Tk 28 trillion laundered during Awami League rule

A total of USD 234 billion or approximately Tk 28 trillion was siphoned off aboard during the tenures of the Awami League governments between 2009 and 2023, thus, an average of Tk 1.80 trillion was laundered annually. Corrupt politicians, businessmen, financial players, middlemen and government officials moved these funds during the Awami League terms

This estimation on money laundering came to light after the committee to prepare a white paper on state of economy in Bangladesh handed over the white paper titled ‘Dissection of a Development Narrative’ to the Chief Adviser to the interim government Dr Muhammad Yunus on Sunday. The Committee prepared the report based on the Global Financial Integrity Reports (GFIRs) and certain assumptions.

The White Paper said, “Over the recent past years, illicit financial outflows have emerged as an alarmingly growing phenomenon in Bangladesh, a malignant tumour that was devouring a significant part of the country’s economy and wealth.”

The average illicit outflow was equivalent to 3.4 per cent of Bangladesh’s current GDP (gross domestic products) or about one-fifth of export earnings and remittance inflows in the 2023-24 fiscal. The illicit outflows, on average, was more than twice the net flows of foreign aid and FDI flows over the corresponding period.

The head of the White Paper Committee 2024 and distinguished fellow of the Centre for Policy Dialogue (CPD) , Debapriya Bhattacharya handed over the White Paper to the chief adviser at an event at the Chief Adviser’s Office. Other members of the committee were also present.

The White Paper highlighted various aspects that include the banking sector, stock markets, looting of project funds and use of statistics on political motives. The report shed light on the macro economy saying GPD growth dropped and expressed concern over sleepwalking into the middle-income trap. The 397-page White Paper highlighted a total of 22 issues. These are development, GDP growth, inflation, public debt, domestic revenue mobilisation, public investment, food security, private investment, banking system, power and energy sector, external trade, poverty, inequality, human development, disability-inclusive development, gender issues, employability and labour market, remittance, environment and climate change, megaprojects, illicit financial outflows, declining national development, data ecosystem and development narrative, as well as a strategic outlook.

The White Paper delved into the money launderers, their methods, as well as the destinations of illicit capital flights. According to the White Paper, such outflows constituted a complex web of shadow economy that thrived on criminal activities of diverse nature and drew sustenance from an unholy alliance of sections of corrupt politicians, businessmen, financial players, middlemen, government officials, influence peddlers and wheeler-dealers of different types. A large part of laundered money was accumulated within the country through a range of illegal and criminal activities e.g. bribes and corruption, financial crimes, trade-mispricing, embezzlement of bank money and non-repayment of loans, rent-seeking, misuse of political power and influence peddling, over-costing of projects, share market scams, exploitation of migrant workers, tax dodging, drugs and human trafficking, and a host of other means.

Illicit financial outflows from Bangladesh were found to be destined to, or routed primarily through UAE, UK, Canada, USA, Hong Kong, Malaysia, Singapore, India, as also a number of tax havens. An increasing amount of stolen money was being converted to real estate, business enterprises and commercial activities of various kinds.

Citing various international research organisations, the White Paper stated that 532 property owners of Bangladeshi origin had real estate worth USD 375.0 million in Dubai. Bangladeshis owned a total of 972 residential properties in Dubai worth about USD 315.0 million. Till March 2024, Malaysian Second Homeowners of Bangladeshi origin numbered more than 3,600. According to the EU Tax Observatory Report 2023, the estimate of offshore financial wealth held by Bangladeshis was about USD 8.15 billion in 2021.

The White Paper said these resources can also originate in illegal activities and deals within the country for which payments are made abroad. While previously a large part of the ill-gotten money originating in the country tended to be invested in the domestic economy, forming a sizeable shadow economy, in more recent times, taking the money out of the country and keeping it abroad, in financial and non-financial assets, was considered to be a more secure way of guaranteeing a safe haven for the ill-gotten money.

The White Paper mentioned several reasons behind money laundering, and those are political indulgence and patronage, institutionalised corruption, legal impunity and overall lack of good governance in economic management. So, an uncompromising political will to address the problem is necessary.

According to the White Paper, approximately Tk 7 trillion has been allocated for procuring various goods and services, including the construction of roads, bridges, power infrastructure, hospitals, and educational facilities, among others. It is thus estimated that between Tk 1.61 trillion and Tk 2.80 trillion have been used as bribes and extortion at various levels, solely derived from public expenditure on development projects. Between Tk 770 billion and Tk 980 billion of these were simply bribes paid to government officials while between Tk 700 billion and Tk 1.40 trillion were extortions by politicians and their accomplices and the rest are spent on collusive payments. Most of them live aboard.

