‘Pulling regulators’ strings tantamount to jeopardising economy’

LAHORE: One of the chronic problems, gnawing at our economy, is every government’s trying to pull the strings of regulators to their favour and jeopardise the transparency of regulations and their roles.

It was stated by Khalid Mirza, former chairman Securities & Exchange Commission of Pakistan (SECP), Competition Commission of Pakistan (CCP), and SECP Advisory Board, in an exclusive interview with The News.

During the session, on top of pinpointing the flaws in the country’s regulatory regime, Mirza duly resented the arrest of Jang Group chief on flimsy grounds, saying media gagging impedes the flow of needful information. The following is the gist of that Q&A session.

Q: How do you see the regulatory environment in Pakistan?

A: It is far from ideal. It has improved a bit from what it was at the start of the century but still the government’s implicit interference with regulators goes on. The regulators have to be completely independent. Each member of any regulatory board is an expert in his/her field (or at least it’s expected to be so). The main issue in Pakistan is that the regulators for different sectors of economy are appointed on political grounds. It is only by chance that some competent person gets an entry through this process. The current chairman of Competition Commission of Pakistan for instance is competent but most of the regulators are not. The ills of our economy are mainly due to flawed regulations. Every government desires the regulators to toe their line (because they appointed it). As the tenure of the members and chairman is three years, they face problems if the government is changed in the midst of their tenure. The independent decisions they make are taken as opposition to their authority as the new government thinks the appointment was made on political grounds and in most cases, they may be right.

Q: How can regulators appointments be made transparent?

A: If we look at the procedures for appointment, they look very fair, but the appointments made under these procedures in many cases do not look fair. As I have pointed out the appointments look politically motivated. The government gives proper advertisement detailing qualification and experience of the candidates. The problem arises at the time of interview, which among others, is taken by two federal ministers. Now these ministers are not apolitical. In interviews of this kind an independent panel having no political affiliation should conduct the interview. The panel may suggest three names and the executive could appoint anyone among the three.

Q: This is easier said than done. How can transparency be guaranteed?

A: The World Bank assigned me a task in this regard about a decade back. I recommended that the appointment of all regulators with fixed tenures should be made through an independent panel headed by the chairman Public Service Commission with three members that should include a Supreme Court Judge, a prominent expert from private sector and a top bureaucrat. The panel should invite applications for all regulatory slots. Interview the candidates that in panel’s opinion qualify for the post. The names of all such persons should be notified in the gazette of Pakistan. Whenever any regulatory posts fall vacant; the panel should contact the best person in the list to get his consent. If he/she excuses, it could seek assent of next best. The name should be sent to the Prime Minister, who should be bound to notify the appointment in two weeks. In case the PM fails to notify the person would be automatically appointed. The PM could send his reservations about recommended person back to the panel. However, if those reservations are overruled the person would be automatically inducted. This independence that is best for the country does not suit the rulers.

Q: Why did you resign as chairman Policy Board of SECP after the government withdrew the notification of your removal?

Mirza: When I was removed a chairman and member Policy Board, I challenged the decision in Islamabad High Court. The court reinstated me. On the next hearing the deputy attorney general withdrew the notification of removal. Under the law the state cannot remove member of policy board before the expiry of his tenure. As far as the chairman policy board is concerned it is the prerogative of the government to appoint anyone among members as chairman. Had I not resigned the government would have removed me as chairman, but they cannot remove me as member policy board, which I still am.

Q: What is the role of media in improving regulations and what is your opinion on the arrest of Mir Shakeel-ur-Rehman?

A: Freedom of press is an important tool for regulatory process. Flawed or politically motivated regulations could only be checked by free media. I am disturbed that eminent people from media have been arrested on flimsy grounds as the one you just mentioned. Policymakers and regulators can commit mistakes by default or design and media is duty bound to highlight them. Instead of gagging the media the government should enforce transparent laws that punish through fast judicial process those that make false accusations be it media or the ruling elite.