Pakistan

Researcher + Peer Reviewer3931: Asset disposals are reported in budget documents but are highly abbreviated.

The &quoute;&quoute;Explanatory Memorandum on Federal Receipts 2014-2015&quoute;&quoute; lists abbreviated information about revenues and receipts of each Ministry. The MoD section has various fields reported as two broad fields: Effective and Non-Effective. Effective receipts include the sale and auction of obsolete stores, among other categories [1]. The total sum of &quoute;Effective Receipts&quoute; is not broken down to each category nor is any detailed information regarding asset disposals available in any of the documents related to the budget.

There is a system in place for recording asset disposals: the Pakistan Military Accounts Department (PMAD), which, through its Local Audit Offices (LAOs) [3], records and audits all military finances of each military Unit/Formation. Proceeds from sales are likely to be recorded and reported to the PMAD and the MoD. However, PMAD reports are not publicly available (a search on their website yields no results); they are relayed to the MoD [3] and there is no evidence to suggest that they are intended for parliamentary scrutiny.

The official disclosure of asset disposals [1] does not contain any information about revenues from the sale of land. It includes rent received from government land, but not the sale. It is possible that land is advertised before sale, but it is unclear how much advance notice is given or how the defence department, specifically, disposes land.

There is no further information available about procedures and internal controls, and how this works in practice.

Response to peer reviewer 2:
The assessment itself partially reflects the statement that some procedures and controls are in place . However, a score of 3 cannot be awarded because there are certain disposals which are not reported (e.g land sales), and whatever is reported, lacks detail.

Researcher + Peer Reviewer3931: The Pakistan Military Accounts Department (PMAD), through its Local Audit Offices (LAOs), records and audits all military finances of each military Unit/Formation, these reports are submitted to routinely inform the MoD.

The Defence Audit Department of the Auditor General theoretically has oversight of all revenues of the military establishment (meaning that this may include asset disposals). There is no evidence to suggest that the level of independence of the Defence Audit Department of the Auditor General and scrutiny of assets disposals are not transparent as no information about it is publicly available.

Peer reviewer sources with experience of working in relevant government departments say that records of asset disposals are available to internal auditors and the MoD, however, there is no publicly available information to confirm this.

Response to peer reviewer 2:
There may be internal procedures as the Pakistan Army is a large and an organised force, but without publicly available sources, a higher score cannot be awarded. I have, however, reflected your comment in the response above.

Researcher + Peer Reviewer3931: There is mounting evidence regarding the MoD's lack of accountability in regard to the spending of secret funds [4,5]. The exact percentage of the defence budget set aside as secret funds is not available. The government has neither formally nor informally announced spending on secret items. According to media reports between 011 - 2013, the MoD has been accused of the following:

-The Public Accounts Committee (PAC) has been accused of using millions of secret funds annually which are currently not scrutinised [1].

-The Auditor General of Pakistan reported that the MoD uses secret funds and has refused audits [2,4].

- A case in the Supreme Court heard that the Intelligence Bureau uses secrets funds and that it should be made accountable for it [3].

- In 2013, the Federal Government filed a petition to increase the accountability mechanisms over the use of secret funds, one of the departments of concern was the MoD.

The government has not reacted to any of the above allegations.

Researcher + Peer Reviewer3931: As of August 2015, there are no procedures for the audit of funds labelled as secret. According to news reports from late 2014, the Auditor General Pakistan and the federal government have failed to establish procedures for the audit of secret funds, as required by a Supreme Court in July 2013 [4]. Specific provisions/regulations regulating the information that should officially be provided to the Public Accounts Committee, the Auditor General, and the Supreme Court are not available widely. There are also lapses in oversight of IB allocations and spending [6].

There have been several allegations from the Public Accounts Committee, the Auditor General, and the Supreme Court regarding the use of secret budgets by the MoD. These appear not to be subject to audits or any form of scrutiny. Most recently, in November 2014 there were news reports about inconsistencies in IB's allocations and the Supreme Court was investigating the source of some of the secret funds [6].

Other criticisms against the MoD:

- The Public Accounts Committee (PAC) has been accused of using millions of secret funds annually which are not scrutinised [1].

- The Auditor General of Pakistan reported that the MoD uses secret funds and has refused audits [2].

- A case in the Supreme Court heard that the Intelligence Bureau uses secrets funds and that it should be made accountable for it [3].

- In 2013, the Federal Govt decided to file a petition to increase accountability of secret funds, one of the departments under concern was the MoD.

Response to peer reviewer 1:
Many thanks for this additional information, I have added it into the assessment above.

Researcher + Peer Reviewer3931: The Defence Audit Department of the Auditor General has oversight of the revenue and expenditure of the entire defence and security sector. However, its reports are not transparent. In principle, the Public Accounts Committee [1], the Cabinet Committee of Defence (CCD) [2], and the Senate Standing Committee on Defence and Defence Production [3] are mandated with oversight of the defence budget at the central government; but this does not include secret items.

A news report from November 2014 highlighted that the Auditor General of Pakistan and the federal government were required to establish the audit procedure for secret budgets, after a ruling by the Supreme Court in July 2013 [6]. Currently, there are no published procedures for the audit of secret budgets and the 2014 scrutiny over the source of IB's funding is an indication of procedural lapses, and lack of oversight.

The Demand for Grants from the MoD (as indicated by the Federal Budget [4]) consists of all fields related to the security sector including the police. Following extended web-based research and scrutiny of all the sources provided above, it is assessed that there is no set process for secret budgets, the budget is highly abbreviated, and it cannot be determined if secret items are included.

There are no reports available about parliamentary debates. News reports indicate that there have been increasing calls for added scrutiny of defence budgets [4, 5, 6].&quoute;

Response to peer reviewer 3:
Agreed and score lowered from 1 to 0.

Researcher + Peer Reviewer3931: Other than the brief information in the federal budget document, details relating to defence expenditures are not transparent. This makes it difficult to assess the presence of off-budget expenditure. There is no law or accounting standards that govern reporting mechanisms of &quoute;&quoute;off-budget&quoute;&quoute; or &quoute;&quoute;extra-budgetary&quoute;&quoute; revenues. The budgetary process of provincial and central government follows rules set out by the New Accounting Model introduced in Financial Year 2004-05. There is no guideline for reporting off-budget expenses.

