[🇧🇩] Corruption Watch

[Saif]

The anatomy of corruption in BD

Of late, the media in Bangladesh is abuzz with news of high profile cases of corruption coming in quick succession, sometimes simultaneously. Senior officials, both in office and retired, have been implicated in allegations of corrupt practices and for amassing wealth well beyond their known source

thefinancialexpress.com.bd

The anatomy of corruption in BD
HASNAT ABDUL HYE
Published :
Jul 15, 2024 21:42
Updated :
Jul 15, 2024 21:42

Of late, the media in Bangladesh is abuzz with news of high profile cases of corruption coming in quick succession, sometimes simultaneously. Senior officials, both in office and retired, have been implicated in allegations of corrupt practices and for amassing wealth well beyond their known sources of income. Moveable assets and immoveable properties have allegedly been acquired by officials and shown in the name of near relatives, besides their own. Assets include money deposited in bank accounts, gold in lockers of banks and stocks of various companies, while properties include apartments in metropolitan cities and land all over Bangladesh. Among the cases made public, there are quite a few where land acquired with ill gotten money have been converted into 'resorts', an investment of preferred choice by the noveau riche of the errant kind. It is suspected the alleged offenders may also have immoveable properties abroad, Canada and Malaysia for instance, and cash stashed away in offshore safe havens.
Sensational as the cases of alleged corruptions are, it has long been a public knowledge that many departments under various ministries are mired deep in corruption.

Government officials and functionaries at all levels are alleged to be indulging in corrupt practices of one kind or another for personal gains. So far some officials of only a few ministries and departments like NBR of ministry of finance, the health directorate of the ministry of health, public service commission (PSC) of the ministry of public administration and police department of the ministry of home, have come under the radar of investigation by Anti-Corruption Commission (ACC). Given the widespread and longstanding nature of corruption that has been flagged by independent authorities like Transparency International (TI) it is suspected that almost all branches of government are now wallowing in corruption in degrees allowed by their writ. In this respect there appears to be no scope for any government entity in Bangladesh to adopt a holier than thou attitude visa vis other departments. However, it will be a sweeping generalisation to say that everyone in government service is or was corrupt. There have been honourable exceptions, as is the case with other cases of unethical conduct. But as the rot of corruption set in and it festered like a malignant wound, the dragnet spread wider, embracing an ever increasing number of offenders. Apart from public perception, the unpleasant truth of corruption running riot across the whole spectrum of government could not be beyond the knowledge of higher authorities. Whatever may be the causes of their failure to call the corrupt elements to account until now, the recent cases of high profile anti-corruption probes indicate a clear policy of cleaning up the proverbial Aegean stable. It remains to be seen whether the current spate of anti- corruption cases will be sustained, morphing into a zero tolerance policy for the economic crime of the gravest kind. When it comes to promoting good governance, cleansing administration of malpractices, including corruption, take a seat right at front and centre. The current high profile cases against some senior officials give hope that at long last the campaign launched has political will behind it.

CAUSES AND CONSEQUENCES OF CORRUPTION: All cases of corruption are not the same. They do not stem from the same causes and do not have same consequences. The causes and consequences of different types of corruption constitute the 'anatomy' of the malignancy (corruption) in the body eco-politic that will be discussed in this section, using mostly the cases of alleged corruption that have made 'hot news' in recent weeks. Though limited in number (the alleged cases of corruption), the examples can be used as case studies of corruption in general with wider application.

Three cases of alleged corruption have been made public in which senior officials of National Bureau of Revenue (NBR) have been implicated. None of them were caught at the time of committing the venial act. All the alleged offenders were given away by their ill gotten wealth, either through ostentatious style of living or by the sheer size and value of assets. The advantage of being a country of limited geography and high population is that nothing remains secret for long. Tongues start to wag and rumour mill continue to churn stories of high fliers whose ballast is ill gotten money. No secret intelligence is required to unearth cases of corruption in Bangladesh. But this is one aspect of the anatomy of corruption. The most important part is how did the NBR officials on the dock indulge in corruption in the first place? For the answer one has to look at the responsibility and power of NBR officials. They are entrusted with the task of collecting taxes, VAT and fees from individuals and business and industrial entities liable to pay these under existing rules and provisions of laws. Those who want to evade paying their due may resort to bribery with cash, either directly or through an intermediary. If the NBR officials responsible for determining the tax due from taxpayers agree to the desired evasion, fully or partially, in consideration of money paid, an unholy contract is signed. Tax evasion takes place and money changes hands. This is the most common case of corruption that may be resorted to by a NBR official. When this becomes regular and is institutionalised everyone in the office may get his/her cut. Wherever an official of NBR is alleged to take bribe this is how it takes place. The case of Mr Motiur of NBR is slightly different as he reportedly made money through insider information to buy stocks in companies to which he was privy. Illegal as such an act is, it will be interesting to see if his wealth can be accounted for by this source of earning money alone or whether this is a ploy to cover up income through the classic means mentioned above. In all cases where NBR officials are implicated in cases of corruption they invariably are seen to have misused their discretionary power.

