Wednesday, 21 October 2009

The Process of Rentseeking--A club in Lahore

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Masood Hasan's article in the news reproduced below is one of the first attempts to show how the nature of elite rentseeking. No only do they continue to get subsidies for elite country clubs but they also run those institutions in teh most corrupt manner possible.

We must do much more to expose this dark side of Pakistan's elitism and rentseeking. A number of deep rooted political economy issues need to be exposed through this effort to generate an understanding and a momentum for reform.


On Wednesday, October 21, 2009
Masood Hasan wrote

"Those who lament the better days of the past that are no more could perhaps be forgiven for being nostalgic. One refers to the garish and cheap Club that is now the successor of what was once an elegant establishment at the Montgomery Hall in Lahore's Lawrence Gardens. That Club where people of good breeding and class were to be found is long gone, replaced as so often in Pakistan with a motley crowd of power-hungry boors, crooks, yobs and the uneducated. We have destroyed yet another fine institution.

But even if you grant it the benefit of the doubt --- that a club after all is only a reflection of the social values that are prevalent, you cannot accept the rampant decline in standards and etiquette and large-scale looting, plunder and criminal inefficiency. It is simply shocking. This is white and blue collar crime working in tandem. The Club is a favorite hunting ground for bureaucrats. They continue to rule the Club under one dispensation or another and win elections one way or another to retain power.

Club resources are stretched. The losses are in the millions. A grant of Rs50 million shamelessly accepted from the government of Punjab (amidst thunderous applause from the worthies when announced by the then chairman) was quietly channeled into the main accounts. The 2007-08 losses of Rs32m transformed into profit! Allah be praised indeed.

What plagues the Club would fill out this entire newspaper, but suffice to say that there is literally no area where inefficiency, corruption, violation of laws and total fiscal mismanagement does not hold sway. With over 6,000 members on the rolls and many more waiting to get in, you would think that at least financially the club was doing well, but it is not. Of the 15 areas of its operations, it on average reports losses in 12 and measly minor gains in the remaining three. It has an army of employees – over 800 and administrative losses of Rs27m. Rs8m losses in golf, Rs6.2m catering and bar services, Rs4m tennis, Rs3m swimming, Rs2m each cricket and billiards, Rs1.9m cards, Rs1.4m squash, Rs0.7m library, Rs0.3m tambola and Rs0.2m children/women's functions. No way to run a railroad is it? Why are elitist games like golf subsidized? Fees have been raised recently but the raises are meaningless. Losses upwards of Rs.22m are being incurred on sports. This is criminal. Where is the management and what is it thinking? Raise the fees and lose the votes?

Where it is slowly recovering is The Shoppe and guest rooms. There are many stories about senior members holding rooms from one end of the year to the other without payment. Rooms can be hired in advance if you have the right connections while genuine members are always denied the same even when applying weeks in advance. The gym and wellness centre (outsourced), music and film shows and the sports shop are making minor profits. Overall, as of June 30, 2009, the club's losses stand at Rs14 million down from losses of Rs32 million but how kosher are these figures? Everything about the club is tainted and that's a crying shame. The present committee has done precious little to steer the boat ahead safely. As is the custom in the Land of the Pure, some lowly flunky is strung up as a scapegoat and punished.

When it's election time in December the same faces – Lahore's pillars of society, will be popping up to carry on their agenda of mismanagement. When you experience the canvassing onslaught from members, you wonder if they are fighting for the US Presidency or just a Club. It is now common knowledge that the 2008 elections were blatantly rigged. In January this year, 116 permanent members filed a written complaint highlighting serious instances of rigging, misappropriation of funds, violation of laws, etc For all their trouble, they received stony silence from those who were too busy eating into the Club's resources and having a ball. At the last annual general meeting, the chairman astounded everyone – other than his gang, that the number of permanent members was now 'higher' than those listed in the electoral rolls. This was blatant abuse of authority and ensured that the vote would tilt the election in favor of the junta. The matter was brought to the attention of the CEC, Justice (r) Tanvir Khan, who did just the right thing. Nothing.

On another written enquiry moved by members, the club secretary - another compliant cog in the greasy wheel - admitted that 140 regular members had became permanent, 167 regular members were 'inducted' and 53 'A' members were made regular. This was done without the knowledge or approval of the management committee. That this was a violation of club rules and proof of a massive pre-poll rigging did not impress anybody. When the CEC was again approached, he professed helplessness. He also chose not to resign for that would have been an honorable thing. Letters written to the chairman and club secretary have evoked no response. The various 'conveners' who in reality are the viceroys together with whoever is the chairman, simply carry on regardless.

The Shoppe spawned more jokes than all the Sikh jokes that do the rounds and made the Club the laughing stock of the city. A probe committee discovered that goods in excess of Rs11.6m were 'short supplied' to the Club in a period of just six months. The Club's response was to register an FIR against four of the lowlies. No one questioned the big, fat cats. Social circles regaled one another with stories about 10,000 litres of milk and 110,000 eggs having vanished in just six months. The Club said the rats had taken these. For once they were telling the truth. Rats indeed. The Club's already tattered reputation thus sank further and has continued to sink. And this is one area.

In October this year, senior members wrote to the chairman on a subject – misappropriation of funds – and received no answer, the established SOP now. The management committee's 12-page report in the Annual Report 2008 is silent about the various misappropriations. After 18 months of dilly-dallying CCTV cameras were finally installed to check large-scale pilferage in the kitchens but were sabotaged instantly by vested interests. A forensic audit for the last five years is required but it won't happen because the office-bearers are, or think, they are beyond reproach or the law.

'In this hammam,' as Manto Sahib said, 'everyone is naked.' "