Memorandum submitted by Transparency InternationalBangladesh
Since its independence in 1971 Bangladesh has
been heavily dependent on foreign assistance in order to reduce
poverty and attain sustainable growth. But the track record so
far has been rather modest and the long-standing problems are
still to be tackled. The crisis of governance in Bangladesh is
coming under greater scrutiny from both within the country and
outside. Over the last few years the key stakeholders in Bangladesh
who are involved with the process of development have belatedly
realized that the issue of governance could be more important
than getting the right policies in place. The focus is on issues
such as corruption, transparency and the confrontational politics
(appendix 1 Rethinking Confrontational Politics: A Reform
Agenda by the Civil Society by Feroz M Hassan, President,
MSS/SRG and Secretary General, Free Election Monitoring Alliance
(FEMA) and Manzoor Hasan, Executive Director, Transparency International
Bangladesh, August 2000).
According to Crisis in Governance: A Review
of Bangladesh's Development 1997 (The Centre for Policy Dialogue,
June 1998) "This failure of the Bangladesh economy to move
on to a sustainable growth path . . . points to a crisis of governance
rather than a failure of macro-economic policy." Transparency
International Bangladesh (TIB) has looked into some of the major
sectors and extracts from those reports should suffice to reinforce
the aforementioned judgment of the Centre for Policy Dialogue
Bangladesh Power Development Board
The Bangladesh Power Development Board (BPDB)
can substantially increase its power generation capacity by plugging
some of its revenue and expenditure leakage. At a rough estimate,
a 10 per cent reduction in system loss would yield Tk 3 billion
(USD 0.06 billion) in savings, sufficient to add to the system
200 MW of simple cycle gas turbine generation every year. Alternatively
or additionally, a mere 5 per cent reduction in the inefficiency
of spending the Tk 15 billion (USD 0.28 billion) annual development
budget of the government's power sector could yield Tk 750 million
(USD 13.88 million), sufficient to add another 50 MW to the system,
raising the total additional generation capacity by 250 MW. In
one year, the current power crisis of greater Dhaka (capital of
Bangladesh) could be tackled and in two years, the shortage of
generation capacity in the entire country could be put right.
Genesis of Corruption
Corruption in the power sector had not assumed
serious proportion until after the independence of Bangladesh.
In the 1960s, stealing of electricity was significantly more widespread
in West Pakistan than in East Pakistan. Suspicions about corruption
were mainly focused on the purchase and construction contracts
relating to the power department headquarter, and not so much
on execution of large projects or appointments of consultants
of which there were many.
As shame and remorse once attached to corruption
gradually vanished and certain sections of employees became gradually
emboldened under protection of their Collective Bargaining Agents
(Trade Union), corruption spread to a wider sphere of BPDB's activities
and cases once confined to only subordinate staff extended to
certain sections of officers.
Payment of a small percentage of a bill to the
accounts section by contractors has become standard practice and
is now taken for granted. The same is the case of gratification
required by junior officers for certifying measurements, recommending
quoted rates for unscheduled works, and for higher level officers
approving bills. Engagement of ghost labour in the master roll,
particularly during an emergency, is fairly common. These types
of corrupt transactions would be fairly common in most government
agencies and departments. But however prevalent such petty corruption
may be, it is the large-scale corruption associated with BPDB's
technical and commercial functions that has been eating away at
the vitals of the organisation and hurting the economy and the
Apart from suspicions about high-level, large-magnitude
corruption in the procurement processes resulting from the government's
crisis avoidance actions, the shortage of generation, transformer,
and distribution line capacity provides incentives to fairly widespread
corruption in giving new electric connections and increasing the
The most pernicious phenomenon nurturing corruption
is the so-called system loss, which involves the theft of a substantial
volume of electrical energy. What was initially a minor issue
became gradually more serious due to the neglect in enforcing
discipline at a time when things were still under control. With
no disciplinary actions forthcoming, delinquent BPDB employees
developed an attitude of having the "right to steal".
Protected by strong trade unions that claimed political support
and patronage, and with the connivance of certain sections of
officers, the employees have been an active party to the system
loss, causing huge revenue losses to BPDB and undermining its
financial viability. This has led to the loss of donor trust and
At the same time, demand management has been
handled most casually. Some classes of electricity tariff (residential
and commercial) continue to be higher than rates prevailing in
regional countries. Consumers, faced with high electricity bills
relative to their income, are tempted to get their bill totals
reduced by bribing meter readers, billing clerks, and customer
Corruption in Procurement
Top officials in the BPDB have hinted that major
corrupt practices in large contracts take place "outside
the organisation", which would seem to indicate the ministry
level. None, however, denied the existence of minor vices at different
levels of BPDB, a phenomenon, which they felt, was common to most
development-oriented government departments that handled large
construction and supply works. In contrast, Dhaka Electric Supply
Authority (DESA) officials suggested that corruption in procurement
was not significant, while Rural Electrification Board (REB) officials
claimed that well-developed procurement procedures and effective
supervision of their procurement system offered little scope for
In fiscal 1998-99, BPDB generated 14,150 MkWh
of electricity, purchased another 450 MkWh from private sources,
but billed for only 11,462 MkWh, giving a system loss of 22 per
cent. This was better than DESA's 40 per cent but poorer than
REB's 17 per cent. The weighted average system loss in the power
sector as a whole is estimated at 35 per cent, which includes
21 per cent technical loss. The balance 14 per cent (non-technical
loss) was due to pilferage, theft and unauthorised use. In 1999-2000,
total generation by BPDB and independent power producers is projected
at 17,535 MkWh. Theft of electricity at the rate of 14 per cent
is therefore estimated to be 2,434 MkWh. At an average tariff
of Tk 2.10 per kWh, the value of the theft would be Tk 5 billion
(USD 0.09 billion).