This presents budgetary risks as highlighted in an article by The News, about the overall budgetary process in Pakistan, which may be including &quoute;&quoute;extra-budgetary receipts&quoute;&quoute; as &quoute;revenue receipts&quoute; in the budget as opposed to classifying them as &quoute;off-budget revenues&quoute;. [2]

Researcher + Peer Reviewer3931: The lack of transparency around defence expenditure makes it difficult to assess the extent of off-budget expenditure.

Nevertheless, despite the lack of information regarding off-budget expenditure in defence, reports from other sectors indicate that such expenditures do exist . The public private partnerships implemented under USAID [1] are one example of spending that falls outside of the national budget. The defence sector engages in international MOUs and public-private partnerships [2] where cash-flows are also likely to be off-budget.

Military pensions, like all civil pension payments, are off-budget expenditures [3]. Furthermore, a news article in the The News analysed the problem with the overall budgetary process in Pakistan, which may be recording &quoute;extra-budgetary receipts&quoute; as &quoute;revenue receipts&quoute; in the budget as opposed to classifying them as &quoute;off-budget revenues&quoute;. [4]

There are indications of illicit activities by the Navy and the Army with regard to developmental activities through the use of civilian land and property [5]. This adds to the grey area of development activities going outside the defence budget.

Researcher + Peer Reviewer3931: Clause 8 of the 2002 Freedom of Information (FoI) Ordnance allows for information relating to &quoute;national security&quoute; to be withheld for &quoute;legitimate&quoute; reasons. This covers, &quoute;any information regarding defence planning, deployment of forces, defence installations, and matters that can legitimately be related to national security&quoute;.

As per the Ordnance, a designated person (called Public Information Officers (PIO) in some provinces) deals with FOI requests and withholds information if there is reason to do so as per the sections 8. As per clause 13, he is responsible to record reasons for the decision. Sections 20 and 21 relate to punishable offences, extending to the designated official.

The FOI Ordnance of 2002 does not apply to provincial governments. Some provinces have their own laws; such as the Khyber Pakhtunkhwa Right to Information Act 2013 [2], or the Punjab Transparency and Right to Information Act 2013 [3]. These provincial acts have similar exclusions on grounds of national security. Clause 13 of the Punjab Act, for example, excludes all matters related to national defence or security, public order or international relations of Pakistan [3].

Some news reports have indicated violations of FOI Acts in Punjab [5], where citizens were denied information after filing petitions. The extent of audit over the Public Information Officers is unclear and there is no available information relating to cases where information has been withheld for reasons relating to &quoute;national security&quoute;. Furthermore, there is no information about existing mechanisms for oversight or whether sections 20 and 21 are applied where appropriate.

Given the lack of public disclosure regarding the regulation of provisions relating to national security, noted violations of the FOI Act and the level of secrecy relating to defence in the country, it is likely that individuals can influence decisions relating to the classification of information. The score has been selected accordingly.

Researcher + Peer Reviewer3931: Defence institutions have large commercial businesses. Major businesses appear to be created with complicated structures comprising of a mix of public and private companies. For example, Fouji Foundation, Army Welfare Trust, Bahria Foundation, and Shaheen Foundation are registered as charities under the Charities Endowment Act 1890 [1]. Over the years they have diversified into various business and some elements are now listed in the Karachi Stock Exchange. Examples of companies listed in the stick exchange are Fauji Securities, the investment division of Fauji Foundation [4], Aksari Securities which is part-owned by Army Welfare Trust [5].

These listed-companies have to have their accounts audited each year, just like any other listed-company.
Other major enterprises (such as Bahria Foundation, Fouji Foundation etc) are registered as Charities under the Charities Endowments Act 1980. Fouji Foundation makes annual reports available on its website [8].

Not much is known about enterprises that are not listed under the stock exchange or as charities. In 2014, the Pakistan People’s Party (PPP)’s Senator criticised the military business, industrial, and commercial enterprises for being kept out of the public and parliamentary discourse. [2 & 3].

Response to peer reviewers 2 and 3:
Agreed and score raised from 0 to 1.

Researcher + Peer Reviewer3931: Military-run businesses are quite opaque in the running of their operations. However, those that are listed on the stock exchange have their accounts audited each year. Examples of companies listed in the stock exchange are: Fauji Securities, the investment division of Fauji Foundation [2], and Aksari Securities which is part-owned by Army Welfare Trust [3].

Several statements from the opposition indicate that there might be lack of scrutiny of military businesses. In May 2014, Pakistan People’s Party (PPP)’s Senator Farhatullah Babar cautioned that &quoute;Milbus [military businesses] has not only been kept out of the public view and parliamentary oversight but has also escaped government accountability procedures.” [1]

Ayesha Siddiqa, wrote in her book in 2007 that army's private business assets are worth around £10bn and it owns a handsome share of the country's business and land. She writes that the military is extremely secretive about its businesses and they are categorised as private-sector entities so they cannot be examined by government auditors.

An article in 2012 reported that there has been an increase in private enterprises by senior military officials and retired military officials in recent years [2]. The article reported, &quoute;Out of 96 business run by the military's four largest foundations, only 9 file public accounts&quoute;.

Other businesses that are not publicly audited are subject to the defence sector's own procedures but these procedures and processes are not transparent.

Response to peer reviewers 2 and 3:
The vast majority of military owned businesses fall outside government accountability procedures. Score maintained.

Researcher + Peer Reviewer3931: There is no evidence of specific legislation prohibiting serving military personnel from engaging in private business. The Army Act does not address this either [4]. There is also no publicly available information about whether serving military personnel are engaged in entrepreneurial activities. There is no further information about this topic. There are no recent reports.

Researcher + Peer Reviewer3931: Based on responses from source 1, the military enjoys a high degree of goodwill and respect in Pakistani society. Defence and Army officials do not publicly commit to anti-corruption measures, as it would seem like they are admitting that these institutions suffer from corruption [1]. The National Accountability Bureau has made many public commitments to anti-corruption and politicians also repeat this rhetoric. However, this does not appear to be replicated by members of the Ministry of Defence or military personnel.

