Controlling corruption in Bangladesh

Ambassador Muhammad Zamir

Whether  we like it or not, we routinely find ourselves among the list of most corrupt countries of the world. Yes, we have moved forward- but we are not yet out of the woods. From 2001 until 2005, Bangladesh was ranked the most corrupt country in the world by Transparency International according to its Perception Index.

Although, the status started to improve after 2006 when the BNP government left political power, our country continues to find itself in the bottom half of the draw. The ranking published in 2015 placed the country at 139th among 168 countries in the world, with a CPI of 25 in 100. It was also alleged that the most likely cause for such an evaluation was due to existing areas of mis-governance, manipulation and corruption within the public sectors. It has also been mentioned by certain international institutions that the Anti Corruption Commission formed through an Act promulgated on 23 February 2004 that came into force on 9 May 2004 has been largely ineffective in pro-actively investigating and preventing corruption.

In this context, analysts have held that bribery, rent-seeking and inappropriate use of government funds, excessive lobbying, long time delays in service performance, pilferage, irresponsible conduct from government officials and excessive bureaucratic intemperance and mind-set have made public sector departments associated with law enforcement, water supply, electricity, gas supply, education, waste disposal, health, transportation, issue of passports and maintenance of land records etc. allegedly susceptible to corruption. Lack of proper accountability appears to have also been a cause for such a development.

The Asian Human Rights Commission has gone to the extent of alleging that due to abuse of governance some of the branches of our law enforcement agencies benefit from corruption, political patronage and culture of impunity. Consequently, at times, cases involving serious criminal offences like extortion, homicide, abduction and forcible occupation of property remain unresolved and become sources oframpant human rights abuse. One understands that the greater use of the Right to Information Act, 2009 has helped to usher in a greater degree of accountability. This needs to be carried out however more effectively as is being done in Singapore.

In this regard, it would be interesting to point out that a 2012 Survey carried out by TIB indicated that nearly 40.2pcof persons seeking care in public hospitals had to face irregularities. The print and the electronic media in their investigative reports have also alleged that Doctors, nurses and other professionals working in government-run public hospitals do not always follow the laid-down rules with regard to the carrying out of pathological investigations, in the providing of the required medicines or sleeping facilities expected during treatment in a public hospital. There have been accusations of the demanding of bribes for services which are supposed to be provided free of cost. The survey also alleged that the recruitment, transfer and promotion process of personnel in this sector has also been contaminated because of corruption. These allegations were rejected by the Government Health Ministry at that time but it clearly underlined the need for more stringent monitoring of applicable regulations.

One needs to however note here that it would be unfair to allege that such improper practices only exist in public hospitals. Many of the hospitals, clinics and pathological laboratories in the private sector also suffer from the same malaise. Medical practitioners in both public and private sectors also earn money by driving up heath care costs and commission agreements with diagnostic centers. There have been reports in this regard by patients that, even in emergency situations, they were unable to access services unless a bribe was paid first.

Another area affected by corrupt practices is the lack of conforming to legal regulatory requirements within the private sector. We come across reports on a regular basis where it is pointed out that business owners have not been consistent with proper safety codes that needs to exist in the buildings that are being used as workplaces. Recent drives by the government and careful investigations by Inspectors have led to a degree of improvement but the situation is still not fully satisfactory.  As in other parts of South Asia, efforts are sometimes undermined due to the use of kickbacks in closed-door negotiations.

 One has to remember here that Bangladesh, despite serious odds, has been able to move forward because of the initiatives taken by this government over the last few years. In 2005, Bangladesh’s GDP was around US$ 87 billion. Over the last ten years our per capita income has crossed US$ 1,300 and the GDP has climbed to nearly US$ 200 billion. The private sector has contributed in this exercise in a major way. They do not however need to participate continuously in the creation of a greater “informal economy” through the facilitation of corruption. This affects the branding of our country and in the long run reduces the chances of foreign direct investment or joint participation in economic development.