The corruption related to the theft of electricity
has become very pervasive. Apart from meter readers, supervisors,
ledger keepers and other positions connected with billing and
consumer accounting, many Assistant Engineers and some high level
officers are involved in this vice. With the involvement of officers,
supervision becomes impossible. On the consumer side, people across
the economic spectrum are involved in dishonest practices.
The number of illegal connections is enormous.
Although no one knows the actual figure, it could be as high as
300,000. Theft also takes place by way of tapping distribution
lines, bypassing meters, `fixing' the meters, and misusing free
electricity supply for BPDB employees. High-tension consumers,
particularly some textile mills, jute mills and chemical plants,
often remove the fuses from instrument transformers in order to
disable the energy meters.
Genesis of Corruption
The legacy of corruption and malpractice in
the banking sector can be traced back to the pre-liberation (pre
1971) days. The Pakistan government, bent on rapid industrialisation
and modernisation of agriculture, provided liberal refinance facilities
to specialised development finance institutions, who were encouraged
to dole out large amounts of money to budding industrialists and
large agriculturists. There were reports of borrowers bribing
bank officials in cash or kind for getting loans. Large industrial
loans required political patronage, some of which was thought
to have had a price tag attached to it. Insider lending was common
in private banks, as was the use of bribes to mobilise scarce
deposit funds from owners or controllers of government and military
funds. The incidence of fraud and forgery was however very limited
and/or not made public.
Growth and Spread of Corruption
After independence, all private banks, excepting
foreign banks, were nationalised and brought under the direct
control of the bureaucrats. The government allowed the remission
of interest and, in some cases, even the principal for borrowers
who could claim that they had been adversely affected by the war
The acute shortage of manpower in the banking
sector forced the government to go for hasty, quota-based recruitment
drives. The prolonged government ban on new recruitment of officers
(forced upon by trade union pressure) even when the branch network
was expanding rapidly created pressure for promotion from the
clerical ranks. This resulted in a decline in the average quality
of the work force.
The government's policy of mandated credit for
agriculture, to be disbursed through local level government officials
and rural power brokers, practically institutionalised corruption
in agricultural lending. Dishonest bank officials took a 10 to
20 percent cut of the loan amount, as a matter of routine.
The new government inherited from its predecessor
an enthusiasm for rapid industrialisation. Government-owned development
finance institutions (DFIs), using soft donor loans, financed
numerous projects. However, a large proportion of such loans represented
political patronage to party supporters, former and serving civil
/military bureaucrats, and their relatives. In such cases, the
lending decisionswere obviously not based on sound banking principles.
At the same time, commercial banks offered lines of credit indiscriminately
without reference to the customers' creditability, safe in the
knowledge that the bank's lending risk would be covered by Bangladesh
Bank's credit guarantee. The freewheeling banking operations came
to a shuddering halt in the early eighties, following the hardly
unexpected revelation that the DFIs were burdened with large non-performing
loan portfolios. The flow of donor credit dried up soon afterwards.
Large borrowers wilfully defaulted on the loan
repayments to the DFIs and nationalised commercial banks (NCBs),
emboldened by their close links with the corrupt civil-military
bureaucracy. Subsequently, the defaulters extracted concessions
in the form of interest waivers, segregation of loans into "blocked
accounts", and repeated rescheduling. Some defaulters are
alleged to have used the defaulted funds to start private banks
and insurance companies. This gave them a further opportunity
for insider lending and for diverting yet more funds to various
pet ventures. Herein lies the origin of the "default culture".
The Situation Today
A recent study on the bank loan default problem
found that in the sample group of 125 defaulters, 78 per cent
utilised political connections, including ministers' influence,
to get loans sanctioned. Of the 37 per cent directly involved
with the ruling party, a large proportion had changed their political
affiliation at least once.
Successive governments have made half-hearted
attempts to tackle corruption in the banking sector. Recommendations
made by various committees set up to investigate corruption never
received the priority that they deserved. In some cases, the final
report was not even published. The attitude of major donors was
ambivalent. The Financial Sector Adjustment Credit programme (World
Bank) and the Financial Sector Reform Program (USAID), two major
aid projects focussing on the financial sector, neglected the
issue of combating corruption in banks.
The political patronage enjoyed by the defaulters
and dishonest senior bankers was sufficiently strong to prevent
the Bureau of Anti-corruption (BAC) from investigating suspected
bank officials without the clearance of the Prime Minister's Office
(PMO). Defaulters were allowed to contest the 1991 general election.
In the 1996 elections, the caretaker government initially took
a strong stance against the participation of defaulters. The government
later reversed its position and allowed defaulters to contest,
provided they got their default loans rescheduled on payment of
only a single instalment of 10 per cent of the defaulted amount.
After getting elected the default status of members of Parliament
no longer mattered.
Recently, the government, with some sustained
prodding from the donors, has brought in new laws to fight defaulters
in spite of the powerful defaulter's lobby in the parliament.
But these reform measures have not reversed the poor trend; the
banking sector remains fragile and capital deficient. The proportion
of total bad loans has increased (67 per cent for DFIs, 40 per
cent overall) despite the fall in the proportion of classified
loans disbursed during 1996-98. Today, the NCBs and many private
banks of Bangladesh would be considered insolvent by international
As for the default loan scenario, the entire
focus has been on the borrowers. Bank officials have been very
fortunate to escape blame for their role in many corrupt, or at
best ill judged, lending decisions. There appears to be a lack
of awareness in the government and the banking community that
bank officials can be penalised by the law for wilful or negligent
conduct in disbursing loans.
