INTERNATIONAL ANTI CORRUPTION COUNCIL
MISSION FOR A WORLD WITHOUT CORRUPTION AND BRIBERY
Corruption, The ways of Control
and keys to Change:
The Case Study of Bangladesh
The importance of an Independent Regulatory Body
DR.MD. MAZHARUL ISLAM,PhD
AND
MD SHAKIL MOLLA
CORRUPTION, THE WAYS OF CONTROL
AND KEYS TO CHANGE:
THE CASE STUDY OF BANGLADESH
Dr.Md.Mazharul Islam
I
Contents
Foreword v
1. INTRODUCTION: CORRUPTION, GROWTH, AND EQUITY
1
2. CORRUPTION IN BANGLADESH
9
3. CONTROL OF CORRUPTION17
Enhanced Transparency and Accountability17
Components of Open Budget Survey20
Simplification of Regulations, Professional Civil Service,
and Decentralization
21
Reforms of Election Campaign Finance
25
An Effective Anti-Corruption Commission28
4. DRIVERS OF CHANGE31
Internal Pressure—“Bottom-up” or “Top-down”
31
Urban Middle Class—Anti-Corruption Movement
32
Small Steps at a Time—Grassroots Level Action
37
External Pressure39
Conclusion
50
APPENDIX A—A DIAGNOSTIC SURVEY OF INCIDENCE OF CORRUPTION IN
SERVICE SECTOR53
APPENDIX B.1—UN CONVENTION55
APPENDIX B.2—BANGLADESH’S COUNTRY STRATEGY58
APPENDIX C—ANTI-CORRUPTION COMMISSION60
III
Foreword
The Bangladesh Internatinal Anti Corruption Council (IACC), the country’s
premier autonomous multidisciplinary organization, has a tradition of
conducting policy oriented research on development issues facing Bangladesh
and other developing countries.
conducting policy research by IACC. For the purpose, IACC works for creating
strong research-policy links that could facilitate the use of research outcomes
in policy formulation, directly or indirectly. Such links are governed by complex
to a considerable extent, on the nature and extent of its relationship with
the policymaking process and the direct value that research can provide to
the relevant policymakers. This no doubt is related to the broader issue of
research-policy nexus that exists in Bangladesh.
In the above context, it is our great privilege to publish the present volume
written by Md.Mazharul Islam, one of the leading development economists,
who has successfully combined professional excellence with policymaking at
the highest level. In the present study, Mr. Islam examines the impact
of corruption on growth and equity in the context of Bangladesh. Recognizing
the highly complex nature of the processes underlying corruption in a modern
state, he suggests that, apart from building up strong public institutions, it is
imperative that a process of incremental reforms at the grassroots level can
stimulate changes on a wider scale. In this respect, he also examines the role
including the contribution of the international community.
policymakers, and others concerned in promoting good governance and
corruption-free society in Bangladesh and elsewhere. This will also serve
as an important bridge for familiarizing Mazharul Islam’s deep knowledge,
extensive experience, personal judgment, and emphatic understanding of
the socio-political dynamics with the readers and the young generation of
professionals and policymakers in the country.
Md Shakil Molla
Director of Operation
Anti Corruption Team
United Nations Youth Bangladesh
V
1
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
INTRODUCTION:CORRUPTION,
GROWTH, AND EQUITY
T
he impact of corruption, defined as the use of public office for private
gain, on growth and poverty has been much discussed in recent years.
Several studies have sought to analyze the impact of corruption
on economic growth on the basis of econometric exercises using various
quantitative indices of corruption. A review of 100 econometric studies
of the impact of corruption on growth found that (1) 62 percent of them
were statistically insignificant, (2) 32 percent were significant and negative,
and (3) 6 percent were significant and positive.1 Frequently, the individual
components of corruption such as bribery and/or embezzlement of public
funds were used in such studies whereas such components of corruption
as nepotism, favoritism, or the capture of state by private interests were
often excluded in the absence of quantitative indices for such individual
components. A few studies did indeed show that the corruption and growth
were negatively connected. However, correlation, as was often emphasized,
was not necessarily causation. Moreover, it was not sure which way any
causation went. High economic growth might lead to lower corruption. With
income growth, there was a greater demand for the control of corruption on
the part of the population and at the same time there were more resources at
the disposal of the government to undertake steps for both the prevention
of corruption and enforcement of anti-corruption measures. Historically,
there were cases of countries which had grown fast in spite of a high degree
of corruption. High savings and investment rates combined with the growthpromoting macroeconomic as well as sectoral policies contributed to high
economic growth.2 Whatever were the negative effects of corruption on
growth, they were not strong enough to cause perceptible concern among
the population in general. In these cases, the negative effects of corruption
were more than offset by the high rate of investment and other growthpromoting policies. But such a counter-factual could not be tested.
Increasingly, in lieu of econometric studies of macro relationship between
growth and corruption, attention has been devoted to the different types
of corruption and their effect on the performance of the specific sectors/
activities. This has been found to be a fruitful way of analyzing the impact
1
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
of corruption and, hence, of targeting the anti-corruption measures.
Accordingly, the aggregate corruption index such as Corruption Perception
Index has been increasingly supplemented by an analysis of the incidence
of corruption (sometimes distinguishing between types of corruption)
in the specific sectors of the economy based on surveys of opinion of
individuals or enterprises. For example, for the analysis of the incidence
of corruption in the services sector, the surveys were made of the users of
such services. In the case of production sectors, the surveys of opinions
of those engaged in business enterprises were undertaken. In the latter
case, the rules and regulations of the government which encourage or
facilitate the abuse of power by the public officials and which adversely
affect private investment were sought to be identified.
To illustrate, a case of sector-specific corruption is tax evasion, which
reduces resources at the disposal of the government. However, the loss
of tax revenue is not necessarily growth inhibiting to the extent tax evaded
money is invested in productive projects by the tax evader. However, to
the extent that fewer tax resources at the disposal of government reduce
public investment in essential public goods, which are not provided by the
private sector, tax evasion does inhibit growth; moreover, insufficient public
investment such as in infrastructure itself reduces the incentive for private
investment in the directly productive projects.
Similarly, among the specific acts of corruption which have serious
deleterious effects on growth are those which affect public policies for
the allocation of scarce resources such as permits for the exploration
and development of natural resources like gas, oil, and coal, etc. which
generate considerable monopoly rents and excess profits. Corruption in
the sector allows the monopoly rents to be shared between the permit
giver and the taker, depriving the public sector of resources for investment.
A comparable scope for corruption exists in respect of rules set by the public
officials regarding the sale or purchase of land, a fixed resource which, in the
context of a rising demand in developing country with a growing population,
enjoys high prices and creates possibilities of windfall capital gains from the
transfer of land. This has the potential for the misuse of public power for
private gain, and for the misallocation of land between alternative uses.
The uncertainty regarding the land rights and titles, security of ownership,
and acquisition and compensation of land adversely affects investment in
industry, commerce, and infrastructure.
2
Corruption, : The Case of Bangladesh
Corruption in the public procurement awards may lead to low quality
infrastructure and public services; and this may result in public expenditure
to be biased towards those which provide opportunities for bribe rather
than promote public welfare. Large projects where exact value is difficult
to monitor may present lucrative opportunities for corruption. It is
easier to collect substantial bribes in large projects as, for example, in
the technology defense system or infrastructure projects compared to
small public expenditures such as the provision of textbooks or teachers’
salaries. Thus, these cases illustrate “wholesale” corruption, whereas in the
case of small investments scattered over many sectors, corruption occurs
on a “retail” scale.
Diagnostic surveys of business and private-sector behavior increasingly
confirm that corruption is indeed a form of taxation on business which,
given the secrecy it entails and uncertainty that the bribe taker will fulfill
his part of the bargain, reduces incentive to invest. There are several types
of uncertainty relating to the award of contracts or public procurement
from the point of view of the bribe payer. One is the uncertainty as to who
is to be bribed—i.e., who is the appropriate person with authority within
the government to make the deal; second is the uncertainty with regard
to the adequate amount of bribe for getting the contract or permit. If the
bribe payer is not sure as to who is the appropriate person to bribe or the
necessary amount of bribe, then he ends up bribing a number of persons
and paying different amounts to obtain the contract. This raises the cost
of corruption for a given value of contract or permit. The “mark-up” over
the actual cost of the project, if the quality of project is to be kept as high as
originally stipulated or if the original cost of project is to be preserved, then
the “mark-down” on deterioration in the quality of the project would
be higher in view of the high costs of bribery. Therefore, the diversion of
public resources away from the competing claims of public investment
is larger than otherwise would be the case. Moreover, from the point of
view of the bribe taker, i.e. the official who has the responsibility for the
award of control or license, there is the uncertainty as to whether the bribe
payer would implement the project as agreed upon. All the three types of
uncertainty are likely to be less in a centralized autocratic regime which
defines and controls the channel of corruption relating to the person to be
bribed and the amount of bribe. There is accordingly a certainty of the deal
being successfully concluded on the payment as the bribe-taker and the
3
decision-maker are clearly identified. At the same time, in such a regime the
bribe payer is most likely to pay penalty if he is not able to deliver. The above
scenario was widely known to obtain in such a high growth but corrupt
countries such as South Korea and Indonesia. In both cases, decisions on
big procurements/projects contracts were concentrated in the hands of the
head of the government/state. There were designated/well-known agents
who acted on their behalf.3 In both cases, i.e. South Korea and Indonesia,
since the bribes were given and deals were concluded at a sufficiently
high level, or in fact mostly at the highest level of the government, any
delinquency or non-performance on the part of the private contractor/bribe
giver was to meet dire consequences in terms of punishment, which could
extend from bankruptcy to incarceration.
In democracies or even in semi-democracies, decision-making is
decentralized among different ministries and/or parliamentarians; at the
same time, each ministry has different functionaries. The ministers have
to satisfy different clients in a society, often defined by patron-client
relationships based on ethnicity, caste, religion, or linguistic and regional
loyalties. As a consequence, one has multiple “principals”/decision-makers
and each principal has multiple “agents” so that there are uncertainties on
the part of the bribe payer as to whom to bribe and how much to bribe as well
as the ability of the bribe taker to fulfill his part of the bargain. Frequently,
he ends up paying to multiple agents varying amounts of bribe. Possibly, in
the case of big investment projects/contracts, the head of the government
in such countries has the final decision-making authority but frequently
in cooperation with the respective ministers or officials. Even then, there
may be a residual uncertainty whether the minister/official concerned
can ultimately close the deal.4 However, the degree of concentration of
authority in respect of (a) decision-making on projects/programs and (b)
of “bribe taking” varies among the democratic societies. The greater is the
diffusion of authority without a decisive and central focal point, the greater
the uncertainty and costs of corruption that the bribe payer faces.
In all the above cases, the additional condition for reducing the costs
of corruption is that the development project is implemented efficiently
as per specifications in the contracts. This might not always be the case
in a decentralized democracy or semi-democracy with frequent elections
so that the consequences of a project being inefficiently implemented
would be borne by the successor government and not the incumbent
4
Corruption: The Case of Bangladesh
government. This is what is popularly known as the distinction between
a “roving” banditwith a short time horizon as against settled/stationary
“bandit”, who has a longer-time horizon.
In this context, it may be interesting to examine closely the micro-impact
of corruption at the project level. As explained above, a bribe-payer in order
to recoup the cost of the bribe needs to add to the cost of the project. In
one scenario, thereafter, the project is implemented in accordance with
the agreed terms and conditions. Under these circumstances, there is
a transfer of resources from the government budget to the bribe-taker
who may be an official, elected or otherwise, in charge of the project.
The resources obtained by him through bribery can be invested by him in
real estate or other forms of productive enterprise, or for that matter in
government/corporate securities/bonds, etc. In other words, resources
are now diverted to private investment from whatever public investment
project would otherwise have absorbed these resources. If the return on
private investment that the bribe-taker undertakes is not lower than that
in public investment, there is no loss in the efficiency of use of resources in
the aggregate and no adverse impact on the aggregate national income.
However, there is also the possibility that the bribe taker increase his
consumption expenditures.5 If investment (excluding investment in human
capital) in the aggregate goes down as corruption goes up, because public
investment goes down as resources in the public sector are diverted to the
private sector and no compensating increase in private investment takes
place, it adversely affects growth.
However, in all these instances, it appears that there is no apriori
conclusion as to the effect of corruption on development. It all depends on
the circumstances in each case as to how resources usurped by the bribetaker are utilized. However, there are several unambiguous downsides
to the incidence of corruption. In one case, there is a clear downside if
the bribe-taker transfers resources obtained through bribe out of the
country to avoid detection or possible taxation. It would adversely affect
growth if capital transfer does not come back through increased inward
remittances. Secondly, there is yet one more downside which occurs when
the bribe-taker, in charge of project approval/procurement, insists that the
contractor should not increase the estimated cost of the project and should
absorb the cost of bribe out of his own resources; even if the latter does
increase the cost, it should be less than the amount of bribe. In either case,
5
Corruption : The Case of Bangladesh
the contractor/private investor should either fully or partially absorbs the
cost of bribe. In that case, the latter would most likely lower the quality
of the project, in respect of equipment as well as of construction, etc., to
keep the costs within the agreed lower limit. This would, however, lower
the returns on investment and adversely affect growth. Thirdly, there is the
case when the bribe-taking public official does not select the best bid from
the competing private contractors but indulges in nepotism/favoritism
so that the selected contractor is inferior in respect of entrepreneurial or
management capacity resulting in a low return from investment. In fact, the
nepotism and favoritism, which are forms of corruption, militate against
efficiency and honesty of public officials.6Thus, to keep the adverse effects
of corruption to the minimum, it is necessary that resources diverted from
public investment do not result in increased private consumption or in
the transfer overseas nor should be quality of the investment project be
comprised. Therefore, it seems that the countries which have grown
in spite of corruption have been able to maintain a balance between the
two conflicting objectives, maximizing the amount of bribe and minimizing
the effect on quantity and quality of investment. In the countries with
weak commitment to development, it is likely that corruption coexists
with inefficiencies in investment or a leakage of resources through transfers
abroad.
Public institutions deliver vital services such as health and education,
upon which the poor are particularly dependent. Corruption subverts
and undermines all these services; it reduces quality and the quantity of
such services. It acts as a regressive tax, penalizing poorer citizens and
small firms. It restricts access to services for the more vulnerable citizens.
The adverse effects of corruption on equity are thus unambiguously
high. The weak suffer most from corruption, especially in the provision
of public services, i.e. health, education, sanitation, power, and
transportation, etc., as well as in the administration of various government
rules and regulations. If bribery determines the access to services or the
application of the government rules and regulations, then the poor are
at a disadvantage since their ability to bribe is limited. Where corrupt
practices lead to the reduction of public services, the poor are less likely
to be in a position to substitute their own resources for misappropriated
government resources. Poor households have fewer exit options from
the government-supported education or health system and are therefore
6
Corruption : The Case of Bangladesh
more severely affected by declines in access and in quality. For example,
non-poor households are more likely to be able to afford, compared to
poor households, private tuition in the education sector or private health
facilities to substitute for unauthorized teacher absence or health center
without doctors and medicines. In Bangladesh, primary school students
from the wealthiest households are between two and four times more
likely to pay for extra tuition compared to the poorest students. The poor
are in a weaker position in society as a whole compared to wealthier
households and this makes it less likely that they will resist and expose
corruption in the service sector, especially if they have to act individually.
This lack of power also means that they are more likely to face informal
payments to access services.
In fact, in a society where corruption is widespread or endemic, the
poor may have to survive by participating in and facilitating the corrupt
practices of the public officials in charge of the provision of services and
public goods. The underprivileged could bribe their way to a livelihood
and a few scraps of dignity. The corrupt public officials are not always the
exclusive beneficiaries of corruption. Public funds stolen by them may
trickledown as a source of income for some of the poor. Electoral politics may
compel/oblige politicians to share their loot even if, or especially because, it
is ill-gotten.7
7
2
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
CORRUPTION IN BANGLADESH
T
he Berlin-based Transparency International’s Corruption Perception
Index as well as the World Bank’s “control of corruption” index
ranks Bangladesh as one of the most corrupt countries of the
World.8 The impartiality, quality, and methodology of these corruption
perception indices—as well as other international datasets—have been
questioned, because they are mostly based on the perceptions of selected
national/international actors. However, in case of corruption, the reliance
on perception cannot be totally avoided because corruption almost by
definition leaves no paper trail that can be captured by purely objective
measures. But a few forms or types of corruption may be measured with
some degree of reliability or accuracy. For example, the incidence of bribe
payment as reported by households can be seen as depicting more a
reality than a perception. Frequently, findings from the public-sector audit
reports and results from public expenditure tracking surveys can usefully
point towards financial irregularities—the main limitation being that it
is not possible to verify whether these irregularities are the outcome of
corruption or the products of weak systems of supervision and/or poorlyenforced rules and regulations.9 There are other ways to supplement the
most frequently used perception indices prepared by the international
agencies; they include national opinion surveys prepared by national civil
society organizations such as the Transparency International Bangladesh
and other think tanks.
