ficial of Bangladesh Bank (BB) said since illegal capital flight avoids the banking channels or any other means of lawful transactions, it is hard to accumulate authentic data on such fund outflows immediately. “These types of transaction do not take place through the banks,” said M Mahfuzur Rahman, executive director of the central bank, who is overseeing the Bangladesh Financial Intelligence Unit (BFIU) of BB. He said constant monitoring is in place under the BFIU to detect any suspicious transaction through the banks. Industry insiders say some wealthy people became worried about the security of their wealth amid the ongoing political deadlock and no sign of return to normalcy, prompting them to transfer their money to safer places, either for investing abroad or hiding in offshore bank accounts. They said this money might be undeserved, but could have been invested locally. Analysts say there always have been people who gained huge wealth illegally and look for volatile conditions to siphon off the money abroad. In the past, huge sums of money were siphoned off during the military regime and whenever a political turmoil hit the country. The country is passing through a political deadlock since January 5 after the 20-party alliance headed by BNP Chairperson Begum Khaleda Zia called for an indefinite blockade. Over 100 people were killed and several hundreds were injured so far in bomb and arson attacks during the unrest. People of all sections have been gripped by panic due to widespread violence with businesses coming to a near-halt situation in the back of serious disruption in supply chain and sluggish private-sector investment. Noted economists and experts of international lenders warned of low economic growth due to the violent political impasse. Meanwhile, the parliamentary committee on the finance ministry has come up with some initiatives to identify capital outflows and persons involved in it after the committee was made aware that huge sums of money are being siphoned off abroad. The committee, in its meeting last week, has also asked the National Board of Revenue (NBR) to prepare a report on wealth held by Bangladeshi nationals abroad and send the report to the committee immediately. Head of the committee, former food minister Md Abdur Razzaque MP, could not be contacted for comment despite repeated attempts to reach him on his cell phone Saturday. Meanwhile, sources in the capital market claimed that many investors have withdrawn money from the market last month and transferred those to Singapore and Thailand for starting fresh business there. FBCCI President Kazi Akram Uddin Ahmed said the real businessmen are not involved in illicit capital outflows from the country as it is an offense as per the Money Laundering Act. “But, I agree that the current situation in the country is not comfortable for doing business. But it does not mean that huge funds are being siphoned off,” he said. Khandker Ibrahim Khaled, former deputy governor of Bangladesh Bank and capital market analysts, said the tendency of siphoning off money abroad was seen during the military rule and political volatility in the past. “If you ask me to analyze it, I would say investment climate is not conducive when there is violence, political turmoil or martial law. In these situations, the investors and wealthy people look for safer places to hide their assets. This can’t be done officially or using legal channels,” he said. Former BB Governor Dr Salehuddin Ahmed said investment climate is determined by four conditions—-“Proper policy initiatives and rules of regulatory bodies (BB, BoI, NBR, SEC), sufficient communication facility (includes infrastructure), and a healthy law and order situation. Absence of any one of the four conditions can lead to capital outflows,” he said. He said good governance, accountability, proper functions of regulators and all above peoples’ comfortability should be ensured in a favorable business climate. He said non-political government, political instability, and all the undemocratic means cause unfavourable investment climate. He also said the real investors who want to do business in level-playing field are not involved in illegal capital flight. “Capital flight is always commited by opportunists, who earn wealth through undue means (corruption and undue profits). He or she might be anyone— businessperson, public servant, politician,” he said. Reports say some Bangladeshi nationals have transfer funds even to offshore accounts with Swiss banks. According to a BB statement issued in October last year, the World Financial Integrity (WFI) estimated illicit financial outflows from Bangladesh at $1.17 billion in 2011, which was about 11 percent of gross tax revenues, and about 78.5 percent of gross Overseas Development Assistance inflows of that year. An UNDP report last year reported that siphoning off money is taking place by hundi, over-invoice (in import), under invoice (in export) and meddling inward remittances (by delivering remitters money locally), drug and human trafficking. The UNDP in its report last year said Bangladesh has been losing $800 million in average due to illegal capital outflows every year over the last four decades. Loopholes in this regard include balance of payment leakages, Trade misinvoicing and unreported remittances, the UNDP said. The total capital flight from Bangladesh accounts for 30.4 percent of the GDP, the UNDP report added.