The only exception is a recent article from August 2015 which indicated General Raheel Shariff's willingness to combat corruption and fraud within the Army [3]. Two retired officers were held for corruption and an investigation was opened against an alleged £3m property fraud committed by Elysium Holdings, a company owned by one of General Kayani’s brothers. Aside from this there is no other indication or formal commitment from the defence sector to combat corruption.

Official responses to various land scandals lack any acceptance or commitment to anti-corruption. Despite several land scandals and other public accusations in the media of mismanagement of funds (e.g the National Logistics Cell case [2]), defence officials have not publicly committed to any specific anti-corruption and integrity measures related to these allegations.

Researcher + Peer Reviewer3931: Section 171-E of the Penal Code sets out the punishment for bribery. Other relevant legislation is the Prevention of Corruption Act.

The Army Act, Navy Ordinance, and the Air Force Act set out punishments of officers guilty of misconduct or for committing offences. The punishments range from detention, or field punishment to dismissal depending on the extent of the act of bribery or misconduct itself.

A news article from August 2015 detailed some efforts from General Raheel Sharif taking unprecedented steps to combat fraud and corruption in the military [5]. Action was taken against two retired officers involved in the National Logistics Cell (NLC) scandal. General Sharif has also launched an investigation into a £3m fraud allegation involving Elysium Holdings, a company owned by one of General Kayani’s brothers.

While General Sharif's action indicates that some measures are taken, it must be noted that there are very few punishments or enforcement actions in comparison to the increasing amount of corruption allegations against the military [as evidenced in source 6,7]. This is suggestive of the fact the enforcement actions are not consistent.

A Reuters news report from June 2015 indicated the seriousness of corruption allegations against the military in Karachi, made by the opposition party [7]. However, there are no reports of enforcement actions or investigations around these allegations.

Researcher + Peer Reviewer3931: Whistleblowing is not encouraged in the public sector. There is no legal protection for whistleblowers at a federal or provincial level. The NAB is pushing the government to introduce whistleblower protection [7].

However, the Army act specifies channels for personnel to report complaints. Clause 168 of the Army Act entitled &quoute;complaint by officers&quoute;, permits any &quoute;officer who deems himself wronged by his commanding officer or any superior officer and who, on due application made to his commanding officer, does not receive the redress to which he considers himself entitled, complain to the Federal Government in such manner and through such channels as may from time to time be specified by proper authority.&quoute; [6] There is no evidence that actual mechanisms are implemented and are effective.

There appears to be a complaint cell at the interior ministry [4] but nothing similar at the provincial level or the defence ministry.

On a provincial level, the Khyber Pakhtunkhwa province has made some headway towards whistleblower protection in its 2013 Right to Information Ordinance [1] [2]. Section 30 states, &quoute;no one may be subject to any legal, administrative or employment-related sanction, regardless of any breach of a legal obligation, for releasing information on wrongdoings, or which would disclose a serious threat to health, safety or the environment, as long as they acted in good faith&quoute;.

The Freedom of Information Ordinance of 2002 was enacted to ensure transparency by providing access to information; clause 8(e) provides some immunity to the defence forces [5].

Response to peer reviewer 3:
Agreed and score changed from 1 to 0.

Researcher + Peer Reviewer3931: Exact details about positions and qualifications in defence procurement and financial management are not clear. There is no information about whether special attention is paid to procurement staff.

Response to peer reviewers:
The lack of clarity available from public sources and frequent contradictions in information is indicative of the fact that, while there may be special attention paid to personnel in sensitive positions, this cannot be verified.

Researcher + Peer Reviewer3931: The official figures of civilian, military personnel appear to be classified; Annual Federal Budget reports and press releases from the Inter Services Public Relations (ISPR) do not mention them either.

There are some estimates for military manpower figures available from international private-sector sources like Nationmaster [4], Global Fire Power [5], IISS Military Balance, Jane's Sentinel. However these are to be regarded as &quoute;estimates&quoute; at best and their accuracy, source, and currency cannot be independently verified.

The discrepancies between these sources of the total manpower itself is an indication that official figures are not publicly declared by Pakistan and that these sources report what they consider best estimates.

Researcher + Peer Reviewer3931: Pay and allowances of military personnel are dictated by the &quoute;Pay and Allowances Regulations of 1952&quoute; and subsequent revisions [1]. Civilian Armed Forces' pay and allowances are also published [2].

Regardless of their job titles, civil servants and military personnel in Pakistan are recognized on the basis of their seniority benchmarked by the basic pay scale (BPS), ranging from BPS-1 to BPS-22 (BPS-1 is the lowest) [p.86 of source 1].

The basic pay scale for civilians was last revised as part of the 2015 budget and the exact amounts were published in a July 2015 circular from the Ministry of Finance [5]. The latest publicly available salary is from the 2011 revised pay and allowance notice [3]. Some salary details are also available on respective recruitment pages of the services.

Similarly, revisions or changes to allowances are published as notices [4].

A score of 3 has been issued because the exact current salary of military personnel is not available from any official website.

Researcher + Peer Reviewer3931: There are no reports of irregularities relating to payment of salary, pensions or allowances. The Pakistan Military Accounts Department (PMAD) is in-charge of disbursing payment, allowances, and pensions in a timely manner.

The payment system (i.e the Basic Pay Scale which categorises all salary ranges) is well-established, published, and the basic pay is non-discretionary. There is an e-payment system for wages [3], and there is a direct credit system that has been introduced in order to facilitate the payment of military pensions.

IHS Jane's Sentinel assessment about troop morale and personnel indicate that the military is highly organised and is a sought-after career. It also states that officers are paid without any irregularities in the system [2]. The information was accurate as at 2013. No recent updates are available.

Researcher + Peer Reviewer3931: There are fixed rules and examinations for promotions at the middle and top-level positions. For example, promotion to a senior rank is almost impossible without attendance at the National Defence University (NDU) or a similar overseas establishment, where advanced courses are conducted [1].