The diagnostic surveys carried out by the Transparency International,
Bangladesh provide data on the incidence of corruption in a number of
service sectors of the economy as reported by the affected individuals.
The results of a diagnostic survey in 2010 are shown in Appendix 1.These
surveys indicate that the level of corruption was the highest in the judiciary.
Eighty-eight percent of all the households who received services from
the judiciary were the victims of one or the other form of corruption.
Law enforcing agencies (79.6 percent) and land administration services
(71.2 percent) ranked second and third in the level of corruption. The
percentages of households which were victims of corruption and
irregularities in the education and health sectors were 15.3 percent and
35.2 percent respectively.
9
Corruption : The Case of Bangladesh
As far as the incidence of bribe paying or payment of unauthorized
money was concerned, the overall percentage of households who made
such payments was 71.9 percent for all the service sectors. It is further
observed that households receiving services from law enforcing agencies
paid or were forced to pay the highest rate of bribe (68.1 percent). Land
administration and judiciary occupied the second and third position in
respect of bribe payments; 67 percent and 59.6 percent service receiving
households paid or were forced to pay bribe or unregulated money in
these two service sectors respectively.
In addition to the diagnostic/opinion surveys of households regarding
the service sector and government regulating departments, there have
been, over the years, a number of evaluations of the safety net programs
such as the public food distribution programs. The estimates of leakages
in the distribution of benefits of such programs to the unintended
beneficiaries were considered as equivalent to the estimates of corruption.
For example, an evaluation of the food-for-works program in the 1980s
produced an estimate of leakage of 32–55 percent; the estimates of
leakages in the rural rationing system and the statutory rationing systems
during the 1990s varied between 71 percent and 98 percent. The estimate
of leakage in the vulnerable group development program (for the poor
rural households) was less, i.e. 14 percent, during the 1990s. However,
the estimates of leakages in such programs as Vulnerable Group Feeding
Program, relief programs, etc. during 2005 were much higher and
amounted to 35 percent of the resources.10
In addition, there were a few estimates of corruption or leakage of
resources in the cash and food transfers program intended for the benefit
of the different target groups. In 2010, to get included in the various safety
net programs, 49 percent of households had to pay bribe; 78.1 percent
had a portion of the allotted allocation deducted whereas 12.3 percent
were victims of nepotism, and 20.2 percent of households had their access
to the programs restricted because of political influence.11
The direct quantitative evidence on the amount of bribes or
embezzlement of funds by the public officials in respect of public sector
development projects is not available. However, a survey of newspaper
reports during March 2005 and August 2005 (the period of pre-budget
and post-budget debates on development projects) yielded reports of
10
Corruption : The Case of Bangladesh
about 219 cases of corruption, mismanagement, wrong audit, misuse of
payment of funds and of vehicles as well as various other illegal practices.12
An indirect estimate of the leakages relating to the agriculture and
rural development projects during 2000–2003 amounted to 30 percent
of the costs of development projects. The small projects suffered from
higher rates of leakage, i.e. 30–40 percent and the large projects, i.e. 15–20
percent. The percentage of leakage tended to be higher for small projects
with low average cost per project since a minimum absolute amount of
bribe had to be paid irrespective of the size of a project. Moreover, smallscale projects were usually scattered in remote areas where transparency
was limited. This resulted in a higher rate of misuse of resources.Very few
estimates are available for the amount of illegal payments made by the
private sector to the regulatory or inspection agencies.13
The above results of the surveys of corruption in the various sectors
are not free from varying margins of error or inconsistency due to the
limitations of methodology and data. Nonetheless, from the range of
estimates available, one can have a general impression about the high
incidence of corruption not only in the service sector but also in the wide
range of public-sector projects as well as in the administration of rules
and regulations governing trade and industry. These findings conform to
generally accepted perception in the country at large.
Frequently, faced with this widespread general perception/observation
held domestically and internationally regarding a high incidence of
corruption in Bangladesh, it is argued that corruption in Bangladesh is not
unique; a high degree of corruption in some sectors exists not only in many
developing but also in the advanced countries as well. However, while
comparing between the poor and rich countries in respect of corruption,
one needs to note certain differences. Firstly, in respect of ranking in the
corruption perception index by various international agencies, the advanced
countries rank very low while a few countries like Bangladesh rank the
highest. Secondly, the types of corruption which prevail in the advanced
countries are not so much at the level of essential services performed for
the ordinary citizens but are frequently high-level corruption, for example,
in the financial sector or large government contracts, etc.14 However, even
then the incidence is much less compared that, let us say, in Bangladesh.
The frequency or magnitude of corruption in relation to the whole range
11
Corruption : The Case of Bangladesh
of economic transactions in a developed country is much less. Thirdly,
and most importantly, in the most high-income countries, there is a rule
of law. Once corruption is suspected, there is a relentless effect to detect
and prosecute cases of corruption. The wheels of justice may sometimes
turn slowly but they turn inexorably. Due to the possibilities of detection
and, once detected, of commensurate punishment, the rule of law has a
deterrent effect on wrong doing. In most developed countries, many highlevel and powerful persons in the political arena and/or in the financial/
business sphere, including in some cases the heads of the government and
of the state, have fallen ignominiously because of corruption and suffered
severe punishment.
Even in the neighboring country, India, the politicians and administrators
have been the recipients of punishment, including incarceration—most
possibly much less than they deserved. Ministers had to resign and suffer
public humiliation. It is also true that at the same time, in India, onethird of the members of the lower house of the Parliament is charged
with various criminal offenses.15 But they have not been convicted and
punished and hence have been permitted to carry on their parliamentary
duties. However, they do suffer from a serious lack of public trust in them.
It is worth noting how in recent years even in an authoritarian country
like China, the fastest growing developing country and the second largest
economy in the world, the government does openly and loudly proclaim the
prevalence of large-scale corruption in the country. The recently instituted
leadership in 2013 makes the control and prevention of corruption as the
main policy objective. Already severe punishments have been meted out
in the case of some high profile cases of corruption in China. However, in
view of the non-democratic nature of the country and close association
between the party hierarchy and the state-controlled as well as private
industries, it is unlikely that the action against high-level corruption can
be carried too far at all levels of the government. However, at the levels
of local government, the cases of corruption have recently been under
serious scrutiny and actions have been taken.
In this context, it is significant that very few politicians or bureaucrats
at the top echelons of the government or business in Bangladesh have
been prosecuted and punished for acts of corruption in Bangladesh. It is
ironic that under a military-backed caretaker government during 20072008, acts of corruption by several high-level politicians and bureaucrats
12
Corruption : The Case of Bangladesh
were detected and prosecution started or completed.16 However, at
the same time, defense purchases and equipment procurements, which
are widely known as the major areas of corruption in most countries of
the developing world, did not come under scrutiny during the periods of
either the military control of the government or of the various political
regimes.17 However, in fairness, it should be noted that there have been
instances in Bangladesh when high-level officials/politicians under the one
or the other elected government have been accused and in some cases
have been persecuted and convicted. They almost always belonged to
the opposition party, i.e. members of the party out of power. When the
opposition party returned to power, all the pending cases against their
members were withdrawn and those who were prosecuted and convicted
were set free. This is not to suggest that among these members of the
opposition party who were convicted of corruption, there were not
genuine/bona-fide cases of corruption. But since during the regime of a
political party, no important/high-level member of the ruling party itself
was ever prosecuted or convicted of corruption, all cases of prosecution or
conviction of the members of the opposition party, including the cases of
genuine acts of egregious corruption, appeared in the eyes of the public as
cases for political victimization. The integrity of the process of prosecuting
and convicting the corrupt politicians/bureaucrats continued to be,
therefore, highly suspect in public perception. This would not have been
the case if a ruling party prosecuted and convicted a few high-level corrupt
members of its own party. Not only that, even the businessmen who were
known to be sympathetic to or significant contributors to the finances
of a party were never prosecuted or convicted for the violation of law or
rules and regulations when the party was in power. In a few cases, where
a few businessmen linked to a political party in power were investigated
for possible cases of corruption they were found to be innocent; in cases
when a few had been punished in the face of the public uproar, they were
been acquitted after a brief period of punishment. Therefore, there exists
a widespread public perception that each party protects its own members
and friends/supporters. Since so far no political party has been in power for
two successive terms (each consisting of five years), there has been thus a
game of musical chairs played by the two political parties in convicting each
other’s supporters. As a result, in the long run, no high-level perpetrators
of acts of corruption got any sustained punishment, irrespective of their
political affiliations. If the above analysis is indeed inaccurate or biased,
13
Corruption : The Case of Bangladesh
Bangladesh should be considered as a country where politicians are much
less prone to corruption than is the case of other comparable developing
countries. This is a subject which requires more careful empirical analysis.
However, the widespread perception in the country is otherwise. In politics
and public affairs, public perception, if it is widespread and persistent, is of
crucial importance; it is in some sense as important or more important
than reality. It is, therefore, necessary for the politicians to go out of the
way and take extraordinary steps to dispel such a perception. This is, one
might say, the cross that the politicians who seek public life and political
power have to bear. As we all know “the Caesar’s wife must be above
suspicion.”
The case of the garment industry in Bangladesh has been considered to
be an important example of collusion between the public officials, whether
elected or otherwise, and the private industrialists. It has elements of both
bureaucratic and political corruption.18 The garment industry was alleged
to have captured or influenced the state power for obtaining various
financial/tax concessions as well as for avoiding various government
regulations relating to the operation of the industry.19 In a survey of
garment entrepreneurs in 2006, it was found that 50 to 75 industrialists
had been members of the parliament at various times and a number of
them were ministers. Many retired bureaucrats and senior armed forces’
personnel, etc. had been or were owners of garment factories. It was often
said that anybody “who was somebody in Bangladesh” was in some way
linked to the export-oriented garment industry. Moreover, the garment
factory owners were in many cases major shareholders of banks. The
importance of the industry in the country’s economic landscape allowed it
to avoid regulations which involved costs that could be avoided by bribes.20
High profits earned by the industry were due to (a) very low labor cost and
(b) non-observance of various regulations regarding wages and working
conditions of labor, factory safety standards, and the safety standards
of the buildings housing garment factories, etc.21 The savings on costs of
production due to (a) and (b) above were partly offset by payments of bribe
to the public officials in charge of enforcing such rules and regulations.
In fact, the garment industry in common with other industries did suffer
from inadequate and inefficient infrastructure as well as cumbersome
regulations including inflated fees for licenses and permits—all of which
raised the costs of doing their business. By a combination of political
14
Corruption : The Case of Bangladesh
influence and bribes, they were able to circumvent the obstacles placed
by burdensome and inefficient regulations as well as to obtain preferential
access to limited infrastructure facilities such as energy supply.
The incentives and opportunities for collusion between the garment
manufacturers and the enforcers of laws and regulations were very
striking in the case of non-observance of the factory rules and regulations
regarding (a) workplace safety and (b) building structures. The series of
fire accidents and building collapses in recent years, including the most
devastating one in 2013, resulting from the violation of the relevant rules
and regulations have attracted world-wide attention,22 especially of the
overseas importers as well as labor groups at home (which are very weak)
and abroad (comparably stronger).
15
3
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
CONTROL OF CORRUPTION
T
he control of corruption in the sense of prevention of corruption
and enforcement of punishment of the cases of corruption is closely
related to the improvement of overall system of governance of a
country. The specific aspects of governance which are closely related to the
control of corruption include “voice and accountability,” “rule of law,” and
government effectiveness.23 The voice and accountability comprise such
elements as the participation of citizens in the selection of governments,
representative institutions based on fair and free elections, freedom
of speech and of the press and of association and political pluralism in
the form of multiple political parties, etc. The rules of law includes the
independence of the judiciary, quality of the courts, quality and integrity of
the law-enforcing agencies such as police, access on the part of the poor/
powerless to the legal process as well as the equality of all before law. In a
market economy investment depends on the enforcement of contracts and
property rights. All these factors create confidence of the citizens in and,
therefore, its willingness to abide by the rules of society. The government
effectiveness is reflected in the quality of public services delivered by the
government, quality and degree of independence (free from political
pressure/interference), and ability of the civil services. This includes
credibility of and commitment to policies on the part of the government.
Enhanced Transparency and Accountability
Within the broad framework of good governance, of which control of
corruption is an essential component, there are certain specific measures
which do have an important or significant role in reducing corruption, such
as transparency including the right to information, freedom of speech
and press, and simplification of rules and regulations, including the use of
information technology in order to reduce the direct contact between the
regulated and regulator, etc. The U.S. Supreme Court Justice Brandeis was
widely reported have said “sunlight is said to be the best of all disinfectants.”
Transparency is an important measure to control corruption. For example,
the declaration of assets and liabilities of the candidates for election,
members of Parliament, ministers/high officials of the government,
including the judiciary, are widely considered to act as a constraint on
corruption. These declarations should be made periodically so long as they
hold positions of authority. It is likely that the declarations would be often
under reported. However, all such declarations should be in the public
17
Corruption : The Case of Bangladesh
domain, i.e. published for the public to see and make their judgment. It is
expected, however, that the pressure of public opinion would over time
reduce the incidence of false declarations.24 This requirement is based on
the proposition that in a democracy those who venture to enter public
life/ political arena and are in a position to make decisions which affect
the use of public resources need accept the obligation that their private
assets/ liabilities/income/expenditures are eligible for public scrutiny.
In other words, once one enters public life, the range of privacy one is
allowed with respect to personal wealth/income/expenditures shrinks.25
For such declarations to be effective deterrent, there should ideally be a
mechanism for enforcement. An independent oversight board could be
established to examine such declarations and testify their veracity. Even if
such oversight and verification are not very effective to start with, the fact
that all the relevant information is in the public domain may itself exercise
a certain degree of deterrence or restraint.
It is in the same vein that there is a role in the anti-corruption strategy
for the right to information about the government’s actions and policies as
well as revenues and expenditures. The Right to Information Act was
passed in 2009 in Bangladesh.26 The enforcement of the right to information
is not always very easy since any government can use the alibi of national
security interest to obstruct or delay the provision of information asked for.
All governments everywhere in varying degrees are unenthusiastic about
sharing information widely in the public domain. This is because the control
over information is the part of the exercise of power by the government and
access to information on the part of the wider public diminishes its power
or freedom of action. There are more than 20 kinds of information which
are not to be provided under the Act in Bangladesh. The appeal process to
the court by the complainant in case he challenges the denial of information
by the authority concerned takes time. The intelligence agency and security
organizations, including the police department, have been exempted from
its jurisdiction, except when information is sought regarding corruption
and human rights violation; the language on this issue is not clear. There
are already in existence three acts, Official Secrets Act 1923, Special Powers
Act 1974, and Rules of Business 1999. These Acts may nullify a few of the
provisions of the Information Act. The law applies to the local government
only up to the upzilla (sub- district) and not to the lower levels such as
union councils, i.e. the lowest tier of the government.27 However, the law
has been used in a few cases by the NGOs in Bangladesh to help poor
18
Corruption : The Case of Bangladesh
households/individuals to find out their rights and entitlements under the
social safety programs and to claim the entitlements due to them under
the programs but were denied until they found out by the use of the Right
of Information Act.28In this, the civil society organizations can play a role
in educating the public as to how to choose the appropriate subjects and
types of information to be sought as well as the procedures to follow to get
the required information. They can serve as watchdog on the activities and
performance of the government in all areas of public concern. They have a
vital role to play in ensuring transparency and accountability at the various
government agencies, and bring them to the notice of the public through
the exercise of rights to freedom of the press and speech. The Right to
Information Act is an important complement to the effective role for the
media, i.e. freedom of the press and freedom of speech, which is critical to
transparency. An argument is often made about the abuse of the freedom
of press by the media. There are two ways in which the possibility of such
abuse can be reduced, if not eliminated. One is to use the legal system
to challenge the news media for misinformation or defamation; second,
there could be a system of self-regulation through such a mechanism as a
press council composed of members of the press as well as independent
individuals and civil society organizations. Moreover, in a regime of free
press with a multiplicity of competing news media, misinformation by one
can be challenged by another. In the ultimate analysis, the risks to public
welfare through the restriction of the freedom of press are larger than
caused by misinformation since truth does ultimately prevail.29
One particular piece of information which is very crucial in the context
of anti-corruption measures relates to the use of public resources. The
transparency relating to the financial operations of the government,
i.e. revenues and expenditures, is important for an oversight over and
a constraint on the possible use of public resources for private gain.
