Sons, bribes, perks, and jobs – the murky world of corporate lobbying in Pakistan

On a foreign tour organized and sponsored by the Coca-Cola company, a number of well known journalists and industry professionals found themselves confounded by the special attention that the host was giving to a woman and her kid that were part of the touring group. None of the people on the trip recognised her as a fellow journalist or as anyone they recognised from the company, and the lady did not attend a single one of the events and conferences that the group was there for. 

One of the people on that trip, who is now the publishing editor of this magazine, inquired from the company’s management who the unknown guests were. It turned out that it was Riji Yusuf, the wife of then Federal Board of Revenue (FBR) Chairman Abdullah Yusuf. 

A little more digging and one of the representatives of the company told that the MNC often “engaged” Mrs Yusuf, who has no known skills apart from having her husband’s ear, in an unofficial capacity as a lobbyist. This particular example from April of 2005 only scratches the surface of the murky world of corporate lobbying in Pakistan. (More on Abdullah Yusuf and others later in the story.)

Lobbying is when corporations or other interest groups try to influence and sway government decision making towards directions that benefit their bottom line. A soft drink manufacturer might advocate for a lower taxation rate on sugar, while a tobacco manufacturer might want a smaller health warning on the cigarette packs. The interests of these large corporations vary according to what their work is, and the decisions that impact their businesses are all made by the government. 

The problem is not so much with the concept of advocacy and lobbying as it is with the techniques which lobbyists often use, which at times may border on bribery. There is nothing wrong with an industry banding together and presenting their opinions and research to the government but there is an issue with that industry doing favours for people in power or using their personal connections to get the job done. 

In the United States, lobbying is considered not just a high powered career trajectory but also a well-respected one. Lobbyists run Washington, and a peculiarity of American campaign finance laws means that they can even make monetary contributions to the campaigns of politicians. In Pakistan, things are different. Lobbying does not take place formally, but is instead carried out by trade organizations, regulatory affairs departments, and even by the media. 

In this story, Profit will look at the tenebrous terrain of corporate lobbying in Pakistan. From fully funded foreign trips to jobs for the children of powerful officials – it is a world of constantly exchanged favours, unsaid understandings, and a never ending cycle of you-scratch-my-back-I’ll-scratch-yours. To understand it, we have gone to four people, all of whom represent different faces of corporate lobbying in the country. There is Fahad Qadir, the former head of Coca Cola Pakistan’s regulatory affairs department. Then there is Ehsan Malik, the CEO of the Pakistan Business Council (PBC). We have Shahid Sattar, the general secretary of the All Pakistan Textile Mills Association (APTMA). And finally there is Azfar Ahsan, the CEO of Nutshell Communications, which is Pakistan’s first dedicated lobbying firm. It is through them that we will tell the story of corporate lobbying in Pakistan, along with all of its trials, tribulations, and successes.

The associations and regulation managers

Let us tackle the first two kinds of lobbyists that exist in Pakistan. The first are different industry associations and the second are the regulatory affairs departments in different MNCs and corporations. There is an association for everything. Every industry has very specific interests that it needs to have advocated or which it needs protected. For example, while textile manufacturers might be duking it out and competing in the market, in the grander scheme of things, all of them will want more cotton to be grown and for the taxes on cotton manufacturers to be lower. That is a common goal they have. 

For this purpose, they form coalitions or collectives or associations that work independently from individual textile manufacturers and advocate for the common goals that the industry has. “APTMA represents the larger companies in the textile industry. We have roughly 250 members, and all of the major manufacturers like Bareeze, Nishat, and Sapphire are members of this association, and since we are the second largest sector in the country after agriculture, the work we do here affects around 50 million people,” explains Shahid Sattar, the general secretary and executive director of APTMA. 

On the other hand, regulatory affairs departments in large companies do much of the same, except they do it to protect the interests of their specific companies rather than the industry at large. Often, these departments and their relevant associations work in close contact with each other. For example, the regulatory affairs department at Coca-Cola will work closely with the Pakistan Beverage Manufacturers Association. 