The White Paper compared the banking sector to a blackhole. The default loans of the banking sector amounted to Tk 6.75 trillion in the country, which is equivalent to the cost of constructing 14 metro rails or 24 Padma bridges. Banks were taken over in collusion with the state agencies over the one and a half decades. The next highest amount of money was laundered abroad. Banking sector saw the most corruption, destroying the sector.

At the event, Bangladesh Bank governor Ahsan H Mansur said the defaulted loans will reach 25-30 per cent in the banking sector, and a large portion of those loans was disbursed after 2017.

According to the White Paper, trillions of takas were embezzled from the stock market through fraud, manipulation, placement shares, and deceit in the IPO process. A major manipulation network involving influential entrepreneurs, issue managers, auditors, and a certain class of investors emerged. Stock market intermediaries suffered bankruptcy with negative equity of Tk 130 billion.

The culprits within the banking system are all heavy weights and the same heavyweights demolished confidence in the share market, the White Paper explained.

About USD 60 billion or Tk 7.20 trillion has been spent through the annual development programme (ADP) over the past 15 years, but USD 14 billion (23 per cent) or approximately Tk 1.61 trillion to USD 24 billion (40 per cent) or approximately Tk 2.80 trillion of it was wasted and looted in the name of development projects during this period, according to the committee to prepare white paper on the state of Bangladesh economy.

As muchas USD 14–24 billion (Tk 1.61–2.80 trillion) from annual development programme (ADP) and development projects has been lost to political extortion, bribery, and inflated budgets during the Awami League rule over the past 15 years. Misappropriation of funds during land acquisitions and the appointment of patronised project directors have further strained resources, undermining potential benefits from infrastructure and social investments.

The White Paper also raised objections to data and statistics gathered by the Bangladesh Bureau of Statistics (BBS), which had been a subject to political interferences. Tax exemption also equalled 6 per cent of GDP during the Awami League governments.

At the event, Debapriya Bhattacharya said the Committee worked independently without any inferences from the government. “The problem is deeper than we thought. The 30 chapters of this nearly 400-page long White Paper explained how the capitalist oligarchs were born and how they control the policy formulation.”

Committee member and former lead economist at World Bank Bangladesh, Zahid Hussain said various vanity projects got priority in the name of development during the Awami League government, and the interim government inherited and fragile economy because of the irregularities and lootings of that period.

Chief adviser’s press secretary Shafiqul Alam also shared the speech of Zahid Hussain on Facebook

Zahid Hussain said, “Self-satisfaction took away the vision of then-policymakers. Solutions to problems got no recognition. Our rules and regulations, as well as various local and national institutions, have fallen to pieces. The vicious circle of corruption has surrounded all levels.”

Referring to money laundering, leaders who become beneficiaries of the past government amassed huge money abroad with the help of the oligarchs. Statistics were used as the toll of political campaigns during the Awami League government, Zahid Hussain opined.

Headed by renowned economist, distinguished fellow of the Centre for Policy Dialogue (CPD) and convener of the Citizen's Platform for SDGs, Bangladesh Debapriya Bhattacharya, the committee was formed on 29 August with the approval of the chief adviser of the interim government.

The other members are professor A K Enamul Haque, deputy vice chancellor, UCSI University, Bangladesh branch and director, Economic Research Group, Dhaka; Ferdaus Ara Begum, CEO, Business Initiative Leading Development (BUILD); Imran Matin, executive director, BRAC Institute of Governance and Development (BIGD); Kazi Iqbal, research director, Bangladesh Institute of Development Studies (BIDS); M Tamim, professor, Bangladesh University of Engineering and Technology (BUET); Mohammad Abu Eusuf, professor, Department of Development Studies and Director, Centre on Budget and Policy, University of Dhaka and executive director, Research and Policy Integration for Development (RAPID); professor Mustafizur Rahman, distinguished fellow, Centre for Policy Dialogue (CPD); Selim Raihan, professor, Department of Economics, University of Dhaka and executive director, South Asian Network on Economic Modeling (SANEM); Sharmind Neelormi, professor, Department of Economics, Jahangirnagar University; Tasneem Arefa Siddiqui, professor, Department of Political Science, University of Dhaka and founding chair, Refugee and Migratory Movements Research Unit (RMMRU), and Zahid Hussain, former Lead Economist, World Bank Bangladesh.