The greater the details in which information on public expenditures is
available to the public, the greater is the possibility of any misuse of
public resources to be detected and therefore to be debated and widely
known. This creates pressure on the government for remedial action.
The open budget index, prepared by the International Budget Partnership,
evaluates budgetary transparency which includes such items as the public
participation in the budget process as well as the role of the oversight
institutions such as the legislature and the Supreme Audit institutions
19
Corruption : The Case of Bangladesh
(Auditor General, for example).30 The transparency of the budgetary
process is judged by the information to the public available in respect
of specific budget documents; i.e. 3 pre-budget documents, 4 budget
executive documents, and audit reports. The legislative oversight involved
in the budget process includes the following components, i.e. involvement
in the budget process prior to the submission of the executive budget
proposal, access of the legislature to research and analytical capacity,
enough time to discuss and adequate powers to amend, and to shift funds
during budget implementation, etc. The strength of the Supreme Audit
institution is judged by the following criteria: (1) authority to remove
the head of the institution; (2) legal power to audit public finances; (3)
discretion to undertake audits, if they wish to, even beyond the yearend attestation audits; (4) financial resources available and authority to
determine its own budget; and (5) the availability of skilled personnel.
In 2012, in the overall open budget index, Bangladesh scores 58 with
scores ranging between 0 and 100, the most open being 100 and the least
open being zero.31 Among the five groups of countries classified under
the index, the group with scores (41–60) provide some information, i.e.
neither significant nor extensive. This is the group to which Bangladesh
belongs. This is the group to which Pakistan, the Philippines, Sri Lanka,
and Nepal—all belong. Among 100 countries, the majority of the countries
belong to this group. However, India and Indonesia belong to the higher
group, i.e. significant group (61–80).
Components of Open Budget Survey
Table 1—Availability of Budget Documents (2012)
Bangladesh
Executive’s
Pre-budget
Citizens’ Enacted Year
Mid-Year Year-End Audit
Budget
proposal
Budget Budget Reports Review Report Report
Proposal
XXX
X
XXX
X
X
X
XXX
XXX
India
XXX
X
X
X
X
X
X
X
Pakistan
XX
X
XXX
X
X
XXX
X
X
Sri Lanka
XXX
X
XXX
X
XX
XXX
X
X
Nepal
XXX
X
X
X
X
X
X
X
Philippines
XX
X
XXX
XX
XX
XXX
XXX
X
Indonesia
X
X
X
X
XX
X
X
X
Thailand
XX
X
X
X
XX
XXX
XXX
XX
X = Available to the public; XX = Available for Internal Use; XXX = Not Produced.
20
Corruption : the Case of Bangladesh
Table 2—Public Engagement and the Strength of the Oversight
Institution (scores: 100–0)
Public Engagement
Legislative
Strength
Supreme Auditor
Institution
Bangladesh
11
58
67
India
17
76
100
Pakistan
11
51
92
Sri Lanka
8
47
50
Nepal
17
39
100
Philippines
17
39
100
Indonesia
19
85
67
Thailand
14
70
83
In this connection, a well-equipped, competent, and independent office
of the Auditor General and its timely and exhaustive reports can play
a crucial role. In respect of the strength of the Auditor General’s Office,
Bangladesh ranks far below India, Nepal, the Philippines, and Pakistan.
While the Auditor General in Bangladesh is responsible for the oversight
of all the expenses of the government, monitoring of the project
funded through foreign assistance does not fall under the jurisdiction
of the Auditor General. He is to be appointed by the President, where
the President in this matter acts on the advice of the Prime Minister.
The majority of the managerial staff in the Auditor General’s Office
do not have accounting or auditing background, raising doubts regarding
political consideration in their appointments. More importantly, it is rare
that the Audit observations contained in its report get translated into
serious corrective action.32 Recently, the reports of the Auditor General’s
office in India led to the resignation of the Ministers in the government for
having exposed for either their negligence or involvement in a few cases of
a government contracts/licenses.
Simplification of Regulations, Professional Civil Service,
and Decentralization
The rules and regulations of a government provide opportunities for
the abuse of power and corruption in the course of their implementation.
For example, trade restrictions, subsidies, and control over capital
21
Corruption, Its Control and Drivers oge: The Case of Bangladesh
movements—all provide opportunities for corruption since officials
can regulate the access to trade opportunities, subsidies of goods and
services as well as ability to shift capital across border. Access to mineral
resources which are under the control of government can be obtained by
paying bribes. Whenever natural monopoly or public monopoly exists, the
government can extract illegal payments for access to such monopolized
resources. The government regulations regarding the startup of a business
as well as its operations are often quite comprehensive. They include
various types of permissions and licensing for enterprises/institutions;
also an individual seeking a service needs to follow regulations. The fewer
are the controls and regulations of the government affecting the private
sector, i.e. individual/enterprise/institution, the lower, therefore, is the
scope of discretionary use of official power and, therefore, of the misuse of
power for private financial gain. The more complex are the regulations, the
greater is the scope for discretionary exercise of power by the regulators
and hence greater is the opportunity of the misuse of power for private
gain. At the same time, it must be stressed that all regulations are not
redundant. There are many regulations which are necessary for ensuring
economic efficiency and equity: for example, safety net, pollution, financial
market, which is plagued by asymmetry of information, preservation of
natural resources, monopolies, health and sanitation, and environmental
degradation—all are areas requiring rules and regulations. However, it is
important to ensure that as far as possible, the regulations are simple to
implement and understand.33 Secondly, the rules and regulations should
be widely known and publicized so that all economic actors know and
understand their implications. This is a very important requirement since
in these days of complex and interdependent economic structures and
organizations regulations tend to accumulate and grow in complexity.
Hence, the search for simplicity on the part of the regulatory authorities is
crucial. At the same time, their widest possible dissemination among the
affected populations is vital.
However, in one area, Bangladesh should and can make potentially
a significant progress. That is to undertake a comprehensive review of
all regulations and rules with a view to eliminating those which are
outdated, cumbersome, duplicative, and unnecessary and simplifying
those that need to be retained. A review of such regulations should be
undertaken by a joint effort of all the stakeholders, i.e. the executive branch,
22
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
business enterprises, and other institutions affected by such regulations
as well as the public. In the past, a few reviews of some regulations were
undertaken in Bangladesh but their suggestions and recommendations
were not followed through. The executive branch of the government is
reluctant to give up controls and regulations because this involves a great
deal of loss of power. Moreover, many regulations may be implemented
in the context of recent advances in information technology without the
personal contact with the official implementing regulations. This is an area
which deserves a high priority attention.
It is in this context that the integrity and competence of the public
officials implementing the regulations assumes critical importance. They
need to be impartial and unbiased in the administration of regulations.
This in turn depends on the organizational and supervisory structure
of public administration and the system of the incentives, financial and
otherwise, affecting the efficiency and integrity of the officials. A suggestion
has often been made that raising the wages of the bureaucrats/regulators
would reduce the incidence of corruption among them. The answer to
this question is not unequivocal or unambiguous. If the rate or level of
bribe is not fixed, and if no third-party enforcement exists, the answer is
ambiguous. This is because if the public official and the bribe payer bargain
over the rate of bribe, a higher wage strengthens the official’s bargaining
power. It raises the expected cost of being caught and, therefore, leads to
higher bribes.34
In a highly politically polarized society like Bangladesh, it is critical
that civil service is not “politicized” and that it retains its impartiality.
The political reshuffling at the top levels of the government is a
common feature of even the most firmly established democracies.
In the highly confrontational political environment, dominated by
the two parties in Bangladesh, there are legitimate reasons for not
wanting bureaucrats appointed in key positions by the opposition party
where they could hinder the implementation of priority policies of the
successor government. However, there is no rationale for appointments
based on such consideration in other than key policymaking positions.
The politicization from the top to the lower tiers of administration has
resulted in appointments and promotions of unqualified persons. This
has been facilitated by unclear and to some extent discriminatory rules
for promotion as well as by the lack of civil service regulations to protect
23
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
bureaucrats from outside influence. All these resulted in apathy and
a decline in the quality of public service. An increase in the influence of
political considerations in day-to-day executive decisions has strengthened
the collaborative relationship in acts of corruption between the corrupt
politicians, one the one hand, and the bureaucrats, on the other. This is
because the fate of the bureaucrats and their political bosses becomes
closely interlinked. A significant reduction in the degree of politicization of
the civil service is essential not only for the control of corruption but also
for an effective and efficient government necessary for development.
The challenge of corruption in the services’ sector, i.e. health and
education as well as in such areas as infrastructure and local-level
development projects, can partly be met by decentralizing the responsibility
for such services and development projects to the local government and
as much as possible to the lowest tier of the local governments. The local
governments are in close proximity of the local population who requires
access to these services and projects and pays for them. However,
for such a decentralization to be effective in improving efficiency and
reducing corruption/misuse of power would require accountable and
representative, i.e. elected local governments. The local government
should be representative, elected by local population, and have financial
resources at its disposal provided from its own revenue resources as
well as grants/allocations from the national government; it should have
the autonomy for the determination of priority in development projects
as well as income transfer programs (such as safety net programs) and
should have the executives at the local level under its own control and
supervision free from interference from the national government. The
executives belonging to the different central ministries/agencies but
working at the local level would be under the control and supervision of
the local government.
There is no apriori reason why the local public officials would
be less corrupt than the public officials at the central government. The
representative local governments, therefore, need to be supplemented
by the organizations of the users of services as well as voluntary/civil
society organizations which can serve the oversight function on behalf of
and jointly with the users/beneficiaries on the provision of and access to
such services and projects. These organizations being in close proximity
with the local officials are likely to function more effectively to serve their
24
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
watchdog functions. It should be relatively easy to collect evidence and to
get access to information. In a close-knit small village community, it is not
easy to hide acts of corruption. The Right to Information law should be
applicable at the local level for allowing the citizens to have information
about the resources available at the level of the local government as well
as the particular projects and services for which they are used and for
which they are able to hold the local officials accountable.35
However, decentralization can be promoted either by pressure from
below, i.e. citizens, or from above by the political leadership which
is willing to surrender power on the part of the central legislators/
executives. In Bangladesh, there has been a long-standing and persistent
resistance on the part of the political leadership to surrender power and
resources to the local government.36 In fact, if the central leadership is
willing to surrender power, it can use its allocation of resources to the local
governments in encouraging competition between local governments in
the delivery of efficient and corruption-free services and development
projects.
Reforms of Election Campaign Finance
In electoral democracies or semi-democracies, one of the main reasons
why the politicians require access to resources aside from personal
desire to accumulate wealth or meet personal needs (beyond what is
possible to meet from legally earned or acquired resources) is to meet
expenses associated with the electoral campaigns. There are two kinds of
expenditures: one is to finance the expenditures of year-round activities
of the political party organizations, including office and establishment
expenditures as well as salaries of party workers, travels, publicity,
meetings, etc.; second are the direct expenditures on an election
campaign, i.e. such items as mobilization of voters, including the costs of
travels and meetings by the electoral candidates. There is, moreover, an
important invisible component of election expenditures which consists of
contribution to the central fund of the party to secure the nomination of
the party.
By one estimate, the average expenditures during the early 2000s of
a candidate amounted to around Tk50 million.37 Such a large amount of
expenditures cannot be met out of personal resources unless the candidate
25
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
is very wealthy. If he borrows/gets contribution from his benefactors, he
has to pay this back out of the public resources which he can divert for
the purpose, once he is elected to the parliament. If most of the members
of the parliament are from the trading and industrial classes, they are
in a position to indirectly participate in government contracts accessing
public resources; the rest can use their political power to recoup
their expenditures by providing their benefactors access to government
contracts and procurements. The public-sector resources which are then
diverted to pay for the election expenses (visible and invisible) do not
finance private investment because expenditures on election campaigns
and the party organizations constitute current expenditures on goods
and services. By their very nature, they are widely distributed so that a
large proportion of the population participates in the benefits of these
expenditures.
It is worth examining whether this amount of public resources, which
are diverted by the candidates through the abuse of public/official power,
could not be spent directly and more efficiently for financing their election
expenditures. For ensuring an efficient way of public financing of election
expenses, one has to consider two issues. One relates to the amount of
expenditures on election campaigns. What are the possibilities of reducing
such expenditures? Currently, the Election Commission in Bangladesh
requires the candidates to (a) report their expenditures and (b) put a cap
on such expenditures. The limitation on expenditures cannot be enforced
in practice since the candidates invariably overspend and underreport.
Therefore, the system of the upper limit on expenditures is redundant and
thus may be eliminated. However, the candidates should be required to
report all expenditures in details and the accounts of such expenditures
should be published in the media. The Election Commission might as far
as possible indicate the specific items on which such expenditures are
not permissible. This leaves the candidates free to decide the amount
of permissible expenditures that allow the population at large to judge
from their own experience or information if and how far the candidates
are underreporting. The voters in each constituency do have a rough idea/
impression regarding the expenditures incurred by the candidates. Even
though their perceptions may not be accurate, they would form an opinion
about the cases where the expenditures are very grossly underreported.
It is quite possible that the media would discuss and comment on such
26
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
expenditures. There is a possibility that investigative reporters or civil
society organizations could undertake survey on election expenditures,
interviewing multiple sources of information, and publish them. There
could be an independent board to examine the veracity of the reported
expenditures in the light of all relevant financial information relating to
the individual candidates. The cumulative effect of all these measures may
act as a constraint on the amount of expenditures.
The second issue in campaign finance relates to the choice between
the alternative methods of public financing of election campaigns. The
government may decide the average amount for a candidate on the
basis of its assessment of recent expenditures (as mentioned above) and
distribute the specified amount directly to each candidate. Alternatively,
the party organizations may be provided the resources to be distributed
by them to the candidates on the condition that grants to each candidate
be published. The financing could be provided to the political parties on
the basis of their representation in the last Parliament.38 The resources
for such financing could be obtained by the government partly from the
budgetary resources of the government and partly from contributions
by private individuals/institutions/business enterprises which could be
provided tax credit for such contributions. In fact, various formulae
could be designed in order to govern the allocation of public finance to
the candidates. Moreover, the individuals/private corporations could be
allowed to contribute to the election fund of the individual parties or to
the independent candidates provided these contributions are reported to
and published by the Election Commission.
One can conceive of yet another way to provide campaign finance. This is
to allow the political parties to establish their own foundations/investment
funds which, following the example of the Armed Forces Foundation,
should be allowed to own a wide variety of industrial/trading/banking
or financial enterprises. These institutions or investment funds could be
provided an initial capital by the state to start or purchase a profit-making
enterprise. In fact, it is conceivable that the party foundations may own
their own banks and insurance companies, etc. The party foundations/
investment funds which own profit-making enterprises can draw upon
their income/profits to add to resources to the government/sponsored
or financed election fund as mentioned above. The most appropriate
and effective combination of various measures for election financing, as
27
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
suggested above, can only be decided after further analysis and possible
experimentation in stages. However, it is imperative that measures chosen
ensure transparency and accountability. Their basic objective is to ensure
that as far as possible the system of campaign finance does not require the
candidates to procure resources through the abuse of their public power
and thus to reduce the incidence of corruption. These arrangements,
however, would not reduce or eliminate the temptation or greed on the
part of those in power to exercise their authority/decision-making power
to seek ways of personal enrichment. But this is a step in the direction
of avoiding an obvious and widely known reason for corruption in the
electoral democracies.
