Written off

Based on a suo-motu case dating back to 2007, the Supreme Court has now issued notices to 222 individuals and companies that had loans of Rs54 billion written off from state-owned and private financial institutions. These are instances where the Supreme Court believes the loans were written off illegally. While there are many instances where loans can be written off for legitimate reasons, it is a sad reality in Pakistan that many powerful and well-connected individuals and companies use their influence to take large loans that they have no intention of ever paying off. Even private banks are not immune to the pressure that can be placed on them by those in power, forcing them to write off loans. When state-owned banks are pressured into writing off loans, the one ultimately paying for these bad debts is the taxpayer. It is thus important to find out which individuals and companies had loans written off without following the proper procedures and then to punish not just them but the banks that did not follow the rules and anyone in power who may have leaned on the banks to write off the loans.

Part of the reason corruption is still rife both in the public and private sectors is that those who are guilty of theft rarely receive the appropriate punishment. We saw this when the Supreme Court held suo-motu hearings on the plea bargain and voluntary return schemes used by NAB. Corrupt officials were let off the hook after paying back only a fraction of the amount they had plundered. In many cases, they were even allowed to return to their government jobs after a five-year suspension. The details of such cases were usually kept secret by NAB, making it difficult to know if corrupt individuals had returned the entirety of their illicit gains. The Supreme Court eventually expressed its disapproval of such schemes and is now working to ensure similar transparency in cases where loans were written off. NAB too has a role to play in this by proactively making sure all loans that were written off followed the correct procedure rather than waiting for the Supreme Court to do its job for it. If the state is serious about cracking down on corruption, it will take the Supreme Court’s lead and follow up on all such cases.