Cleaning up the NGO sector
The clearance of ‘The Regulation of Foreign Contribution Bill 2012’ by the Senate Standing Committee on Finance is being counted as a significant measure to deal with corruption among NGOS. There are more than 100,000 non-governmental organizations (NGOS) currently operating in Pakistan, with 17 agencies to register them under 12 different laws. However, no one has any idea, how much funds they generate and spend, what are their sources of donations and what objectives they are able to achieve.
According to Senator Tariq Azeem, the government does not know how many of these NGOS are in fact registered and how many are working without any legal cover, though many of them have been found working against public and national interest in the recent times.
The United Nations had been advising the government about the need for accountability and transparency in the NGO sector, arguing that “the corruption in Pakistani society is rampant in the NGO and commercial sector as well. There is also a need to critically examine the short-cuts that donors have often taken to be able to say to their headquarters that they have actually disbursed the required funds.”
The National Council of Social Welfare, an umbrella organisation of the federal government, says: “In Pakistan, there is no law which regulates the foreign funding to NGOS contrary to the good governance practices in other countries. This has resulted in giving birth to NGOS which advance the interests of the donors and in certain cases they may also work against vital interest of the country.
It said, some foreign NGOS sign memorandum of understanding with the Economic Affairs Division before the start of activities but once the MOU is signed, the EAD has no institutionalized contact with them, providing them ample space to operate the way they like, without any check and balance from any quarter.
In most cases, the administrative expenses of the NGO go beyond 80 percent while remaining funds go for the activities for which donations were made, obviously with little outcome. In some cases, the physical verification of fund utilization is thwarted by local representatives of foreign NGOS with threats and other discouraging tactics.
People associated with NGOS exhibit wealth in their lifestyles, riding in luxurious vehicles and holding functions and dining at five-star hotels, bribing policy makers and parliamentarians directly and indirectly by arranging for them visits abroad but there is no public scrutiny about their activities, funding and objectives even though some of their donors might be well intentioned.
The corruption and misuse of donor funds had become such a serious issue that USAID had to set up its own system and launch a helpline for complaints against misuse of its funds and point out frauds. That meant that despite monitoring from outside, the regulation of the activities of NGOS was necessary to know about the impact and results that are generally now seen on ground. Some European countries have had also pointed out problems with funds utilization in post-earthquake and flood rehabilitation process.
Under the existing environment, the NGOS are not required to declare their accounts, donations and gifts they receive from abroad and stay away from public scrutiny. Even the foreign funding agencies are worried about utilization of their resources.
The Regulation of Foreign Contribution Bill 2012 seeks to cap administrative spending at 20 percent of total even though the Ministry of Foreign Affairs had advised restricting administrative expenditures at 14 percent in line with international practices. The law seeks 80 percent of funds for operational purpose declared at the time of receiving donations.
The proposed law also seeks penalties in the form of up to three-years imprisonment and fine equivalent to the market value of fraudulently obtained foreign funding, diversion for some other purpose and calls for submission of annual accounts to the Securities and Exchange Commission of Pakistan that would be the single agency — instead of 17 at present — to register non-governmental organisations.
Under the law, the government and the SECP will have the powers to call for any information or document, inspect and audit accounts and initiate proceedings against any NGO or person found involved in violating law of Pakistan or against the sovereignty, integrity, security, strategic, scientific and economic interests of the country.