Magnitude of Corruption
Reliable estimates of the monetary involvement
in cases of bribery, fraud and forgery in the banking are hard
to come by because of the high degree of secrecy maintained by
the concerned parties. Good borrowers prefer to conceal their
involvement whereas defaulters are prone to exaggerate their costs
of doing business with banks.
The cumulative losses through frauds and
forgeries are estimated to be Tk 1 billion (USD 0.2 billion)
at the end of November 1998, at 0.2 per cent of total bank deposits.
Bribes related to agricultural loans are said to range
between 10 to 20 per cent of the loan amount; but a lower rate
(2-10 per cent) applies in the case of larger loans, which are
usually taken out by relatively influential borrowers. In the
case of project loans for agriculture, fisheries, and dairy,
bribes collected by the bank officials are sometimes shared with
the local government project development officers. In the case
of commercial loans, the banker not only collects outright
bribes (1-5 per cent of the loan limit), but also often receives
occasional gifts and regular hospitality or entertainment from
the client. For term loans, the bribes range from 1 to
5 per cent, depending on the (a) type and size of the projects,
(b) special services, if any, to be rendered by the bank staff
in preparation of the project feasibility report and processing
the loan proposal as a "package deal", and (c) the status
of the person influencing the loan sanctioning decision. The successful
borrower has to pay a further sum at the time of disbursement.
Working capital loans involve a separate payment of 1 to
5 per cent to the bank's managers, employees and trade union leaders.
The Roads and Highways Department (RHD), under
the Ministry of Communication, is responsible for building and
maintaining (a) national highways, (b) regional highways, (c)
feeder roads which connect thana headquarters to the arterial
road network, and (d) bridges and culverts. Additionally, RHD
operates ferries of various types and sizes to link the rest of
RHD receives a healthy allocation from the government's
development budget, In FY 1999-2000, RHD's allocation was Tk 14
billion (USD 270 million), of which the foreign aid component
was 55 percent. The bulk of aid funds (83 per cent) came from
IDA, ADB and OECF Japan.
The chief operating officer of RHD is the Chief
Engineer who sits at the top a pyramid organisation structure,
with engineers dominating the line functions. Apart from the 9,000
or so permanent employees, RHD is burdened with at least an equal
number of temporary lower level staff, who were originally employed
under specific projects but managed to stay in employment with
support of the unions and other vested groups. Not surprisingly,
the RHD is grossly over-manned.
Corruption in the Selection of New Roads
The identification and selection of new roads
to be constructed should be based on cost-benefit analysis, considering
the availability of financial resources. In practice, such analysis
is rarely done except in the case of donor-funded projects. The
task of identifying new road projects has traditionally been "delegated"
to ministers, members of parliament, bureaucrats, and the influential
local elite, for whom the construction of a road is an effective
means of buying future votes. Thus, many of the road projects
which are taken up have very little to do with national or regional
priority and availability of financial resources. Yet, neither
the Planning Commission nor any other relevant agency raises any
question about the justification of such "mandatory"
Until a road is completed, the project sponsors
will often invoke the support of a minister or even the prime
minister to successfully lobby for additional financial allocations,
causing even more wastage of scare developmental funds. Sometimes
pressure is brought upon divisional RHD officers who, under the
government's administrative and financial rules, are authorised
to write cheques on the government account without any limit.
Projects are rarely completed in time because
of the large numbers in the implementation schedule. When a particular
stretch of a road is ultimately built and opened to traffic, repairs
become necessary before the full length of the road is completed.
Development funds are usually diverted for such repair work, with
little regard to proper maintenance of accounts for such expenditure.
Corruption in Road Construction
Widespread corruption is involved in determining
the path a new feeder road should follow. It is quite common for
affected landowners to bribe junior level RHD officials or use
of their political connections to change the course of a road.
As a result, a road that had a straight alignment as per the original
plan ends up with numerous bends.
After the commencement of civil work, RHD officials
receive kickbacks from the contractors either as a direct payment
(usually a percentage of the contract value) at different stages
of the job, or as a share of the contractor's surplus arising
from an over-billed or fictitious or substandard contract work
which was knowingly approved by the RHD engineers in the first
A common example of the second type is the frequent
re-carpeting of roads. The annual re-carpeting which takes place
in Bangladesh would not be required had the work been done according
to RHD's written specifications. By producing sub-standard work,
the contractors and the collusive RHD officials jointly ensure
the continuity of future corrupt earnings.
Earthwork is another source of rampant corruption.
Embankments of six to eight feet height are often required to
protect the road from flooding during the rainy season. Private
contractors will usually make the road measurements just before
the onset of the rainy season (March to June) and carry out earthwork
during the rainy season when parts of the earthwork are washed
away, making it impossible to verify the extent of the work. It
is common practice for contractors to bill for trucked-in earth,
which involves a higher cost, when in fact the earth is usually
dug up from the depressed areas on either side of the road. The
contractor, who shares a part of it with the RHD executive engineer
who certified the work and cleared it for payment, pockets the
windfall gains resulting from such fraudulent activities.