“Our job, essentially, is government and stakeholder relations, which is quite boundless. We have to build a narrative and engage the right stakeholders so we can protect our investments,” explains Fahad Qadir, the former head of regulatory affairs at Coca Cola Pakistan. “We are dealing not just with the FBR but also with the provincial and federal governments and many others.” 

These two kinds of lobbyists have existed for a long time in Pakistan. Since they are not formally “lobbies” and are instead advocacy groups, they are often not recognised as what they are. The third and final category of lobbyists that we have chosen is a new one – officially declared lobbying firms. Started seven months ago, Nutshell Communications headed by Azfar Ahsan claims to already have 90 regular clients and up to 150 clients overall that they work with. These clients include some of the largest banks in Pakistan, all four major telecom companies, K-Electric, and other major energy companies. Azfar himself does not shy away from the word lobbying, and admits that is exactly what Nutshell communications does. 

“Public relations companies in Pakistan are unfortunately working simply as post offices. That is why we do not call ourselves a PR company – we hold ourselves to a better standard. We are involved in strategic engagement, and for that we have to do our research and get in touch with the right people,” he says. 

This is where it gets interesting. All three of these are approaches to the same thing, and all three categories do much the same work. They conduct research, make policy briefs, publish ads and articles in newspapers and essentially try to build a narrative around their beliefs that will become popular and be adopted by the government. However, this is only the very surface level work that they do. Simply publishing an op-ed is not going to get their point across, and what they need to do is to go directly to the stakeholders and the decision makers sitting in the corridors of power. 

Finding the fixers 

This is one of the most important factors in corporate lobbying in Pakistan, not just in the associations but also at large corporations and among professional lobbyists – contacts. You see, if you have prepared a report on cotton growth in Pakistan and need to get it to the commerce minister, you cannot simply walk up to his office, knock on the door, have a small chat and leave the report at his desk. You need to have a person that has an ‘in’ with the minister and can arrange a meeting – essentially you need a fixer. Who could these fixers be? They could be former bureaucrats, other politicians, other cabinet ministers, the relatives of cabinet ministers and serving members of the higher judiciary, retired generals of the Pakistan Army, senior journalists and so on and so forth. 

This is where people like the earlier mentioned Abdullah Yusuf thrive. They are hired by corporations and associations at high salaries so that they can use their contacts and influence to get those companies or industries profitable deals with the government. Yusuf, who served as FBR Chairman during the Musharraf regime, has since served, just to mention a few, as the Chairman of the Independent Power Producers Advisory Council and as Chairman of the Pakistan Aluminium Beverage Cans Ltd. In his current role as Chairman of the IPPAC, he lobbies for and gets the council meetings with key figures. During his time at PABC, he was being paid a salary of Rs 1 million a month according to one source, for what is a ceremonial role. Why? Because Yusuf made sure that Pakistan imposed a 20% regulatory duty on the import of aluminium tin cans from Sri Lanka despite a Free Trade Agreement with it, which turned out to be a gamechanger and kept PABC in business. 

Another similar example of a post-retirement corporate lobbyist could be Ashraf Mahmood Wathra, who after serving as Governor of the SBP from 2014 to 2017, was hired within months by the largest bank in Pakistan as senior corporate consultant on international strategy and operations. It was problematic because it meant that Wathra was, until only a few months ago, regulating his future employers. Who is to say he did not already sense a job opportunity at a big bank and possibly went easy on them to stay on their good side and get the high paying job after retiring as SBP Governor? 

In more recent times, even tech startups have been known to hire influential people on their boards by offering them high salaries and sweat equity to get them through the regulatory hurdles.

“APTMA is not one of those organizations that give bribes, but we do have a relationship with the bureaucracy and government functionaries. You need people that can open doors for you. There is no way to get the job done without them,” explains Shahid Sattar. “Consider this, if I want to meet the finance minister, he is not going to see me unless he knows me from before. If I’m being completely frank with you, then the reason I am good at my job is because I have worked in the government before this and so I know all of these people either from work, or school, or college and that is why they entertain me.” 

