribe at checkpoints and weak border monitoring facilitate this. AI-powered cargo tracking integrated with tax records, along with deploying drones and satellite tracking for border monitoring, can help prevent smuggling.

The Federal Board of Revenue (FBR) should also frequently rotate customs officials to prevent long-term relationships. Corruption in public services, such as police, licensing and utility connections, arises when officials demand bribes for faster processing. Manual processing and lack of transparency in service delivery fuel this issue. Fully automated e-governance systems can eliminate human discretion. Performance-based incentives for honest public servants and anonymous reporting and reward systems for whistleblowers can deter corruption.

By addressing these loopholes through digitalisation, oversight and institutional reforms, Pakistan can significantly reduce corruption and promote transparency, ultimately strengthening its economy and governance.