Private Sector And Corruption

Anirudra Neupane

Politicians are said to be first and bureaucrats the second most corrupt sections of society in Nepal followed by the police and the judiciary. There is a different opinion regarding corruption in the judiciary because lawyers are said to play the main role in encouraging unfair practices in this sector, not the politicians. Politicians are the main players in corruption in the remaining sectors as they facilitate in creating a corruption-friendly environment for fostering corruption.

Rampant corruption

There is mass opinion that corruption in Nepal has grown rampant because the politicians encourage the bureaucrats, security forces and other line agencies of the government to engage in corruption. It is said that officials, including police personnel, prefer particular offices for their posting because there are better chances of misusing the state resources for personal benefit. This preference is neither to explore opportunities for professional development nor to contribute better to society.

But public opinion about corruption and the corrupt has proved to be unilateral and incomplete because corruption starts in the private sector which later passes on to the government sector. In this context, King Prithvi Narayan Shah’s adage that both the bribe givers and takers are enemies of the nation holds true. Discouraging the bribe givers is as important as it is to discourage the bribe takers to control corruption. People in public position involve in corrupt practices and abuse their authority, not only because of the self but also because of outsiders, i.e., the bribe givers who benefit from such abuse.

The private sector is the key outsider who is able to get its malafide intentions fulfilled through politicians and bureaucrats by offering them a small amount of money from the huge amount they save by doing so, which otherwise would go to the government treasury in the form of taxes.

Media reports show that the private sector is zero sensitive toward their social responsibility. The key players in the private sector are evading huge chunks of their tax liability either by developing fake VAT bills or by forming a nexus with business persons of neighbouring countries. They are deceiving the nation and the people, violating the prevailing laws of the land. Government officials are also guilty of the fraudulent acts of businesspersons because they are limiting themselves to their formal responsibilities and ignoring their social accountability.

For example, civil servants work in the customs offices as if their role is just to issue custom clearance certificates to the containers carrying highly under invoiced items without conducting even a minimum investigation. However, as there is no mechanism with our government to test the genuineness of the invoices issued by foreign traders, officials with only formal responsibility can claim their innocence.

The preference by the government employees to be posted at the customs offices is because the bribe givers often stay ready with cash in hand and highly under invoiced imported items in the containers in front of these offices. Businesspersons offer bribes instead of taxes means that they create a ground for corruption. Bribe giving is seen as a highly profitable investment. If businesspersons were to play a fair game, they would stop bribing and start paying taxes. In such a scenario, the customs offices would no longer be lucrative, resulting in corruption control on the part of government officials. Similar is the case for other government institutions, too.

Tax evasion through fake VAT bills or under invoicing is just a single example of the fraudulent and corrupt practices in the private sector in Nepal. There are other serious malpractices also. There is no competition among the businesspersons, instead there are cartels or syndicates everywhere. Removal of such wrongdoings is difficult because the law enforcing agencies have been paralysed by foul players in the business sector.

Each major political party has appointed at least one MP from a heavyweight business family not because those appointed have contributed politically to the respective parties but because the burden of collecting resources to finance the running cost of those parties shifts to those MPs via such appointments. Representatives of big business families want to be appointed to public posts even though they need to finance huge amounts to meet the cost of that party and senior leaders. It is because such financing is risk free investment with high rate of return (ROR) for them. These MPs can even influence senior leaders in formulating laws favouring the wrongdoers in business sector.

Social accountability

Whatever the reality behind the private sector in Nepal, it is not possible to exclude this sector while talking about growth and development in the current democratic era. We must see the private sector not as a burden of the nation but as a key economic stimulator. It should not be like a warehouse where the corrupt and those engaging in malpractices live together. Foul players must be replaced by fair players in this sector so that they are identified as agents of economic development not the supply side of corruption.

Social accountability should be promoted and corruption should be reduced. It happens only when the business people see benefit in paying taxes than offering bribes. So it is time to start a civil society campaign for stopping the supply of black money from the private to the government sector.

(An article published in The Rising Nepal of 21 May 2012 )