Mukti

On corruption

Posted in economics, politics by jrahman on October 11, 2007

The legacy of corruption left behind the politicians is the reason why we are in such a mess today. Corruption is the fundamental evil that we have to eliminate if we want to become a prosperous nation with durable democracy. — I’m sure you’ve heard something similar many times in the recent months.  I think sentences like these are dangerously simplistic and quite possibly misleading.

I’m told that it costs about 1,500 taka to move one’s landline to a new address.  To most people who can afford a phone, this is not a large sum.  However, not many people paid the amount when moving houses. Why?  You see, to move your landline to a new address, in addition to the connection fee, you need to provide the original letter of issuance of the line to you.  

Think about it for a minute. 

You moved into the government quarter in the early 1980s, when you were a young man with a new family.  20 years on, you’re retiring and moving off to your small flat, and you want to take the landline with you.  You’re happy to pay the 1,500 taka fee, and you have the receipts for the last 6 months’ bill to prove that you indeed have the legal rights to the line.  But no, they want the original letter that was issued when Zia-ur-Rahman was the president and your multinational-employed son was a toddler.  The guy at the telephone office says that this can be ‘fixed’ for 2,000 taka.  What do you do? 

This is how, my dear reader, corruption used to happen at the microeconomic level.  This had nothing to do with the family of Mrs Zia or the political stand off that brought us 1/11.  And what is the impact of the grand anti-corruption drive of the current regime in this case?

After the January revolution, the small-fry clerk is too afraid to ask for the 2,000 taka bribe.  He says, bring in the original letter or nothing doing.  Your son tells you to get a new line.  That apparently costs 8,000 or so taka.   He is doing well, and this is not much money for him.  But who knows how long it will take to get the line installed?  So you’re without a landline.  And without proper VOIP connection, your pregnant daughter who lives in some foreign city cannot talk to her sickly mother.  

“What about the rights of the Bangladeshi citizens that were stolen from and kept in terrible poverty? What is happening here is nothing short of a quiet revolution without violence,” said Mainul Hosein, the caretaker government’s key law and justice official. “At least we are trying to establish an honest government.”

The above paragraph is from the recent Washington Post article discussed by Indrani.  So, what has the anti-corruption drive done to the much talked about corruption indicator?  Nothing apparently, as AsifS notes.  Meanwhile, it has become harder to business in Bangladesh according to a much less talked about indicator.  This, my dear, is the immediate economic impact of the January revolution.  Here’s what a Dhaka-based writer has to say about our medium-term economic prospects in the latest Forum:

Foreign private investment will be more limited as the military-bureaucratic alliance will not make it easy, seeing intrigue and exploitation behind every tree. Taken altogether, Bangladesh will experience much slower growth in private investment resulting in a slower growth of the economy. With luck a new generation of businessmen will emerge with an acceptable alliance with the politicians to permit a resurgence of private investment. But realism should make us recognise that cleansing the society of corruption — the achievement that the new revolution is undertaking — has a cost. This cost is the reduction in the economic growth rate, possibly for several years.

It is economic growth that has brought millions out of poverty in East Asia.  It is economic growth that is improving people’s lives in India and China.  It is the lack of economic growth that has held Africa and Latin America back.  And for all the corruption of the past 16 years, we were growing faster.  

So, sentences we started with are simplistic.  It is also potentially misleading to argue that corruption brought the nation to the situation that caused 1/11.  As great a problem corruption was, and as incompetent and wasteful the government of Mrs Zia was, it wasn’t corruption that was the fundamental flaw with our democracy.  As I’ve argued previously, the problem was the winner-takes-all nature of the political system.  That system needs reform, sure.  Let’s talk about those reforms.  Let’s not pretend that those reforms can be achieved through anti-corruption drives.  Pretending so, knowing that the issue in January was a peaceful and competitive election, is simply misleading.