Another equation has now been added to this formula of existing corruption. There have been revelations in the recent past of Bangladeshis being involved in illicit money outflow to different financial points in various countries of the world. Findings made public by the Global Financial Integrity institution in its 2015 Report have indicated the siphoning off of big sums of money from Bangladesh. This has apparently been going on for some time. Over the past decade it appears to have increased. It has also been estimated that on an average every year such illicit flow out of Bangladesh has exceeded US Dollar Five billion. Bangladesh has been identified as being at the top among the Least Developed Countries in terms of illegal money laundering and positioned 40th among the top hundred countries.”The Daily Observer” in its editorial of 1 July, 2016 has pointed out that “the total volume of illicitly transferred money from Bangladesh in the last decade is one lakh crore more than the amount of Bangladesh’s proposed national budget for the fiscal year 2016-17”.

Apparently, most of this process has involved the use of ‘over-invoicing’. “The Asian Age” in an editorial on 2 July, 2016 has mentioned that “about 88pcof illegal money outflow is done in this way. Importers make illicit arrangements with their foreign suppliers where they pay more money for the foreign goods being imported and the suppliers pass the extra amount to foreign accounts of such importers”. This illegal process is to a great extent facilitated by corrupt bankers who add to the negative facet by providing additional loans to such importers who claim that they need additional loans to meet higher import costs of raw materials or capital goods and machineries. Subsequently, these same bankers re-do the re-payment schedules.  Unfortunately, quite often it is found at this stage that the financial institution from where the importer has borrowed money against spurious collateral does not have sufficient back-up and the bank ends up losing the loan content.

The net loser at the end of the day turns out to be the depositors and the State if it is a public Bank. It may be noted that such a format of capital outflow is also being unfortunately followed in many other developing countries.

This dismal picture has also been reiterated by the fact that according to data issued by the Swiss National Bank, Bangladeshi nationals appear to have deposited 590.85 million Swiss Francs in 2015 in different Swiss accounts. This was an increase of about 8.89pccompared to 2014. As opposed to this scenario, it has been reported that money held by Indians in Swiss Banks has fallen by nearly one-third. Interestingly, it has also been noted that money kept by Pakistani nationals in Swiss Banks has risen by over 16%. Analysts have pointed out that such illegal transfer of funds abroad by the private sector might be stemming from lack of confidence within the trading community and the corporate sector pertaining to financial security, accountability in governance and absence of political and social stability required for creating an investment friendly atmosphere.

India has reportedly been particularly busy in implementing serious steps towards damage control. Their relevant authorities have taken serious steps to find out the names of Indian depositors abroad including Switzerland (where a web of secrecy operates with regard to financial parameters). Bangladesh should do the same. This will raise the stakes in money laundering.

We need to understand that illicit money outflow from the country cannot be stopped totally at one go. It can however probably be reduced over time by overcoming the challenges existing at the grass roots level. One measure that might take us forward would be to deny the right of whitening black money which indirectly sanctions the right to make money through illegal means. Such a step however might not be acceptable particularly to REHAB which supposedly benefits from the investment of “untaxed money”. Nevertheless this deserves more serious consideration from the wider perspective.

We have the Anti-Corruption Commission but probably need to create another exclusive independent institution under the Ministry of Finance to tackle the question of illicit money transactions. It should include representatives of law enforcement agencies, the ACC, the NBR and the Bangladesh Bank. We should also set up Special Courts for speedy disposal of corruption cases that should not be allowed to get stuck in the quagmire of legal technicalities. There also has to be the necessary political will because tackling this disease of corruption requires all stakeholders to rise above respective partisan political agenda.

One needs to conclude by referring to the report on corruption released by the International Monetary Fund in mid-May where it was mentioned that bribery and the informal economy “sucks up between US $ 1.5 and US$ 2 trillion annually around the world, dragging down economies and worsening social services for the poor”.

We need to understand that the economic impact of corruption might be hard to quantify but we have to agree with the contention in this Report “that corruption perpetuates economic inefficiency, undermines public policy and exacerbates inequality”.