An Effective Anti-Corruption Commission
An important anti-corruption measure taken recently by the government
is the establishment of the Anti-Corruption Commission in 2004, of which
details are provided in the Appendix C. The challenge, however, is to make
it effective-in fact and not merely in law. This requires (a) its freedom from
the executive control, (b) independence of its financial resources, and of
organizational framework, (c) freedom for the appointment of its officials,
and (d) freedom of operation and investigation. The demonstration of its
freedom in all the above respects is the only way to generate confidence
in the integrity and freedom of the Commission in the public mind.39
Right from the beginning, Bangladesh Anti-Corruption Commission
(ACC) faced political and logistical obstacles, lack of organizational rules,
role clarity, fragile leadership, weak investigative capacity which affected
its independence and ability to carry out its mandate.40 It is inadequately
staffed; it absorbed the employees of the now defunct Bureau of AntiCorruption without any screening process, even though the latter was
notorious for its inefficiencies and lack of integrity. It has no budgetary
independence; the executive branch not only determines its budget but
also items on which it can be spent. Convictions by it are successfully
challenged on a number of occasions in the High Court. Detection
and investigation cannot credibly increase the risks of punishment for
corruption if there is no effective prosecution, limited capacity and lack of
expert legal knowledge in pursuing complex legal cases.41
28
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Many of the measures outlined above for the control of corruption are
basically intended to ensure (a) transparency in respect of public policies
and development activities as well as (b) accountability of the public officials
in the exercise of power for the use of public resources. The effectiveness
of the anti-corruption measures in the ultimate analysis depends on the
importance of overall governance. This is important to ensure that the
attempt to achieve the best does not become the enemy of the good. The
control of corruption is a slow process and this requires persistent and
sustained efforts. Eternal vigilance on the part of an awakened people is
the price of progress towards the reduction of corruption.
29
4
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
DRIVERS OF CHANGE
Internal Pressure—“Bottom-up” or “Top-down”
T
hat are the circumstances under which the various anti- corruption
measures suggested above are likely to be implemented in a
country like Bangladesh. In fact, many of these measures have
been discussed in the past. The knowledge about such measures is not a
sufficient condition for their adoption. The pertinent question, therefore,
is what are the drivers or agents of change. The drivers or agents of change
,as historical experience shows, can emerge or be initiated in a society
either from “top-down” or “bottom-up.” The external circumstances
or forces may also contribute to the momentum for change. Under
certain circumstances, both the internal and external circumstances may
reinforce each other to act as drivers of change.42 To begin with, there
must be a wide awareness among the population, including not only the
general public but also citizen groups which are affected by the incidence
of corruption. The recognition and definition of this problem is thus a first
step in any anti-corruption effort. In Bangladesh, thanks to the abundant
media reports as well as various diagnostic surveys of the incidence of
corruption, as indicated above, conducted by civil society organizations
and think-tanks as well as by international organizations, both private
and inter-governmental, there is a wide awareness of the problem of
corruption.
In this context, an effective attack on corruption within a country
ultimately requires (a) a critical mass of political leaders committed to
the anti-corruption effort and (b) a significant section of the society, i.e.
public, business enterprises, civil society organizations, etc. that are ready
to launch an anti-corruption campaign.43 If the top political leadership is
not committed to the control of corruption or indeed is indulgent towards
corruption, then the lower rungs of the leadership indulge in it as well.
When the leaders/elected political officials are indifferent to corruption
or in fact complicit in it, the bureaucracy becomes a party to the corrupt
system. In other words, if there are corruption free and relatively honest/
vigilant political leaders/elected officials, corruption in the bureaucracy of
the country is likely to be significantly small.44
31
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Urban Middle Class—Anti-Corruption Movement
However, the pressure for change may also originate from “bottomup.” In order for the pressure and momentum for the control of corruption
to emerge from the “bottom-up” what is required is the emergence of a
large, urban educated middle class which in most societies or at most times
is the engine of social, economic, and political change.45 They act through
multiple civil society organizations, think tanks, or groups of concerned
citizens of various kinds. Frequently, the political leadership emerges out
of this class and is supported by the larger middle class providing the basis
for collective action. The political protest historically has been led not by
the poor but by those with higher than average income and education.
While the poor struggle to survive from day-to-day, the disappointed
middle class are much more likely to engage in political activism to get
their way.
The momentum for change originates or springs in particular from the
younger generation of the expanding urban-educated middle class. In
developing countries with a high rate of population growth, after a stage
the ratio of working-age population (the age group of 15–45, for example)
in the total population becomes high. This young population, often called
the demographic dividend, has a little noted political consequence as well
apart from its economic consequences. As the recent experience in the
Middle East and in Brazil demonstrates the movement for change was
spearheaded by the youth, especially the growing unemployed, educated
urban middle-class youth. They are less risk averse, compared to the
older generation; frequently, they do not have expanding employment
and income ensuring opportunities while their expectations are high,
leading to dissatisfaction and frustration. With a very rapid spread of
the new information technology, they are “wired” to developments in
other countries. Moreover, with the ease of their access to information
technology such as “smartphones” and social media, they can quickly
mobilize protest movements on a large scale. Further, they not only
are more aware and conscious of the misuse of power and corruption,
but also they have a lower threshold of tolerance for corruption than the
older generations who are more conservative and, to some extent, are
compromised as they participate in the benefits of corruption.
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
The essential preconditions for such a momentum for change, it should
be stressed, are, firstly, there has to be a large middle class; secondly,
it has to be urbanized; and thirdly, it has to be educated. So long as the
members of the urban educated middle class are not very large in relation
to the population of a country, they can be induced/provided incentives
to participate in the corrupt system. They may gain from it in terms
of access to resources in the public and private sector such as business
opportunities, large and small, by the exercise of nepotism, favoritism, or
payment of bribes. Hence, as they are coupled by the prevailing leadership,
they lose their incentive for collective action. Under the circumstances,
there is not likely to be a country-wide strong anti-corruption movement.
However, a tipping part may be reached when the political/bureaucratic
system does not have enough (a) resources and (b) economic power at
their disposal to satisfy the rising expectations of this emerging class. As a
consequence, there arises a strong momentum for change at all levels of
society as the movement spreads from the ranks of the urban youth to the
poor, dissatisfied urban, slum dwellers.
The impetus for movement in Bangladesh for such a socioeconomic
change has been stymied or absent for several factors: firstly, the urban,
educated middle class has not grown large enough in relation to the
population as a whole or even in relation to the urban population. Also, it
is not only the size of the urban middle class, but also its prevailing level of
education is not high enough to be critically important. Secondly, over the
last two to three decades, Bangladesh has achieved not only an increase
in average per capita income but also a consistent decline in poverty, both
urban and rural. Even though there is a growing inequality, its visibility and
extent in the urban areas or in the country as a whole have not greatly
exceeded up till now a socially acceptable level. The mean per capita real
consumption expenditure in Bangladesh increased at an average annual
rate of 2 percent during 2000–2010. At the same time, the percentage of
population below the poverty line declined from 48.9 percent in 2000 to
31.5 percent in 2010. Inequality of income increased between 2000 and
2005 from 0.307 to 0.310 but then it declined between 2005 and 2010 from
0.310 to 0.299.46 This implied that per capita real consumption expenditures
increased more or less proportionately across different income groups. It is
also interesting to observe that percentage difference between per capita
consumption expenditures of different groups remained more or less
33
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
the same between 2000 and 2010. However, the percentage difference
between the per capita consumption expenditure of the top 10 percent of
the population and that of the bottom 10 percent of the population went
down between 2000 and 2005, even though it went up between 2005 and
2010. This trend is also observed in respect of a comparison between the
consumption expenditures of the upper 50 percent that of the bottom
10 percent. For other expenditure groups, the percentage difference
in per capita consumption expenditure remained the same during the
two periods.47 Therefore, the gap between the middle-income group
and the rich has not increased. Thus, the urban educated middle class in
Bangladesh has neither grown very large in relation to the total urban
population neither its economic status has stagnant nor its relative status
vis-à-vis the rich has worsened much. Accordingly, benefits derived by the
middle class from the current rate of (a) income growth and (b) changes in
distribution of income are not perceived by them to be unacceptable up
till now.
Moreover, as long as everybody’s income has gone up and the access
to the benefits of corruption, through bribes, nepotism, or favoritism, has
been widely shared among the urban, educated middle class, any pressure
by them for a change in the status quo has been constrained. The wide
sharing of the benefits of growth and corruption among the middle class
has been facilitated by the fact that the control of the government has
changed hands every five years, since 1991, through periodic elections,
among the different groups of the middle class organized into different
political parties or associated interest groups.48 The periodical change in
the composition of the middle class which exercises political power and
thus controls the levers of economic patronage and access to resources,
has enabled the benefits of the corrupt system to be widely distributed
over time. Even the young students, including the unemployed and/or
unemployable youth, have been linked to the political parties. They have
been powerful instrument for mass mobilization used by the political
parties at various stages of Bangladesh’s political evolution, before and
after independence.49 The urge on the part of the youth for the reform of
the misgoverned, corrupt system has been blunted by their access to the
opportunities for sharing in economic benefits through a partly politically
allotted or apportioned employment opportunities in the public sector,
but, more importantly, through access to contracts/public procurement/
34
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
business tenders in the public/semi-public sector institutions. The
militant sub-groups among the youth organizations have exploited the
opportunities for extortion and “protection money”extracted from a wide
variety of traders and members of the business community.
In the case of the counter-factual, i.e. if composition of the ruling elite
did not change periodically and if only one political party (one set of elites)
stayed in power for very long in Bangladesh, whereas the educated urban,
middle class continued to grow, and the economy stagnated, the emerging
scenario would have become highly unstable. In general, as experience
elsewhere shows, unless the middle class, so to speak, is pushed to the
wall with a stagnation or a fall in their economic status in the context of
rising and highly visible income inequalities, there is a built-in caution/
restraint among the middle class in most societies against pushing strongly
for change. This is because there is no certainty that the movement
for change will overcome the resistance to change on the part of the
beneficiaries of the prevailing system. Moreover, the consequences of
changes cannot always be predicted with any degree of certainty. There
might be unintended consequences. Moreover, even if the pressure for
change succeeds, the benefits for the middle class resulting from a change
in the prevailing system of sociopolitical alignment might not outweigh
the benefits of the continuation of the status quo. Thus, while the benefits
to be achieved by an abrupt/major change or realignment of political
forces are uncertain, the costs of such change in the short run are more
certain. Therefore, they settle on a compromise with those in power, even
if they are authoritarian governments; this seemed like the best means of
securing their economic futures—allowing themselves individually or in
small groups to be bought off by a system that offers rewards to those who
learn to play the insiders’ game.
In such situations, the educated, urban middle class, especially
the small subgroup that is internationally mobile, keeps its option open.
They diversify their assets between Bangladesh and abroad so that they
can move back and forth. In many cases, they even split their families
between overseas locations and Bangladesh. This tendency towards the
diversification of sources of income and assets is aggravated by fear of
future political instability which may be fraught with chaos and violence.
The rich and the affluent middle class have much to lose under these
35
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
circumstances. Hence, they search for an alternative safe haven. For
example, it is alleged that the top industrialists and exporters, especially
the garment manufacturers, minimize the investment of their personal
resources in the country. Many of them locate their factories in the rented
spaces, and they do not invest in physical infrastructure; they borrow
from the banking system, both long-term capital against the mortgage of
machinery and equipment and short-term working capital against stocks.
They transfer profits abroad through under-invoicing. In many cases, they
have their family members abroad to act as importers so that they export
to themselves and as a result importer’s profits are earned by them as
well. In this scenario, their profits are not mostly reinvested at home but
are instead invested in real estate or trading ventures abroad.
In the light of the above, it stands to reason why so far there is not
an indication of any anti-corruption movement in Bangladesh, however
sporadic or short-lived it could be like what is currently sweeping the Latin
American countries. The first organized youth movement in Bangladesh,
very brief and short-lived, was the Shahabag movement in the capital city
of Bangladesh in early 2013 and it was focused on the demand for death
penalty for the 1971 war criminals. Misgovernance and corruption did not
feature in this demand. Thus, in spite of awareness of corruption among
the public, there has been no indication of any attempt at collective action
against it on the part of the educated, urban, middle-class, and students.
There is yet an additional factor working against the success of any
such movement organized by the small, urban, middle class through
protests/street demonstrations. The relevant question is whether such
a mobilization could be widespread enough and could be sustained long
enough in order to create a nation-wide movement. On their own they
can rarely succeed in making significant reforms unless the urban, middle
class movement forms a coalition with other parts of the wider public or
the rest of the population. They are not always very competent in reaching
out to peasants and working class to form broader coalitions. They are
often divided and do not have a leader to bring together diverse groups—
in order to organize new political parties, for example, and fight elections.
The success of such movement needs a leader who can build coalitions
large enough to carry forward the movement for a change.50
36
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Small Steps at a Time—Grassroots Level Action
Given this rather discouraging macro scenario for the persistence of
corruption, there are some social thinkers/reformers who do not want to
give up in despair all hopes of change. They recommend that incremental
steps at the micro-level should nonetheless be attempted. They believe
that the civil society organizations, including not only nongovernmental
organizations but also all types of community-based groups and
organizations, self-help groups, professional and business associations,
independent policy research centers/institutes and faith-based groups,
can and need to play on important part in the prevention and control
of corruption. This is illustrated by a recent international initiative
called Citizens Against Corruption: Partnership for Transparency.51 This
movement believes that civil society organizations, broadly defined as
above, can perform two principal functions in respect of the anticorruption campaign. One is to review and monitor the performance
of the various anti-corruption agencies/institutions which are intended to
perform in their turn oversight function of the various executive branches
of the government. This includes national anti-corruption commissions/
agencies, the Supreme National Auditor General, the Right to Information
Act, Ombudsman, etc. At the national level, they can also review the
transparency of the government policies and actions, especially in
respect of the openness of the government budgets, i.e. expenditures.
The second type of anti-corruption efforts is for them to work at the
grassroots level to generate pressure of demand for the prevention
of corruption. The idea is to encourage multiple agents of change to
introduce incremental change, wherever appropriate, and to experiment
and adapt. Such efforts can best be initiated in the provision of services
by the government agency at the various tiers of the local government
starting from the grassroots level. People in the grassroots level feel
directly the impact of corrupt practices at the local level of service
providing government agencies. Hence, it provides an opportunity to raise
their awareness and, second, to mobilize them to demand remedial action.
In the process, they are able to expose the corrupt officials and make them
aware of their right to hold the officers accountable.
The main components of such an approach for a civil-society
organization are to (1) identify and diagnose the corrupt acts in a particular
service delivery at the local level by means, let us say, of baseline survey
37
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
of the state of service delivery, (2) persuade the local media (press,
radio, TV, and printed materials) as well as social media in view of the
widespread use of smartphones, etc. to publicize incidence of corruption;
(3) form the citizen’s groups such as volunteer groups/self-help groups of
all kinds to monitor, expose, and protect against corruption as well as
to build-up network across various tiers of local government upwards
from the village level; (4) help citizens group to discuss with the social
activists, community-based organizations, volunteer groups/youth clubs,
local-level service providers as well as with local-level government
officials, their facilities and weaknesses of the local service sectors; (5)
organize village-wide meetings and public hearings to which they invite
the officials/administration as well as service departments at a higher tier;
organize rallies and demonstrations and write letters to media and the
higher-level officials providing evidence of acts of corruption collected
through surveys and group meetings; and (6) subsequently as the officials
respond when they see the strength of the civil society groups, organize
meetings with the higher level supervisors and officers and have dialogue
with the citizens’ groups and follow-up on remedial action.
In order for the civil-society organizations to successfully organize and
mobilize local-level citizens’ groups to galvanize action, there has to be
available enough dedicated and credible social intermediaries imbued with
the spirit of voluntarism to serve as so-called citizen’s vigilant groups as well
as to work along with the groups of service users to monitor and collect
evidence. Also, for such efforts to succeed in getting the cooperation of
(a) public officials (elected or otherwise) and (b) supervisors of the service
providers at the (a) local level as well as (b) where necessary at the national
level, it is important to locate a few such officials/supervisors—some key
officials dedicated to or interested in service and integrity—who are
prepared to engage constructively with communities and make available
information that is needed for the beneficiaries to provide feedback and
to improve service delivery. The proponents of this strategy assert that
there are always available at the local level some politicians/officials who
will be receptive to small incremental steps for anti-corruption measures.
Small experiments and success, it is hoped, may have a snowball effect and
spread in other areas/sectors. It is believed that “the aggregate of millions of
actions would eventually reach a tipping point.” This approach of small steps
at a time can be supplementary to efforts at the macro-level and certainly
38
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
no substitute for them. At the same time, they are certainly preferable to
no-action in the face of the fact that significant changes in policies and
institutions are being constrained by the prevailing socio- political order.
Around 200 projects in 53 countries around the world have so far been
implemented along the above lines, which have successfully prevented
corrupt practices mostly at local and partly at national levels. Time will tell
whether such incremental reforms, through small projects at the grassroots,
would lead to any “ground-swell” of changes throughout the economy.