And sentences like what this begins are dangerous because their logical conclusion will plunge our nation into a generation-long conflict that we truly cannot afford.  As this Progressive Bangladesh piece argues:  

Corruption in Bangladesh cannot be eliminated by decapitating the political leadership, and it certainly cannot be done by an unaccountable military-led government. There is no question that individuals in past governments engaged in massive corruption. But what encouraged that is the tyranny of a few within those governments. As long as power in Bangladesh remains concentrated, reducing corruption will be difficult. Rounding up politicians in the name of an “anti-corruption” drive may grab headlines, but the deeper damage caused by the application of draconian laws and the complete disregard for the rule of law will only breed more corruption. Our past gives us every reason and every right to be very suspicious of any government run by a few and accountable to none.

(Crossposted at UV) 

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17 Responses

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  1. Sid said, on October 11, 2007 at 9:21 pm

    The example you’ve used to illustrate corruption in Bangladesh occurs, as you’ve admitted, on a micro level. It is pervasive, endemic, deep-seated and probably ingrained culturally. It is part and parcel of the way Bangladeshis supply and even expect delivery of services.

    It is, in absolute terms, what brings our national index of corruption by TI to such horrific levels. I don’t think any anti-corruption drive will remove this kind of corruption even if policies and steps were exhaustive, relentless and long term. The best we can hope for is a shift in atttitudes to accepting and practicing this kind of corruption is generational. Make that two.

    However, the real damage to national levels of confidence towards democracy which is far more corrosive. Historically, culpable are a critical mass of significant politcians at the top of the political layer-cake were corrupt enough for the rot to set and give crediblility to nefarious corruption at every level of beauracracy.

    No government in the history of Bangladesh has yet addressed this elite-sanctioned corruption. You may doubt the motives or the effectiveness of the drive, but it cannot be doubted that the move by this CTG to hold this group of people culpable is unique and, dare I say it, revolutionary. In that regard, no previous government has tackled political corruption, obviously because of vested interests. Does this make a dent in the Bangladesh’s TI index. Probably not in 10 months.

    It is therefore a little unfair of you to suggest that just because there has not been any significant change in TI index as a result of the anti-corruption drives of teh last 9 months it renders the actions of this government redundant or at worst a failure.

    You say the politica culture of “winner-takes-all” has been the underlying reason for the failure of democracy in BD. In this regard, I think we are arguing for the same thing, but cross referenced. I’d say that the large-scale political corruption of previous democratic governments is symptomatic of this of this culture.

  2. ALO said, on October 11, 2007 at 10:47 pm

    So let us sleep.

    “Corruption in Bangladesh cannot be eliminated by decapitating the political leadership” – so let us leave them free and allow them to do the same more for unlimited period at the cost of sweat and blood of people.

    “it certainly cannot be done by an unaccountable military-led government” – a dumb and blind can only say military-led government is not accountable (elected governments are accountable to unelected government now, it is the good faith and desire with peoples support) – as if elected government of the past were accountable to anybody.

    Bangladesh is not India and China. Bangladesh is Bangladesh. It will prosper and shortly – not before or after, but in time.

    And many contents are contradictory.

    Finally, there will be always SOMEONE who will be in position with anti good move with words of frustration – we find the write up is one of those.

    ALO

  3. addafication said, on October 12, 2007 at 1:12 am

    Great point, Jyoti bhai. This needed to be said… – Saif

  4. Mash said, on October 12, 2007 at 8:28 am

    Sid, I would disagree with your assertion that “no government in the history of Bangladesh has yet addressed this elite-sanctioned corruption” and “it cannot be doubted that the move by this CTG to hold this group of people culpable is unique and, dare I say it, revolutionary.”

    The regime that came to power after the coup of August 1975 launched a very high profile “anti-corruption” drive. In fact, the very evening after the coup the new regime announced on television and radio that the reason they seized power was to save Bangladesh from corruption and abuse of power (the text of that speech will sound very familiar to you). The rhetoric back then was almost exactly the same as it is today. They made a number of high-profile arrests including the four independence leaders who were rounded up on charges of corruption and were later killed in their jail cells. At one point, Mushtaque had promulgated an ordinance that made corruption a capital offense.

