AL smuggled over $150 b in 15 years

Makes BD a loan burden country

Mahfuz Emran: Sheikh Hasina has fled the country with a government debt of Tk 18 lakh 35 thousand crores. This loan has been taken from domestic and foreign sources. But when Hasina assumed power in 2009, the debt status of the government was only Tk 2 lakh 76 thousand 830 crores. Accordingly, during the rule of Awami League for a decade and a half, the debt status of the government has increased by Tk 15 lakh 58 thousand 206 crores, which is about 85 percent of the total debt of the government. According to the data of the Ministry of Finance, this picture of abnormal increase in the government’s debt has emerged in the last one and a half decades.
This loan has been taken from domestic and foreign sources to meet the government’s operating expenses and development activities. Although there are many allegations of unlimited irregularities and corruption against the Hasina government. At this time, the country’s banking sector has been subjected to unrestrained looting.
These people’s looted money has been smuggled to Europe-America and other countries. According to the data analysis of US-based research institute Global Financial Integrity (GFI), at least $149.20 billion have been smuggled out of the country during the one and a half decade rule of Sheikh Hasina.
The amount of money smuggled in Bangladeshi currency is at least Tk 17 lakh 60 thousand crores (according to the current exchange rate of Tk 118 per dollar). However, Bangladesh currently has less than $16 billion in usable net reserves.
Sheikh Hasina took over as Prime Minister on January 6, 2009 after winning the 9th National Assembly Elections. Even till December 31 of that year, the amount of defaulted loans in the country’s bank sector was only Tk 22,482 crores.
By March this year, the amount of defaulted loans exceeded Tk 1 lakh 82 thousand crores. According to Bangladesh Bank sources, the amount of defaulted loans in the country exceeded Tk 2 lakh crore when Hasina fled the country due to the mass uprising of the students.
Bangladesh Bank is the regulatory body of the country’s banking sector.
The autonomous organization was responsible for establishing good governance in the banking sector and suppressing irregularities and corruption.
Although the leading officials of Bangladesh Bank themselves say that the central bank has been forced to play the role of an accomplice in looting the banking sector. In a meeting with the media workers yesterday, the four deputy governors of Bangladesh Bank admitted and said, “We have failed in fulfilling our responsibilities. Governor Abdur Rauf Talukder did not go to Bangladesh Bank yesterday. He may resign by today.
In the last few years, Bangladesh Bank has liberalized various policies including rescheduling, withdrawal. Through this, the real picture of defaulted loans of the banking sector has been covered up.
Again, banks that are ‘owned’ by influential businessmen and leaders of the ruling party have been given the freedom to indulge in irregularities and corruption. Those banks were not properly audited. Bank officials said that the amount of uncollectible loans including anonymous loans, rescheduled and foreclosed loans from the country’s banking sector is at least Tk 7 lakh crore. A large part of this loan that has come out of the bank has been smuggled out of the country.
And economists say, for the sake of development, Hasina’s government has built some infrastructure like roads, bridges, metrorail. But on the contrary, it crippled the economy in the long run. He has destroyed the institutions of every sector including the financial sector of the country. If it is not possible to pull the economy on an urgent basis and make effective reforms, a dire situation awaits Bangladesh.
The executive director of the private research institute Center for Policy Dialogue (CPD). Fahmida Khatun told, “It is not possible to determine the amount of financial loss and money laundering in the last decade and a half.” Because no statistics of the country are correct. The government has consistently withheld information over the years. A strong commission should be set up at an accelerated pace to assess the damage to the economy. That commission will produce a white paper assessing the damage to the economy. After that, the right roadmap should be formulated to pull the economy.
Dr. Fahmida Khatun said, ‘In the last 15 years, the economy of Bangladesh has turned into a mess. We used to say that the economy is on the brink. But now the economy is completely in the ditch. To pull out from here requires hard work, initiative and focus. Apart from stabilizing the law and order situation, the primary responsibility of the new government will be to pull the economy out of the hole.
According to the data of the Ministry of Finance, the total debt of the government from domestic and foreign sources was Tk 2 lakh 76 thousand 830 crores in the fiscal year 2009-10. Of this, a loan of Tk 1 lakh 61 thousand 20 crore was taken from foreign sources. The remaining debt of Tk 1 lakh 15 thousand 810 crore was from internal sources of the country. Apart from the bank sector, this amount of loan is taken from other sectors including savings bonds.