The consequences of allowing tax evasion to take place are obvious. To the degree and extent tax evasion is allowed for monetary consideration by NBR officials there is a consequent shortfall in revenue collection. The entire economy suffers from inadequate resource mobilisation, forcing government to borrow money to balance the budget. The tax-GDP ratio languishing at the paltry rate of 9 per cent can be mostly explained by this.

The second case of corruption that have made news in recent weeks involve very senior police officials, including the former head of the police department, now retired. In these instances also, the officials in question were given away by their wealth and assets. They are alleged to have assets in banks and immoveable properties (apartments and land) well beyond their known sources of income. How do police officials like the ones in the news make oodles of money? It is alleged that one source of making illegal money by police is the misuse or abuse of power by police. Police has been given immense power under law over the liberty and property of people and they have discretion in using these selectively. For instance, they can arrest anyone on suspicion under section 54 of criminal procedure code or include/exclude names in FIR of heinous cases. They also have the right to take cognisance of an offence. In short, personnel of no other department of government has as much and as wide a power as police has. With so much power at their disposal some of them may be tempted to use it for personal gains. The police officials who are being investigated and have made news may have misused and abused their power while in office quite liberally. Like the NBR officials, they too are guilty of misusing their power, though their powers differ and scope of work vary.

It is not so much the economy as the society that suffers when police misuse their power. The rule of law is undermined or made short shrift of when bias is seen in the conduct of police in applying rules and laws selectively. Good governance has a great deal to do with rule of law and therefore use of power vested in police matters very importantly.

The third case of alleged corruption concerns some doctors under the ministry of health. They are alleged to have made money illegally by using their power in matters of purchase and appointments. Purchases increase when there are development projects and tenders are called. Suppliers and contractors vie with one another to get the order for which they don't think too much to offer bribe. Here too, the cause of corruption is misuse of power as rules may be bent to accommodate preferred parties. The consequence of misuse of power by officials in health ministry results in both high cost paid for items purchased and diminished service delivery to the public because of the increase in out of pocket expenses for relatives of patients.

The fourth case of alleged corruption that has made news involves officials and staff of PSC. The former chairman of public service commission, a former professor of a university, is reportedly among the suspects. They are accused of divulging question papers for BCS examination of a certain year. Here too, the cause of corruption is abuse of power that resulted in leaking official secrets (question papers) for pecuniary gains of the corrupt. The consequence of this misuse of power is to society, in so far as those who contested honestly might have lost in competition to candidates less meritorious than them. The quality of service provided by government may have been compromised by this loss of talent in public service. Another result of this alleged offense is the undermining of trust in the neutrality of public service commission.
The fifth case of corruption in the news relate to a state-owned bank whose chairman made thousand crores of money by sanctioning huge loans to parties having little or no credible credentials. This is just a tip of the ice berg as most of the institutions in the financial sector are floundering because of the egregious growth of non- performing loans (NPLs) and widespread incidence of self-serving management. In many cases both bank officials and directors of boards are guilty of misuse of power or failure to exercise due diligence.

CONCLUSION: The above discussion on the anatomy of corruption, causes and consequences, has been confined to cases that pertain to recent news in media. There is no doubt that corruption is taking place in other ministries and departments under them in varying degrees. If misuse of power happened in the reported cases in police, health, NBR and PSC, other departments and agencies in the government cannot be aseptic to this malaise. However, there is one case of misuse of power that requires elaboration as it has become endemic to the entire system of governance. In a great variety of cases and at all levels of government, services to which public are entitled free of charges, monetary payment is demanded by government functionaries. This kind of rent seeking is pervasive and has almost become routine. Universal in nature, this practice has become firmly entrenched.