    So, no, this is neither unique nor revolutionary. Beyond Bangladesh, a lot of recent military coups come in with the “anti-corruption” rationale. Invariably the so-called “anti-corruption” drive starts to look like a political purge.

  5. addafication said, on October 12, 2007 at 9:14 am

    I believe that the Ershad regime made similar noises about cleaning up corruption. It was, of course, ironic that it did…
    - Saif

  6. AsifY said, on October 12, 2007 at 6:35 pm

    ALO,

    I agree with you that the previous governments were not accountable. How you come to the conclusion that this government is accountable is beyond me.

    Jyoti bhai,

    Either corruption or growth cannot be the only two choices. Lots of countries grow and deal with corruption at the same time. Corruption eats away at the fairness and equity inherent in a working system and makes it unworkable. Without fairness and equity, growth is impossible.

    None of which to say that simply jailing a few people and crying “Mission Accomplished” while silencing critics is the way to go…..

  7. Sid said, on October 13, 2007 at 11:49 am

    Mash,

    Surely there’s a difference between microeconomic corruption of the kind where a member of the public is obliged to pay Taka 3000 to get a file passed by some goverment bureaucrat and political corruption like when, for example, the sons of a number of government ministers form a company XYZ and divert, say, 370 million US dollars from a donor slush fund to buy shares in a property development scheme in Dubai as XYZ. If a regime, army or civilian, goes after the latter kind of corruption, it’s going to be a “political purge” however you interpret it.

  8. [...] Mukti on the all pervasive corruption and how it affects Bangladesh at all levels. Share This [...]

  9. kgazi said, on October 14, 2007 at 1:35 am

    Mash,

    Why are you ignoring the MACRO ECONOMIC corruption where the PM’s amd ministers share a piece of every govt project, and every govt decision, (even on anti-corruption) is based on how much loot each minister, secretary and burueaucrat will get?

    That was the kind of corruption which the ministers, who are now in jail, were directly responsible for.

  10. kgazi said, on October 14, 2007 at 6:04 am

    Mash #4, “this is neither unique nor revolutionary…Invariably the so-called “anti-corruption” drive starts to look like a political purge.”
    ———-

    Rampant corruption seen in BD pre-1975 was nothing compared to pre 2007. People were totally disgusted of widespread corruption lately.

    The same in Pakistan, when military took over Nawaz Sharif’s corrupt govt, people ran to the streets and cheered in jubilation. The same happened in Bangladesh in 75, 91, 96, 2001 and 2007, but why is it that politicians never LEARNED form those “purges”?

    Anti-corruption drives may look like political purges, but the extent of corruption back then is almost exactly the same PATTERN as it is today, but far more widespread successively today.

    As long as politicians continue to run politics like a thieves paradise, people will continue to support crackdown and takeover, and politicians will rightfully deserve such takeovers. But it is the nation that suffers either way.

    Therefore what is needed, so that it does not happen again, is a Code of Ethics in govt operation supported by separate judiciary and ACC to punish politicians WHILE in power – to reduce ABUSE of power and embezzlement. In Bangladesh the CTG/army are trying to establish exactly that.

  11. jrahman said, on October 15, 2007 at 3:54 pm

    Great comments. Some additional observations.

    1. Sid: I’d say that the large-scale political corruption of previous democratic governments is symptomatic of this of this culture.

    It’s important to be clear what we mean by political corruption. There is a tendency to think that political corruption is limited to taking bribes and kickbacks. Far more damaging is the corruption of placing party hacks in the judiciary / constitutional bodies / universities etc to achieve the political end of winning the next election. And this political corruption is symptomatic of the political culture, I agree. But where does the culture come from? I argue that it comes from the political institution we set up after 1990. Without reforming that institutional set up, jailing people — even if they are ex-PMs — will do nothing to curb political corruption.

    2. The uniqueness of this government’s activities.

    In addition to 1975 and 1982, I’d throw in 1958 as well. Then too a lot of politicians were thrown into jail for unprecedented corruption. Whether you think this government’s motivations are different from the dictators of the past, their anti-corruption actions are thus far are not all that different.

