Bureaucrats, politicians, businessmen turned Bangladesh into a kleptocratic state: Debapriya

The country under the previous government shifted from crony capitalism to kleptocracy, where corruption was carried out collectively by politicians, bureaucrats, and business leaders, Debapriya Bhattacharya, head of the National White Paper Committee, said today (2 December).

"The 2018 election planted the seeds of kleptocracy, weakening local governance," he said at a press briefing held at the Planning Commission, marking the release of the White Paper on the state of the economy under the Awami League government in the past 15 years.

Debapriya said they initially identified politicians and businesspeople as the most corrupt, but further findings revealed that "military and civil bureaucrats committed the most corruption".

He said the "villain" in the narrative of the past 15 years of development in Bangladesh has been the data, and to address this, he stressed the need for a Data Commission. 

The economist added that the legislature, executive, and judiciary were complicit in "systemic theft", underscoring the urgent need for reforms to dismantle this entrenched system. 

He called for economic stability, improvements in law and order, and enhanced public safety as foundational steps for a meaningful change. He also emphasised the importance of a medium-term plan, outlining the interim government's programmes and priorities for the next two years.

"Without addressing economic challenges, efforts for political and institutional reforms may also fail to deliver the desired outcomes," the economist cautioned.

Selim Raihan, a member of the National White Paper Committee and a professor at Dhaka University, said unless corruption is addressed, the same corrupt individuals will continue to control the system. 

"Therefore, the doors of corruption must be closed," he added.

Raihan, also executive director at South Asian Network on Economic Modeling (Sanem), said the methodology used for calculating GDP growth had been designed in such a way that the growth rate does not appear to decrease.

"Since 2013, Bangladesh's GDP growth has been significantly inflated. To address this, it is necessary to not only revise the methodology but also close the doors for intervention from higher authorities," he added.

Tk25cr worth intellectual investment

Debapriya pointed out that the report was prepared outside traditional research methods. "The intellectual effort and time invested by the committee members are valued at Tk25 crore, though none of the members received any allowances for their work."

He explained that the focus of the White Paper was not on pointing fingers at specific individuals or institutions but rather on describing how the economic irregularities occurred. 

He also mentioned that some of the information in the White Paper could change, and due to variations in the usage of British and American English, the document has been published as an unedited final draft.

The report will take one to one and a half months to be finalised and published in book format, said Debapriya, adding that the White Paper was drafted after collecting input from around 340 people and engaging with the public.

"While presenting the White Paper to the chief adviser on Sunday, he remarked that the White Paper would remain a valuable resource for future generations," Debapriya mentioned.

Professor Selim Raihan said the White Paper has opened up an opportunity for in-depth research to tackle corruption issues effectively.

'Hold development forum next year'

Debapriya advised the interim government to publicly disclose the economic policies implemented over the past five months and share their future economic plans with the public. 

"The government must clarify its planned reforms for the next six months, outlining how they will impact inflation, interest rates, and exchange rates," he said.

Debapriya proposed holding a development forum with representatives from providers of external development finance, providers of preferential market access, hosts of Bangladeshi migrant workers, and foreign investors early next year, where the overall situation of the country should be discussed.

"This government doesn't want to remain in power for five years. Reforms will require at least two years. A medium-term plan from the government is urgently needed. Without a clear medium-term vision, the government won't be able to engage with foreign investors or companies operating in Bangladesh," he added.

Support for LDC graduation by 2026

Debapriya said an analysis of the data for graduation from Least Developed Country (LDC) status shows that Bangladesh currently meets or exceeds the three key criteria required for graduation. 

He sees no reason to delay the country's graduation from the LDC at this point and stressed the importance of quickly implementing the Sustainable Transition Strategy being developed by the government. 

"Considering the country's size, population, and resources, Bangladesh no longer qualifies as an LDC," Debapriya said, warning that if graduation is delayed beyond 2026, it would reflect poorly, as the country has the potential to succeed. 

He also pointed out the influence of some vested interest groups who are lobbying to postpone the LDC graduation, questioning their motives and involvement in monopolistic practices in export sectors.

Debapriya noted that if a major economic crisis were to arise before 2026, the decision could be revisited, but for now, he believes the situation remains stable and the transition is on track.

Mustafizur Rahman, a committee member, said Nepal, with a lower per capita income than Bangladesh, is set to graduate in 2026 by meeting two out of the three UN criteria, making Bangladesh's graduation the logical next step.

Alarming poverty 

Imran Matin, another committee member, discussed the alarming poverty levels in the country, stating that many people just above the poverty line could fall below it with a small loss in income. 

"If people do not work even two days a week, the country's poverty rate could double," he said. He also pointed out the 10% of the richest people controlling 85% of the wealth.

Corruption in power Sector

M Tamim, another committee member, said the special provisions made for the gas and power sectors in 2010 to address the electricity crisis were also applied to long-term power plants. 

"These policies created opportunities for corruption. Based on a projected 9% GDP growth over 20 years, artificial electricity demand was presented to approve new power plants," he said.

He mentioned that while there is no direct evidence of theft on paper, around $30–$33 billion has been invested in the power sector over the last 15 years. 

"Even without concrete proof, it is certain that at least 10% of this investment involved corruption, and financial transactions have taken place in every project," added Tamim, also professor at Bangladesh University of Engineering and Technology (Buet).

60% of corruption money sent abroad

Mustafizur Rahman said 60% of the proceeds from corruption have been laundered abroad, a sharp contrast to the past when such funds remained in the shadow economy. 

He mentioned that mega projects had been inflated, resulting in huge debts for the current and future generations, with costs no longer aligned with project returns.

Mustafizur also noted that the White Paper estimates about $16 billion in annual capital flight, using international standards to calculate these figures.

He said the government needs to negotiate better terms with foreign lenders, including reducing interest rates and extending repayment periods. 

Regarding foreign lenders, committee chair Debapriya said it is important to restructure foreign loans within six months, advocating for a development forum with foreign lenders and countries providing market access to negotiate better terms.