Corruption in Engineering Supply and Repair Contracts
In engineering supply contracts (eg spare parts
for ferries), original or genuine parts are never supplied. The
contractor, after paying bribes to the RHD hierarchy, has to make
some profit for himself after all. There would be nothing left
if he purchased a genuine or new part. Sometimes, the contractor
will purchase an original partone, which has been stolen
from RHD stores with the connivance of the storekeeper. For repair
works, most contracts end up is false or fictitious works since
there is no physical supply involved. In some cases, the contract
itself is fictitious. If the work is to be done outside of Dhaka,
chances are even greater that no actual work or supply will take
The rates of bribe paid to the different levels
of RHD officials are well established and known to all relevant
parties. Deviations from the standard rates are the prerogative
of the higher-level officials. The total bribes paid by a contractor
ranges from 37 per cent to 47 per cent of the gross contract value.
The effective rate of 40 per cent to 52 per cent of the net contract
value, after deduction of VAT and advance income tax.
Selection of Local Contractors
Local contractors are usually selected through
covert negotiation, although records would show that a competitive
bidding system, as required by government rules, was followed.
Prior to the submission of bids, a tacit understanding between
the RHD officials and the contractor syndicate on the allocation
of contracts amongst contractors and the contract prices. Competitors
do not object to such an arrangement, and wait obediently for
their turn in some other contract.
Outside experts are rarely used for determining
the volume of material and labour input, or for preparing the
design specifications. As a result, the quantity of work budgeted
for is usually much higher than actual requirements. Besides,
few projects can be completed within the stipulated period for
want of adequate resources. For such delays, contractors are compensated
by increasing rates and in other forms providing additional benefits.
Selection of Consultants and Contractors in Aided
For aided projects, the method of selection
of consultants and international contractors is guided by the
terms of the loan / grant agreement and the guidelines of the
respective development partner. Even so, RHD officials enjoy considerable
discretion in determining the ranking criteria for contractors
involved in the pre-qualification. Advance information is passed
to select international firms or individuals through their local
agents with a view to favouring them in the final selection. In
some cases the bid documents are manipulated to favour a particular
Although the donor agency usually approves shortlist
of consultants, the final selection lies with the RHD, based on
weights assigned to the various selection criteria. There is scope
for considerable discretion here, mainly at the higher levels
of officials. The bid evaluation report and the recommendations
of the evaluation committee are not made public before the final
Cases have also been reported where RHD officials
had to make decisions (in selecting consultants/contractors) respecting
the wishes of the administrative and political authorities and
the ministry. As a result, there have been cases where the selection
changed when the "authority" changed. In the Jamuna
Bangabandhu Bridge project, selection of the consultant for construction
of the access road was changed several times with change of such
"authorities". This process may lead to selection of
consultants who are not technically the best, but are found "acceptable"
on other considerations, at times with disastrous consequences.
Corruption in Consulting Activities
Consultants pay, on average, 12 to 15 per cent
of their fee as bribe at the time of commissing of the contract.
The money is divided between ministry officials, and the members
of RHD's Technical Evaluation Committee. Interestingly, the corruption
level in the RHD is judged to be "moderate" compared
to other government departments. The RHD rate is usually between
2 and 6 per cent of the consultant's fees, whereas in other departments,
the rate is not only higher (up to 15 per cent) but is applied
to the sum of consultant fees plus out-of-pocket expenses. RHD
is by far the largest user of consultants and the recipients of
bribes apparently abide by the dictum of "not killing the
goose that lays the golden egg".
The Governments of Bangladesh (GOB), past and
present, have failed to generate a high rate of recovery and it
relates to number of factors: constraints of law, efficacy of
enforcement and collusive arrangements between the executing agency
and the assessees. This problem of under collection applies to
all variety of public revenues from direct taxes to revenue from
public utilities, such as electricity, gas, telecommunications,
water and sewerage. The problem here is social, political and
Corruption is pervasive in the customs department
mainly because of the immense discretionary and monopoly powers
vested in and enjoyed by customs officers in a system where accountability
is conspicuous by its absence. A secondary reason is the absence
of institutional discipline, whereby career planning decisions,
transfers and postings are made on the basis of pressures, gratification
and other considerations instead of clearly established principles.
The situation is made worse by an absence of moral commitment
on the part of customs officers, arising from a flawed system
of recruitment which is based on transfers or promotions from
other government departments or ministries, instead of direct
and focused recruitment followed by training. Corruption is certainly
not a transitory phenomenon here.
"The indiscipline may originate from below
but its persistence and consolidation derive from the failure
of political will at the top to stop the rot and to impose the
democratic authority of the regime in enforcing administrative
order . . .. Interestingly enough, regimes which have come to
power with a clear democratic mandate are equally inept at taking
on the vested forces both of the bureaucracy and society . ..
In the absence of any serious political prospect to either economise
or rationalize current expenditures, the burden of adjustment
falls on the Annual Development Plan (ADP) whose share of GDP
has remained unchanged over nearly two decades. This has serious
consequences for stimulating growth since public investment, largely
aid-funded, can have a catalytic effect on economic growth. However,
ADP budgets remain underused, aid lies unspent with a project
aid pipeline, which has doubled from $3 billion to $6 billion
in the last 10 years. Over a third of the ADP is padded with items
of recurring expenditure, which cannot be accommodated in the
revenue budget . . . the large ADP projects themselves often tend
to be misconceived, or over-designed, uncoordinated with collateral
projects, poorly implemented, and after completion, inefficiently
managed. Thus, ADP projects represent both an inefficient use
of public funds as well as a failure to derive the expected returns
from such investments. Most of those problems associated with
public expenditure are governance related, reflecting lack of
transparency in design and execution, lack of accountability,
weak supervision, potential for large scale corruption and eventually
inefficient management of the end-product (see appendix 2Judicial
Review application challenging the establishment of a container
port on transparency grounds).