To read the rest of the news, please click on the link above.​

 

[Saif]

HC orders ACC to continue probing corruption allegation against Benazir, family

The High Court today ordered the Anti-Corruption Commission (ACC) to continue probing the corruption allegations against former IGP Benazir Ahmed, his wife, and two daughters and to submit updates before it by November 5

www.thedailystar.net

HC orders ACC to continue probing corruption allegation against Benazir, family

Photo: Collected from Facebook

The High Court today ordered the Anti-Corruption Commission (ACC) to continue probing the corruption allegations against former IGP Benazir Ahmed, his wife, and two daughters and to submit updates before it by November 5.

After accepting a preliminary probe, the court also asked the commission to inform it by this period if any case is filed against them.

The HC bench of Justice Md Nazrul Islam Talukder and Justice Kazi Ebadoth Hossain passed the order while hearing a writ petition.

Advocate Khurshid Alam Khan, who placed the preliminary report on behalf of the ACC on Sunday, told the HC bench that his client has found unusual and suspicious bank transactions of Benazir and his wife and two daughters in the primary inquiry.

The commission has collected relevant records and information about their properties, he said, adding that more information may be found in the complete inquiry.

In the preliminary probe report submitted to the HC on Sunday, the ACC said Benazir Ahmed, his wife, and two daughters amassed properties worth Tk 43.46 crore beyond known sources of income.

"From records and information received so far, Benazir Ahmed has movable and immovable assets worth Tk 9.25 crore, his wife Jissan Mirza Tk 21.34 crore, their eldest daughter Farheen Rishta Binte Benazir Tk 8.11 crore, and their second daughter Tahseen Raisa Binte Tk 4.76 crore worth of assets," the report said.

Following a writ petition filed by Supreme Court lawyer Md Salahuddin Reagan, the HC bench on April 23 directed the ACC to submit a progress report on the inquiry into reported allegations of corruption against Benazir Ahmed.​

 

[Saif]

Politically-motivated lending causing bad loans to spiral: WB

The amount of bad loans has been spiralling in Bangladesh owing to rampant politically-motivated lending and inadequate credit risk management, according to a World Bank report.

www.thedailystar.net

Politically-motivated lending causing bad loans to spiral: WB

The amount of bad loans has been spiralling in Bangladesh owing to rampant politically-motivated lending and inadequate credit risk management, according to a World Bank report.

"Non-performing loans (NPLs) are rising, triggered by widespread related-party and politically directed lending on the back of weak credit risk management," it said.

The global lender prepared the report as a project information document for a $400 million loan project for Bangladesh, which is still under scrutiny. This project is designed to support financial stability and inclusion by enhancing financial sector infrastructure and safety net and fostering access to catalytic private sector finance in Bangladesh.

The WB said NPLs had officially increased by 20.7 percent year-on-year at the end of December 2023 to 9 percent of the loan portfolio, but that was significantly understated due to lax NPL definition, poor accounting and disclosure standards and regulatory forbearance.

State-owned banks account for almost half of the NPLs, it added.

"Growing NPLs and rising cost of funds lower banks' returns and ability to build additional capital buffers, while the requirement to distribute dividends even by loss-making banks further depletes banks' reserves and increases risks to depositors and creditors," it added.

The WB said the four watchdogs who regulate the financial sector -- namely Bangladesh Bank, Insurance Development and Regulatory Authority, Bangladesh Securities and Exchange Commission, and Microcredit Regulatory Authority -- lack operational independence, powers, skills, and the modern legislation necessary for sound financial sector development.

Despite recent efforts supported by the World Bank and other international financial institutions, much of the financial sector regulatory framework still needs to be brought in line with international standards, it said.

The banking sector's risks are also being triggered because of long-standing poor governance, weak market discipline, and low capital buffers, according to the report.

"The reported aggregate banking sector capital adequacy ratio (CAR) – 11.64 percent in December 2023 – is too low given the high level of risks in the banking sector. At least 16 banks are undercapitalised, with special BB waivers for deferred loan loss provisions (LLP) and capital increases."

Besides, the existing framework for intervening in ailing financial institutions is weak, with authorities relying on mergers and capitalisation using state money to deal with failing banks, it said.

In December 2023, the central bank adopted a new Prompt Corrective Action (PCA) framework, supported by the WB, but it will not be fully in force until April 1, 2025, it said.

As a way forward, the World Bank said broad-based financial sector reforms are crucial for mobilising the private capital necessary to drive further growth.

"This in return requires the authorities to address in a timely and orderly manner the persistent financial sector vulnerabilities which distort credit flows and, if left unattended, may lead to large losses to the budget and the people's savings."

