Muhammad Q. Islam

The cost of public corruption

October 18, 2012
Photo: bdnews24.com

Photo: bdnews24.com

Tk 3600 crore embezzled from Sonali Bank! At Tk 80 per dollar, that’s a whopping $450,000,000.  Suranjit Sen Gupta and Tk 70 lakh? Amateurish by comparison! Coco Rahman’s $3m bribe from Siemens? Nothing! Child’s play. So how is this possible? Take half a billion dollars! The GDP of Bangladesh in 2011 was $110 billion. Did a few businessmen and bank officials really manage to steal ½ % of our GDP?

According to an English daily report, “After being interrogated by the ACC team, Tanvir (Mahmud, GM Hall Mark Group) told journalists that he had assets worth 20 times higher than the amount borrowed from the state-run commercial bank.” So, let’s compute: the Hallmark group borrowed Tk 2700 crore. If Mr. Mahmud is worth 20 times more, then his net worth is Tk 54,000 crore (or Tk 72,000 crore if we use the Tk 3600 crore figure). That is: Tk 540000000000. It is difficult to count the number of 0’s without making a mistake! Converted: $6.75 billion (or may be as high as $9 billion). So why does a person of Mr. Mahmud’s wealth engage in seemingly corrupt means to acquire money?

We cannot blame Mr. Mahmud. The scale of his undertaking may have been different, but the nature of the undertaking is the same. Our politicians have been leading the way and we the citizens are simply following the lessons our leaders are teaching us.

Coco Rahman, son of our former prime minister, resides outside Bangladesh for fear of prosecution for corruption. Our former PM calls him an innocent victim of persecution. Sonali Bank officials, after an 11-year hiatus, finally filed a case against the brothers Rahman for not making payments on loans that, with accrued interest, is about Tk 42 crore. Yet, when the former PM speaks, we often see Tarique Zia’s picture proudly displayed on the wall behind her. And why should it not be there? Minister Suranjit Sen Gupta resigned because his personal assistant was caught with a sack full of money apparently on his way to the minister’s home. Our PM waited only a few days before honouring him with another cabinet appointment, albeit without portfolio. MP Abul Hossain, accused of corruption by the World Bank, resigned from the cabinet, only for us to learn that our PM has given him the accolade of being a “true patriot.” It was reported that Bangladesh Bank, under immense political pressure, approved the formation of nine new banks. And who are the beneficiaries? They include MPs of the party in power and also a coalition partner, former president, General Ershad.

Our politicians, of all persuasion, and their cronies take as they please, and our leaders commend them for their accomplishments. The corrupt are protected and offered immunity with impunity. And repeated governments legitimize corruption by allowing the “whitening” of ill gotten gains.

With corruption endemic, governance fails. We know not to rely on our institutions, for those institutions are not credible. The August 21 bomb attack killed many, including Ivy Rahman, but the then government chose to frame an innocent man, Joj Mia, and jailed him for several years for the attack. Many are killed by crossfire, but none investigated, no one held responsible for the extrajudicial killings. Who are we to trust and who are we to approach when we seek justice?

Dhaka University student Limon, was shot and maimed by RAB, but instead of punishing the culprits, the victim is repeatedly harassed by the very law enforcement officials who have sworn to protect him. And the then home minister, Shahara Khatun, simply waived her hands and declared that the government has no further responsibility, not even to ensure that a fair and forthright investigation is completed. No wonder that we are often reluctant to approach the institutions of justice unless we are able to bring along a sack full of taka to satisfy the lust of those in positions of authority. And without the trust in our institutions, we sometimes take matters in our own hands: accused criminals are not handed over to the police, but justice (or injustice) meted out immediately by the crowd. The rule of law is set aside.

The economic cost of public corruption is well documented. Bangladesh has ranked near the top of the Corruption Perception Index for the last decade. Bangladesh is often called one of the most corrupt countries in the world. Countries that rank high in the Corruption Perception Index also do poorly on the Doing Business Index, restricting much needed investment, particularly by foreigners. Some have estimated that had corruption not been prevalent, the country’s GDP could grow at nine to ten percent every year instead of the six to seven percent that Bangladesh currently achieves.