It is apparent from above that the process of incremental reforms at the
grassroots level to be successful and to stimulate changes on a wider scale
requires a set of stringent conditions to be satisfied such as the availability
of leaders of NGOs with high integrity and ability, the availability of
officials (elected or otherwise) at the local level dedicated to service and
integrity, a government willing and cooperative enough to allow sufficient
freedom of action by the NGOs and the availability of independent sources
of finance, including external assistance, channeled through international
civil society organizations delinked from the donor’s policies.
While Bangladesh is well endowed with a large number of nongovernment
organizations (NGOs) engaged in the provision of a wide range of services
in the social and productive sectors, some with considerable international
reputation, most of them are heavily dependent either on government
funds or on the donor assistance as service providers or contractors.
Accordingly, they are constrained in spearheading anti-corruption efforts.
A few, small NGOs serve monitoring or watchdog functions such as those
relating to human rights, women’s rights, environment, or to diagnostic
surveys of service provision by the government agencies, etc. They have
very limited resources and are also heavily dependent on the donor
assistance. However, it is possible for a few of them to seek to expand
their functions in organizing citizens against corruptions, along the lines
indicated above. For sources of financing, they will need to explore
linking their activities to the well-known and financially well-endowed
international civil society organizations.
External Pressure
An important and pertinent question is whether the role of the “drivers
of change” in respect of anti-corruption efforts in Bangladesh can be
39
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
played by the external factors. The awareness of and attitude towards
corruption in the international community has been greatly heightened in
recent times.
The recently internationally-agreed UN Convention Against Corruption
is an indication of the awareness and the willingness on the part of the
international community to take action to prevent and control it.52 This is
partly due to the fact that corruption in one country has implications for
another country as it affects their economic relationships. In other words,
it is not entirely an internal matter without cross-border implications.
The most outstanding example is the case of the assets stolen by the
corrupt people in one country which gets transferred to another country.
Money laundering is an important aspect of international ramifications of
corruption.
The UN convention to which Bangladesh is a signatory is not a legal
obligation but a voluntary agreement and undertaking among and by
countries to take action against corruption. It covers all important aspects
and avenues of corruption and suggests actions relevant to them and
introduces a very comprehensive set of standards, measures, and rules that
“all countries can apply to strengthen their legal and regulatory regimes
to fight corruption.” The most important provision relates to the, for
example, anti-corruption bodies; it postulates that in order to enable them
to carry out their functions effectively, (a) “necessary material resources,
(b) specialized staff, and (c) training that such staff may require shall be
provided.” The convention urges upon the international community to
promote international assistance for such efforts.
Among a wide variety of other measures, a few relevant provisions may
be mentioned below:
• Adequate procedures for the selection and training of individuals
for public positions considered especially vulnerable to corruption
and the rotation, where appropriate, of such individuals to the
other positions;
•
Transparency in the funding of candidates for elected public office
and, where appropriate, the funding of political parties;
• Public officials make declaration to appropriate authorities
regarding inter-alia their outside activities, employment,
40
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
investment, assets, and substantial gifts or benefits from which
a conflict of interest may result with respect to the functions as
public officials;53
• Appropriate system of procurement, based on transparency,
competition, and objective criteria in decision-making that are
effective, inter-alia, in preventing corruption;
• Public distribution of information relating to procurement
procedures and contracts, including information on invitations
to tender and relevant or pertinent information on the award of
contracts, allowing potential tenderers sufficient time to perform
and submit their tenders;
• Use of objective and predetermined criteria for public procurement
decisions, in order to facilitate the subsequent verification of the
correct application of the rules or procedures, effective system
of domestic review, including an effective system of appeal, to
ensure legal recourse and remedies in the event that the rules or
procedures are not followed;
• Measures to regulate matters regarding personnel responsible for
procurement, such as declaration of interest in particular public
procurements, screening procedures, and training requirements;
•
Ensuring transparency in (a) its public administration including
with regard to its organization, functioning, and decision- making
processes of the public administration and, with due regard for
the protection of privacy and personal data in (b) decisions and
legal acts that concern members of the public; and
•
Simplifying administrative procedures, where appropriate, in
order to facilitate public access to the competent decision-making
authorities, and publishing information which may include periodic
reports on the risks of corruption in public administration.
The civil society organizations, think tanks, and research organizations
need to publicize the provisions of the conviction widely among public
and media in order to remind the governments, current and future, that
they have accepted the responsibilities of implementing the convention.54
The cynics may say that the governments in Bangladesh are immune to
such publicity. On the other hand, there is no harm in keeping the pressure
of public opinion alive. It is not known when and how such constant
41
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
reminders and publicity may spark some action. In fact, every time an
important act of corruption takes place, it is appropriate for the media and
the civil society organizations to draw attention to the relevant provisions
of the convention to remind the government and the public about the
government’s undertaking in this respect. The discussion of the provisions
of the convention within and outside the government may open up spaces
for reformers to maneuver. The process of periodic review of the progress
of anti-corruption measures would identify the risks of and challenges
to reforms process.55 There are currently two external factors driving for
change in Bangladesh: (1) the foreign aid agencies and (2) the international
trading partners. The developed countries engaged in a wide range of
economic relationships with Bangladesh in respect of trade, aid, and
foreign direct investment can use the convention as an instrument for
evaluation of country’s commitment towards the anti-corruption agenda.56
The donors can help Bangladesh with assistance, financial and technical
advisory services to implement anti-corruption measures. They can use it
as a useful tool for dialogue with the governments.
The developed-country governments are themselves under great
pressure from their legislators and public opinion to exercise caution
against the possibilities of corruption in their development financing. This
is a comparatively new development in the donor countries. In the last two
decades or so, it has gained great momentum. The heightened awareness
among the aid agencies to act against corruption in the use of aid is due
partly to the shortage in aid resources in relation to an increasing number
of countries seeking aid and partly due to an increase in the purposes for
which aid is sought. This requires that scarce aid resources are productively
used and not misused through corruption.57
Increasingly, the donor countries/agencies adopt measures to (a)
safeguard and to reduce the exposure of their aid programs to acts of
corruption and (b) provide advice or assistance in order to improve the
institutions of governance in general, and to reduce the economy-wide
incidence of corruption. These two factors are interrelated. If indeed there
is widespread corruption in the country, it is very difficult to insulate the
aid-financed projects from the effects of corruption. To the extent that aid
programs such as assistance for budget or balance of payments support
involves the provision of resources which are fungible, the use of foreign
aid and domestic resources cannot be separated. Hence, in these cases,
42
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
attention needs to be paid to reduce the incidence of corruption in the
overall use of budgetary resources, including financial management and
auditing of public expenditures.
Secondly, even if the aid-financed projects can somehow be protected
from the incidence of corruption, corruption in the use of aggregate
resources, including domestic resources, in the public sector would
adversely affect growth. The beneficial or growth-inducing effects
of the aided-projects may be offset or more than offset by the misuse/
misallocation of aggregate uses. This leads the donor agencies to provide
assistance to strengthen the major institutions—such as judiciary, law
enforcing, agencies, civil service administration, civil society, government
effectiveness—which affect the governance of the overall economy. The
greater is the involvement or engagement of donors in the development
of a recipient country, the greater is its interest in ensuring that the
aggregate resources are productively used through the improvement of
its overall governance.
While the lending agencies, on the one hand, are anxious to guard
against and, if necessary, cancel/withdraw loans if corruption is
suspected, on the other hand, there is an appreciation on their part
of the urgency of the need to provide assistance to a poor country like
Bangladesh, which after all is their raison de entre. Therefore, these are
two conflicting considerations that need to be balanced. This is a
judgment which the lending agencies have to and in fact do make case
by case.58
The donor agencies such as the multilateral development banks like
the World Bank have established specialized units called integrity offices
to act as watchdog on and to investigate the cases of corruption in their
projects. In many countries, including Bangladesh, the Bank and other
donors stopped aid disbursement in the middle of implementation of
specific projects when cases of corruption were detected. All over the
world large infrastructure projects such as bridges, highways, railways,
airports, seaports, etc. provide great temptation and opportunities for
abuses of resources and corruption in the course of aware of contracts
and procurements. That was why everywhere large expenditures or
infrastructure projects raise great concerns for possible corruption among
the donors.59 These projects have great visibility and draw attraction from
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
the contractors and consultants in the developed donor countries, who
compete for the award of contracts for procurement, implementation,
and supervision.
The international development finance institutions like the World Bank
as well as the major bilateral donors have their own governance and
anti-corruption strategies to act as guidelines and frameworks for their
anti- corruption activities at the country level.60 The Bank’s assistance
strategy for Bangladesh for the period of 2006–2009, for example,
stressed the following elements: (i) fully operationalize anti-corruption
commission; (ii) lay the foundation for legal and judicial reform;
and (iii) strengthen people’s voice, empowerment, and participation
in the decision-making process. Subsequently, in 2010, the focus of the
Bank’s Bangladesh Country Partnership Strategy shifted to a different
set of issues: (a) public financial management, (b) procurement, (c) local
government, (d) service delivery, and (e) civil society (its demand for good
governance).61
The strategy of engagement of another group or group of donors (e.g.,
Nordic countries and the DFID), in Bangladesh takes a different approach
and are less specific.62 They adopted for their assistance program the
governance agenda as incorporated in (a) the Bangladesh national strategy
for development and the poverty reduction strategies (PRSP) and (b)the
provisions of the UN Convention Against Corruption. Following these two
guidelines, their specific assistance programs related to the civil service
reforms, strengthening of the judiciary and law enforcing agencies, public
financial management, election commissions and its rules and regulations,
and transparency and accountability of the public procurement system.
They provided assistance to the Bangladesh Anti-Corruption Commission
as well as in respect of the preparation of the Freedom of Information
Act. A wide variety of civil society organizations which received assistance
from these donors included the Transparency International Bangladesh,
human rights organizations including women rights organizations, labor
unions, legal aid society, and environmental groups as well as think tanks.
The donors perceived them as important agents of change by increasing
wide awareness of the various aspects of corruption and by generating
public demand/pressure for the control of corruption (Appendix B.1 and
Appendix B.2).
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
The types of assistance provided by the donors, both multilateral
and bilateral, illustrated above, were primarily programs of technical
assistance designed to improve the organizational structure of the various
institutions engaged in governance and anti-corruption activities as well
as to upgrade their professional and technical capacity. They provided
for (a) training of the staff of the relevant agencies; (b) organizing
workshops, seminars, and conferences for the dissemination of ideas and
exchange of experience; and (c) supplying hardware and software for the
effective upgrading of the task of administration and implementation of
development projects.
What has been the experience of the donors in their pursuit of anticorruption strategy in Bangladesh as analyzed in their own evaluation
reports? For example, the World Bank’s evaluation report in 2011 on
Bangladesh stated as follows: “Anti-corruption commission’s work
and integrity environment have a poor track record in that it often
selectively investigates corrupt acts based on partisanship; investigations
are not supported by other parts of the system (prosecution, trial, and
punishment).” The Bank’s strict approach to “fiduciary risk management
led to Bank’s withdrawal from national highways, and it did not succeed
for over a decade in bringing a Bank-financed large power-generating
project to successful tender;” progress on civil service reform was very
slow;” “government ministers are accustomed to a directive approach
and resist the extra effort, time, and risks of expanding transparency and
participation.”63
The World Bank found that the projects to mobilize demand for good
governance through the energizing civil society organizations were
“very complex” for a number of reasons: “civil society organizations
focus much more on service delivery than an advocacy, both because the
former brings income and also because the latter can “put livelihoods
and lives at risk;” NGOs engaged in service delivery with funds from
government found it difficult to criticize the government; demand for
good governance measures by NGOs has also been constrained by their
(a) weak capacity, (b) politization in many cases with loss of credibility (for
independent monitoring), and (c) incidence of government interference
in the subcontracting NGOs; at the same time, NGOs that receive funding
from donors are often accused of carrying out donors’ agendas.
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
The World Bank’s overall assessment of the political economy of
governance in Bangladesh was as follows: “the ruling party uses state
institutions for its own interests without building institutions with
checks and balances. Public institutions have very few formal oversight
mechanisms that the opposition can use to hold the government
accountable. Parliament and the judiciary do not provide significant
oversight of executive power.”
The joint evaluation of the anti-corruption efforts of the other donors,
mentioned earlier, concluded that their assistance programs which were
mainly in training, administrative, auditing, and accounting systems
in various institutions did not meet with much success. Their efforts to
promote integrity within key public institutions such as Bangladesh civil
service and law enforcement agencies through (a) training as well as (b)
support for internal auditing systems met with limited success. In order
to encourage stronger ethics, transparency, and public reporting, they
worked with the media and research institutions. However, their work
with the media remained limited.64
They emphasized that corruption was endemic and systematic in
Bangladesh, affecting all aspects of daily life; it was “a feature of
how things were done” for private businesses, politicians, officials, and
nongovernmental organizations (NGOs).” Further, it had permeated the
institutions such as the police and judiciary which had a role in the fight
against corruption. Therefore, the government agencies were unlikely
to be very effective unless other actions were taken such as amplifying
demand, supporting competition, and improving political processes.
Among the actual or potential agents of change such as the private sector,
professional and civil society organizations, and the media, the latter two
were vibrant and powerful; but they were not always “independent and
could be themselves prone to corruption.”
The overall assessment by all the donors seemed to emphasize that
the internal domestic factors posed obstacles to serious anti-corruption
efforts which the donors could not overcome. They included deficiencies
in the political system of accountability and transparency, inadequate
or ineffective oversight role of the judiciary and parliament, lack of
commitment by the political leadership, and limitations of the civil society
organizations in generating public pressure for anti-corruption efforts.
46
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
The donors, however, could only support/assist domestic commitment
to fight corruption with technical and financial assistance and could also
bring the lessons of experience in anti-corruption efforts of the other
similarly situated countries for Bangladesh to follow, where possible, their
successful efforts.
The donors faced two sets of dilemma: one dilemma is related to
“pressure to spend” which might play against their zero-tolerance
to corruption, and might lead to lower emphasis on promoting anticorruption measures. Secondly, there was the dilemma between, on
the one hand, deciding the amount of assistance to Bangladesh, a large
country of 160 million very poor people, which badly required aid and, on
the other, ensuring productive, corruption-free utilization of aid.65
In addition to aid relationships, Bangladesh’s trade relationships might
also play on some occasions a role in combating the incidence of corruption.
In Bangladesh, this was demonstrated by the international reaction to the
recent disaster of a collapse of a building in which several export-oriented
garment factories were located. In these days of growing economic interdependence and instantaneous transmission of news around the world
any noticeable incident, political, strategic and economic, anywhere in the
world becomes quickly known everywhere in the world. This is especially
so if it involves accidents and disasters.66
The garment manufacturing industry of Bangladesh has high
international visibility in the field of the world garment trade as an exporter
of low cost textiles. Bangladesh emerged as the second largest exporter
of the readymade garments, next to China, with a rapid increase in the last
five years, expanding from $16 million a year in 2007 to $20 billion a year by
2012 mainly to EU and USA. There was a serious concern that reputation or
“brand” name of Bangladesh in the world market for garments would be
adversely affected, especially as Bangladesh attempted to expand sales
in competition with other low-cost developing-country exporters such as
Cambodia, Vietnam, Laos, Myanmar, etc.
The international pressure on Bangladesh mounted for the enforcement
of the standards for building construction as well as the worker’s safety.
The sources of international pressure were (a) international trade
union, labor activists, human rights activists and consumer’s groups
47
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
in the importing countries as well as (b) governments of the importing
countries which granted special trade privileges (Generalized System of
Preferences) to Bangladesh exports, i.e. duty-free and quota-free access
to their markets. The most important among them was the EU which was a
dominant importer of the Bangladesh garments, whereas the USA granted
special trade concession to the Bangladesh exports other than garments
exports. Owing to a pressure by labor activists and human rights groups
on the U.S. Government, the latter suspended the GSP preferences for
the Bangladesh exports in July 2013. While the EU had not suspended their
GSP, they had expressed very strong concern about low safety standards
in Bangladesh, with the implied threat if Bangladesh did not improve the
standards, remedial action might follow.67
Moreover, the importers and the overseas retailers of garments from
Bangladesh were themselves subject to pressure by labor activists and
consumers/human rights activists in the developed, importing countries
to tighten their inspection of the suppliers’ factories to ensure that they
would comply with the safety standards. The pressure on Bangladesh,
both on the government and the exporters, thus originated from multiple
external sources.