All promotions in the senior levels have to be met with the approval of the Army Promotion Board [2]. There are set rules governing promotions and time in position (seniority) [3]. While there is evidence of procedures for promotion of army top brass, news reports do indicate that selection of the Army General may not be done purely on merit. For example, a news report in November 2013 said that despite the fact that General Sharif was highly capable and qualified, his selection as Army General may have been recommended to the Prime Minister by Abdul Qadir Baloch, a retired army general and cabinet minister who is known to be a good friend of General Sharif. This statement could not be independently confirmed.

News reports also indicate that promotions in the intelligence services also occur based on seniority and capability [4]. Officers are recruited at the Pakistan Military Academy and promoted on the basis of seniority and past record [6]. There is also an established criteria for the selection of female cadets for the Army and is available in the public domain [7].

This is confirmed by close collaboration in the past with military officers in Pakistan who stated at the time that the Pakistani military is highly organised and there is a strict system for promotion and payments (5).

Researcher + Peer Reviewer3931: There are fixed rules and examinations for promotions [1] and there is an Army Promotion Board that approves promotions [2]. The Board is part of the MoD and the service HQ. It is not clear from publicly available information if the promotion boards are outside the chain of command of the respective service and as such, it cannot be determined if there is independent oversight of promotions. There is limited information about other forms of oversight.

Promotions appear to be based on seniority and qualification. There are training colleges and courses at various levels. For example, promotion to a senior rank is almost impossible without attendance at the National Defence University (NDU) or a similar overseas establishment, where advanced courses are conducted [3].

Regardless of their job titles, civil servants and military personnel in Pakistan are recognised on the basis of their seniority bench-marked by the basic pay scale (BPS), ranging from BPS-1 to BPS-22 (BPS-1 is the lowest) [p.86 of source 3]. Jobs are categorised by BPS and each level has a required amount of experience in service and seniority.

The BPS is relevant here is as it is the only instrument which includes &quoute;time in post&quoute; as basis for promotion as well. Promotions in Pakistan are two-fold. One can go up the ranks based on skill, as well go up basic pay grades based on time in post. Although this is essentially equivalent to a pay rise, in Pakistan, it is called a promotion from one BPS grade to another.

Researcher + Peer Reviewer3931: There is no conscription in Pakistan.

Researcher + Peer Reviewer3931: The Pakistan Armed Forces is an all-volunteer force. In addition, there is no indication of the existence of any policy of voluntary conscription.

Researcher + Peer Reviewer3931: There are no reports of ghost soldiers. There is a strong accounting and payment system within the military. Local Audit Offices (LAOs) audit accounts and payroll at the Unit/Formation level [1]. This is reported upwards to the Pakistan Military Accounts Department (PMAD).

However, official manpower figures are not transparent, and there are no publicly available audit reports covering the functions of the PMAD.

Response to peer reviewer 2:
Agreed that there is no evidence of ghost soldiers, however there is no transparency over personnel numbers or records and/or expenditure on personnel costs that I can use to verify this. Score maintained.

Researcher + Peer Reviewer3931: The Pakistani military is a huge organisation with well-established chains of payment headed by the Pakistan Military Accounts Department (PMAD) [1]. There are Comptrollers at regional and unit levels that are in charge of respective divisions. There are regional-level Comptroller of Military Accounts (CMA) which are further divided into various disbursement cells [2].

The organisation structure and chain of payment is published in the sources section. While this may not be a published policy, there is clearly strict separation.

Researcher + Peer Reviewer3931: There is no Code of Conduct as such. The Army Act of 1951, Navy Ordinance of 1961, and the Air Force Act of 1963 have provisions prohibiting &quoute;misconduct&quoute; and &quoute;offenses&quoute;. They do not specifically cover &quoute;bribery, gifts and hospitality, conflicts of interest, and post-separation activities&quoute;. There are also clauses covering &quoute;punishments&quoute;. For example, chapters IX, X, and XI cover rules relating to offenses, punishments, court trials, court marshals, and pardons.

The Army Act includes clauses against &quoute;disgraceful conduct&quoute; and &quoute;illegal gratification&quoute; (bribery). Clause 42 on Illegal Gratification prohibits personnel from directly or indirectly accepting or agreeing to accept, or attempts to obtain,&quoute;any gratification whatever other than a legal remuneration, as a motive or reward for doing or forbearing to do any act, or for showing favour or disfavour to any person, in relation to any of the affairs of the State or of any service affairs&quoute;.

There are no further sources available on the subject.

Researcher + Peer Reviewer3931: There is no Code of Conduct as such. The Army Act of 1951, Navy Ordinance of 1961, and the Air Force Act of 1963 have provisions prohibiting &quoute;misconduct&quoute; and &quoute;offenses&quoute;. There are also clauses covering &quoute;punishments&quoute;. For example, chapters IX, X, and XI cover rules relating to offenses, punishments, court trials, court marshals, and pardons.

Although there have been some media reports of corruption cases [5] relating to land scams, there are no reports of investigations or any prosecutions, it is not clear as to what extent these laws are applied in practice.

Researcher + Peer Reviewer3931: There is no evidence that indicates that anti-corruption training is conducted for military and/or civilian personnel. Given that the Army, Navy, and Air Force laws prohibit &quoute;misconduct&quoute; and &quoute;offences&quoute;, it is likely that general training about these aspects of the law is imparted in training courses. No specific anti-corruption training appears to takes place.

Researcher + Peer Reviewer3931: There is no indication of a policy requiring outcomes of corruption investigations to be made public. While there are some examples of cases where outcomes of investigations are made public, this does not seem to be the norm.

Recently, there was an example of a case where the outcome was made public. An investigation into corruption allegations involving a multi-billion rupee National Logistic Cell, found two retired army officers guilty of misappropriation of funds between 2004 and 2008. This has been a high profile case in the media for the past year.

There are several other corruption allegations [such as source 1] against which not been met with conclusive investigations or enforcement actions. This suggests that the NLC case, which indicates effective prosecution and publicity, was an exception rather than the rule.

