Capital flight on as govt goes lenient

Staff Correspondent | Published: 00:00, Jun 29,2019

 
 

Corrupt individuals having close relationships with the government might have laundered money from the country and deposited it with banks in Switzerland to avoid future risks, said economists and experts on Friday.

However, they said, they did not think that the government would become mindful of recovering the laundered money.

As individuals could not be sure whether the Awami League-led government would continue for long or not, they opted to keep their unlawfully-earned money in safe places like Switzerland, thereby resulting in an increase in the deposits by Bangladeshi nationals in Swiss banks, economists observed.

As per the latest annual report of the Swiss National Bank, the deposits with Swiss banks by Bangladeshis increased by 28.34 per cent – 136.4 million Swiss francs equivalent to Tk 1,182.32 crore – in the year 2018.

The deposits went up to 617.72 million Swiss francs or Tk 5,354.39 crore at the end of December, 2018 from 481.32 million Swiss francs or Tk 4,172.08 crore a year ago.

Asked, Policy Research Institute executive director Ahsan H Mansur told New Age that the money kept with Swiss banks was a small portion of the amount siphoned off the country ‘as it’s neither the only place nor the biggest place [to keep such money]’.

‘The Swiss banks are not the major destination for illegally-earned money, instead people keep illegal money in many other places,’ he said.

However, the amount deposited with Swiss banks marked an important rise in 2018 ahead of the 11th parliament election in December 30 in the year.

‘The change of the ruling party might not be a matter [of concern] for the honest people but the people who have earned money illegally became panicked ahead of the election in an apprehension of grave consequences if the ruling party fails to return to power,’ he said.

Asked whether the government has anything to do to contain the capital flight, the PRI ED did not find any possibility of any government measures in this regard ‘as people linked to the government usually launder money which they have earned illegally’.

Besides, he mentioned, corrupt government employees also follow the same path to keep their money safe.

‘The present state of governance and corruption is the major reason behind the money laundering,’ he said, adding that the situation would not change until the state of governance improved.

Global Financial Integrity, a Washington-based non-government organisation, in a report said that a total of $5.9 billion was siphoned out of Bangladesh in 2015 through trade misinvoicing.

The report also ranked Bangladesh second in South Asia in terms of illicit money outflows.

Asked about the reason behind such capital flight, former caretaker government adviser AB Mirza Azizul Islam said, ‘The central bank should give the answer, but I think there could be two reasons for such capital flight.’

Firstly, corrupt people prefer stashing away illegally-earned money to bypass any measures from institutions like Anti-Corruption Commission, Azizul said.

‘The absence of [a good] investment climate and the sorry state of the country’s banking sector could be the other reasons behind such capital flight,’ he added.

Azizul also expressed his doubts that the government was adequately alert in preventing capital flight or bringing back the money to the country.

He suggested a dialogue between the Bangladeshi and Swiss authorities concerned to know who the owners of the fund were, in addition to ascertaining how they earned and transferred the money.

Finally, he suggested applying local laws of Switzerland for confiscating the money.

‘Such transfer of funds is a kind of bleeding of the country’s economy,’ said former National Board of Revenue chairman Muhammad Abdul Majid.

He also pointed out corruption as a major reason behind the laundering of money.

‘There are enough rules and regulations as safeguards against money laundering from the country but they only work for very few people who have less clout,’ he commented, adding that the influential people, however, managed to neutralise the laws and authorities concerned.

As the system did not work for the influential people, tighter measures could help contain such capital flight, the former NBR chairman said.

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

 

Advertisement

images