In response to this heavy and increasing pressure from the international
community, there were a few steps already taken by the government of
Bangladesh to improve the system of inspection of working conditions of
the factories. The lack of capacity on the part of the labor ministry to enforce
the country’s factory laws and regulations acted as serious constraint.68 The
BGMEA (Bangladesh Garment Manufacturer’s and Exporters Association)
decided to undertake a survey of the garment factories included in their
membership with regard to workers’ safety standards including those
relating to building construction. The Bangladesh government formulated
a comprehensive labor law in the aftermath of the disaster.69
In addition, the government has agreed on an action program in
cooperation with the industry and the ILO. A joint statement issued by
the government, the ILO and the factory owners declared that ILO would
work with the industry to recommend reforms, including ensuring rights
to form unions, collective bargaining, and better workplace safety. By
the end of the year, the government and the industry were to complete
a comprehensive safety assessment of all export-oriented garment
48
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
factories, including an analysis of their structural integrity and fire safety
provisions, with remedial actions including possible relocation for those
that are substandard.70
The foregoing illustrates how the collusive framework within which
the Bangladesh exporters and the foreign importers, with the connivance
of the corruption-ridden supervising agencies of the government,
single-mindedly pursued high profits in total negligence of the safety
of the workers. It also illustrated that economic sectors which were
heavily engaged in international economic and trading relations and had
international visibility caused the combined outcry of the various groups
involved such as in this case, the labor unions, foreign consumers, and
the governments in the importing countries, when misgovernance and
corruption led to major catastrophes. The reaction in the trading partners
did lead to action on the part of the government and the industry in
Bangladesh. However, such instances of external trade relationships
leading to improvement in the system of governance in a specific sector
of the economy are few and far between.
In the end, external pressure arising from aid and trade relationships was,
in general, not very effective in reducing the overall incidence of corruption
in the country. This was indeed recognized by the donors themselves;
theirultimate weapon was to withdraw assistance and that was also only
in the case of the aid-funded projects when corruption was detected. Their
contribution to the improvement of the general environment of corruption
was, therefore, rather limited. In this respect, the donors faced a dilemma;
the withdrawal of assistance to a poor country to generate pressure
to control corruption had adverse consequences for the employment
and income opportunities as well as for the provision of safety nets for
the poor. Moreover, the immediate adverse impact on the poor of the
withdrawal of aid could be a heavy price to pay for the long-run benefits
of the reduction of corruption. However, they have tried to “ring fence”
their particular aid-projects as far as possible from corrupt practices. For
example, they have tried to introduce more stringent safeguards for the
award of contracts for the procurement of equipment and supplies as
well as for project implementation and supervision. At the same time, the
fulfillment of these safeguards and conditions often causes delays in the
project implementation and increases the administrative costs of projects.
49
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
At a general level, the donors have been persuasive and helpful in
the establishing of a few anti-corruption institutions such as the AntiCorruption Commission and the Right to Information Act, etc. The challenge
is to make these institutions effective. Moreover, they have attempted
to follow the guidelines of the UN Anti-Corruption Convention in their
assistance programs and have drawn attention to its various provisions
which the government has undertaken to implement. In their assistance
programs, they have provided assistance to different think tanks and civil
society organizations to produce evidence of corruption through surveys
and studies and thus to increase the general awareness of corruption and
to generate pressure for its prevention.
Conclusion
In the last analysis, the control of corruption in Bangladesh is a long
process which has to be generated and sustained by the domestic forces
of change and reform, resulting from a combination of “top-down”
dedicated leadership and “bottom-up” pressure. The role of the urban,
educated middle class, as it grows in size and as its rising expectations are
not met by the benefits of income growth, is crucial in creating pressure of
demand for the reduction of corruption. The success of the middle class in
this task depends upon how far they are able to inspire and mobilize the
rest of the population. The civil society organizations and the media can
widely publicize the acts and incidence of corruption in order to mobilize
public opinion against corruption. They also can serve as watchdog on the
state institutions to increase transparency and accountability. Whenever
possible, they can undertake micro projects at the grassroots level to
reduce corruption at the level of local governments and thus to build up
“bottom-up” pressure for change.
Eternal vigilance is the price of freedom from corruption. In the ultimate
analysis, there has to be a significant reduction in the threshold of tolerance
of corruption on the part of the population at large. This holds the key to
the urgent impetus for corrective action. This threshold determines the
desire or incentive on the part of the leaders with a vision or ambition for
“leaving behind a legacy” or for the masses, led by the middle class, to
generate the necessary degree of pressure from the “bottom-up.” The
threshold of tolerance of corruption in its turn to a large extent depends
on the morals, values, and traditions of a society.71 The ethical standards
50
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
apply not only to the population in general as well as to those who exercise
political and economic power. Also, important are the ethical standards of
the private entrepreneurs who like to bend the rules and to capture state
power to make laws/regulations favoring them. In the long run, however,
the exercise of graft and corruption to avoid or twist regulations in order
to maximize profit may lead to a collapse of confidence in the integrity of
the corporate sector/market economy.72
The change in attitudes and values occurs over a long period. In the
end, final answers as to why, when, and how anti-corruption effects may
gain momentum and achieve success are not available. This is a work in
progress.
51
APPENDIX
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
APPENDIX A—A DIAGNOSTIC SURVEY OF INCIDENCE OF CORRUPTION IN
SERVICE SECTOR
Table 1—Corruption and irregularities faced by households in different service sector1
Name of Sectors
Corruption
and
Irregularities
Households in 2010 (%)
Judiciary
88.0
Law-Enforcement Agency
79.7
Land Administration
71.2
Tax and Customs
51.3
Electricity
45.9
Agriculture
45.3
Local Government
43.9
Health
33.2
Insurance
19.2
Banking
17.5
Education
15.3
NGO
10.1
Others
34.1
OVERALL
84.2
Faced
1 Transparency International, Bangladesh, Corruption in the Service Sectors: National Household
Survey 2010, Dhaka, December 2010.
Corruption was not limited to bribery only. Negligence of duty, nepotism, embezzlement,
deception, and capturing money or wealth through application of force and other irregularities
have also been considered as corruption; 84.2 percent of the households surveyed throughout
the country had experience in these corruptions.
The survey indicates that the level of corruption was the highest in judiciary.
Eighty-eight percent of all the households who received services from the judiciary faced
corruption.
53
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Table 2—Bribe and unauthorized money paid by households in different service
sectors in 2010
Name of Sectors
Bribe and Unauthorized
Payments (%)
Amount of Average Bribe and
Unauthorized Money (Taka)
Law-Enforcement
Agency
68.1
3,352
Land Administration
67.0
6,116
Judiciary
59.6
7,918
Tax and Customs
43.9
6,734
Agriculture
38.1
310
Local Government
36.7
913
Electricity
27.6
1,834
Education
15.0
168
Insurance
15.0
3,949
Banking
12.7
1,928
Health
13.2
463
NGO
7.2
549
Others
35.5
6,804
Overall
71.9
5,365
The average amount of unauthorized money paid per household was 168 taka in the
education sector. Households were victims of irregularities and corruption in the case of
student admission, obtaining free books and getting stipends. About 13.2 percent service
recipient households had to pay on average 463 taka for receiving different health services.
During 2010, 97.1 percent of the households received government and private health
services. Out of this, 20 percent received health services from government and 80 percent
from private institutions. Based on the types of government hospitals, the percentage of
households having to pay bribes was 38.4 percent for Upazila Health Complex, 35.2 percent
for general hospital, and 33.6 percent for medical college hospitals. Among the patients
who were victims of corruption and irregularities in the emergency department,38.7
percent did not find a doctor during emergency, whereas 22.9 percent were victims of
harassment by brokers. Overall, 37.7 percent households receiving health services from
the emergency department paid additionally on average of 143 taka. The households on an
average paid Tk5,365 for the various services. Considering the total number of households
in the country to be 30.12 million in December 2009, an estimate of the amount of bribe
and illegal money paid nationally between June 2009 and May 2010 in the different service
sectors amounted to 95,916 million or about 100 billion takas. Ibid.
2
54
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
APPENDIX B.1—UN CONVENTION
The policies and programs of NORAD and other donors in relation to the relevant provisions
of the UN Convention are shown below:1
UNCAC Article and Headings
Donor Programs
Preventive measures:
5. Preventive anti-corruption policies and • Voter cards
practices
• Preparation of electoral rolls
… implement or maintain effective,
coordinated anti-corruption policies that • Voters photo ID
promote the participation of society and
reflect the principles of the rule of law, • Election monitors
proper management of public affairs and
public property, integrity, transparency, • Access to information
and accountability.
6. Preventive anti- corruption body
or
bodies (a) Implementing the policies
referred to in article 5 of this Convention
and, where appropriate, overseeing and
coordinating the implementation of those
policies; (b) Increasing and disseminating
knowledge
about
the
prevention
ofcorruption.
7. Public sector … to adopt, maintain,
and strengthen systems for the
recruitment, hiring, retention, promotion,
and retirement of civil servants and,
where appropriate, other non-elected
public officials: (a) That are based on
principles of efficiency, transparency, and
objective criteria such as merit, equity,
aptitude,etc.
• Human rights and good governance
• Transparency and Accountability
• Election working group
• Local government
• Election observation
• Strengthening parliamentary
committees
• Public service reform
• Public service capacity building
• Institutional system for planning
• Management training
• Human rights and good governance
• Women Lawyers Association
• Policy Reform
The highlighted sections indicate the correspondence between the donor programs and the
UNCAC provisions.
1
55
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
UNCAC Article and Headings
Donor programs
8. Code of conduct for public officials … • Access to justice
promote, inter alia, integrity, honesty, and
• Human rights and good
responsibility among its public officials,
governance
… establishing measures and systems to • Transparency and accountability
facilitate the reporting by public officials
• Public service capacity strength
of acts of corruption to appropriate
Authorities
• Access to information
• Institutions for service delivery
9. Public procurement and public
financial management … establish
appropriate systems of procurement,
based on transparency, competition,
and objective criteria in decision-making,
that are effective, inter alia, in preventing
corruption
…
take
appropriate
measures to promote transparency and
accountability in the management of
public finances.
• Institutional system
10. Public
reporting
to enhance
transparency in its public administration,
including with regard to its organization,
functioning,
and
decision-making
processes, where appropriate.
• Parliamentary Committee
11. Measures relating to the judiciary and
prosecution services. Bearing in mind
the independence of the judiciary and
its crucial role in combating corruption,
each State Party shall, in accordance
with the fundamental principles of
its legal system and without prejudice to
judicial independence, take measures
to strengthen integrity and to prevent
opportunities for corruption among
members of the judiciary.
• Legal aid and advocacy
56
• Financial management
• Revenue administrative
• Public expenditure management
• Tax administration and tax
• Institutions for planning
• Human rights and good
governance
• Legal aid
• Human rights
• Lawyers association
• Policy reform
• Capital market
• Insurance
• Rights and system for
enterprises
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
UNCAC Article and Headings
Donor programs
12. Private sector to prevent corruption • State enterprise
involving the private sector, enhance
• Regulatory and investment for
accounting and auditing standards in the
private sector
private sector and, where appropriate,
provide effective, proportionate, and
dissuasive civil, administrative, or criminal
penalties for failure to comply with such
measures.
13. Participation of society to promote
the active participation of individuals
and groups outside the public sector,
such as civil society, nongovernmental
organizations, and community-based
organizations, in the prevention of
and the fight against corruption and
to raise public awareness regarding the
existence, causes, and gravity of and
the threat posed by corruption.
• Strengthening civil service
• Gender equity
• Civil rights watch
• Legal aid and advocacy
• Gender and human rights
• NGOs
• Think tanks
• Social movement
• Economic planning
• Access to information
14. Measure to prevent moneylaundering
1. (a) Institute a comprehensive domestic
regulatory and supervisory regime for
banks and non-bank financial institutions
…(b) … ensure that administrative,
regulatory, law enforcement, and
other authorities … have the ability to
cooperate and exchange information
atthe national and international levels
Criminalization and law enforcement
Articles 15 to 42
• Human rights and legal aid
• Access to justice
• Legals services
• Fund justice coordinator
• Women lawyer’s association
• Public access to justice
57
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
APPENDIX B.2—BANGLADESH’S COUNTRY STRATEGY
The following illustrates the provisions in the Bangladesh’s Country Strategy regarding
good governance as reflected in NSAPR-I and II, followed by NORAD and other donors:
Good Governance and Anti-Corruption (AC) Priorities according
to NSAPR-I and NSAPR-II
NSAPR-I (2005–08)
NSAPR-II (2009–11)
Pillar
Supporting Strategy 2:
Promoting good governance
Supporting Strategy 2:
Promoting good governance
Strategic
good
governance
priorities
• Promoting local governance
• Strengthening the AC Strategy
• Reforming criminal justice and
enhancing access to justice for
the poor
• Improving implementation
capacity
• Improving sectoral governance
• Making parliamentary
process effective
• Reforming and
strengthening the public
service system
• Reforming the legal and
judicial system to ensure
judicial help for the poor
and women
• Changing roles of law
enforcing agencies
• Strengthening of local
government
• Promoting e-governance
• Combating corruption
• Ensuring human rights
• Accessing information
• Improving project
implementation capacity
• Improving sectoral
governance
58
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Good Governance and Anti-Corruption (AC) Priorities according
to NSAPR-I and NSAPR-II
NSAPR-I (2005–08)
NSAPR-II (2009–11)
Pillar
Supporting Strategy 2:
Promoting good governance
Supporting Strategy 2:
Promoting good governance
Specific
strategic AC
priorities
• Three-pronged approach:
deterrence, system
improvements, and valuecreation
• Fast-tracking operationalization
of the ACC
• Continuing reforms in financial
management
• Strengthening oversight
functions both at apex levels,
such as parliamentary standing
committees, Auditor General,
and proposed offices of
ombudsman, as well as within
routine administration
• Strengthening and enforcing
codes of conduct within the
electoral process
• Targeting transformation
of recruitment and human
resources institutions to ensure
a higher level of administrative
quality
• Strengthening information
flows, leading to ‘right to
information’ legislation
• Short-term: enforcement and
sanctions against corruption
• Medium-term: strengthen
core institutions of
governance, including the
ACC, Judiciary, Election
Commission, and PSC
• Long-term: public awareness
and education in preventive
measures; compliance with
UNCAC
• Other: improving
transparency of public
spending; citizen right to
information
Source: NSAPR-I and NSAPR-II. In their assistance programs, the donors have sought
to follow the priorities for good governance and anti-corruption strategy as outlined
in the above national strategies, National Strategy to Accelerate Poverty Reduction: I
(2005-08), II (2009-11).
59
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
APPENDIX C—ANTI-CORRUPTION COMMISSION
The salient features of the Anti-Corruption Commission established in 2004 can
be briefly stated as follows:73
• To hold enquiry into allegations of corruption on its own motion or on
the application of aggrieved person or any person on his behalf and to
file cases on the basis of enquiry or investigation and conduct cases;
• To determine the procedure of enquiry, investigation, filing of cases;
• To review any recognized provisions of any law for prevention
of corruption and submit recommendation for their effective
implementation;
• To identify various causes of corruption and make recommendations
for taking necessary steps;
• To undertake research; to organize seminar, symposium, workshop;
and to prepare plan for prevention of corruption and submit
recommendations for action; and
• To raise awareness and create feeling of honesty and integrity
among people.
The Commission has defined some forms of corruption as follows:

Bribery: It is the offering of money, services, or other valuables to persuade
someone to do something in return. Synonyms: kickbacks, baksheesh (tips),
payola, hush money, sweetener, protection money, boodle, and gratuity.

Embezzlement: Taking of money, property, or other valuables by the person
to whom it has been entrusted for personal benefit.

Extortion: Demanding or taking of money, property, or other of extortion
would be when armed police or military men exact money for passage
through a roadblock. Synonyms include blackmail, bloodsucking, and
extraction.

Abuse of discretion: The abuse of office for private gain, but without external
inducement or extortion. Patterns of such abuses are usually associated
with bureaucracies in which broad individual discretion is created, few
oversights or accountability structures are present, as well as those in which
decision-making rules are so complex as to neutralize the effectiveness of
such structures even if they exist.

Improper political contribution: Payments made in an attempt to unduly
influence present or future activities by a party or its members when they
are in office.
60
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Its independence is not only curbed by its lack of financial autonomy and budget
are determined by the government. It can make rules for its internal organization
and functioning only with the prior approval of the President. The government is
allowed to intervene and resolve difficulties that may arise due to the vagueness
of the ACC Act regarding the powers and responsibilities of the Commission. ACC
lacks transparency; it is not clear how it chooses the corruption case targets;
how it selects special cases or how it selects the cases to pursue against a very
large number of complaints.