During the first term of Awami League, i.e. from 2009 to 2013, the growth rate of government debt was fairly stable. However, at this time, several major looting incidents like basic bank looting, Hallmark, Bismillah scams took place in the banking sector of the country. While the state-owned banks were looted, the private sector banks fared relatively well. In 2014, the Awami League came back to power in a one-sided election in the face of boycotting the opposition party. Awami League candidates were elected unopposed in 154 seats in that election. Immediately after coming to power for the second consecutive term, looting in the banking sector of the country started with new zeal. At this time many private sector banks of the country were looted and changed ownership. The main entrepreneurs were thrown out of many banks, including the country’s largest bank-Islami Bank Bangladesh Limited, Social Islami Bank and National Bank. At the same time, the government’s borrowing from domestic and foreign sources also increased at an abnormal rate. Conversely, government revenue collection as a proportion of GDP began to decline. As a result, the country’s economy is in a bad state. Earth-shattering cybercrimes like the theft of foreign exchange reserves also took place in February 2016.
Reviewing the data of the Ministry of Finance, it can be seen that in the five years from 2018 to 2022, the government’s debt from internal sources, including banks, has increased by about Tk 4 lakh crore. At the end of December 2017, the total debt of the government from internal sources was Tk 3 lakh 20 thousand 272 crores. At the end of 2022, it exceeded Tk 7 lakh 17 thousand 189 crores. When the bank sector failed to provide loans to the government, Bangladesh Bank itself printed new money and gave loans to the government last year. In this, the debt of the government from internal sources has increased to Tk 10 lakh 35 thousand 530 crores. Along with Bangladesh Bank, the government has taken this loan from the people using various instruments including bank and financial sector, savings certificates. As the government’s demand for loans increased at an abnormal rate, its interest rates also doubled or tripled. Treasury bill-bond interest rates have now hovered around 12 to 13 percent. However, two years ago the interest rate on government treasury bills and bonds was 1 to 6 percent.
Speaking of development activities, the government has taken loans from foreign sources at an unusual rate in the last one and a half decades. Even in 2010, the debt position of the government from foreign sources was only $20.33 billion. According to the information of the Ministry of Finance, in February 2023, the status of this debt has reached $59.21 billion. However, according to the data of Bangladesh Bank, at the end of March 2024, the foreign debt status of the government and public institutions has increased to $79 billion. According to the current exchange rate (at the rate of Tk 118 per dollar), the debt position of the government in Bangladeshi currency is more than Tk 9 lakh 32 thousand crores.
In the last one and a half decade, the country’s economy and institutional structure has deteriorated, said economist Dr. Ahsan H. Mansoor. He said, “An honest, competent, efficient finance minister and governor is needed to pull the country out of the economic decline.” The revolution that the students of the country have made is unforgettable. But care should be taken so that this revolution does not fail or fail in any way.
This economist said, “The overall economy of the country is currently facing various challenges including high inflation, exchange rate instability, reserve crisis. These challenges can be overcome quickly if proper steps are taken. But it will take a long time to repair the damage done to the country’s institutions. The students who led the mass uprising in the country demanded reform of the state. If the state is to be reformed, the political parties must also be reformed.
US-based think tank Global Financial Integrity (GFI) researches data on global money laundering. According to the information of the organization, between 2011 and 2018, money equivalent to $90 billion has been smuggled from Bangladesh. From 2005 to 2014, an average of $6.4 billion was smuggled every year. Between 2014 and 2018, this average increased to $8.27 billion. After 2019 money laundering from the country increased. However, if the average of the period 2014-2018 is considered, at least $4,135 million have been smuggled from Bangladesh from 2019 to 2023. According to that, during the one and a half decade rule of Sheikh Hasina from 2009 to 2023, the amount of money smuggled out of the country stands at least Tk 14,920 crores or $149.20 billion. According to the current exchange rate, the amount of money smuggled in Bangladeshi currency is at least Tk 17 lakh 60 thousand crores.
Earlier, among the popular destinations for money laundering from Bangladesh were Switzerland, United Kingdom, United States, Malaysia, Canada and some island countries known as tax havens. However, the destination of money laundering has changed in the last few years. Currently, Bangladeshi smugglers are choosing countries like Middle East, Southeast Asia or Eastern Europe including Dubai in the United Arab Emirates as a safe destination for money. Politicians, businessmen, bureaucrats, government employees including police, banks, financial institutions, chairman-directors of insurance, senior and middle level officials are also smuggling money from the country.
