Urgent action is needed, not only to stop this deadly bleeding, but also to recover the country’s stolen wealth.
Corruption and illegal transfer of funds
Bangladesh is a fertile ground for corruption and the seizure of government funds. A 2011 UNDP Report placed Bangladesh, along with Angola, at the top of the list of least developed countries (LDCs) for ‘illicit financial flows’.
Corruption and illegal money transfers reached a peak unprecedented level during the autocratic regime of the fallen Sheikh Hasina as the regime’s survival became increasingly dependent on allowing its cronies and kleptocrats rob banks. A a staggering US$8.4 billion was embezzled from banks through irregularities, abuse of power and money laundering.
Another major source of corruption by kleptocrats is grossly inflated mega-projects financed by aid and foreign debtTax evasion by politically connected elites is a major source of revenue loss, estimated at US$703 million per year.
A 2017 Global Report on Financial Integrity found the largest illicit financial flows from Bangladesh among the least developed countries. An average of about $8.3 billion per year between 2009 and 2018 alone, money was laundered from Bangladesh through false trade invoices – by inflating the import price and understating the export price.
In addition to using “dog“, criminals also use their children to study abroad as”money mules“to transfer illegally acquired assets. Various schemes, such as “golden visa“, “second home“, from destination countries such as Canada, Portugal, Australia, Malaysia, Dubai – also offer easy means to launder illegally obtained assets.
It is reported that 252 Bangladeshi civil servants, police officers and other officials bought homes in the United States by laundering money from the country. Bengalis on top the list of foreign buyers of real estate in dubai. canada’s “begumpara” is the “forbidden paradise” of wealthy Bangladeshis. One ex-minister of the previous regime alone owns 350 properties, worth approximately $264 millionin the United Kingdom.
Bangladesh’s offshore financial wealth is estimated at 0.7% of the country’s GDPThe illegal money transfers from Bangladesh are estimated at 2.2% of the country’s total income in the 2019-2020 budget year, depriving Bangladesh of more than $700 million in revenue.
Kleptocracy: rule by thieves
Under Sheikh Hasina, state institutions served the regime elites or kleptocrats to exploit citizensThis undermined democratic norms and weakened the basis of the economy. Kleptocrats often hid their ill-gotten gains outside the country.
If the ill-gotten money had stayed in the country and been invested, the economy would have benefited, even if it came at the cost of growing inequality and misgovernance. However, with such a large illegal outflow of funds, the country has the worst of both worlds: an increasingly precarious economy, unable to create productive and decent jobs for a growing youth population, and income and wealth inequality is growing rapidly to an uncomfortable level – while all state institutions are in the hands of the regime’s supporters.
Recovering Stolen Wealth for Sustainable Development
Corruption and illicit transfer of funds are major barriers to development. That is why asset recovery is included in the Sustainable Development Goals (SDG) under Target 16.4 and in the commitments under the Addis Ababa Action Agenda on Financing for Development.
The recovery of stolen property is a fundamental principle of the UN Convention against CorruptionChapter V of the Convention provides a framework for the return of stolen assets and requires States Parties to take measures to reduce, seize, confiscate and return the proceeds of corruption.
However, there is no single international authority responsible for recovering laundered money. Various mechanisms and institutions work together to tackle this problem. There are a number of international laws and treaties that can be used to claim laundered money. These agreements provide a framework for cooperation between countries in the fight against money laundering, terrorist financing and other financial crimes.
Bangladesh can seek help from the United Nations, the World Bank and Interpol. The United Nations Office on Drugs and Crime (UNODC) and the World Bank have a joint Stolen Asset Recovery Initiative (StAR) to support international efforts to end safe havens for corrupt funds. Since its inception in 2007, StAR has assisted more than 35 countries in establishing legal frameworks, setting up institutional structures, and building the capabilities needed to trace and return stolen assets.
Interpol helps countries recover and return corruptly obtained assets. Interpol works closely with a number of national, regional and international agencies such as the International Anti-Corruption Coordination Centre, which brings together specialist law enforcement officials from multiple agencies around the world to tackle allegations of large-scale corruption and bring corrupt elites to justice.
Political will is crucial
The recovery and return of criminal assets is a complex process. It can take many different forms, depending on the type of corruption offence, how the recovery attempt is initiated and by whom. It also depends on whether there is a criminal conviction in the source state, whether a criminal or civil process is used – or both; and what legal mechanisms to restrict assets are available in the destination state. Whether the state harmed by corruption has requested the return of their stolen assets is fundamentally important.
The most critical factor, however, is political will. Collusion with abuse of power is the main reason why nothing is done to the perpetrators of high-level corruption and illegal money transfers.
Bangladesh itself has the Prevention of Money Laundering Act, which criminalizes money laundering and allows for the seizure of laundered assets. Bangladesh has also concluded Mutual Legal Assistance Treaties (MLATs) with other countries.
Unfortunately, the country is not using any of the tools to recover laundered money, whether during Hasina’s autocratic rule or before. Bangladesh has yet to sign MLATs with popular money laundering destinations: Australia, Canada, Cyprus and Switzerland.
Time to act now
Major national newspapers have recently published editorials highlighting urgent need to get the smuggled money back from the country. Politicians also raise the issue with important countries, such as Switzerland. The The chairman of the Bangladesh Economic Association has urged for the establishment of a separate commission to combat corruption, money laundering and the recovery of undisclosed funds.
There is also momentum in some destination countries. For example, Sheikh Hasina’s cousin Tulip Siddiq, a British-Bangladesh Labour Party lawmaker and minister, is examined by the British Parliament standards for a London property.
The Bangladeshi diaspora community is actively engaged in exposing money laundering and real estate investments by corrupt Bangladeshi politicians and elites in various countries; and is campaign to confiscate their property.
So there is momentum; and the interim government must act now. This is the country’s best chance to recover its billions of dollars in stolen assets. The head of the interim government, Professor Yunus, must use his international prestige and goodwill to appeal to the United Nations, Interpol and destination countries to help Bangladesh do this.
The interim government should also initiate MLATS with missing popular destination countries and become a party to the OECD. Convention on Mutual Administrative Assistance in Tax Matters And “Common reporting standard“. This will enable Bangladesh to obtain the bank account and other financial information of Bangladeshis living in the signatory countries.
Anise ChowdhuryEmeritus Professor at Western Sydney University (Australia) and former Director of the Macroeconomic Policy and Development Division of UN-ESCAP.
Khalilur Rahmanformer Secretary of the UN Secretary-General’s High-level Panel on the Technology Bank for Least Developed Countries; former Head of UNCTAD’s Trade Analysis Division and New York Office.
Ziauddin HyderFormer Director of Research at BRAC and Associate Professor, University of the Philippines at Los Banos
© Inter Press Service (2024) — All rights reservedOriginal source: Inter Press Service
