How Hasina’s kleptocracy destroyed good governance and the economy

Toppled from power in a mass uprising on 5 August this year, autocrat Sheikh Hasina fled to India. On 29 August, chief advisor Dr Muhammad Yunus announced that a committee headed by Dr Debapriya Bhattacharya would be formed to prepare a white paper on the economy.

The committee was given the task of looking into the state of the country’s economy over the past 15 years of autocracy and to hand over a white paper in this regard to the government within three months.

On 1 December the committee handed in a draft of its white paper to Muhammad Yunus. The white paper was titled ‘Dissection of a Development Narrative’. The draft report of around 396 pages consisted of 24 chapters in total. Dr Debapriya Bhattacharya claimed that the economy system during Sheikh Hasina’s rule transformed from crony capitalism to kleptocracy.

Sheikh Hasina clinched a landslide victory in the 2018 election. As soon as they came to power, Awami League’s ministers and the prime minister’s relations unleashed unrestrained corruption and embezzlement. Some say that the prime minister has encouraged this. This white paper remains as a dispassionate dissection of the unbelievable reign of plunder. A detailed study of the white paper will reveal the following points.

The white paper’s research revealed that by means of autocrat Sheikh Hasina’s 15-year reign of plunder, a total of 234 billion dollars had been siphoned out of the country, at around 16 billion dollars a year. The most loot and plunder took place in the banking and financial sectors, the energy and power sectors, infrastructure and IT. The white paper studied the sector-wise facts and figures of this looting and published an estimate of the looted funds.

The white paper analysed 28 methods of corruption in this process of plunder. The United Arab Emirates, Canada, United States, United Kingdom, Singapore, Malaysia, Hong Kong, India and several tax havens have been identified at the major beneficiaries of capital flight. With active patronage of the corrupt politicians, the main actors of this kleptocracy are business oligarchs, financial sector players, corrupt bureaucrats, contractors and middlemen, Hasina’s relatives as well as influence peddlers and wheeler-dealers.

In collusion with each other, these looters have rendered the executive, the civil administration, the judiciary, the financial sector institutions, the government revenue collection departments, and the investment regulatory departments extremely corrupt and made then partners in the plunder. They have weakened investment and revenue collection. They have caused the foreign exchange reserves to collapse. They have destroyed macroeconomic management and good governance.

Around 47 billion to 100 billion has been siphoned out to Canada. A total of 972 Bangladeshis own real estate in Dubai. At least 3600  Bangladeshis have bought houses under the ‘second home’ scheme in Malaysia. Every year on average 23 to 40 per cent of the country’s Annual Development Programme (ADP) is misappropriated.

Under the directives of the former planning minister Mustafa Kamal, from 2014 the Bangladesh Bureau of Statistics (BBS) became a hub of manipulating data. Every year the GDP figures were inflated. At the same time, in order to display a higher per capita GDP, the country’s total population was shown to be lower than actual.

Inflated export revenue was put on display. Inflation rates were always shown to be lower than actual. The population under the poverty line was shown lower than it actually is to magnify the government’s success in poverty alleviation.

The birth rate and mortality rate was shown to be lower than actual so that the population growth rate could be artificially shown to be low. The total fertility rate of the country was also depicted lower than actual so that this would depict the government to be successful in controlling population growth. In this backdrop, export earnings have fallen by around 5 billion dollars compared to the amount projected in the 2023-24 fiscal as projected by the previous government.

Funds were looted by inflating the estimate for the expenditure on seven mega projects by 70 per cent more than the preliminary estimate. This is around 805.69 billion taka (80,569 crore taka). The mega projects included the Padma bridge project, the Karnaphuli tunnel project, Dhaka metro-rail project, the Dhaka-Mawa-Jashore-Payra rail route via Padma bridge project, the Chattogram-Dohazari-Cox’s Bazar rail route project, the Payra port project and the Matarbari coal-fired power project. As no proper feasibility studies or cost analyses were carried out on these projects, this created the scope to increase costs by 70 per cent.

The actual defaulted loans in the country’s banking sector amount to 6,750 billion taka (6.75 lakh crore taka). The white paper terms the defaulted loans as distressed assets. According to the white paper, 13.5 metro-rails or 22.5 Padma bridges could have been constructed with these distressed assets. And 13,400 billion taka (13.4 lakh crore taka) has been siphoned out of the country by means of the illegal hundi channels. Meanwhile, 10 banks are technically bankrupt. Of these, two banks are state-owned banks and eight are Islamic Shariah-based banks. The banks are steeped in deep liquidity crisis.

The state-owned Janata Bank and BASIC Bank are victims of massive loan theft. The biggest loans have been taken from Islami Bank and other Shahriah-based banks, around 1500 billion taka (1 lakh 50 thousand crore) and siphoned out of the country by the looters.

At least 27 billion dollars has been directly filched from the country’s share market. Certain specific persons have looted over one trillion taka (one lakh crore taka) from the share market my various manipulations. No heed was paid to the report of the committee formed to look into the deliberate crash of the share market in 2010-11 fiscal. As a result, confidence in the Dhaka and Chattogram stock exchanges has seriously plummeted.

The country’s Gini coefficient, that measure inequality in income, reached 0.5 in 2022. Among 72 countries where the World Bank carried out an income disparity survey, Brazil, Colombia and Panama had a higher Gini coefficient than this. Bangladesh’s Gini coefficient for resource disparity reached an even worse level, going from 0.82 to 0.84 from 2016 to 2022. Bangladesh is now a country of excessively high income inequality and resource disparity.

From 1995 Bangladesh per capita growth has been shown to be higher than actual. That is why many development economists dub this GDP growth of Bangladesh as a paradox. After the fall of the autocratic ruler, the GDP growth rate will likely fall from the 6.5 per cent projected rate of the former government to 5.8 per cent.

The white paper said that around 770 billion taka to 980 billion taka (77 thousand crore to 98 thousand crore taka) has gone into the hands of the government officials in the form of bribes and corruption. And 700 billion to 1,400 billion taka (70 thousand crore taka to 1 lakh 40 thousand crore taka) has gone to the hands of politicians by similar means. And the wives and children of these bureaucrats and politicians have settled overseas.