It has no accountability to prevent the abuse of its powers other than
submitting an annual report of its activities to the President, who can forward
it to the Parliament. It is true that the greater the degree of independence
that is allowed to ACC, the greater is the need for an accountability mechanism.
Therefore, it is necessary to ensure that the Commission should publish clear and
comprehensive policies to inform the public about its methods and procedures.
A Parliamentary Standing Committee on Anti-Corruption Commission, with
representation of all major political parties may review its activities with a view
to minimizing the scope for partisan influence.74
In this context, the experience of Indonesia in respect of its Anti- Corruption
Commission may be relevant.75 The Indonesian Corruption Eradication
Commission was entrusted with wide-ranging functions for the prevention of
corruption as well as for the enforcement of anti-corruption measures. It could
monitor the governance of the state institutions as well as play a role in educating
and mobilizing of public opinion in favor of anti- corruption measures. It can
investigate any public official for corruption, including members of parliament,
judges, and even the military (it could investigate the military but could not
prosecute them). It had all the investigative powers of a law-enforcing agency
such as conducting wiretaps on suspects, examination of bank accounts and
records, freezing assets, and making arrests. It was independent of the executive,
legislative, judiciary, and other state organizations. It was audited by the
Indonesian Supreme Audit Board.
It had the responsibility of supervising and coordinating all law- enforcing
institutions/organizations which were authorized to combat acts of corruption.
Accordingly, it coordinated with (a) the Ministry of Home Affairs as well as with
the internal monitoring units of all government institutions; (b)with the stateowned enterprises for investigating state assets under the unauthorized control
of current and former officials; and (c) with Attorney General’s Office and the
Police headquarters to establish cooperation, coordination, and supervision of
investigations and prosecutions of cases of corruption, etc. It coordinated with
the Ministry of establishment and bureaucracy to trigger civil service reforms,
as well as to ensure the compliance of wealth reporting of the public officials
61
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
and evaluated the effectiveness with which such reports were examined and
76
confirmed.
It had the responsibility to monitor the administrative and management
systems of state and public institutions, to make recommendations to these
institutions, and monitor the implementation of such recommendations. For
example, as of 2010, it had ongoing review of the land administrative agency,
import regulatory agency, state budgeting, taxation, state treasury, immigration as
well as funding of political parties, etc. It undertook studies and surveys on ways
of eradicating/reducing corruption, including surveys on the public perception of
the ACC itself, review of public procurement, integrity surveys of the public
services in selected institutions, governance of local governments, corporate
governance as well as management of state enterprises.
During 2004–2009, its anti-corruption investigations, prosecutions, and
convictions undertaken by its prosecutor included 45 members of parliament,
8 ministers/ministerial level heads, 8 provincial governors, 1 governor, 4 deputygovernors of the Central Bank, 27 mayors and heads of districts, 3 judges, 3
prosecutors of the Attorney General’s Office, 3 ambassadors, 4 counsel generals,
77
and 1 chief of police.
62
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
ENDNOTES
1. The econometric studies were not able to solve satisfactorily the
following problems: (1) reverse causality among the variables, (2) the
limitations of the measures of corruption which were either opinions
loaded with ideological bias or were a general perception of corruption.
Also, the poor quality of data plagued in many such studies. N. Campos, R.
Dimova, and A. Saleh, “Whither Corruption? A Quantitative Survey of the
Literature on Corruption and Growth,” Institute for the Study of Labor
(IZA), Bonn, Germany, November 2010, Discussion Paper Series No. 5334.
2. In the examination of impact of corruption on growth, a few pertinent
questions relate to (a) the mechanism through which corruption works,
and (b) the type of corruption which is the dominant one and how severely
it acts as a constraint on economic activities. In some of the cross-country
econometric studies cited in the above references, the introduction of
(a) trade openness, (b) institutions, and (c) fixed effects, differentiating
between countries, depresses or offsets the negative effects of corruption
on growth. The East Asian studies showed no negative correlation of
corruption with growth even after allowing for the intermediate effects of
institutions, etc. Ibid.
3. It was said that the chiefs of big South Korean conglomerates would
personally be interviewed by Park, the President of Republic of South
Korea, and on their way out of his office, they would leave the requisite
bribe in a closed envelope with the assistant to the President, sitting just
outside his office. In the case of Indonesia, it was widely known during
his early years that President Suharto’s wife was the designated agent;
she used to be called 10-percent Mrs. Suharto. Later on, when his son
established himself in business, it was said that he also served as an agent
with some specialization with his mother.
4.In Bangladesh, during the time of President Ershad, it was widely
Perceived that the authority for the approval of big project/procurement
was concentrated in his hand and hence there was a greater amount
of certainty that bribe paying was likely to ensure the deal being
implemented. It was rumored that he had closely studied the system of
Indonesia in this respect and was attempting to follow it in Bangladesh.
As the system was getting established and widely systematized, he was
removed from office.
5.This could involve, for example, increasing educational investment of his
children, in which case it contributes to the formation of human capital and
development.
63
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
6. It was widely believed that in South Korea and Indonesia, there was a
vigorous oversight by the government to ensure that the project’s quality
was not compromised and it was implemented as per agreement so that
growth impact of contracted investment was not adversely affected. In
most cases, it was held that the bribe takers in Indonesia or South Korea
did not transfer capital abroad nor indulge in luxurious consumption but
invested at home.
7. Katherine Boo, Behind the Beautiful Forevers. Life, death, and hope in
MumbaiUncercity, 2012, Radon House. “One Cheer for Corruption in India:
For the indigent and unemployed, bribery is a way to share in resources long
plundered by the better-off” by Pankaj Mishra in Wall Street Journal. [link]
A conductor (ticket inspector) on railways who allows ticketless travelling
on payment of a bribe which is less than the price of the ticket is recouping
a part of the cost of the bribe he pays in order to get his job in the first
place. He then shares in the distribution of the benefits of corruption.
8. In 2012, the rank of Bangladesh in the Corruption Perception Index prepared
by the Transparency International was 144 among the 176 countries for
which the index was prepared.
9. Although corruption leaves no paper trail behind—improved auditing
processes that look at performance can play a useful role. The progress
in the fight against corruption can be measured, through keeping records
of corruption investigations, prosecution cases, and the number of audit
observations acted upon by the government.
10. M.S. Mudahar and R. Ahmed, “Government and Rural Transformation:
Role of Public Spending and Policies in Bangladesh.” UPL, Dhaka, 2010, pp.
194–204.
11. Transparency International Bangladesh, “Corruption in Service Sector:
National Household Survey 2010,” Dhaka, 2012.
12. Mudahar and Ahmed, et al. pp. 202–204.
13. During the 1990s, the bribe payments at the time of establishment of a
factory were 1.28 times of the legally required costs of license; the bribe
payments for the renewal of licenses and approvals were 30 times of the
legally allowed costs. In 1992, the initial cost in the prices of 1992 of a factory
permit/approval was around Tk70,000 and the bribe payments were
about Tk95,000. The cost of yearly renewal was around Tk15,000 and the
corresponding bribe payments were Tk45,000 in the prices of 1992. World
Bank, “The Manufacturing Sector of Bangladesh,” selected issues 1992.
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
14. Moreover, the corruption in the advanced countries frequently takes
the form of state capture, i.e. influencing the legislative/executive
branches of the government to pass and implement laws and regulations
which favor a particular sector or industry or activity. For example, the
practice of “lobbying” in the United States by special interest groups to
influence legislation on environment, gun control, energy, and power,
pharmaceutical, and health insurance industries, etc. is well known.
However, there are at the same time laws regulating such lobbying efforts
and expenditures. There are strict limits with which such lobbying efforts
can be done, which are subject to legal action and prosecution if the limits
are exceeded. Moreover, these efforts and expenditures by the lobbying
groups are subject to public exposure and transparent.
15. Thirty percent of the members of the Indian Parliament have criminal
charges against them.
16. The subsequent elected government at the end of the military government,
however, withdrew a very large number of these cases and freed most
of their party members charged or prosecuted or convicted during the
military government; however, those of the opposition party prosecuted
or convicted by the military-backed government were not treated in the
same way.
17. During the regime of the military-backed caretaker government of 2007–
2008, it is reported that “taking advantage of immunity, a section of the
member of the armed forces got involved in the abuse of power and
financial corruption which affected the rule of law and human rights.” For
example, illegal payments were also collected for exempting individuals
from the corrupt person’s list prepared by the Army, arranging bail,
influencing judges to reduce sentence of corruption cases filed by AntiCorruption Commission, etc. Landowners were forced to sell their lands to
people with military connections, taking reluctant sellers to military camps
for torture, etc. In some cases, businessmen were forced to pay large sums
as a refund to the government for import taxes and illegal transactions and
a part of the payment was appropriated by the military, etc.
Transparency International Bangladesh: Role of a Section of the Bangladesh
Armed Forces During the Caretaker Government of 2007-08 — A Review/
Executive Summary, February 2013.
18. There were two aspects of corruption. The first case is one in which the
garment industry paid bribes for getting permits, approvals, and licenses
at high cost which was a multiple of the permitted official costs. The
second aspect of corruption is one of state capture, i.e. payments to the
65
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
officials to avoid rules and regulations needed in the interest of protecting
environment or resource conservation as well as safety building structures
and the safety and working conditions of the factories, etc.
19. In 1994, a study revealed that the garment industry paid bribes amounting
to about 3 percent of the profits earned by the industry. The garment
industry was highly profitable so that high profits acted as a driving force
for the industry to be able and agree to pay such high bribes to meet the
demands of the corrupt bureaucrats—in the various agencies ranging from
customs, central bank, export-import promotion bureau—for all kinds of
access to permits/licenses in setting up as well as operating the garment
industry. World Bank, op cit.
20. “Bad governance and good services. The ready-made garment industry in
Bangladesh,” in N. Islam and M. Asaduzzaman, “A Ship Adrift: Governance
and Development in Bangladesh,” BIDS 2008, Dhaka. The industry accounts
for around 75 percent of exports and 13 percent of GDP of Bangladesh.
21. Wages are kept lower not only in comparison with other competing
countries but also other industries in the country; the wages are 1.4 to 2 times
lower than comparable factory workers in textile and other industries. The
workers were denied all or many non-wage benefits that they were entitled
under the provisions of various factory laws and regulations; they were
often treated as casual workers who were entitled to less than minimum
wages; they get no severance pay since they were frequently dismissed
especially in the case of female workers. Most of them had no formal
appointment letter and hence did not get medical insurance, maternity, and
transport benefits, etc. Ibid. Also, Mudahar and Ahmed, op cit.
22. A series of fire accidents in the garment factories left more than 700 dead in
the last decade; building collapses have been lethal in 2005; the structural
failures of a sweater factory killed 164 people and injured 80” (The Wall
Street Journal, 25 April 2013, p. A-10). No one was convicted. In 2012, another
garment factory building burned down killing 100 people (The Wall Street
Journal, 27 April 2013). The building collapses are due to poor construction
techniques, shoddy materials, and a very few inspections, thus allowing
owners to cut cost. The building codes were not enforced, whereas due to
very inadequate safety standards, fire accidents were common. No one so
far has been prosecuted or convicted. The latest building collapse involving
garment factories in 2013 resulted in more than 1,100 deaths and hundreds
of wounded/maimed workers.
It is alleged that the industry is tied to the political system. As of 2013,
at least 25 MPs have direct investment in the garment industry. After
66
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
November (2012) fire, the BGMEA (Bangladesh Garment Manufacturers
and Exporters Association) sent inspections to some of its members’
factories. Four buildings had structural flaws or violated construction or
labor laws. Who were the owners? The lobby group’s president, Atiqul
Islam, his predecessor, and a former Vice President of the Association.
None was prosecuted (The Economist, 4 May, 2013).
23. N. Islam, “Reflection on Governance and Development,” Journal of
Bangladesh Studies, vol. 12, no. 2, 2010.
24. Every government servant in Bangladesh under the existing rules of
conduct is expected to submit an annual return of his or her assets to
the government every year, but evidence of this practice is hard to find.
Rather, the evidence is of corrupt practices, such as accumulation of assets
or levels of household expenditures, etc. believed to be beyond the known
sources of income. If the Government Servant (Conduct) Rules, 1979, was
followed strictly, then approximately 75 percent of government employees’
corruption could be eliminated. (M. Shamsul Haque, Advocate, Supreme
Court, Bangladesh (http://www.humanrights.asia/resources/journalsmagazines/article2/0901/08anti-corruption-mechanisms-in-Bangladesh).
25. In many developed democracies where such public scrutiny of private
finance is obligatory, there are instances of people who have the potential
to be effective public officials, elected or otherwise, and who decide not
to choose public/political life because they do not want public scrutiny of
their personal finances.
26. Government of Bangladesh, “The Right to Information Act 2009,” Act No.
XX. 2009, Dhaka, Bangladesh.
27. Committee on Human Rights Initiative. Bangladesh—The Right to Information
Act, New York 2009. Right to Information Law— Major Challenges to
Implementation Dream B4 Dies web blog: Tomorrow Never Dies, May 2010.
28. World Bank, WBI. ANSA Region—The Power of Using the Right to
Information Act in Bangladesh. Experiences from the Ground, 2012.
29. The role of the free press and free speech combined with civil- society
activism was recently demonstrated in India following the rape of a
woman in a Delhi bus. This led to a change in the laws, regulations, and
institutions engaged in preventing violence against women.
30. IBP (International Budgetary Partnership), Open Budget Survey 2012: Open
Budgets Transform Lives, 2012.
67
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
31. Extensive Information (81–100), Significant Information (61–80), Some
Information (41–60), Minimal Information (21–40), Scant or No Information
(0–20).
32. Sofia Wickberg, Anti-Corruption Resource Centre, Transparency
International Bangladesh and Chr. Michelsen Institute, November 2012,
Norway. U4 Expert Answer: Overview of Corruption and Anti-Corruption in
Bangladesh.
33. It is often argued that corruption has a greasing effect in enabling business
enterprises to function and generate growth by paying bribes to go around
the restrictive effects of regulations on enterprise. However, this may be
true when rules and regulations are unnecessary and cumbersome, and
restrictive without serving the purpose it is intended to serve. These
regulations are growth- stultifying in themselves.
34. Singapore boasts of paying very high salaries to its public officers, elected
or otherwise, and thus significantly reducing the incidence of corruption
among its public officials. This phenomenon is ascribed to two factors:
the commitment at the highest level of the political leadership to achieve,
as far as possible, a corruption- free administration; and secondly, a very
stringent oversight mechanism to ensure that the corrupt bureaucrats,
if caught, are severely punished. The cross-section inter-country
econometric studies of relation between high wages and corruption
did not produce any significant results. This is because of endogeneity
problems, i.e. low corruption leads to high income and wages as well as
high wages and income are associated with low corruption. (J. Stevenson,
“Eight Questions About Corruption,” Journal of Economic Perspectives,
Summer 2005.)
35. World Bank Institute, ANSA, CIDA. 2012. “The Power of Using the Right
to Information Act in Bangladesh: Experience from the Ground.”
36. The obstacles to the introduction of effective local governments in
Bangladesh and an approach towards their removal are discussed in Nurul
Islam, Role of Experts in Policy Advice: Lessons of Experience, BIDS, Dhaka,
2010.
37. One estimate, based on past experience, puts the aggregate amount
required for the total number of candidates of the two major political
parties during the early 2000s, including the independent candidates, at
between 1.5 percent and 2.5 percent of GDP.M. Mudahar and R. Ahmed,
Government and Rural Transformation, op cit.
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
38. The independent candidates would also be provided finance which will
be equal to the total payments made to the political parties divided by the
total number of candidates financed by the government fund.
39. Some forms of corruption such as bribery through intermediaries,
harassment of citizens with a view to soliciting bribes as well as the
bribery of foreign public officials remain outside its scope. Punishments
are also lenient as imprisonment ranges from 3 to 10 years. In contrast, in
Malaysia, it can extend up to 20 years. In Indonesia, life-time imprisonment
is provided for some forms of corruption. In theory, the ACC in Bangladesh
has wide-ranging powers of inquiry, investigative, and even arrest. (S.
NaushinParnini, “Governance Reforms and Anti-Corruption Commission in
Bangladesh,” Romanian Journal of Political Science, vol. 11, No. 1, 2011.)
40. During the military-backed government of 2006-2007, it played a fairly
active role in bringing charges and prosecuting a wide range of officials and
politicians and business organizations. How it exempted the military from
the scope of its operations, their detracting from its credibility. Since it was
associated with a highly controversial and short-term military government,
it suffered a setback in the following years.