Compounded over time, the cost of corruption is considerable. If we did not lose this 3% every year since 2000, the Gross National Income of Bangladesh, measured in constant 2000 US $’s, could have been 25% larger today. Surely more than enough to pay for the Padma bridge ourselves!

Household surveys done by Transperancy International, Bangladesh, indicate over 80% of households that interacted with institutions, public and private, were victims of corruption. The same body reports that households in Bangladesh lose 4% of their income to corruption, with those in lower economic echelons bearing a disproportionate share of this economic cost.

The Padma bridge affair is a solemn reminder of what the failure to reform can do to us as a nation. We are a sovereign nation. Yet we find the World Bank now telling us who can serve in our governments’ cabinet, who can serve as the prime minister’s advisor, which public official is acceptable and who is not. They insist on coming into our country to observe and decide whether the ACC is creditably investigating accusations of corruption. That’s a shame, but a shame that the corrupt in our country have brought upon us. We have all the laws we need. Yet, the terms of compliance are dictated to us by outsiders. As a nation we hope that our governments succeed because we need our governments to succeed. The lasting legacy that our politicians can leave us is a set of institutions that above all establishes the rule of law in the country. And we have no more time to waste.

The PM speaks about reforming the World Bank and the IMF. Suranjit Sen Gupta is still in the cabinet; Abul Hossain “a patriot.” Perhaps she should begin by looking at those who sit at the table around her, and speak to her own first. The former PM speaks of corruption by the members of the current government. Her sons await repatriation and rehabilitation. Perhaps she should also begin by speaking to her own first.

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Muhammad Q. Islam, is an Associate Professor of Economics, John Cook School of Business, Saint Louis University, USA.

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16 Responses to “ The cost of public corruption ”

  1. shamsul on January 21, 2013 at 12:48 am

    kill them all,who are sucking our blood money.

  2. Lipi on October 23, 2012 at 6:54 pm

    We have corruption everywhere. We are a corrupt nation.

  3. Lipi on October 23, 2012 at 6:50 pm

    Corruption is such a common word in Bangladesh.

  4. Lipi on October 23, 2012 at 6:47 pm

    This was such good piece. Very well written.

  5. Nur on October 23, 2012 at 11:37 am

    The numbers have given me goose bump when I tried to realize the true amount in market value and what I can do with it… :-) What also amazed me is that we do have that much money in the bank to steal! We live in the era of “whatever one wants to do…do … and get away with it”. I have a hunch even this time… there will be no exemplary punishment which may refrain others from this shameful act. Sad but this is how it has been!

    Nice work Dr. Islam. Looking forward to see more!

  6. amzad on October 21, 2012 at 11:24 am

    Days are getting from bad to worse…we need good leader like dr.Mohater Muhammad to rule and lead the nation.Bad people in the shelter of politics, are snatching everything from the weak ..all the lands, all the hills, all the rivers..all the banks…all the rights..

    • Mohammad Zaman on October 21, 2012 at 10:30 pm

      Amzad Shahib,

      I agree, that inept leadership is at the crux of all maladies in our beloved swadesh … But unless the people wake up and vote the right way, it is not going to happen.

      Few years ago, I wrote a few words about leadership; hope you like:

      ON LEADERSHIP

      ‘Here goes my people and I follow them’ — of leadership, thus spoke MK Gandhi — a leader of ‘leaders-of-finest-calibre’. He was the undisputed leader of British India and yet, he was not in the conventional league of leadership. Leadership of extraordinary intellect and greatness like Jawaharlal Nehru and Maulana Abul Kalam Azad, instead of being stifled, flourished under his rather expansive shade! ‘A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves’ — thus goes Lao Tzu (Taoist philosopher).