The WB also said the financial sector safety net and crisis preparedness framework need to be strengthened in the face of rising stability risks.

The deposit insurance system (DIS) for banks and non-bank deposit-taking institutions, while established under BB two decades ago, is not fully operational and does not comply with international standards, according to the report.

It said deposit insurance coverage is low and the payout mechanism is undeveloped and was never tested. While BB revoked the licences of several banks in the past, it did not trigger insured deposits despite a large accumulated DIS fund of nearly $ 1.2 billion as of the end 2023.

"The crisis response framework remains fragmented, non-transparent, and underdeveloped, including access to lender of last resort, least cost resolution and liquidation tools, use of government funds to bail out domestic systemically important banks, mandate and operations of financial stability committee, and crisis communications framework."

Upgrading the regulatory and supervisory capacity of the central bank is also required to safeguard market confidence and foster sustainable financial intermediation, it said.

The global lender added that while the banking sector has shown rapid growth in loans and deposits over the past decade, private sector access to credit is now constrained by tightened liquidity in the banking sector and rising interest rates.

Private sector credit growth slowed to 9.9 percent in the first nine months of FY24 from 16.2 percent in the same period a year earlier.

New letters of credit declined from $8 billion per month in FY22 to $5 billion per month in FY24, according to the report.​

 

[Saif]

Nearly two-thirds of TIN-holders don’t submit tax returns

Bangladesh recently reached a milestone registering one crore Taxpayer Identification Numbers (TINs), yet nearly 59 percent of these individuals did not file tax returns in the just-concluded fiscal year of 2023-24.

www.thedailystar.net

Nearly two-thirds of TIN-holders don't submit tax returns

Bangladesh recently reached a milestone registering one crore Taxpayer Identification Numbers (TINs), yet nearly 59 percent of these individuals did not file tax returns in the just-concluded fiscal year of 2023-24.

The number of registered taxpayers is gradually increasing but tax return submissions are failing to keep up with the size and growth of the economy, for which collection of tax required for public expenditure remains lower than the potential.

According to data from the National Board of Revenue (NBR), there were 1.04 crore TINs as of last month, when the fiscal year ended.

Meanwhile, only 43 lakh tax returns were submitted, up 22 percent year-on-year.

Bangladesh has one of the lowest tax-to-GDP ratios in the world, even though it posted high economic growth over the past decade.

"The increase in the number of TIN holders is a positive development. Overall, the tax net has not yet been adequately expanded in Bangladesh," said MA Razzaque, research director of Policy Research Institute (PRI).

But the number of tax returns being submitted is very low. Bangladesh still lags behind Southeast Asian countries such as Vietnam, Thailand and Malaysia in this regard, he said.

Many taxpayers do not submit tax returns to simply avoid going through all the paperwork and out of apprehensions over being harassed by the tax administration, Razzaque said.

The economist suggested reducing individual contact between the NBR officials and taxpayers through automation.

"The NBR should ensure automation in auditing to reduce the scope of corruption and harassment," he said.

At present, filing of tax returns is mandatory for all with a TIN.

Currently, a TIN is required for availing around 40 services, so many people secure it but do not submit tax returns, according to the NBR.

Analysts blame inadequate monitoring and enforcement, the absence of regular taxpayer surveys by independent agencies, and the slow pace of automation of the tax administration for the low number of tax returns being submitted.

In a report prepared recently, the NBR said around 5 lakh people do not submit tax returns as they only needed the TIN for land transfers while around 4 lakh people availed TINs to seek specific services.

Over 2 lakh people with TINs have already passed away and some 3 lakh people availed TINs to migrate abroad for jobs and other purposes, according to the NBR.

Another prime reason is a lack of awareness among taxpayers.

Besides, a huge number of firms that registered as companies have become inactive.

The NBR found that Bangladesh has around 1.37 lakh inactive companies under the Registrar of Joint Stock Companies and Firms.

A large number of people availed TINs to get trade licences but those firms later became dormant.

Shams Uddin Ahmed, a former member of tax policy at the NBR, said the culture of tax payment needs to be developed gradually.

The NBR has initiated various steps to motivate taxpayers, said Ahmed, hoping that interest among taxpayers in doing their share in building the nation would increase in the coming days.

There is a lack of understanding among tax officials about new modes of digitalisation and innovative business models, he said.​

 

[Saif]

Huge amount of money has been recovered from the house of Awami League leader Amir Hossain Amu.