“That doesn’t mean they’ll do what I say, but it at least gives me the opportunity to get some facetime and advocate for my industry. Letter writing does not get you anywhere at all, you need to have connections to actually get your file on the table,” Sattar adds. 

“Getting your file on the table of the relevant person is considered a real success,” says Fahad Qadir. MNCs like the one Fahad worked for have regulatory affairs departments, which essentially work as an in-house lobbying solution through their regulatory affairs departments. “In the recent past we had industry wide problems such as the sin tax imposed on our usage of sugar. We had to prepare and present a case to the government to convince them to either not impose the tax, or to also impose it on biscuit manufacturers and the like. Now, when we go to present our case, the government will hear us out because Coca Cola is a massive company, but others without that kind of international recognition will need an inside man to arrange a meeting for them and get in a good word.” 

“So when you’re constantly fighting battles like these, whether it is against a tax on sugar or it is against a ban on plastics, then you have to know there are people in important places ready to back you. You need to know that if this issue comes up in cabinet, what minister will back you? And to make sure that you have someone on the inside that will raise their voice for you, it is necessary to engage these people,” he explains. 

In these situations, and when the stakes are this high, associations and corporations alike can be very blatant in hiring people that they might not necessarily bring great skill but bring great contacts and social capital. At one point, in fact, the Supreme Court took notice of why the tobacco industry was consistently hiring the sons, nephews, and other relatives of people heading important regulatory divisions such as the FBR. 

This happens everywhere and is rampant. In corporations and MNCs, people hire the sons of important bureaucrats and politicians with the idea that the connection will one day come in handy. While there are certain moments in which these sons or nephews may be asked directly to ask their fathers or uncles for favours these are rather unlikely. The techniques that are used are more subtle than this, and there is a general expectation that since the relative of a person in an important office is part of an organization, doors simply begin to open for them in an unspoken understanding. Some officials even approach companies to ask for jobs for their children, or for things like money for their wife’s NGO or some charity event. Again, none of this is strictly illegal and is not technically bribery, but it is a more subtle way of greasing palms. 

And that is because these are MNCs and organizations that represent massive industries, which is why they have some rules and regulations they must follow to keep up appearances. On a smaller scale, where the fixer is someone like a famous journalist or a talking head on television that knows politicians, straight-up cash payments are made. You get paid to arrange a meeting, and if the work gets done you also get a success fee. 

Then there is another tactic which is even more common. If not the children of people in office, these companies hire recently retired officials that still have links and some pull in the places they just retired from. “These people are often hired on contract for a year or two. You see, since they are recently retired, their coworkers are also due for retirement soon and they can only leverage their influence for so long. But they get hired for a year or two and in that time they get paid in the millions,” says Fahad Qadir. 

“Fixing a meeting is not enough, but fixing a meeting is the first step,” says Azfar. His company, Nutshell Communications, recently hired a retired Major General and a recently retired Brigadier of the ISI as part of their strategic engagement division. The Major General, who commanded a division of the Pakistan army once, now commands the strategic engagement division of Nutshell Communications. The hiring of former military officers that have the right connections is very regular, but it is not just the military’s retirement pool that Azfar, the associations, and the regulatory affairs departments go fishing in. Azfar has also hired bigshots from both the corporate world and the civil bureaucracy. All or most of what goes on in this murky world is legal, but that does not mean it is not sketchy.

How much is too much? 

There is nothing stopping a company or association from hiring people that were part of the civil bureaucracy or the military. Retired officials deserve jobs, and at times they have very specific skills that no one else has. A person that retired as FBR Chairman will know the workings of the board better than anyone else, and thus can offer that expert knowledge as a service to a company that regularly has to deal with the FBR. But how is one to know where the expert knowledge ends and using favours begins. 

“There is a fine line between advocacy and lobbying,” says Ehsan Malik, the CEO of the Pakistan Business Council (PBC). The PBC is a large umbrella organisation that advocates for macro policy changes that will be pro business in Pakistan. Since it has a lot of stakeholders, it does not exactly participate in strategic engagement the way the other organizations we have mentioned do. However, they are in the same field and thus see what goes on in the world of advocacy and lobbying. “If you are presenting your research to a government minister or a finance secretary there is nothing wrong with that at all, but the moment you go out of your way to form a social connection with that person or to wine and dine them and ingratiate yourself to them is where the lobbying begins.” 