Thus public revenues are lower than they need to be whilst public
current expenditures are higher than they need to be. Public development
expenditures whilst much lower than is appropriate from the resources
available to the GOB, tend to be wastefully spent and inefficiently
managed. This means that mis-governance is giving Bangladesh a
much lower level of public savings, investment and GDP growth
than would be available to her within a better governed system."
(Crisis in Governance: A Review of Bangladesh's Development
Transparency International Bangladesh Survey
In 1996, Transparency International's Bangladesh
chapter conducted a survey of 2,500 rural and urban households
to determine people's experience with corruption and their perception
of its prevalence. In addition to seeking respondents" views
about the definition of corruption, the survey covered 10 sectors
where corruption was believed to be rife and underscored the ways
in which the respondents suffered from corruption.
HOUSEHOLD (HH) SURVEY
Police and Courts
96 per cent of HHs said they have
to pay the police to get any help or service
63 per cent of HHs involved in court
cases said they have to bribe court officials and lawyers
89 per cent of HHs involved in court
cases said it was almost impossible to get fair and quick judgment
from the court without money or influence
74 per cent of HHs said it required
extra-regular methods to get children into school
42 per cent of HHs said it was not
possible for children to get good results or promotion into next
higher class without hiring teacher as private tutor
40 per cent of HHs reported extra
pay was needed to get admission to hospitals
41 per cent of patients at hospitals
said they did not get their medicine without extra pay
65 per cent of HHs said it took money
or influence to get licenses
32 per cent of HHs reduce their electricity
and water bills through extra payments
47 per cent of HHs reduce their tax
bill through extra payments
85 per cent of HHs involved in land
sales/purchases reported need to make extra payments to officials
to get sale registered
Places of Corruption
Main institutions where bribery is said to be
Thana Police (97 per cent of HHs)
Courts (89 per cent of HHs)
Perceived causes of corruption
"get rich quick"76
"lack of accountability"51
Seventy-six percent of the respondents defined
corruption as the misuse of position and power and the neglect
of duty. The judicial system and the police were identified as
the most corrupt sectors in Bangladesh. More than 96 percent of
the respondents stated that it was impossible to get help from
the police without money or influence and 89 per cent felt that
quick and just settlement from the courts was impossible without
resorting to bribes or influence. Most households reported having
to pay bribes to obtain health services, education services, municipal
services, transport services, land title records, and loans from
the financial system.
(see appendix 3Survey on Corruption in
Bangladesh, Transparency International Bangladesh, December 1997).
It is no wonder that accelerated public investments
in health and education are not matched with improved governance
in these sectors. Consequently, even today Bangladesh's human
development indicators remain comparable to those of Bihar, India's
socially most backward state. Health is another problem area:
the bottom 20 per cent of the rural health population spends 7-10
per cent of income on meeting private medical expenses, whereas
the benefits from the public health service (PHS) are equivalent
to only 1 to 3 per cent of their income. This dependence on private
healthcare provides, which is usually of poor quality, a reflection
of the lack of confidence of the poor in the public health facilities,
arising from the mis-governance of these programmes.
Public Administration Reform Commission observed
that "The general perception of people is that almost all
important institutions of public lifethe law and order
agency, the judiciary, the revenue collection departments, the
service sector, the financial sector, to name a few, and majority
of public servants of all categories working in them are involved
in corruption. Corruption has become so pervasive that the press
in Bangladesh, Transparency International and many development
partners have drawn attention of the government of Bangladesh
from time to time for taking urgent remedial measures to combat
it." (Public Administration for 21st CenturyReport
of the Public Administration Reform Commission Volume 1, June
Transparency International Bangladesh News Scan
The sampling technique included developing a
data bank through collection of news from nine national dailies
over a six-month period Newspapers are a good source of current
information since many corruption-related reports are published
in the newspapers everyday focusing on various sectors such as
Police, Forest Department and Local Government. By scanning nine
dailies for six months (January-June 2000) TIB News Scan Database
Team gathered one thousand three hundred and forty five corruption
cases ie more than 224 cases in each month or about 51 cases each
While scanning news coverage on corruption the
News Scan Database Team also found corruption cases against the
officials working in 36 of the mentioned thirty-seven sectors/departments/directorates.
Among these, Law Enforcement Agency, which included police, BDR
and Ansar and VDP, were found to be the most corrupt service sector
(20.67 per cent). The reported number of cases against this sector
was 278. The table below ranks corruption by sector/department/directorate.
DISTRIBUTION OF CORRUPTION BY SECTOR/DEPARTMENT/DIRECTORATE
||Reported Cases ||Sector/Department/
||Reported Cases |
||Fisheries and Livestock||0.67
|Forest and Environment||4.46
||60||Department of Narcotics
|Direct and Indirect Tax||4.46
||60||Public Works and Housing
||Energy and Mineral Resource ||0.45
||Civil Aviation and Tourism||0.37
|Post and Telecommunication||2.97
||40 ||Disaster Management and Relief
||32||Sports and Youth||0.30
|Commerce and Industry||1.26
|Passport and Immigration||1.12
||15||Bureau of Anti-corruption
||Private Service Organization||4.68
Table 3.1 also shows that the first four sectors represent
half of the total reported cases (51.08 per cent). The next 8
sectors represent about 30 per cent of the reported cases. Bureau
of Anti-corruption was the only department without any reported
Corruption in Law Enforcement Agency
During the study period Law Enforcement Agencies (Police,
BDR, Ansar and VDP) was found to be the most corrupt service sector.