Sunday, March 15, 2015
Vested quarters on capital flight Illegal capital outflows from Bangladesh marked a rise since a group of wealthy people are reportedly siphoning off huge funds:Daily Sun
ficial of Bangladesh Bank (BB) said since illegal capital flight avoids the banking channels or any other means of lawful transactions, it is hard to accumulate authentic data on such fund outflows immediately. “These types of transaction do not take place through the banks,” said M Mahfuzur Rahman, executive director of the central bank, who is overseeing the Bangladesh Financial Intelligence Unit (BFIU) of BB. He said constant monitoring is in place under the BFIU to detect any suspicious transaction through the banks. Industry insiders say some wealthy people became worried about the security of their wealth amid the ongoing political deadlock and no sign of return to normalcy, prompting them to transfer their money to safer places, either for investing abroad or hiding in offshore bank accounts. They said this money might be undeserved, but could have been invested locally. Analysts say there always have been people who gained huge wealth illegally and look for volatile conditions to siphon off the money abroad. In the past, huge sums of money were siphoned off during the military regime and whenever a political turmoil hit the country. The country is passing through a political deadlock since January 5 after the 20-party alliance headed by BNP Chairperson Begum Khaleda Zia called for an indefinite blockade. Over 100 people were killed and several hundreds were injured so far in bomb and arson attacks during the unrest. People of all sections have been gripped by panic due to widespread violence with businesses coming to a near-halt situation in the back of serious disruption in supply chain and sluggish private-sector investment. Noted economists and experts of international lenders warned of low economic growth due to the violent political impasse. Meanwhile, the parliamentary committee on the finance ministry has come up with some initiatives to identify capital outflows and persons involved in it after the committee was made aware that huge sums of money are being siphoned off abroad. The committee, in its meeting last week, has also asked the National Board of Revenue (NBR) to prepare a report on wealth held by Bangladeshi nationals abroad and send the report to the committee immediately. Head of the committee, former food minister Md Abdur Razzaque MP, could not be contacted for comment despite repeated attempts to reach him on his cell phone Saturday. Meanwhile, sources in the capital market claimed that many investors have withdrawn money from the market last month and transferred those to Singapore and Thailand for starting fresh business there. FBCCI President Kazi Akram Uddin Ahmed said the real businessmen are not involved in illicit capital outflows from the country as it is an offense as per the Money Laundering Act. “But, I agree that the current situation in the country is not comfortable for doing business. But it does not mean that huge funds are being siphoned off,” he said. Khandker Ibrahim Khaled, former deputy governor of Bangladesh Bank and capital market analysts, said the tendency of siphoning off money abroad was seen during the military rule and political volatility in the past. “If you ask me to analyze it, I would say investment climate is not conducive when there is violence, political turmoil or martial law. In these situations, the investors and wealthy people look for safer places to hide their assets. This can’t be done officially or using legal channels,” he said. Former BB Governor Dr Salehuddin Ahmed said investment climate is determined by four conditions—-“Proper policy initiatives and rules of regulatory bodies (BB, BoI, NBR, SEC), sufficient communication facility (includes infrastructure), and a healthy law and order situation. Absence of any one of the four conditions can lead to capital outflows,” he said. He said good governance, accountability, proper functions of regulators and all above peoples’ comfortability should be ensured in a favorable business climate. He said non-political government, political instability, and all the undemocratic means cause unfavourable investment climate. He also said the real investors who want to do business in level-playing field are not involved in illegal capital flight. “Capital flight is always commited by opportunists, who earn wealth through undue means (corruption and undue profits). He or she might be anyone— businessperson, public servant, politician,” he said. Reports say some Bangladeshi nationals have transfer funds even to offshore accounts with Swiss banks. According to a BB statement issued in October last year, the World Financial Integrity (WFI) estimated illicit financial outflows from Bangladesh at $1.17 billion in 2011, which was about 11 percent of gross tax revenues, and about 78.5 percent of gross Overseas Development Assistance inflows of that year. An UNDP report last year reported that siphoning off money is taking place by hundi, over-invoice (in import), under invoice (in export) and meddling inward remittances (by delivering remitters money locally), drug and human trafficking. The UNDP in its report last year said Bangladesh has been losing $800 million in average due to illegal capital outflows every year over the last four decades. Loopholes in this regard include balance of payment leakages, Trade misinvoicing and unreported remittances, the UNDP said. The total capital flight from Bangladesh accounts for 30.4 percent of the GDP, the UNDP report added.
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