41. The Appendix (see Appendix C) does describe as an example the wide range
and effective power of the Anti-Corruption Commission in a country like
Indonesia, which had a history of high corruption during the Suharto regime.
42. The subject of political economy of reforms is still in its infancy. This requires
the identification of social, political, economic, and institutional factors
which are supportive or obstructive of changes, incentives of different
sectors in society to support change, and their power and influence in the
government vis-à-vis those who oppose change.
43. At a certain point of time, a leader with a band of like-minded colleagues
/supporters, acting in concert and with courage appear on the political
scene and push for reforms. Circumstances may throw up leaders or
leaders may emerge to mold circumstances to implement their own
vision for an improved governance and control of corruption. Thus, the
process of governance reforms or control of corruption may be a matter
of serendipity or combination of accidental developments.
44. The experience of the state of Gujarat in India in respect of the control of
corruption has been widely acclaimed in this context. A. Panageria, Why
Gujrat Miracle Matters. The Times of India, June 29, 2013. T. Shah, A. Gulati,
Hemant P.G. Shreedhar, and P.C. Jan. Secret of Gujrat’s Miracle After 2000,
Economic and Political Weekly, December 26, 2009.
69
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
45. N. Loaza, J. Rigolini, R. Pigotlini, and G. Llorente, “Do Middle Classes
Bring Institutional Reforms?” Discussion Paper, March 2012, Institute
for the Study of Labor, Bonn. The recent example of the Anna Hazare anticorruption movement in India in 2012 was supported and spearheaded by
the urban middle class but it petered out before it was widespread and
sustained enough to put adequate pressure on the top political leadership,
which was not committed strongly to the anti-corruption campaign. Even
then it has had some effect on the new anti-corruption measures introduced
in India such as the institution of ombudsman and an enlargement of its
powers and responsibilities.
46. World Bank, “Bangladesh Poverty Assessment 2010: Assessing a Decade
of Progress in Reducing Poverty.” World Bank, Washington, DC, 2013. Even
though the poor has not gained proportionally, they have gained in recent
years from a very large expansion of various safety net programs which
currently constitute 2.5 percent of GDP, benefits of which have percolated
to the poor, if not wholly for 2.5–3 percent of GDP.
47. Ibid.
48. Even before 1991, when the middle class was not as large as now, it
was possible to control any pressure for change in the prevailing system
by playing one group against another through a combination of financial
patronage and political repression, by the authoritarian regimes during
1975–1981.
49. Broadly speaking, this is the scenario which seems to be prevailing not
only in Bangladesh but also in many developing countries, especially in
South and Southeast Asian as well as some African countries. The above
scenario prevails mostly in societies in which the governments change
over time through elections, even though these governments which
are “perceptively” called illiberal democracies. In the middle- or highincome non- democratic countries such as mineral/oil-rich countries,
there is an implicit bargain between the social classes, i.e. the elite and
the rest, such that any movement for political and social change (including
anti-corruption movement) is dealt with by the authoritarian governments
by a combination of repression and an increase in access to resources
through transfer payments—cash and kind of various kinds. However,
in the stagnant, resource poor countries misgovernance and corruption
for some periods can besustained by the application of force if there is
an authoritarian government which is controlled by the military or by a
civilian elite in cooperation with the military. This is an unstable situation
and prospects for change are high but uncertain. Francis Fukuyama, “The
Middle Class Revolution—Mid, Middling, and Mobilized” Wall Street
70
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
Journal Review, January 24-30, 2013. Fareed Zakaria, The Rise of Illiberal
Democracy, Foreign Affairs, November/December 1997.
50. Ibid.
51. Pierre Landell-Mills, “Citizens Against Corruption: Partnership for
Transparency,” Final, UK, 2013.Citizens Against Corruption: What Work?
Findings from 200 projects in 53 countries. http:// blogs.worldbank.org/
publicsphere/. This book describes in details a number of projects in
various countries in different continents how civil society organizations
have organized, assisted, and galvanized citizens groups, mostly at
local levels and partly at national levels, to successfully prevent corrupt
practices such as citizen monitoring of public buying and selling (public
contracts and procurement, delivery of services, and social safety nets)
as well as strengthen the anti-corruption framework and institutions in
different activities. For the civil-society organizations to play a constructive
role in the anti-corruption campaign it is crucial that they must have an
image of integrity and conduct their efforts in the spirit of transparency
and accountability vis-à-vis their stakeholders. The government needs
to allow sufficient freedom of action to perform their responsibilities.
A confrontational relationship between the civil-society organizations
and the government militates against their usefulness. They should not
be dependent mainly on government contracts and resources from
the government because in that case they are severely constrained in
playing such as an independent role. They have to have independent
resources such as contributions from the members or grants from private
philanthropy. Since inevitably, the major source of finance for performing
such functions in the foreseeable future would be the external assistance,
it may be desirable to provide assistance through the well-known reputable
international NGOs and other civil society organizations in the developed
countries in order to make such contributions as much as possible from
free the politics of donor-recipient relationship. Many of these international
NGOs and think tanks are well known for their independence of the
governments of the developed countries where they are located.
52. United Nations Office of Drugs and Crimes (UNODC), “United Nations
Convention Against Corruption” (Vienna, Austria: UNODC, 2004),
pp.
10–13.http://en.wilipedia.org/wiki/United_Nations_Convention_against_
Corruption.
53. The convention provides a broad definition of public officials responsible
for much of corruption, such as civil servants, politicians, members of the
judiciary, whether elected or not.
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
54. This convention in a sense provides an instrument by which the public, the
civil-society organization and the media in Bangladesh can mobilize public
opinion in favor of anti-corruption measures. The inclusion of civil society
in the review process is of crucial importance for the accountability and
transparency as well as for the credibility and effectiveness of the review
process. Transparency International Bangladesh and UNCAC Coalition. UN
Convention Against Corruption: Civil Society Review, Bangladesh, 2011.
No matter how sophisticated the legal framework is in place, the dominant
coalition in a country may find ways to subvert it to secure its power base
and limit access for other actors. Thus, there is a need for citizens to step
up the demand for state responsiveness.” (H. Hechter, G.F. Zinkernagel,
L. Koeschem, D. Morns, “Can UNCAC Address Grand Corruption?,” Chr.
Michelsen Institute, U4 Anti-Corruption Resource Centre, U4 Report,
October 2011.)
55. A Conference of the States Parties (CoSP) to UNCAC was established as
a secretariat to improve the capacity of and cooperation between States
Parties to achieve the objectives set forth in UNCAC, and in order to promote
and review its implementation; the Implementation Review Group, which
focuses on the implementation review mechanism and technical assistance,
the Working Group on Asset Recovery, the Working Group on Prevention,
as well as expert group meetings on international cooperation meet
regularly in the inter-sessional period. It requested donors and receiving
countries to strengthen coordination and enhance technical assistance
for the implementation of UNCAC, and dealt with the issue of bribery of
officials of public international organizations. The First Conference of States
Parties (CoSP) in December 2006 agreed that “effective and efficient review
of the implementation of the Convention … is of paramount importance and
urgent.” This represented an important agreement in principle. However, the
Second CoSP in January 2008 made little progress, largely due to concerns
voiced by influential member countries of the G77 (“UN Convention against
Corruption: Recommendations for a Review Mechanism,” Heimann and Dell,
April 2009). In an open letter to the UN Secretary General Bank Ki-Moon, the
CEO’s of 40 private firms and NGOs have expressed support for the UNCAC
but warned of implementation paralysis. According to a synthesis report on
6 country case studies: “Self- assessments did not bring results and ‘external’
reviews of progress, e.g. by parliaments, research institutes, and universities,
had often not even been planned” (Anti-corruption Policymaking in Practice:
What Can Be Learned for Implementing Article 5 of UNCAC?” Report by U4
Anti-Corruption Resource Center, 2007; UN Global Compact. Link given:
http://www.unglobalcompact.org/issues/transparency_anticorruption/
CEO_Letter.html).
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
56. Ibid.
57. In the allocation of the World Bank/IDA aid resources to the low-income
developing countries, the governance/control of corruption is one of the
criteria which determine the allocation of IDA funds. It is important to note
in this context that it is not only aid but also FDI which is adversely affected
by widespread perception of corruption in the recipient country. This is
especially so in the case of FDI from those countries which have stringent
laws for punishment of their companies which indulge in corrupt practices
to win contracts in the countries of their investment. Many of the OECD
countries have Corrupt Practices Act to prosecute and punish the private
corporations which undertake to bribe the politicians and bureaucrats of
the foreign countries.
58. In this context, the recent statement by the World Bank President is
relevant. “We need to be engaged in settings and contexts that do not
rank highly on global indices of good governance. We need to be fighting
poverty in areas where the legal framework for combating corrupt and
illicit behavior is imperfect and institutions of public accountability may
not function well, or even exist at all. Our willingness to work in difficult
situations and an appetite for measured risk should never be confused with
a willingness to tolerate corruption in Bank projects and activities.”The
case of withdrawal of assistance of the World Bank assistance for the
Padma Bridge in 2012–2013 was specifically mentioned to illustrate as a
case of a major aid project withdrawn in view of detection of the possibility
of corruption in the procurement process. The statement continues as
follows: “Should we shy away from high- risk interventions and forgo
the potentially massive benefits to the poor or should we rather take
a calculated risk, design appropriate safeguards and move forward with
them? My answer is that we need to take risks for development results
but we have to do so with our eyes open and try to mitigate those risks as
much as we can.” The Bank President’s address at the Centre for Strategic
and International Studies, Washington, DC, 2013. http:// www.worldbank.
org/en/news/speech/2013/01/30/world-bank-group-president-jim-yong-kimspeech-anti-corruption-center-for- strategic-and-international-studies.
59. Another area of concern in the anti-corruption community is expenditure
on military hardware. In democratic countries, corruption is shared
between the political leaders and the military. The details of defense
purchases in most countries are shrouded in mystery and are much less
transparent than the procurement for the civilian projects. However, most
of the development aid agencies, especially the multilateral and regional
institutions, are not involved in such military assistance.
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
60. For example, the World Bank seeks to implement its strategy in the following
way: (a) engagement in country governance and anti-corruption processes
comprises joint workshop and peer- to-peer learning events, etc. to diagnose
governance challenges and identify ways of addressing them in strategies
and project specification as well as to identify points of entry for Bank’s
involvement in anti-corruption measures; (b) engagement in governance
and anti-corruption effort in sectors and projects to strengthen (i) incentive
and accounting framework in sector dialogue and project design, and (ii)
systematic risk assessment and management in sectors and projects through
political economy analysis, accountable governance indicators, and demandside measurements. IEG, World Bank, “Bangladesh: World Bank Engagement
in Governance and Anti-Corruption,” 2011.
61. Ibid.
62. NORAD, Joint Evaluation of Support to Anti-Corruption Efforts: Bangladesh
Country Report, January 2011. DFID, SIDA, NORAD, ADB, DANIDA. See
Appendix C.
63. World Bank, op cit., p.6, pp. 29–31.
64. NORAD, op cit. Also, a separate assessment by DFID in 2008 stated that the
Government of Bangladesh was only responsive where demands for change
did not threaten the patronage system; little real action is taken elsewhere.
This explains why macroeconomic stabilization has achieved success
but failed in the fight against corruption and civil service reforms. Any
significant reform of the public service is hampered by the lack of political
will to abandon patronage and politicization within the administration.
This has divided the civil service, has broken its chain of command, and
weakened its internal and external accountability mechanisms. S. Foot
and A.K. Mubin. 2007. Political Economy Assessment for Review of Financial
Management Reform Programme. DFID, Bangladesh.
This is a continuing challenge which donors find it difficult to meet. This is
not to say that there are no reformers within state agencies, notably in the
civil service, judiciary, policy, and armed forces. But the problem is that many
individuals and organizations that offer potential for promoting change are
often fragmented, isolated, and insufficiently influential to bring it about.
M. Moore, 2003, Politics and the Drivers of Pro-Poor Change in Bangladesh.
65. NORAD, op cit.
66. As has been stated earlier, the failure to observe whatever laws and
regulations, which already existed in the country relating to safe building
74
Corruption, Its Control and Drivers of Change: The Case of Bangladesh
structures as well as safe working conditions for the workers, was largely
traced to (a) collusive relationship cemented by bribes between the
inspectors in the enforcing agencies and the industry as well as (b) certain
degree of “state capture” by the industrialists who had an interest in keeping
inspection agencies weak and incompetent. The international perception
which led to the reaction abroad was reported in the international media
(The Economist, May 4, 2013) as follows: “The Bangladesh Garment
Manufacturers and Exporters Association (BGMEA) has about 4,000
members which exercise considerable political power. The industry is
tied to corrupt political system, at least 25 MPs have investments in the
garment industry.” After the November (2012) fire in a major factory, “the
BGMEA sent inspectors to some of its member factories. Four buildings
had structural flows or violated construction or labor laws. Who were
the owners? They were the lobby group’s president, Aliqul Islam, his
predecessor, and a former Vice President of the Association. None was
prosecuted. “A test is due this month following court’s ruling that the
BGMA’s 15-sotry quarters in Dhaka is illegal. The court ruled that it must
be demolished by June 16. Nobody expects the Association to comply.
But if it fails to put its own house in order, why should anyone else.” One
large garment entrepreneur, i.e. the Nassu Group, which is the supplier to
Walmart and Sears, etc. is one of Bangladesh’s largest corporations with
interests in banking, construction, and agriculture. The Group’s chairman is
also the chairman of the Bangladesh Association of Banks. A recent survey
of its factories finds that three of the factories do not have building safety
standards and are liable to collapse. Wall Street Journal, March 30, 2013.
67. “Now we see that these people are, well, we can say underpaid; they
are virtually unpaid and above all they have to work in unsanitary
and security conditions that are totally unacceptable. It is some kind of
modern “slavery”. It was further reported that “if Bangladesh fails to take
quick action to improve labor standards, he would consider suspending
Bangladesh’s access to the EU system of GSP.”EU Trade Commission’s
statement quoted in Wall Street Journal, Monday, May 6, 2013, p.A8.
68. The number of inspectors has been decided to be increased from about 18
in number to several hundreds.
69. For example, the Bangladesh workers have now given the legal right to
form unions and bargain collectively with the factory owners. In reality,
attempts to unionize the garment workers in the past were suppressed
while activist workers were hounded out of their jobs, often with tacit
government approval. The Washington Post, May 4–5, 2013. This was
probably an exaggeration but this was the impression abroad. The fact
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Corruption, Its Control and Drivers of Change: The Case of Bangladesh
remain, even though there were some labor laws in the past, they were
not implemented in practice.
70. Financial Times, May 6, 2013.
71. Ethical conduct creates the valuable quality of trust. At the most basic level,
ethics are a low cost substitute for internal control and external regulation.
In the field of governance, without ethical behavior, regulations beyond a
point become exorbitantly costly and are difficult to enforce. The burden
on the law-enforcing mechanism becomes unwieldy if there is no minimum
moral foundation of human transactions. A core system of values makes it
easier for the regulatory system to operate. It appears that over time there
has been an increase, maybe a significant increase in Bangladesh, in the
threshold of tolerance for corruption at all levels of society, especially at the
higher levels of the government and the elite. In such an environment, the
average person loses faith in the legitimacy of the political/administrative
system. There is a general loss of respect for the rule of law, i.e. for the
prevailing system of law and order.
72. Adam Smith, the prophet of the private capitalist system—emphasized
the need for virtue as well as wealth. He was wary of high profits. “They
destroy parsimony which in other circumstances is natural to the
character of the merchant. When profits are high, sober virtue seems
to be superfluous, and expensive luxury suits better the affluence of his
situation” N. Islam, “Making of a Nation,” p.405.
73. http://en.wikipedia.org/wiki/Anti_Corruption_Commission_ Bangladesh
74. Naushin Pasnini, Governance Reforms and Anti-Corruption Commission in
Bangladesh. Romanian Journal of Political Science 2 (1), 2011.
75. M. Jason, Commissioner Vice Chairman, Corruption Eradication Commission,
Indonesian Corruption Eradication Commission, 2010, Jakarta, Indonesia.
76. It has triggered as of 2012 administrative and civil service reforms on
such ministries as the Ministry of Finance, and Customs and Excise
Administration, etc. as well as has strengthened internal rules for avoiding
conflict of interests of officials in the Central Bank of Indonesia.
77. In an effort to learn from the experience of others as well as for building
its own capacity, the Indonesian anti-corruption commissions has close
contracts and cooperate with similar commissions in South Korea, Malaysia,
Thailand, Brunei, Hong Kong, and Singapore.
76