In recent years corruption in police department has been widely
publicized. Several reports (WB 2000, US Human Rights Report 2000)
revealed that corruption is widespread in police service in Bangladesh.
In 1997, TIB in its "Survey on Corruption in Bangladesh"
also found police service as one of the most corrupt sectors.
Total number of reported cases against Law Enforcement Agencies
was 278, out of which 254 cases were against police department.
This includes Detective Branch (DB) police, Metropolitan police,
Thana/Upazila police, traffic police and district police line.
The reported number of cases against BDR, which is the border
petrol force, was 18 while it was 6 for both Ansar and Vliiage
Defence Party (VDP). Table 3.2 shows the breakdown of corruption
in Law Enforcement Agency by department and type of corruption.
CORRUPTION IN LAW ENFORCEMENT AGENCIES
|Type of Corruption||Police
||BDR||Ansar and VDP
|Abuse of Power||123||3
|Misuse of Resources||3
|Refusal to Provide Services/Perform|
Abuse of power was widespread in police department. About
half of the reported cases (123) that were published are related
to abuse of power. Analysis reveals that discretionary power granted
under Act 54 have been the source of abuse of power for this department.
At Local Government level, Union Parishad was reported to
be the most corrupt with 48 cases of corruption. District Parishad
and Local Government Engineering Department (LGED) follow Union
Parishad with 23 cases of corruption. Third in line is the Thana
Parishad with 21 reported cases of corruption. The lowest in the
hierarchy is City Corporation and Pourashava with a total reported
cases of 11.
Unlike Law Enforcement Agency, the local level officials
use their office for misappropriating public resources. Most of
the misappropriation took place under the VGD and VGF program
where chairman and members of the Union Parishard misused fund,
wheat, rice and other allocated public resources. Some of the
cases show that Union Parishad in collusion with other local government
organizations like Local Government Engineering Department (LGED)
misdirected public funds. For example, wheat and rice were misappropriated
under "Food for Work" program to reconstruct a local
embankment. Government is looking into various reform measures
for local government units. The corruption cases reported on the
Local Government level indicate that more checks and control need
to be in place to stop the malpractices. Close scrutiny is also
needed in the areas where misappropriation takes place.
CORRUPTION IN LOCAL GOVERNMENT SERVICE
||Upazila/Thana Parishad||City Corpo-ration
|Ministry of Local Government|
|Abuse of Power||6||4
|Misuse of Resources||1||1
|Refusal to Provide Services||0
Education is one of the largest and important public service
providers in Bangladesh. The National Plan of Action (NPA) 1990
in its overview stated that lack of basic education was the Achilles
hell of the society and economy of Bangladesh. Millions of dollars
have already been pumped into this sector but the situation is
far from satisfactory level.
CORRUPTION IN EDUCATION
|Type of Corruption||Secondary School
||Food for Education||Primary School
||Education Ministry||Education Office
|Abuse of Power||6||4
|Refusal to Provide Services||2
|Misuse of Resources||0||1
In all department/directorate of education sector TIB Database
Team monitored 147 cases published in nine dailies during the
study period. Embezzlement was the most common form of (47) reported
cases, followed by abuse of power (32). Refusal to provide services
(17), bribery and fraud (14) were also significant in the education
sector. Only one case of nepotism was found and no case was found
on influence peddling.
It is also evident from the table that about half of the
cases were reported as abuse of power in six education boards.
Embezzlement (six) was also widespread among the boards. In "Food
for Education" most of the reported cases were identified
as embezzlement (nine) and in primary school half of the cases
(seven) were belonged to this type. The rest of the cases were
reported against Education Ministry (12), Education offices (11)
and University (11) and eight cases were reported on madrashas
The government has dedicated ample resources to the health
sector in order to fulfill its target "health for all"
by the year 2000.
CORRUPTION IN HEALTH SECTOR
(Upazila & Dist)
|Family Planning||Health Ministry
|Abuse of Power||9||8
|Misuse of Resources||1||2
|Refusal to Provide Services||16
TIB identified 105 corruption cases in the health sector.
Embezzlement and refusal to provide services are the most common
form of corrupt practice. Out of the 35 reported cases of corruption
against Health Complexes located in the districts and Upazilas,
16 were refusal to provide services due to absentee health officials
and doctors. In addition doctors were often engaged in private
practices. Embezzlement was found in the Civil Surgeon Office,
where officials misappropriated fund allocated for expensive medical
equipment and machinery. Misuse of resources has been stemming
from lack of inspection and absence of proper regulatory bodies.
For example, due to lack of inspection many shops are able to
sell life saving drugs without proper license.
Table 3.6 shows the distribution of reported corruption cases
related to on forestry and environment.
During our study period fifty-nine cases were reported on
forest department with officials and employees of Forest Department
permitted the wood smugglers to cut trees from forests. Sometimes
cutting and selling of trees by the officials themselves were
reported. In exchange of bribery, the forest officials directly
cooperated with timber traders to cut huge quantity of wood and
poachers to kill animals. The highest number of cases about Forest
Department was embezzlement (20) reflecting one-third of the total
reported cases in this sector. The number of cases related to
abuse of power was 14 followed by 12 cases of bribery.
