PART I: SHARE MARKET, DESTINY, HALLMARK…

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Corruption…?  Or, pathological greed?

By rahnuma ahmed

© Mehedi/New Age

Why should we pay our income tax when…?

INCOME TAX returns were due by September 30, 2012. Last week, while I sat in the office of an income tax officer — a rare one, for, unlike most government officials who tend to be rude and officious, she lives by the pledge of public service — I watched other taxpayers vent their fury.

“They expect us to pay taxes while they plunder and steal and rob the public,” said one [For reasons unknown to me, the government is always spoken of in the plural in Bangla].

“Yes, to think that my tax is calculated to the last penny earned while ruling party politicians and businessmen loot crores of public money,” said another.

“And that fool of a finance minister, saying 4,000 crore taka is no big deal..”, chimed in the third.

“For once Muhith was right, compared to what’s been stolen, it’s puny” — a volley of words through which the income tax officer kept working quietly. Without raising her eyes, busy as they were in tallying figures, she gently demurred, “He did apologise in parliament later.” 

“It doesn’t mean a thing, he’s a blundering fool, remember what he said about the share market scam, he said, its “wicked.” Why, its criminal!”

“I’m sure those guys don’t pay any taxes”, said another, and almost in unison, all three began reeling off names. Of cabinet ministers, the prime minister herself, her family members, of others as well — the “big fish” outside the cabinet, many of whom have since become household names in middle class homes. Disreputable names.

Thieves”, senior journalist A B M Musa, had spat out on a TV talk show.

Far worse than thieves and dacoits”, observed left economist Anu Muhammad at a discussion.

Kleptocrats”, thundered Manzurul Ahsan Khan, president, Communist Party of Bangladesh (CPB), at a public rally. On another occasion, he’d also said, while corruption during the BNP-Jamaat regime was controlled by “one” house (ie, Hawa Bhaban), it is now being done by “many.”

“Well, so-and-so does, I mean, pay taxes,” she said matter of factly, yet again, eyes lowered, busy at her work. But her gentle correction was of no help, another excitable volley of words. Back and forth, each taxpayer picking up before the other had finished. No pauses.

“Aah yes, but do they declare their real incomes? Didn’t the Awami League pledge before the elections that the wealth statement and income of the prime minister, her cabinet ministers, MPs, their family members would be made public every year?”

“Have they arrested anyone? Remanded anyone? Hallmark? Sonali Bank? Destiny? Share market? Everyone knows that the prime minister’s adviser Syed Modassir Ali is involved in the Hallmark scandal, but what does the parliamentary committee say? His name didn’t crop up in the allegations! Do they take us to be fools?”

“And look at those ACC [Anti-Corruption Committee] guys, they interviewed Modasser at his home instead of hauling him over to the ACC headquarters. Would they have been similarly kind and considerate if it had been a member of the public?”

“And that Beximco’s Salman, they covered up for him in 1996, they’re doing it again, how can he  still be the PM’s private sector advisor?”

A lull in the tirade, broken by one taxpayer saying, half aloud, almost to herself, “I wonder whose pocket my income tax will go into?” Her question was cut short as another immediately butted in, “Maybe we should all stop paying our taxes?”

But of course, nothing of that sort happened. Everyone present, a former school teacher, a college teacher, and a housewife, duly handed in their respective income tax returns. I watched them respond to the officer’s searching questions, I observed their earnest responses.  “I need to submit more papers, do I? Sure, I’ll bring them in.”

According to media reports, this year’s income tax fair was a resounding success. The National Board of Revenue (NBR) says, taxes collected at this year’s fair was double the amount collected last year.

(While we pay our taxes, the powerful are busy) Making money 

Even though the successive scams — share market crash, Destiny, and Hallmark — are fresh in our minds, I’ll quickly run over some of the details,

  • The government appointed a probe committee of the worst-ever share market crash in January 2011; according to the 320-page report, a group of dishonest traders colluded with stockmarket regulators to swindle retail investors out of at least 20,000 crore taka. Taka 5,000 crore went into private pockets, 15,000 crore taka was siphoned abroad. The report — submitted to the finance minister on April 7, 2011 — named 2 merchant banks and 60 individuals, of whom 20 were allegedly the “masterminds.” At the finance minister’s insistence, individual names were deleted before the report was made public, but press leaks had flashed the names.

Thai-Bangla Aluminium (one of the named) filed a defamation case against widely-respected Khondker Ibrahim Khaled, head of the committee, and its 3 members, demanding 100 crore taka in compensation. Khaled, fortunately, won the legal battle; Muhith later accused Khaled of engaging in “character assassination,” a preposterous charge, but it was backed by a section of the corporate-owned print and electronic media. The government has yet to take any action against any of those those named.

Khaled had told the press, the Securities and Exchange Commission (SEC), the Investment Corporation of Bangladesh (ICB), military officers, government high officials and bourses (stock exchange) are “all connected with [the] placement business.” He’d added — and this is highly significant, lending as it does a window into the nature of the ruling class, apparently wracked by strife and dissension among the two major political parties, led by leaders who hate each other’s guts, parties who present themselves as have nothing in common, neither in their ideological beliefs nor in their programmes for economic development: “Some businessmen, who have close ties with the people in power, might have taken undue advantage of their connections. Some of them either support Awami League or BNP, but when it comes to making money, they are above politics.”