Researcher + Peer Reviewer3931: Laws exist to broadly prohibit &quoute;bribery&quoute; and &quoute;illegal gratification&quoute; but there is nothing that specifically addresses &quoute;facilitation payments&quoute;. The Army includes clauses against &quoute;disgraceful conduct&quoute; and &quoute;illegal gratification&quoute; (bribery). Clause 42 on illegal gratification prohibits personnel from directly or indirectly accepting or agreeing to accept, or attempts to obtain,&quoute;any gratification whatever other than a legal remuneration, as a motive or reward for doing or forbearing to do any act, or for showing favour or disfavour to any person, in relation to any of the affairs of the State or of any service affairs&quoute;.

The Prevention of Corruption Act 1947 also prohibits bribery and any illegal gratification [2]. The Pakistan Penal Code of 1860 penalises bribery as an offence.

Small facilitation payments are widespread in Pakistani society [4]. The interviewee had no personal experience/knowledge of facilitation payments in the military; but the interviewee's opinions indicated the perception of an overall weakness in law enforcement.

The score has been selected given that there appears to be no mechanisms in place to discourage facilitation payments.

Researcher + Peer Reviewer3931: There is no military &quoute;doctrine&quoute; that governs the Armed Forces. There is a Riposte Doctrine which is a tactical guidance document for military posture and deployment [1].

The Riposte is the closest document to a doctrine. It does not address corruption as a strategic issue on operations or otherwise. There is no other evidence to indicate that corruption is recognised as an aspect of governance either.

Researcher + Peer Reviewer3931: It is not clear if there is specific training on corruption issues faced during deployment for commanders. The Command Staff College training involves advance leadership modules, staff duty training, and other specialisations [1], but there is no publicly-available evidence that these modules include anti-corruption.

While there have been various cases of corruption involving senior officials in land scams [2,3], there is no specific information available on corruption during deployment.

Response to peer reviewer 3:
Agreed that there is no anti-corruption training for commanders, but I could find no information to verify the evidence of corruption issues on the ground during deployment. Score maintained.

Researcher + Peer Reviewer3931: There is no evidence that any trained professionals are deployed to monitor corruption risks during missions. In general, military missions in Pakistan are quite closed. For example, the ongoing military operations in the Waziristan region are closed to the media and all observers [1] as reported by the BBC.

The Armed Forces has not responded to various corruption allegations made in the recent past [2]; it is not clear if anti-corruption is considered a priority in ongoing counter-terrorism missions. The Army is not currently deployed in peacekeeping missions.

Researcher + Peer Reviewer3931: The PPRA is responsible for the capability building of public procurement staff and is the only body that conducts training via the National Institute for Procurement (NIP) [2]. Details about its training programmes are available on its website [1]. There is no evidence that training specifically includes corruption risks while contracting during missions.

Researcher + Peer Reviewer3931: There are no private &quoute;military&quoute; contractors in Pakistan, but there are several &quoute;security&quoute; contractors [5]. It appears that it is not in the interest of the government and the intelligence service to allow private companies to operate in the security sector, as described in source [1]. Private security companies carry out roles such as facilities protection, security guard services, cash-in-transit protection, CCTV surveillance, and other security consulting [1].

There is no federal act concerning security companies in Pakistan as a whole. Each federated state of Pakistan has its own regulation [4]; such as the 2002 Private Security Companies Ordinance of Punjab [2], and the Sindh Private Security Companies Ordinance enforced in 2001 [3]. Laws of other provinces were not publicly available at the time of this research. There are laws against unauthorised security contractors, these laws stipulate requirements for being in uniform, carrying identities, license to carry arms etc (e.g section 12 and 13 of the Punjab Ordinance Act).

There are some reports of unauthorised companies operating without required approvals [4]. There is no evidence of sanctions in place [based on open source search]. All security companies have to be created according to the 1984 Companies Ordinance (XLVII of 1984) with approval from the Security and Exchange Commission of Pakistan (SECP). According to a news report [4], some companies operate with just a no-objection certificate (NOC) instead of procuring a full fledged license. The Ordinance explicitly states that a company will be considered as unauthorised if it is not approved by the SECP (section 14, Punjab Ordinance Act).

There is no evidence to comment on the level of associated scrutiny.

Researcher + Peer Reviewer3931: The Public Procurement Regulatory Authority (PPRA) [1] was established at the federal level under the Public Procurement Regulatory Authority Ordinance 2002 followed by the promulgation of Public Procurement Rules in 2004 [7].

The PPRA Rules 2004 provide a common legal framework to all the procuring entities at the federal level. Some laws and acts have been passed at provincial levels but they are not in harmony with each other as follows [2].

- Balochistan enacted the Balochistan Public Procurement Regulatory Authority Act in 2009; there is no law governing procurement of consulting services.

- Khyber Punkhtunkhwa enacted the Public Procurement Regulatory Authority Act on 3rd September 2012 which is the most advanced of all provinces [8].

- Punjab PPRA rules were passed in 2009, Acts and Rules are replicas of the ones at the Federal level;

- Sindh Public Procurement Regulatory Authority Act was enacted in 2009 [9] and notification of Rules in 2010 [10].

In theory, the PPRA Rules 2004 apply to all public procurement, including defence. However, procuring entities can seek exemptions to protect the &quoute;National Interest&quoute; by writing to the PPRA. The &quoute;procuring agency in case of ex-ante (before the event) exemptions required under unavoidable circumstances must clearly mention that the National Interest is being safeguarded through the proposed exemption.&quoute; [3].

A letter to Transparency International in 2005 explains this clearly, where the government has exempted PPRA Rules [4]. This continues to be the case, as described by news reports [5].

Researcher + Peer Reviewer3931: Limited information about defence procurement is available from the media at the time of sign-off, but there is a high level of secrecy surrounding defence deals. For example, the most recent deal involving procurement of Chinese submarines [3], contains limited information and it states that government officials did not provide any details, even declining to confirm the size of the transaction.

Assessment of needs is carried out by respective service HQs and related information is not made public. Supplier registration, contract implementation and asset disposal are carried out by the Directorate General Defence Purchase (DGDP) [1]; proceedings are not made public.

Some procurement are made through open tenders, especially those related to small arms, supplies, clothing, and stores [2]. Tenders are published on the PPRA website; the HQs, Directorate General Munitions Production (DGMP) and DG Defence also publish tenders in the national media.