The definition is a good one, generally because a lot of lobbying is currying favours and talking to the right people, and the rest is throwing your weight around. “There are so many ways for companies to do this, multinational corporations do not even shy away from using their home countries as a bargaining chip. If at any time their regulatory affairs department is unable to get the job done through their local contacts, they will contact the US Embassy and ask them to exert pressure” says one source.

One thing that all sides do seem to agree on, however, is that there is never a sure shot way of getting something done. There will always be hiccups, and the goal is to at least have a foot in the door. 

“There is no research-based lobbying in Pakistan. There are certain individuals that often act as fixers, but they only get you a meeting with the finance minister or the commerce minister or whoever it is that you want to meet. But they are simply trying to make a quick buck. Whether the job gets done or not is completely up to the decision makers then,” says Azfar. Fahad Qadir agrees with him. “There is no guarantee that the work will get done. At most you are able to convince a minister of something and they promise to take it up with the Prime Minister. But the stakes are so high and the money involved so much that companies and associations are willing to spend millions to just get a meeting or to get a point across in the hope that we will be able to influence the government. A lot of the time it doesn’t work, but it is an absolutely critical role.” 

Could lobbying be formalized in Pakistan?  

Corporate lobbying in the shape of regulatory affairs has existed since forever in Pakistan, and trade and industry associations have been around for even longer. They are very clearly there for a reason, and that reason is to lobby. Call it advocacy, call it strategic engagement or whatever you like but the primary function is to get the government to hear them out and try their best to convince them to change their policies so that they can increase their profits. Even in the news media industry, organisations such as the All Pakistan Newspaper Society (APNS), act as lobbying groups that advocate for things like more government ad revenue for newspapers and for lowering tax on newsprint – the paper newspapers are printed on. 

There is nothing legally wrong with this. The sketchy part begins when favours are exchanged, friendships are formed, and the public and the personal mix in an unholy dalliance. What is interesting, however, is the emergence of Azfar Ahsan and Nutshell Communications. As mentioned in the note above, Azfar began by organising conferences. He was incredibly good at this, and even his detractors agree that he was always able to draw the biggest names for his conferences. He also started a Whatsapp group called ‘Corporate Pakistan Group’ for the who’s who of Pakistan’s political and business elite. The CPG group has morphed into an association that holds dinners, mushairas, and other gatherings that are used as a social tool by Azfar and others to mingle with other powerful people. 

It is this very influence that Azfar uses to make Nutshell Communications work, and he is quite smug about it. At one point in the course of our interview with him, he said that it was “tougher to get into the CPG Whatsapp group than it was to get into the Sindh Club or Punjab club.”  It is these connections that Azfar is leveraging for his lobbying firm. With nearly 150 clients as claimed, Azfar has come far and is making a lot of money in the process. According to one source, just one client from the energy sector pays him a retainer of a couple of million rupees every month. Much of what he does is the same old ways of lobbying that have been used for decades, but what he has changed is the attempt to not turn lobbying into a bad word. 

“Arranging a meeting is no longer enough. You need to go in there with hands full and a lot of noise behind you. Sometimes the client will bring you all the data and you go to the relevant stakeholders with it and other times we have to do the research ourselves and guide the clients,” he says.  “We have corporate sector people, we have people from other industries – people that know the ins and outs. We took two people from the military as well and people from the civil bureaucracy. They have their own access and experience that comes in handy. You need all three kinds of these sources in a lobbying firm.” 

It is the same story – you need these people so that others will pick up your calls. Companies are willing to pay exorbitant prices to get their point across because if the gamble pays off, it is entirely possible that the rewards to be reaped will be massive. “There are no lobbying firms in Pakistan other than us, and the individuals that do it on their own are using their contacts to make a quick buck. Yes, a foot in the door is important, but we can’t push anyone, we can simply try our best to convince them.”