    3. AsifY: Either corruption or growth cannot be the only two choices.

    I agree. However, the effect of the anti-corruption drive as it is being carried out is likely to be a prolonged slowdown in growth. To me, that is not an acceptable trade off, especially as this is not likely to reduce corruption in the long run.

    4. Alo: And many contents are contradictory.

    Exactly what contradicts what?

  12. Sid said, on October 15, 2007 at 4:47 pm

    Jyoti:
    Without reforming that institutional set up, jailing people — even if they are ex-PMs — will do nothing to curb political corruption.

    Surely demonstrable accountability should be part of these reforms? Even if it’s just a signal. Or should we do nothing and say to these politicians, “run along now and go play with your billions. We adults have serious business of political reforms to do”.

  13. ai said, on October 16, 2007 at 12:26 am

    Here is some interesting info:

    They say that they are here to uproot so called “Paribar Tantra”. Look at here http://www.trustbankbd.com/directors.htm. Doesn’t the Chairman and the managing director’s name look familiar? To help you here is the managing director http://www.trustbankbd.com/management.htm.

    So here is the rule of the game: if you are political leader and your relatives are in its leadership position, you are bad – I will correct it by all means, but for me it is alright!!! I can employ my brother as MD for the bank (monthly pay of more than 4 lakhs) where I am the chairman.

    But Bangladesh Bank does not agree with this too – look at http://www.bangladesh-bank.org/mediaroom/guide_regul/prudential_regulations.html#bkt6 . It says “Not more than one member of a family will become director of a bank. For this purpose family members shall include spouse, parents, children, brothers and sisters of the director and other persons dependent on him/her.” I put my brother in the Managing Director Position where I am the chairman of the Bank, which violate the Bangladesh Bank Regulation/Guideline –but that is ok!! (Even the latest update of the regulation doesn’t give anyone to put two relatives in the board of director if they have less than 5% share).

    Look at here at page 29 loan to directors section (http://www.secbd.org/Full%20Prospectus%20of%20Trust%20Bank%20Limited.pdf ). As a chairman I took almost one crore taka and paid back two third of that in one year. You should not question why I took it at the first place and how I paid back most of it in one year or if I influenced the decision to grant me that amount from my position (only one other director took any loan of only 10 lakhs). But I can question you about every penny of your asset, and if you cannot give a good answer I will put you in jail!

    There is an old saying “Sharisha bhoot tarabe, but shorishar bhoot tarabe ke?”

  14. ai said, on October 16, 2007 at 12:34 am

    the links doesn’t work as there is a fullstop at the end. Here are the first two links:
    http://www.trustbankbd.com/directors.htm
    http://www.trustbankbd.com/management.htm

  15. jrahman said, on October 17, 2007 at 7:34 pm

    Sid (12), yes, demonstrable accountability should be a part of these reforms. Now, what would that demonstrable accountability look like? To me, this would involve cases involving substantial misappropriation of public fund, or appointing party hacks to public posts for political gains, or criminal negligence in ministerial responsibility. Moreover, these cases would have to prosecuted successfully beyond reasonable doubt in a fair trial. That would have the effect that you’re talking about.

    Instead of this, we have cases that are being thrown out by the High Court and reinstated by the Supreme Court in a fairly questionable fashion.

    Whatever the original intentions were, jailing of the top politicians is now nothing more than the regime’s political maneuvering. At some point, before the emergency is lifted, there will be a political deal with some set of politicians. Some bunch will get released from jail. They’ll join the next government. Others will become symbols against political repression.

    What signals do you think this is sending?

  16. [...] This comment was posted last week by a reader.  Similar comments and questions were raised across the Bangladeshi and related cyberspace — see here and here for example.  The issues are: [...]

  17. Milbus, and the new godfathers « Mukti said, on January 2, 2008 at 3:14 pm

    [...] is news by any standard definition, bloggers need to step up.  You have been great in breaking Bankgate to the world, or covering the midnight coup in BNP in real time.  Now we need you to come forward [...]


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