DISTRIBUTION OF REPORTED CASES IN FOREST and ENVIRONMENT
|Type of Corruption|
|Forest Department %
||Department of Environment|
|Abuse of Power||23.73
|Misuse of Resources||11.86
|Refusal to Provide Services/Perform Duties
Taxation is the largest source of revenue for the government
of Bangladesh. Direct and Indirect Taxation departments consisted
of Customs, Revenue, VAT and taxation administration.
There were 60 reported cases of corruption in the nine dailies
during the six-month data collection period. Abuse of power and
bribery were the most frequently reported cases in customs department.
Seventeen cases related to abuse of power were reported while
the number of reported cases on bribery was 15. Tax collectors
were found to collect excess tax in violation of government rules.
Other reported cases were release of illegal imported goods and
misappropriation of fund collected as taxes.
CORRUPTION IN DIRECT AND INDIRECT TAXATION
|Type of Corruption||Customs (%)
|Abuse of Power||17 (34.00)
|Refusal to Provide Services||3 (6.00)
|Misuse of Resources||0 (0.00)
|Influences Peddling||0 (0.00)
Fraud, embezzlement and abuse of power are the most common
form of corrupt practices in the financial sector with most of
the reported cases occurring in the nationalized banks. During
the research period, there were 56 reported cases on corruption
out of which 21 were fraud, 19 on embezzlement and 14 on abuse
of power. There were two cases on abuse of power. Other examples
of corruption involved a group of bank officials in nationalized
banks submitting false papers to draw agricultural loan by claiming
to be poor farmers. In another case a farmer got an agricultural
loan which was less than the sanctioned amount. Some officials
were involved in forging Letters of Credit (LC) and selling US
dollars in the black market. General Manager (GM) and other high
bank officials were observed to use personal preference in providing
CORRUPTION IN FINANCE SECTOR
|Type of Corruption||Nationalised|
|Abuse of Power||14||2
|Refusal to Provide Services/Perform Duties
|Misuse of Resources||0||0
There were 49 reported cases of corruption in the transport
and communication sector with abuse of power the dominant form
of corruption practice. There were 18 cases of abuse of power
of which 13 cases were reported on Bangladesh Railway department.
CORRUPTION IN COMMUNICATION SECTOR
||Roads and Highways||BRTA
|Abuse of Power||13||3
|Misuse of Resources||5
|Refusal to Provide Services||4
There were total of 31 cases reported against Bangladesh
Railway followed by 13 cases against Roads and Highways and five
cases on BRTA. There were 11 cases of embezzlement and seven cases
of refusal to provide services.
Other examples of corruption in Communication sector involved
officials in Roads and Highways misappropriating funds allocated
for construction works and giving away tender work on the basis
of nepotism without bidding. There were reported cases on issuing
illegal licenses, fitness certificates, route permits, Blue books
by BRTA office.
Water Resources sector consists of Water Development Board
(WDB), Irrigation, Water Resource Ministry and WAPDA. Most of
the reported cases of corruption were on WDB. Out of a total of
46 reported cases 21 cases related to embezzlement. There were
10 cases on misuse of resources and 6 cases on abuse of power.
There were some cases relating to bribery (three) and refusal
to provide services (four).
There were reported cases of embezzlement and abuse of power
at WDB when some of their officials by-passed tender process and
selected constructors after taking bribes. Project directors,
engineers and other officials misappropriated public funds in
various construction projects. There were reported cases of corruption
on Water Resource Ministry.
CORRUPTION IN WATER RESOURCE SECTOR
|Type of Corruption||WDB (%)
||Irrigation||Water Resource Ministry
|Misuse of Resources||8 (22.22)
|Abuse of Power||4 (11.11)
|Bribery||3 (8.33) ||0
|Refusal to Provide Services||3 ( 8.33)
|Extortion||1 (2.79) ||0
|Nepotism||0 (0.00) ||0
|Influence Peddling||0 (0.00)
|Fraud||0 (0.00) ||0
There were 40 reported cases of corruption in Post and Telecommunication
sector and most of those cases were related to abuse of power
(11) followed by embezzlement (eight) and bribery (seven). Others
were cases of refusal to provide services (five) and fraud (four).
Officials at BTTB are commonly found to harass subscribers by
providing false bills and taking bribes to reduce the bills. Corruption
also takes the form of extortion of money by threatening disconnection
of lines. Refusal to provide services is a more common type of
corruption practice within Post Offices.
CORRUPTION IN POST AND TELECOMMUNICATION SERVICE
|Type of Corruption||BTTB
|Abuse of Power||9||2
|Misuse of Resources||3
|Refusal to Provide Services||0
Power Service Sector consists of PDB, DESA, PBS and REB.
Reported cases of corruption in this sector during the research
period were 39. PDB was reported to have the highest number of
corruption cases (23) followed by DESA (10), PBS (five) and REB
(one). Most of the cases related to abuse of power (15), followed
by embezzlement (seven), bribery (five), fraud (four) and misuse
of resources (four).
PDB officials and engineers are involved in various types
of irregularities such as taking bribes from public for reducing
bills. 60 crore taka (USD 0.01 billion) was embezzled by showing
system loss, which means unauthorized and illegal connections.
CORRUPTION IN POWER SERVICE SECTOR
|Type of Corruption||PDB
|Abuse of Power||10||5
|Refusal to Provide Services||1
|Misuse of Resources||0
During the news scan survey period there were 32 reported
case of corruption in Land Administration and out of 37 directorate/sector
surveyed land administration was found to be the 13th most corrupt
department. Most of the cases reported were bribery (12), abuse
of power (seven), extortion (five). There were also cases of fraud,
embezzlement and refusal to provide services.
