[🇧🇩] Corruption Watch

[Saif]

Corruption and capital flight

AS A social worker, it is a great opportunity to work with grassroots people. I worked for two years and seven months...

www.newagebd.net

Corruption and capital flight
Mohammed Mamun Rashid | Published: 00:00, Mar 07,2024

AS A social worker, it is a great opportunity to work with grassroots people. I worked for two years and seven months at Transparency International Bangladesh. It enhanced my visionary zeal for the anti-corruption campaign a lot because of my work in civic engagement, social movements, and good governance. Still, I abide by it. Once I asked one of my neighbours, ‘what do you mean by good governance?’ Naturally, he did not answer theoretically, as we usually expect. But he gave some real expectations from his heart. He said, ‘I want an honest officer-in-charge, land registration without bribery, easy access to public health services, etc.’

People’s pains, predicaments and expectations are often reflected in newspaper or television reports. Corruption and money laundering are two of the most important factors that cause inequality to grow and make people suffer. Corruption is not limited to bribery but can take a number of other forms, such as extortion, influence peddling, nepotism, fraud, the use of speed money (money given to government officials for speeding up their consideration of a business matter falling within their jurisdiction), embezzlement, etc. There are three broad forms of corruption: petty administrative or bureaucratic corruption, grand corruption and state capture or influence peddling.

Petty corruption means isolated corrupt transactions by individual public officials who abuse their office; grand corruption occurs when vast amounts of public resources are devoured or misappropriated by state officials, usually members of the political or administrative elite; and state capture or influence peddling takes place when actors of the private sector operate in collusion with public officials or politicians for their mutual and private gain. Corruption in the public sector, particularly in developing and lower-middle income countries like Bangladesh, is a more serious problem than that of the private sector.

Corruption in Service Sectors: National Household Survey 2021 by the TIB shows that overall, 70.9 per cent of households have been victims of corruption while taking services from 17 sectors. The seven most corrupt sectors are, according to the survey, law enforcement agencies (74.4 per cent), passport offices (70.5 per cent), BRTA (68.3 per cent), judicial services (56.8 per cent), health (48.7 per cent), local government institutions (46.6 per cent) and land services (46.3 per cent). The estimated total amount of bribery at the national level is around Tk 108,301.1 million, which is 5.9 per cent of the national budget (revised) for the fiscal year 2020–21 and 0.4 per cent of the GDP of Bangladesh.

The Corruption Perceptions Index 2023, released by Transparency International on January 30, 2024, shows further worsening of Bangladesh’s performance. The country has scored 24 on a scale of 100, the 10th lowest global score.

Another sophisticated, heinous, and complex crime is money laundering. The Global Financial Institute, a Washington-based think tank, identified four major ways of money laundering: under-invoicing of exported products, over-invoicing of imported goods, Voice Over Internet Protocol business, and Hundi. According to a Global Financial Integrity report for 2020, every year more than $7.5 billion is laundered from Bangladesh, much of which is via the mis-invoicing of export-import trades. The reports say dishonest businesses, politicians and financial institutions are often involved in smuggling money out of the country. Sadly, the country does not seem to be effectively using any of the tools to recover laundered money. The process of claiming money back typically involves identifying laundered money, the persons or groups behind the crime, and the location; gathering evidence; filing lawsuits in the country the money has been located in; obtaining a judgement from the court; and enforcing the judgement in the specific country.

Money laundering damages financial sector institutions that are critical for economic growth, promotes crime and corruption that slow economic growth, and reduces efficiency in the real sector of the economy. These problems also have social consequences. The increasing inequality causes social degeneration. One of the most critical damages of black money is its negative effect on income distribution. The gap between individuals in terms of income distribution increases the tendency to commit crimes and makes money attractive. Moreover, it is a serious burden for honest people to maintain their daily lives, which is difficult to measure by so-called indicators. The silent pains of those people are being overlooked.

The agencies, such as the Anti-Corruption Commission and the Bangladesh Financial Intelligence Unit, that are mandated to curb corruption and money laundering appear to lack capacity, resources and logistical support to deliver their duties. In addition, these institutions are not free from political and bureaucratic influence. Overall, there is a lack of political will.

Corruption and money laundering are like a metastatic cancer in Bangladesh. It is a serious threat to our economic growth. This metastatic cancer also creates hindrance to other social progress. The government never fails to give a lip service to the issue, often vigorously stating its zero tolerance policy against corruption, but when it comes to walk the talk, it fails.

Dr Mohammed Mamun Rashid has recently obtained his PhD degree from Universiti Sains Malaysia.​

 

[Saif]

Who will restrain prices in the month of restraint?