For such procurement, there is no information disclosed regarding the assessment of needs, sign-off, the selected supplier, etc.

The process for disposing assets is not clear; there is no evidence of a policy to publish disposal plans and make them available publicly. Some details about revenues from disposal (aggregated) is provided in the Annual Federal Receipts document.

Researcher + Peer Reviewer3931: The Directorate General Defence Purchase (DGDP) and the Public Procurement Regulatory Authority have oversight of procurement programmes, although many defence projects are exempt from PPRA rules with unclear oversight [1], [2].

The DGDP is responsible for ensuring the timely completion of defence procurement and provides functional and administrative cover for procurement programmes [3].

The PPRA has an oversight function of all public procurement programmes. While many defence deals are exempt, the ones that are carried out as open tenders do fall under PPRA rules [4].

The independence of the PPRA is doubtful- although it is considered as an autonomous body, rule 4 of the PPRA Ordinance 2002 states, &quoute;the Federal Government may, as and when it considers necessary, issue directives to the Authority on matters of policy, and such directives shall be binding on the Authority.&quoute;

There is no evidence to suggest that the PPRA and DGDP have autonomy in scrutiny of defence deals in practice as procurement can be exempt from their oversight for reasons cited as &quoute;national security&quoute;. Finally, the results of the PPRA oversight are not publicly available so an assessment about its effectiveness is not possible.

Researcher + Peer Reviewer3931: There is a high level of secrecy surrounding defence deals and many procurement programmes are kept secret with the justification that it is being done to protect &quoute;national interests&quoute; [1], [2]. This is especially the case with major military procurement and strategic programmes. Some procurement programmes such as supplies, small arms, clothing, infrastructure, and other non-strategic equipment are conducted as open competition via the PPRA website [3].

There is no information about potential defence purchases; there are no procurement strategies or forward-looking plans.

Response to peer reviewer 1:
It is not exactly clear if there is a tendency for Pakistan to be more transparent about purchases from China and Russia. It might seem that way because they are the largest suppliers for Pakistan. There are reports about other suppliers too. e.g http://www.dawn.com/news/1107901 / http://www.thenews.com.pk/Todays-News-13-28662-PAF-acquires-F-16s-from-Jordan

Researcher + Peer Reviewer3931: There is no formal requirement for bidders to have a compliance program in place. When defence procurement programmes are being conducted under PPRA rules, the procuring entity and all bidders are required to sign an &quoute;Integrity Pact&quoute; where procurement exceeds Rupees 10 million [1]. Although it is not called a &quoute;no-corruption clause&quoute;, the &quoute;Integrity Pact&quoute;, states that neither party will offer or accept bribes or any extra payment throughout the process. The PPRA Rules 2004 include clauses to prevent &quoute;corrupt and fraudulent&quoute; practices [4].

Rule 19 of the Public Procurement Rules 2004 [5] allows the procuring entity to &quoute;permanently or temporarily bar, from participating in their respective procurement proceedings, suppliers and contractors who either consistently fail to provide satisfactory performances or are found to be indulging in corrupt or fraudulent practices&quoute;. A list of black-listed companies are available on the PPRA website [6].

There is evidence of major defence procurement programmes have been exempt from PPRA rules as sources [2 and 3]. In such cases, it is unclear if Integrity Pacts are signed in practice. There is no further information about this, nor reports of successful implementation of Integrity Pacts.

Researcher + Peer Reviewer3931: There is no National Defence and Security Strategy guiding the direction of the Pakistan Armed Forces; a draft National Security Policy is available through the media [5]. There are reports of a &quoute;maritime strategy&quoute; but it does not guide procurement in any way [1].

Procurement priorities are sometimes reactive and made on an urgent basis. A good example is when defence procurements related to the Air Force (radar and air-defence) were prioritised in the aftermath of the US Navy Seal raid in Abbottobad [2].

The Ministry of Defence has two main elements: the Defence Division, and Defence Production Division; there is no procurement division or agency [3]. So far as can be determined, the individual service HQs prepare procurement lists and priorities; this process is not transparent.

Response to peer reviewer 2:
There is no evidence of any National Security Policy/Strategy in the public domain. There is evidence of a draft policy. Score maintained.

Researcher + Peer Reviewer3931: Rules 8 and 10 of the PPRA Rules 2004 cover requirements, specifications, and justification of needs for public procurement. Rule 8 states, &quoute;all procuring agencies shall devise a mechanism, for planning in detail for all proposed procurements with the object of realistically determining the requirements of the procuring agency, within its available resources, delivery time or completion date and benefits that are likely to accrue to the procuring agency in future&quoute;. Additionally, Rule 10 states &quoute;Specifications are to be broad to ensure fair competition&quoute;.

It is possible that many cases of defence procurement to be exempt from PPRA rules under &quoute;national interest&quoute; clauses [2]. There are no publicly available audit reports of procurement to verify the level of identification and quantification undertaken to define requirements for defence tenders and as such, it is difficult to assess how often this takes place in practice.

Researcher + Peer Reviewer3931: There is a high level of secrecy surrounding defence procurement. Many procurement programmes are kept secret with the justification that it is being done to protect the &quoute;national interest&quoute; [1], [2]. This is especially the case with major military procurement and strategic programmes. Other procurement programmes such as supplies, small arms, clothing, infrastructure, and other non-strategic equipment are conducted as open competition via the PPRA website [3].

There is evidence that the procurement of major equipment is single-sourced under government to government contracts; recent examples include purchase of F-16s from Jordan [10], and submarines from China [9]. There are cases where PPRA rules are violated by defence/security purchases made without an open tender; a recent example is the case where the Supreme Court is investigating Sindh Police's procurement of APCs from Serbia. The Court confirmed PPRA violations as &quoute;no advertisement was given regarding the purchase of APC by the Sindh police&quoute; [11].

Defence trade to Pakistan has historically been limited to few options due to international arms embargoes from the West [7, 8], leaving Pakistan with few suppliers to source from. Pakistan has chosen to procure from countries where there are no risk of disruptions from sanctions (resulting in many contracts issued to China, Russia). For example, US-Pakistan defence trade went to an all-time low following the Abbottobad raid by US troops in Pakistan and was seen to further deteriorate in 2013 [4]. Pakistan has also chosen to single-source equipment from China due to the benefits of joint-development, and technology-transfer [5,6] offered by China.