According to the data of the Swiss National Bank (SNB), the central bank of Switzerland, in 2021, the amount of money deposited by Bangladeshis in the country was $871.11 million Swiss francs. This was the most money deposited by Bangladeshis in the country. Since then, the amount of deposits has been decreasing. In 2022, the amount of deposits deposited by Bangladeshis in Swiss banks was Tk 5 crore 52 lakh 11 thousand Swiss francs and at the end of 2023 it has come down to Tk 1 crore 77 lakh 12 thousand Swiss francs. According to related sources, Bangladesh government’s relations with the Europeans, including the United States, have been deteriorating for several years on the issue of democracy and fair elections in Bangladesh. In this context, Bangladeshi smugglers divert money from Swiss banks to other destinations.
The presence of Bangladeshis in the entire property market of the United Kingdom has become very strong in the last era. In addition to properties registered anonymously as offshore properties, there are many properties registered in Bangladesh. As of January 2010, the number of properties registered in the UK housing sector using Bangladeshi addresses for property owners was 15, according to British government figures. After six years, in January 2016, this number stood at 52. Five years later, in August 2021, the number increased to 107. London-based Astons provides immigration services for investment quotas for wealthy people from around the world. According to the information of the organization, in the nine months from January to September 2020, Bangladeshis bought properties worth about 1.29 billion pounds through 98 transactions in various elite areas of prime central London.
Based on the analysis of data collected by the US-based Center for Advanced Defense Studies (C4ADS), the EU Tax Observatory said that 459 Bangladeshis bought property in Dubai, United Arab Emirates, by concealing information in Bangladesh. As of 2020, they own a total of 972 property purchases, worth $31.5 million on paper. But in fact, the amount of expenditure of the buyers to buy these properties can be much higher, the stakeholders think. They say that the tendency of Bangladeshis to buy property in Dubai has increased significantly in recent years. During this period, Bangladeshis have bought a huge amount of property, the information of which they have completely concealed in the country. According to various media reports, the value of properties secretly bought by Bangladeshis in Dubai is now close to $1 billion.
Singapore is one of the biggest hubs of international trade conducted from Bangladesh. The country now ranks third in the Global Financial Privacy Index. There have long been allegations of money laundering by exploiting the facilities of one of Asia’s largest financial and commercial hubs. According to various sources, the import-export trade is the largest source of money laundering in Singapore. Many businessmen of the sector have to travel there regularly to import machinery for the textile and apparel sector. It is alleged that many of them are transferring money there using this opportunity.
Bangladeshis are also in the fourth position in the list of participants in the ‘Malaysia My Second Home’ program to build a second residence in Malaysia. So far, 3,604 Bangladeshis have built a ‘second home’ in Malaysia, said the country’s Minister of Arts and Culture Tiong King Singh last March.
Information about the investment of Bangladeshis can also be heard at various times in island countries known as offshore investment paradises like Barbuda, Cayman Island, British Virgin Island. In the past, Panama Papers and Pandora Papers also revealed information about Bangladeshis investing in some countries with the help of offshore investment companies. Besides, a significant amount of money has been smuggled from Bangladesh to Singapore and Canada. In Begumpara, Canada, the issue of money laundering by Bangladeshis to buy assets has raised quite a stir. Local Bangladeshi immigrants have been seen protesting this. Besides, it has been reported in various media that money smuggled out of the country is currently being diverted to some Eastern European countries like Turkey, Poland, Hungary, Romania, Slovenia etc.
Sheikh Hasina fled to India last Monday in the face of mass uprising by students. Her younger sister Sheikh Rehana also fled with him. For a few days, important ministers of the government, parliament, members of the prime minister’s family, government officials, big businessmen close to the government, many leaders of the ruling party have fled the country. Political observers say that these politicians, bureaucrats and businessmen have a lot of wealth including houses and cars abroad. It is because of the greed of wealth that they are encouraged to leave the common leaders and activists and flee abroad so easily.
The former chief economist of the World Bank’s Dhaka office Zahid Hossain thinks, ‘Awami League has built some infrastructure like roads, bridges, metrorail in the last decade and a half. On the contrary, every institution in Bangladesh has been destroyed. No institution including judiciary, administration, police, Bangladesh Bank, Anti-Corruption Commission (ACC), Election Commission has survived. It will take many years for the country to revive these institutions. It is not possible to put any value on these losses. The mandate of the interim government is very important in the current situation. Students didn’t want change of state players, they wanted change of game. I think, in order to save Bangladesh, starting from the political structure, every institution has to be rebuilt.