A government’s job is not to preach about people’s food choices, but to keep food prices stable and reasonably down. When it starts to preach, more often than not it is trying to deflect scrutiny of what it cannot achieve through actions.

www.thedailystar.net

Of Magic & Madness​

Who will restrain prices in the month of restraint?​

FILE ILLUSTRATION: BIPLOB CHAKROBORTY

A government's job is not to preach about people's food choices, but to keep food prices stable and reasonably down. When it starts to preach, more often than not it is trying to deflect scrutiny of what it cannot achieve through actions. So when the industries minister advises us to choose locally sourced fruits like plums and guavas for iftar—over imported delicacies such as dates or grapes—as a means of cutting down on Ramadan costs, any sincerity in his statement is lost on the consumers who are overwhelmed by the relentless tide of price rises over about three years now. Instead, it comes across as insincere, classist, and oddly evasive, as if he was responding to an unuttered accusation.

When people worry about food prices in Ramadan, they don't mean just grapes or dates. Despite the minister's claim, these are still outliers—one a luxury best afforded in kinder economic times, and the other a starter best had in small quantities. No one, frankly, rues not having more dates on their iftar plates. But it is their prices which are worrisome, where they become one with essential food items, with the humble date going for as much as Tk 1,500-2,000 per kg now, up from last Ramadan's Tk 500-700. This is even after the government reduced import tariffs on dates earlier last month. Prices of almost all other fruits have similarly shot up. One kg of sugar, another iftar essential, will set you back about Tk 140-150.​

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Before we get into further details, consider this: if the total number of households in the country is 4.1 crore, price rises have affected over 2.9 crore (or 71 percent of all households), according to a World Bank report published in early January. Since then, nothing has changed to assuage their concern. On the contrary, food prices witnessed a fresh spike weeks before the start of Ramadan, which is when you usually expect it to happen.
As per a recent report by this daily, multiple price shocks have sent consumers reeling, with things set to turn worse following the imposition of newly set electricity prices. Barring exceptions, prices of most Ramadan staples including chickpeas, moshur daal, rice, eggs, and all varieties of meat have seen an increase. The price of onion has slightly decreased following news of imports from India, but only just. It is unlikely to go down much further if the state of other food imports is any indication.

So, try as the government may to get us to buy into its upbeat Ramadan forecast, with the finance minister even refusing to accept inflation as a major issue, the fact is that prices in general remain in the stratosphere. The question is: why can't the government control them despite supposedly enhancing market monitoring, vowing tough legal action against hoarding, shoring up supplies, and reducing import duties on some items? Checking commodity prices was one of the priorities outlined in Awami League's election manifesto. What possible reason could there be for an all-powerful government, saturated with MPs boasting enviable business pedigree, to fail to deliver on one promise?

Last week, at a meeting organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), business leaders identified four major reasons for the surge in prices, including the dollar crisis and the currency's increased rate, extortion, syndicates, and still-high import duties. Importantly, they said that traders are forced to pay extortionists at multiple stages while bringing a product from grassroots to the wholesale markets. Even after buying from wholesale markets, retailers also have to pay additional money to secure their release. Apart from extortion, traders also blamed the middlemen, saying a product changes hands at least four times before coming to the wholesale markets. Thus, prices of locally sourced items may increase abnormally.

There are other factors and forces as well. We can talk about market monopolies, or systemic issues making imports costlier as they reach our shelves. We can talk about the trickle-down effects of high costs of fuel and utilities, as well as ballooning indirect taxes hurting people's purchasing capacity. We can talk about the culture of rules violation that nullifies any price control measure, and also the culture of non-enforcement by relevant agencies. We can even talk about excessive greed. Many influences coalesced to create the perfect storm that is our commodity market.

But one aspect that rarely gets a mention from government functionaries is the crippling effect of patronage politics. The gaggle of syndicates, middlemen, hoarders, and extortionists who exert an oversized influence on the supply chain draw their power from their association with the ruling establishment. So when the government talks tough love, how tough can it be, really? How far or long can the deputy commissioners—who have been lately tasked with checking hoarding and ensuring the smooth transportation of supplies—go when the many beneficiaries of patronage politics push back? For they will push back, sooner or later.

Organised highway gangs are perhaps the most visible of these disruptive forces. Last month, Prothom Alo reported how about Tk 2 crore was being extorted every month from goods-laden trucks in Sylhet city. The men behind this racket? Activists of different groups and sub-groups affiliated with Sylhet Chhatra League. On Tuesday, Transparency International Bangladesh further revealed that private bus operators are forced to pay at least Tk 1,059 crore in bribes annually to unscrupulous BRTA officials, police, transport associations, staffers of city corporations and municipalities, and individuals affiliated with political parties. The list of "collectors" is really stupefying. What about goods-carrying trucks? One can only guess what insanity they, too, are subjected to on their route.

