How sincere is the finance minister in halting money laundering?

In a report published on 8 June in Prothom Alo, the finance minister was quoted as saying in parliament, “I do not have the list of money launderers. If you have a list of those laundering money, give it to me.”

In reply, the Prothom Alo editorial on 9 June stated, “If someone wants to look for something with his eyes and ears closed, he will never find it. All you have to do is open your eyes and ears to get the names of those the finance minister is looking for, and it will take commitment from his government to take action against the money launderers.”

It is the finance minister’s responsibility to come up with the list, why will the members of parliament provide it to him? The person who remains asleep while awake, cannot be awakened. Some time back a High Court bench had issued a ruling, asking the Anti-Corruption Commission (ACC) for names of those siphoning off capital overseas. The honourable judge reprimanded the ACC lawyer for responding to the ruling by submitting a carelessly made list. The court returned the list to him and ordered that relevant investigations be carried out and a proper list be drawn up. The court had observed that money launderers were the enemies of the nation.

A few days after that, during a ‘Meet the Press’ event on 18 November last year, foreign minister AK Abdul Momen said that he had personally undertaken a secret survey of Canada’s ‘Begumpara’ and in 28 samples he noted that the majority of residents in ‘Begumpara’ were not politicians, but civil servants. Of these 28 families, 4 were of politicians and the rest were government officials and readymade garment industrialists.

While the Bangladesh Bank authorities, ACC and CID have several times collected lists of money launderers from the central bank’s Financial Intelligence Unit, nothing has been done. Why did the finance minister not keep track of the sensational money laundering of recent times carried out by PK Halder and Papul? In 2018, the Panama Papers and Paradise Papers published the names of 82 Bangladeshis who siphoned funds out of the country. Does the finance minister not have their names? Is he not aware that the defaulted bank loans are directly linked to capital flight? Even since he became finance minister, he was creating all sorts of facilities for the huge loan defaulters and simply sweeping the loan default crisis under the rug. The volume of default loans is on a steady rise, yet he declared at the parliament’s budget session that this was not important at all.

The question irrevocably arises as to how far the finance minister is actually sincere about controlling corruption, the rise in default loans and the resulting capital flight. The roots of money laundering lie in the unrestrained corruption and increase in default loans. After the assassination of Bangabandhu and family on 15 August 1975, when military ruler Ziaur Rahman took over power, he gave indulgence to political and bureaucratic corruption in the interests of his own politics and to win the loyalty and support of the military and civil bureaucrats.

While corruption has steadily spread since 1973, during Bangabandhu’s rule it was an aberration, not a norm in politics and bureaucracy. But though Zia established himself as an icon of integrity, it was under his indulgence that corruption and money laundering was institutionalised. History points to how, before the defeat in the Battle of Plassey in 1757, Bengal had the most flourishing agro-economy of the Indian subcontinent. But the relentless looting, siphoning out of wealth and exploitation by the British East India Company left that economy devastated for the next 100 years.

American historian Brook Adams says that such huge amounts of wealth were taken back by wooden ships to England from Bengal after 1757, that it would take three months to unload each vessels at the port in London. Historians refer to this as ‘The Bengal Loot.’ It is said that this loot contributed significantly to the first Industrial Revolution of England. The British took over direct rule in 1758, and the looting continued unabated.

In 1947, victim of the British rulers’ partition of India, East Bengal was included as part of Pakistan and for another 24 years was subject to looting, exploitation, pilferage of wealth and unlimited repression. These 214 years of wealth being siphoned out, left the country high and dry and the independent Bangladesh in 1972 was indubitably dubbed as an international basket case. And now these money launderers every year are sending off 7 billion to 9 billion dollars overseas, according to the US-based Global Financial Intelligence.

Dr Momen’s statement indicates that at present, alongside the businessmen, it is the politicians, civil servants of different levels and various professional groups who are principally involved in money laundering. They steadily siphon off the money so that they may live cushy lives with their families in developed countries of the capitalist world. Over invoicing for imports in foreign business deals is one of the most common ploys for money laundering and under invoicing in the case of exports.

Alongside these well-used methods of money laundering, there is the ‘hundi’ system of money transfer commonly used by expatriate Bangladeshis. As this is unofficial, there is no record of how much money is actually sent overseas from the country every year. The remittance flow into the economy, official or unofficial, benefits the economy. But the ‘hundi’ dollars sent overseas are bought by the corrupt black money owners and the bank defaulters. These ‘hundi’ dollars are being used to build up ‘Begumpara’ in Toronto and the ‘second homes’ in Malaysia.

The huge deposits coming in from remittances has prevented the banks from collapsing under the weight of default loans. The disruption of the ‘hundi’ system under the impact of coronavirus over the past 15 months, has brought in waves of remittance through formal channels and kept our GDP growth vibrant. The pandemic has also slowed down the outflow of capital and so in the current fiscal there has been a massive trend of whitening black money. After the pandemic comes under control, money laundering will resume in full force. So if money laundering is to be halted, sincere efforts much be made to stop this corruption and pilferage of capital. If not, even if the government gets the list of money launderers, it will not be able to stop this capital flight.

* Muinul Islam is an economist and retired professor of economics at Chittagong University.

* This column appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir