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Glimpses from the Press, September 1998

Glimpses from the Press, September 1998

Corruption, mismanagement in DCC keep city unclean

- The Daily Star (1 August, 1998)

Why is Dhaka City so unclean? Is it because of lack of resources, funds, equipment or manpower?

A study on the Dhaka City Corporation’s (DCC) garbage cleaning system says, none of these factors are responsible. Rather, it is corruption, lack of accountability and supervision, which keep the city unclean.

The study titled "When both market and state fail: The crisis of solid waste management in Urban Bangladesh" was made by the Center for Policy Dialogue as part of its third Independent Review of Bangladesh’s Development (IRBD), 1997.

The report prepared by M Asaduzzaman of BIDS and Sayed A Hye of Jahangirnagar University reveals that every year, crores of taka are being embezzled in the name of giving ‘wages’ to ghost sweepers, and through misappropriation of the cleaning materials used by them.

Even with 50 per cent of DCC’s conservancy manpower remaining absent, each sweeper has to clean only about 100 meters of roads and each truck has to make a trip of two kilometers a day, the study showed. And yet, the city seems not to have any garbage cleaning system at all because of "administrative failures".

The Color of Money

- Holiday (21 August, 1998)

What is ‘black money’ and ‘dirty money’? Is there any difference in this terminology as described by important bankers and policy makers? This question was put before couple of economists- one of them taught finance at an American University- all of whom said they have no clue.

These two terms were discussed at a seminar on ‘Financial Sector: Money Laundering’ organized by the American Chamber of Commerce (AmCham) on 18 August. The seminar was also supported by four important foreign banks - American Express, ANZ Grindlays, Hong Kong Bank and Citibank NA.

Finance Minister Shah A.M. S. Kibria, who has allowed the holders of ‘black money’ or money on which no income tax was paid, to ‘whiten’ it by investing the same after paying a flat 7.5 percent tax, announced at the seminar that the ‘facility’ "would not be extended even by a single day" after the time limit expires at the end of 1999.

What are the sources of black money? Kibria had identified three: Drug trafficking, smuggling and corruption or bribery. "I suspect the (bribe) money may be mobilized for financing drug trafficking and smuggling. The bribe money goes underground and stays underground", he said.

Murshid Kuli Khan, a General Manager in the Bangladesh Bank, in a paper, however, discounted the importance of drug money since it has "not yet been felt to pose a major concern for Bangladesh", but said, "money laundering is no less significant" in the economy. Says he: "Black money and dirty money are being laundered in various ways", and identified eight different channels for the purpose. Conversion of local money into foreign currency in the ‘black market’, smuggling it out of the country and then depositing it in a foreign bank is one of the major ways of money laundering in Bangladesh. The use of telegraphic transfer and ‘hundi’ to send money overseas, use of bearer instruments like bank drafts, cheques and stock certificates, running loss-making businesses, opening accounts in false names in financial institutions and purchase of expensive items such as luxury goods, gold, flashy vehicles and real estate are some of the other mechanisms for money laundering which exist in the country.

Black money has been dominating the economies of South Asian countries for a long time. Its dominance in Bangladesh has been on the increase in recent years. A study on the subject by researchers at the Bangladesh Institute of Development Studies (BIDS) earlier last year had shown that over 40 percent of the nation’s economic activities are controlled by what it described as "informal economy" – an euphemism for ‘black market’.

Rampant tax evasion by some garment manufacturers

- The Financial Express (26 August, 1998)

The National Board of Revenue (NBR) is learnt to have not been able to realize custom and other duties amounting to several hundred million taka from a section of garments manufacturers.

Sources in the NBR and the Ministry of Commerce said with some reservations that duties which remained unrealized were accumulated over the last several years.

They said a good number of garments manufactures during the last few years imported cloths (fabrics) under the bonded warehouse facility without paying duty. The condition on such import was that the imported fabrics must be converted into readymade garments for re-export. But importers sold the fabrics in the local market instead of converting them into clothes for re-exporting.

Informed sources said the manufacturers sold thousands of meters of imported fabrics in the local market and did not pay any tax or duty to the government. The NBR estimated that duty payable on this account would be several hundred million taka.

Defaulters launch movement to reopen SB branch

- The Financial Express (20 August, 1998)

After the closure of the London branch of Sonali Bank (SB), now renamed Sonali Finance Company, a group of Bengalee intellectuals, based in the UK, have started a movement for reopening of SB’s London branch. But to Sonali Bank, most of them are big defaulters.

World Bank to cancel loans if corruption or irregularity found in projects

- Daily Janakantha (31 August, 1998)

The World Bank will cancel loans for projects financed by it whenever corruption or irregularity is found in purchases by these projects. According to the new procurement policy framed by the bank, these stringent rules will be applied to firmly deal with corruption. The Country Director of the World Bank in Bangladesh Pierre Landell-Mills wrote letters to 14 GOB Ministers and 23 Secretaries on 26 August pointing out the new procurement rules.

The letter expressed concern at the fact that corruption has become a fundamental problem in Bangladesh. It is seriously impeding the development process of the country. Corruption discourages private sector investment, jeopardizes public sector budgetary allocations and hinders poverty alleviation programs. Consequently, formulation of a high-quality policy covering purchases and contractual agreements of the projects financed by the World Bank became urgent. The South Asian Regional Management of the World Bank has decided to take some urgent measures to combat corruption in project procurements.