Against this backdrop, efforts like adjusting fuel prices, fixing rates of certain essentials, conducting drives against hoarding and price gouging, or occasional import tariff reductions are but baby steps that will take us only so far. To really make an impact, what we need are institutional reforms designed to prevent scope for undue influences in the market and resolve all systemic issues. If the government really wants to control or bring down prices during Ramadan and afterwards, it must be willing to go after its "own people."​

 

[Saif]

Govt hostage to syndicate: GM Quader

The government has failed to control the price hike of essentials, said Jatiyo Party Chairman and Leader of the Opposition GM Quader, adding that the government itself has become a hostage to the syndicate.

www.thedailystar.net

Price hike

Govt hostage to syndicate: GM Quader​

The government has failed to control the price hike of essentials, said Jatiyo Party Chairman and Leader of the Opposition GM Quader, adding that the government itself has become a hostage to the syndicate.

He made the remarks while talking to journalists in Rangpur yesterday.

"Most of the country's products are import-dependent. Many businessmen in the country do not have the ability to import, only businessmen with money can do so, and many are taking this opportunity. Also, most of those who are involved in importing from outside are at the government's policy-making level. This has already formed a syndicate," said GM Quader.

All these have caused the government to be hostage to the syndicate, he said.

"The government can not control the price hike now, even if it wants to. Without competition among traders, it is not possible to control the market," he added.

Regarding JP's recent crisis, GM Quader said those who are involved with the split in JP are outsiders. Kongkon Karmaker, Monday, 11 March 2024​

 

[Saif]

Ban on foreign travel, trade licence, national award for wilful defaulters

Bangladesh Bank issues new guideline on wilful defaulters today

www.thedailystar.net

Ban on foreign travel, trade licence, national award for wilful defaulters​

Bangladesh Bank issues new guideline on wilful defaulters today

Wilful defaulter will be banned from travelling abroad and they will not be allowed to receive trade licences and national awards, according to a guideline issued by Bangladesh Bank today.

The guideline was prepared for identification and finalisation of wilful defaulters and actions to be taken against them.

The banking watchdog took the move when the banking sector has been hit by massive irregularities of some lenders, directors' undue intervention and rising bad loans.

On February 4, the Bangladesh Bank unveiled a roadmap to bring down default loans below 8 percent by June 2026 from 9 percent in 2023 and ensure corporate governance in the banking sector.

The BB has taken 17 initiatives to implement the roadmap.​

 

[Saif]

How tough can Bangladesh Bank be with wilful defaulters?

Any success of its roadmap will depend on its enforcement

www.thedailystar.net

How tough can Bangladesh Bank be with wilful defaulters?​

Any success of its roadmap will depend on its enforcement

VISUAL: STAR

Bangladesh Bank's newly unveiled measures to rein in wilful loan defaulters—as part of a roadmap to bring down such loans to less than 8 percent by June 2026—may deliver results if properly enforced. But that's a big "if" given the central bank's past performance in this regard. On paper, its plan appears robust as it outlines stringent measures aimed at both banks and borrowers. Banks, as per the new guideline, will have to form a dedicated unit called "wilful defaulters identification unit" by April 9, and must carry out all related activities through it. The guideline also details the criteria for identifying wilful defaulters as well as punitive measures for those found guilty.

These punishments include bans on foreign travel and restrictions on trade licences. Wilful defaulters may also have trouble with the registration of moveable and immovable properties, and cannot become bank directors for a certain period of time. They will not be eligible for any national award, or any interest waiver and loan rescheduling facilities either. The problem with such measures, however, is that they are seldom, if ever, enforced. After all, what enables these politically connected businessmen to get their hands on loans in the first place also enables them to get out of any complication thereof. If it didn't, we'd have seen more action on the relevant clauses of the Finance Companies Act, 2023 that also provide travel bans and trade licence restrictions as well as criminal prosecutions.

As things stand, the banking sector stands at a critical junction. Defaulted loans soared to Tk 145,633 crore by the end of 2023, accounting for nine percent of all outstanding loans. The health of 38 banks also deteriorated between December 2020 and June 2023, according to a recent estimate, owing largely to mismanagement, loan irregularities and scams. The situation has reached such a point that the central bank has threatened to force "mergers and acquisitions of weak banks" if the latter fail to do so voluntarily by December this year. A lot of the problems facing our banks will disappear if we could just reduce the scope for habitual defaulters.

So, while we appreciate Bangladesh Bank sending the message that reckless lending practices will not be tolerated, we must recognise that the true challenge lies in ensuring consistent compliance with its guidelines across all banks. There are also concerns about rescheduling or writing off bad loans to show improved performance, which must be addressed. Regulators must go tough on wilful defaulters this time.​