      However, our leaders belong to a very different genre. They are leaders; it seems, by virtue of divine imposition. They are not followers of their people’s aspiration and/or desires. They rather shall lead as to their own aspirations and/or desires. And yes, they have a following too! And that’s how, one may say, they are to be measured. This quote from Dennis Peer is but a jeering memento as to the mendacious greatness of our present-day great leaders — ‘One measure of leadership is the caliber of people who choose to follow you.’

      Yes it is true that some uxorious kind of their own people has dubbed them greatness with appellations like Jono Netri (leader of the people) and Desh Netri (leader of the land). And that is great.

      But when I saw an avenging face of a sitting prime minister injecting the BDR tragedy in political football by advising her opponent to evacuate her cantonment residence to make room for families of yet more slain military men — I crouched in infernal disbelief. What kind of Jono Netri shall play with a wound that still remains raw in the nation’s psyche!

      And I also wonder, what kind of Desh Netri shall continue to occupy a state-owned stately mansion when she herself is rich enough that necessitates the so-called ‘whitening of black money’! Well, then I remembered that this is the same Netri who once left no stone unturned for the release of a once-enthroned prince who treated her beloved Desh with less dignity than a crumpled ball of discarded tissue paper!

      Well, the sitting and the ex-PM (short for Prima Donna) are of the royal kind. They are beyond the bounds of our petty ideals like democracy, equality, rule of law and the whole shebang … thus even the NRB children of the PM and her sister deserve a secure fortress to reside in for they can’t trust their own people.

      One – who can not trust his own, be a queen or a king; is no LEADER!!

      • Muhammad Islam on October 23, 2012 at 1:40 am

        Well said. Could not agree more. Question is who is going to pick up from where these two ladies leave us.

  7. Kamal on October 21, 2012 at 7:05 am

    Agreeing with comments written above, I only wish if the country had an independent judiciary. That probably would have solved at least 50% of the problem. Our country needs a check and balance in the parliament, so that the top brass should not go ahead with whatever he or she feels like to do.

  8. Mustafa Moin Tareq on October 20, 2012 at 9:01 pm

    A very thoughtful writing. But who will bell the cat?

  9. munir siraj on October 20, 2012 at 2:35 pm

    The strength of progress of Bangladesh is in the civil society movement the under current of which is not felt or visible superficially. The private entrepreneurs have achieved things remarkably despite all sorts of corruption and mismanagement. The political privileges in the form of corruption will crumble under pressure if the civil society movement can be strengthened and institutionalized. Activists should continuously be raising their voices to put political privileges in the defensive and therefore organized efforts are required. People are helpless voters and votes are not going to change the situation. Active Social movement is required and only criticism often is not enough where corruption has been institutionalized.

    Munir Siraj, Poet and Essayist

    • Muhammad Islam on October 23, 2012 at 1:41 am

      Well said!

    • Muhammad Islam on October 23, 2012 at 1:44 am

      Well said. Could not agree more, particularly the role that the private sector has played in the last 20 years. Ultimately, the fate of the country will depend on the private sector, which will at some point, demand the rule of law, because only the rule of law will help preserve what they acquire today with their capital and labor.

  10. Mohammad Zaman on October 19, 2012 at 1:12 am

    Great piece Qamrul Bhai.

    Numbers look so gargantuan and immensely sad at the same time.

    Unless the people of Bangladesh does not change their voting habit, these two churlish ladies shall continue to dig the hole deeper and deeper and …God knows …

    • Juda USA on October 20, 2012 at 10:35 pm

      Great Article. Causes me to realize that ‘We The People’ all over the Globe have many of the same problems! And how it has cost us all. Keep writing. It’s important.

  11. Shahriar on October 19, 2012 at 12:25 am

    Well dissected Quamrul bhai. It is always easier to blame others and point fingers than to do any kind of reforms within their own government.

    That has been the history of this country and even in this age and time of reforms, accountability etc yet in daylights such things are happening.

    120 mm people live by these standards and rules and it is the norm of life, unfortunately….

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