Response to peer reviewers 2 and 3:
Procurement of large and strategic items seems to be single-sourced. However, there is an element of competition with most tenders related to small arms, goods, supplies, military infrastructure, etc. I have changed the score from 2 to 1 in light of the fact that most lucrative contracts are single-sourced.

Researcher + Peer Reviewer3931: The PPRA acts as the tender board as all tenders related to public procurement are published on its website, including those of the defence services [1]. As per the PPRA Ordinance, the accounts of the PRRA are audited annually by the Auditor-General of Pakistan [2]. Many defence procurement projects are not conducted openly, they may not be subject to audits.

The PPRA Code [4] requires procuring entities to keep records of procurement for at least 5 years from the date of completion/rejection of bids. It also requires these records &quoute;to be made available within a
reasonable time to the Auditor General of Pakistan or any authorized officer of the Authority or the Federal Government.&quoute;

Based on the fact that the core members of the PPRA are Secretaries of various Ministries [&quoute;board&quoute; under source 3], it is assessed that there may be a risk that the Auditor-General's audit recommendations may not be effective. It is chaired by the Secretary of the Finance Division and is under financial control of the Federal Government.

No additional public information is available.

Researcher + Peer Reviewer3931: The Competition Act of 2010 of the Federal Government requires fair competition in all procurement activity [3] across all sectors, including defence [2]. There are no laws specific to the defence sector.

The Competition Commission of Pakistan (CCP) is responsible for ensuring compliance with the Competition Act. Its current and past investigations are published on its website as regular press releases [4]. Annual Ministry of Finance reports and news reports suggest that the CCP is active in investigating collusive practices in public sector contracts. Most recently, in April 2015, the CCP penalised an automotive manufacturer for collusive price-fixing [5]; in 2011 the CCP investigated a few major cases of bidder collusion related to FESCO[6], and Port Qasim tenders[7].

PPRA Rules of 2004 includes &quoute;collusive practices&quoute; under the broad category of &quoute;corruption&quoute;. The definition of &quoute;corrupt practices&quoute; includes &quoute;collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial.&quoute; [2]

Standard Bidding Documents prescribed by the PPRA require contractors to sign the undertaking, &quoute;We do hereby declare that the Bid is made without any collusion, comparison of figures or arrangement with any other person or persons making a Bid for the Works&quoute; [1].

Researcher + Peer Reviewer3931: The PPRA is responsible for the capability building of public procurement staff [2]. Their training schedule indicates that this is conducted regularly [source 8]: &quoute;Training of government officials in public procurement was started by Public Procurement Regulatory Authority (PPRA) under a 3 years World Bank Capacity Building Project in 2006. These training activities were formalized through the establishment of National Institute of Procurement in 2009&quoute;. [1]

The training outline published on NIP's website indicates that modules are designed around the public procurement rules and regulations [accessible from Source 1 by clicking on &quoute;Training Outline&quoute;]. Individual training sessions appear to cover various stages of the procurement cycle from planning to completion and recording of information. For example, trainees have various modules and sessions such as: &quoute;handling bidding documents&quoute;, &quoute;planning&quoute;, &quoute;advertising&quoute;, &quoute;bidding evaluation&quoute;, &quoute;close of contract&quoute;, &quoute;record of procurement proceedings&quoute;, &quoute;arbitration&quoute; etc.

Based on the information below, it is assessed that public sector officials from the defence sector do receive training. The NIP lists out names of participants of the PPRA Capacity Building Training Programme (participants of other courses are not identified) by year on their website - sources 4, 5, and 6 list names and designations of participants in 2012, 2013, and 2014 respectively. It is not clear if the list has any omissions or if it is the full list of individual participants (it was not possible to ascertain that during the time of this assessment). That said, the lists for the 3 years appear to include public and private sector officials and there is indication that officials from the MoD, Army, Navy, and some battalion-level officers [source 6, no.16] have obtained training in those years.

Despite the training, annual Auditor General reports have previously found losses which were incurred largely due to injudicious tender evaluations by the PPRA. Although these examples are related to tenders in different sectors, it acts as an indicator of PPRA's staff efficiency. For example, in 2010-2011 the AGP found &quoute;Injudicious evaluation of tenders caused a loss of Rs558 million to the Railways Ministry[9].&quoute;

There is lack of information about how well staffed the PPRA is; there is no evidence about staff rotations. There is also no information specific to defence procurement staff; the Ministry of Defence has two main elements: Defence Division, and Defence Production Division; but there is no specific procurement division or agency that could be held accountable for defence contractors meeting their obligations.

Researcher + Peer Reviewer3931: As per the PPRA Rules 2004, the procuring entity is required to have a &quoute;committee comprising of an odd number of persons, with proper powers and authorizations, to address the complaints of bidders that may occur prior to the entry into force of the procurement contract.&quoute; [1]. Details about the members of these Grievance Redresal Committees for each department can be obtained from the PPRA website by choosing the required Ministry/Department from the drop-down box available on the webpage of Source 3.

Procurement rules are similar on a provincial level, with varying effectiveness of grievance redressal mechanisms across departments. For example, source 2 reports that, &quoute;There is a lack of institutional mechanisms for the redressal of grievances of bidders [in Balochistan] giving rise to litigation and consequent delays in bid awards&quoute;.

There is no information about whether companies would be disadvantaged or otherwise should they choose to complain. There are no news reports available to make this assessment possible. A score of 2 has been awarded on the basis of the available evidence.

Researcher + Peer Reviewer3931: Rule 19 of the Public Procurement Rules 2004 allows the procuring entity to &quoute;permanently or temporarily bar, from participating in their respective procurement proceedings, suppliers and contractors who either consistently fail to provide satisfactory performances or are found to be indulging in corrupt or fraudulent practices&quoute;. A list of black-listed companies are available on the PPRA website [2].