On to the Destiny scam,

  • The Destiny Multipurpose Co-operative Society, a sister concern of Destiny-2000 Limited, had repeatedly been cautioned by Bangladesh Bank (BB) officials, spurred by news reports, to stop illegal banking activities — ranging from collecting deposits to lending. A BB investigation revealed that the organisation had 70 lakh members with targets set to increase its membership to 1 crore; on December 31, 2011, it had collected nearly 2,000 crore taka in deposits and share capital from  people through its cooperative window, by dint of which it enjoys tax exemption. According to press reports, very little was lent to its members, the bulk, initially transferred to various non-profitable and inoperative organisations, was later deposited in the bank accounts of top officials. The ACC have filed two money laundering cases against 22 top officials of Destiny, it includes former army chief and freedom fighter (who was also, secretary general of the Sector Commander’s Forum) Lt Gen (retd) M Harun-Ar-Rashid. They are accused of laundering and misappropriating Tk 33,000 crore, but these official moves occurred only after the Bangladesh Bank had failed to freeze the suspected bank accounts, had failed to prevent Destiny’s executives from withdrawing the money from these accounts.

The Jubok (Jubo Karmasangsthan Society) scam is a precursor to Destiny, it too was a multi-level marketing company, it too had indulged in illegal banking activities. The central bank ordered Jubok’s closure six years ago, instructing it to repay the Taka 100 crore it owed its clients. Repayment has not yet happened.

Next, the Hallmark-Sonali Bank scam, which continues to unfold, in ever more bizarre ways, as the Destiny one remains unresolved.

  • Hallmark followed quick on the heels of the Destiny ripoff. The textile firm Hallmark Group, and its five shady sister concerns embezzled about 3,600 crore taka from Sonali Bank’s Ruposhi Bangla Hotel branch between 2010 and May 2012; the loan was given not against any notable collaterals but against forged documents. Criminal cases have not been filed  against Hallmark by Sonali Bank, supporters of the state-owned bank claim they can’t because of the ongoing ACC investigations, which many reputed analysts point out is utter hogwash; in a bizarre turn of events, the managing director of Hallmark Group Tanvir Mahmud was asked to return 50 percent of the loan within 15 days. Tanvir said he needed “time,” a period variedly reported in the media as being somewhere between 20-30 years.  Some Sonali Bank officials have been suspended, mostly, “small fry.” The directors of the Bank claim they are not to be blamed, they were clueless.

According to a recently published report in weekly Holiday, the extent of financial corruption is far worse. Based on an indepth study conducted by a team of private investigators (audited by a firm of chartered accountants), the weekly’s report claims  that corruption rackets over the last few years have skimmed off 400,000 crore taka from four major public-run sectors — banking, telecommunication, energy and education. The report says that the skimming is routine, which means that it is an everyday occurrence. Mundane. Unremarkable.

  • The telecom sector heads the list, irregularities since June 2009 are estimated to be 151,000 crore taka.
  • Kickbacks in feigned system loss, over-billing by quick rental power plants and numerous energy deals are calculated to have cost the state’s coffers 140,000 crore taka.
  • Corruption in the education sector — conducted mainly through the MPO (Monthly Pay Order) system for 28,000 non-government secondary schools, madrasas and colleges, bribery in teacher recruitment, recommendations for government subsidies, purchase of books etc — accounts for 111,000 crore taka.

The report highlights several specific cases of corruption: a major embezzlement in Bangladesh Krishi Bank (157 crore taka was siphoned away by ruling party loyalists masquerading as businesmen); Warid Telecom transferred  70% shares to Airtel (a front) thereby depriving the public exchequer of a 400 crore taka transfer fee; Voice over Internet Protocol (VOIP) operations have milked 100 crore taka. The Holiday news report also speaks of a possible cartel formation — involving the Summit Group, the country’s single largest power producer — which is “limited to family or political connections.” All power projects since the AL-led government came to power in January 2009, lack even an iota of “transparency,” bearing marks instead of “naked nepotism,” or, “huge” bribes. Summit is owned by the commerce minister’s family (M Shahidul Islam, “Sectorwise Rent-Seeking Rackets.  Over Taka 400,000 crore skimmed out,” Holiday, September 14, 2012).

While the ACC chairman has acknowledged that “financial crimes” in recent years are higher than before, for most people, this is a great understatement.

Meanwhile, banks have written off 21,000 crore taka as bad loans (till March 2012). According to a BB official, these loans had been granted on “political consideration”, ie there are no chances of recovering them. Further, the rampant and improper disbursement of loans in state-owned commercial banks have caused a severe liquidity crisis in the latter.

The revelations of corruption, particularly those connected to the banking sector, has led some experts to call for the (further) privatisation of state-owned banks. This falls in line with the ideas and policies of neo-liberalisation — propagated by the World Bank, the International Monetary Fund, and Western aid agencies.

Published in New Age, Monday, October 1, 2012

 

 

 

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