The rules apply to the defence sector as well, meaning that suppliers of goods, services, consulting to the defence sector can be subject to blacklisting. While overall, there is little information available in the media in regard to the application of sanctions, there is some evidence to suggest that suppliers to the defence sector are subject to sanctions where appropriate.

For example, Aero Marine Enterprises of Karachi was blacklisted in the Punjab province meaning that it cannot supply to the Pakistan Aeronautical Complex (PAC) Kamra [4, and 5]. Similarly, M/S Dewan Mushtaq Motor Company Pvt. Ltd was blacklisted for non-delivery of a contract to the KPK Frontier Corps [&quoute;blacklisted firms&quoute; can be accessed via source 1]. Nevertheless, there are multiple cases of blacklisted firms still gaining key contracts [6, 7, 8].

The Federal Government can also take actions against companies as per the Companies Act of 1974 [3].
However, given the lack of transparency in relation to defence procurement in general, an assessment of the consistency of the application of these sanctions where appropriate cannot be made. There are cases of sanctions evasion but none specific to the defence and security field.

Researcher + Peer Reviewer3931: The lack of transparency in defence procurment makes it impossible for this question to be assessed accurately.

Some defence offset deals which have been reported do not cover details about offset negotiations [1, 2]. Procurement Rules and codes do not mention offsets [3] and there are no reports from the PPRA or the DGDP regarding the implementation of offset contracts. It is likely that the manufacturing facilities come under routine internal audits by the Department of Defence Production [for example, PAC Kamra where the Boeing offset project was set [4] has had routine audits [5]]. However, it is unclear how often this takes place and if offsets are reviewed in detail.

There are some due diligence measures in place to audit defence production sites, although there do not appear to be direct rules related to offsets.

Response to peer reviewer 3:
Agreed and score adjusted from 1 to 0.

Researcher + Peer Reviewer3931: There is a high level of secrecy surrounding defence procurement and very limited information available in regards to offset programmes in particular. Only one offset programme has been reported about so far- the Boeing Offset project in Pakistan Aeronautical Complex, Kamra [1] in 2006.

International news reports have speculated offsets involved in a few other international defence deals [2, 3], but there is no confirmation from local sources, and proceedings of contract negotiations are not made public in Pakistan.

No other public sources are available.

Researcher + Peer Reviewer3931: It is unlikely that offset contracts are subject to the same level of competition regulation as the main contract. There is little public information on this topic. In 2009, there were only two notable organisations that were understood to be involved in offsets contracts - Precision Engineering Complex, Karachi and Pakistan Aeronautical Complex, Kamra [1]. The Boeing offset project was set up at the PAC as it is an Air Force related project [2].

Based on a report by the Senate Committee of Defence and Defence Production in 2009, it appears that offsets deals in defence are quite nascent with few competitors, and a limited number of offset deals. [1].
An accurate assessment cannot be made due to the high level of secrecy surrounding defence procurement; the assessment here is speculative, based on the few sources available. The score has been awarded on the basis of the lack of transparency in this area.

Researcher + Peer Reviewer3931: According to the PPRA's Standard Bidding Document, the rules on contractors' liability, and employers' risks extend to agents and intermediaries [1]. The rules governing agents are stricter in case the procurement is over Rupees 10 million where the entities enter an integrity pact which clearly names all involved parties at the very beginning of the procurement [2].

However, retired military officials end up being hired by international suppliers as agents [3] - there are also suspicions that many retired officials work as consultants for major defence companies, acting in capacity of an agent helping do business in Pakistan. There is no evidence that agents may be subject to vetting and scrutiny.

No recent information is available on the subject.

Researcher + Peer Reviewer3931: Details of financing packages are not made public other than a few details.

When it comes to small procurement, which are conducted via open tenders, these contracts state the estimated cost of procurement in the tender documents. [1]

A high degree of secrecy exists around large procurement deals. News reports about the deals do not cover cost, timeframe, and other financial details. [2], [3]. The news reports do report the identity of the supplier and the platform being procured.

Researcher + Peer Reviewer3931: Bidding documents do not specifically address corruption as an issue but more generally cover &quoute;default&quoute; or &quoute;neglect&quoute;. Source [1] includes a clause which hold the main contractors responsible for &quoute;the acts, default and neglect of any Subcontractor, his agents or employees as fully as if they were the acts, default or (85) neglect of the Contractor, his agents or employees&quoute; [1].

&quoute;Acts&quoute; could potentially include bribery and corruption, depending on how the court sees it. However, normally they would refer to deviations from the work contract with relation to technology or deliveries.

It is not clear as to how far this is enforced in defence procurement, which are already largely exempt from PPRA rules on grounds of security and &quoute;national interest&quoute; [2 and 3].

There are no recent sources relating to subsidiaries and sub-contractors.

Researcher + Peer Reviewer3931: Geopolitical factors have been important for Pakistan while choosing suppliers for three reasons described below. However, procurement appears to be more driven by the need for the equipment than by such considerations.

1- Limited sources due to embargoes. Pakistan's sources for defence material have been limited and have often depended on geopolitical considerations, not just from Pakistan's side but also from the supplier's side. Pakistan has faced different waves of defence embargoes from major western suppliers. For example, the US-Pakistan defence relationship suffered an all-time low following the Abbottobad raid by US troops in Pakistan and was seen to deterioate further in 2013 [1]. Similarly, Russia had also imposed arms embargoes until recently [2].

2- Strategic Alliance with China. Sino-Pak diplomatic relations date back to the 1950s. The existence of a common strategic threat - India - has historically enabled defence relations between the two countries; China has also provided generous amounts of money to Pakistan in the form of aid and soft loans. [3]

3- Prospects of joint-development and technology-transfer from China have made defence deals even more beneficial for Pakistan [4].

There is no other evidence regarding how strictly purchases are made according to military need. There is no transparency regarding need and acquisition planning.

The personal experience of the researcher on the subject is that procurement has been need-based rather than based on political influence of selling nations. Pakistan is in the middle of an ongoing counter-terrorism operation, border protection in Kashmir and naval protection in the Arabian sea. The exact level of capability shortfall is not known but as such, filling this gap is likely to be a priority. Procurement is thus likely based on needs (this may not be verifiable by published needs assessments) although suppliers may be selected on political grounds.