CORRUPTION IN LAND ADMINISTRATION
|Type of Corruption||Reported Cases%N
|Abuse of Power||21.87
|Refusal to Provide Services||6.25
|Misuse of Resources||3.13
There are 496 upazilas/thanas in Bangladesh (BBS Statistical
Pocket Book 1998). TIB Data Base Team looked at the corruption-reports
in all these thanas/upazilas. Out of total number of upazilas/thanas
except 16 had no incidence of corruption.
CORRUPTION IN UPAZILA/THANA ADMINISTRATION
|Name of the Thana/Upazila||Reported Cases %N
NB: Upazila/thana that had five or less number of reported
cases was not included in the table. Furthermore, if a particular
type of case were to be prevalent throughout the district it was
not included within any thana/upazila.
On the other hand no case was found in the following unions:
Aditmari, Atgharia, Akkelpur, Bagatipara, Barhatta, Barkal, Beani
Bazar, Daulatpur, Fenchuganj, Harirampur, Hossainpur, Kumarkhali,
Manpur, Rampal, Saturia and Sullah.
TIB News Scan Database Team found corruption reports from
all 64 districts of Bangladesh. The highest number of cases (221)
was reported against the officials/employees of Dhaka district
and Chittagong was second highest with 78 reported cases.
CORRUPTION BY ADMINISTRATIVE DISTRICT
|Name of the District||Reported Cases %N
||Name of the District||Reported Cases %N
|Nation Wide|| 0.22
Number of cases in Patuakhali (48), Jessore (43), Moulavi
Bazar (42) varied between 40-50 while the reported cases were
found to be 36,35, 32, 30 and 30 in Comilla, Mymensingh, Sherpur,
Barisal and Jhenaidah, respectively. 16 districts were found to
have reported-cases between 20 to 29, while twenty-one districts
had 10 to 19 cases each. Three cases were monitored that covered
the whole country and two were reported covering regionally.
At an individual level first class officials were found to
be more corrupt than others. The number of reported cases against
them was 399. The second highest number of cases was against second-class
officials (219), while the number of monitored cases against both
third and fourth-class officials was less than 50.
NUMBER OF REPORTED CASES BY LEVEL OF OFFICIAL
|Actor Level||Reported Cases %N
|First Class Official||29.67
|Second Class Official||16.28
|Third Class Official||3.57
|Fourth Class Official||3.05
NB: Higher Official = Joint Secretary and Higher.
Cases reported against higher officals were 94, while elected
Victims of Corruption
Table 3.16 shows the distribution of victims of corruption
in reported cases.
VICTIMS OF CORRUPTION
|Name of the Victim||Reported Cases %N
It is evident from the table that the government officials
were mainly to be blamed. About 500 cases were reported on government
officials. The second group was made up of most incurring class
was the citizens which represents more than 30 per cent of all
reported cases. Students, businessmen, government officials, farmers,
teachers and some other professionals from different segments
were found suffering in the reported cases.
Effects of Corruption
The effects of all reported cases could not be measured in
monetary terms. Some cases reflected damage on environment, some
violated human/citizen rights, while some cases were related to
physical harassment. Due to lack of information, TIB database
Team could not measure the financial loss.
EFFECTS OF REPORTED CORRUPTION CASES
|Type of Effects||Reported Cases %N
|Deterioration of Law and Order||5.28
(govt 211, citizen
72, unknown 372)
|Violation of Citizen's Right|| 16.73
|Environmental Degradation|| 5.35
|Violation of Human Rights|| 2.01
| Physical Harassment|| 1.12
During our study period the total amount of loss for the
government from the reported 211 cases amounted to TK 11534.98
crore (USD 2.14 billion). This figure doesn't include the
loss to citizens who paid bribes to corrupt officials (eg businessmen
paying bribes to the police officials for performing duties).
Furthermore, misappropriation of food grain by Union Parishad
(UP) Chairmen and members was not converted into cash, which was
estimated to be 1000 metric tons during the study period.
Financial Loss in Reported Cases
During our study period 655 reported cases related to financial
loss. Among these 211 cases illustrated financial loss, amounting
to Tk11534.98 crore (USD 2.14 billion), and from various government
FINANCIAL LOSS BY SECTOR
Name of the Sector
(Tk in Crore)
|6||Commerce and Industry
|8||Forest and Environment
|9||Direct and Indirect Tax
|14||Passport and Immigration
|15||Law Enforcement Agency
|Other Government Sectors
The government incurred highest level of financial loss from
the education sector, ie Tk 2305.48 crore (USD 0.43 billion).
Total reported financial loss amounted to Tk 2111.23 crore (USD
0.39 billion) for local government. The monetary loss for Health,
Water Resources and Finance was Tk 2051.48 crore (USD 0.38 billion),
Tk 1978.83 crore (USD 0.37 billion) and Tk 993.25 crore (USD 0.18
The World Bank in its report stated that Bangladesh could
achieve 2 to 3 per cent of additional GDP growth by eliminating
corruption (WB 2000). In 1997-98 the total GDP of was Tk1548.33
billion which is equivalent to US $ 28.67 billion. On the other
hand the financial loss amounted to US $ 2.14 billion, which is
7.46 per cent of Bangladesh GDP.
Action Taken Against Reported Cases
Table 3.10 shows the action taken and the name of the authority
initiating the action against the reported cases. Out of 1345
cases, action was taken against 453 cases. The role of the concerned
department was found to be more frequent than Bureau of Anti-Corruption
(BAC). The BAC dealt with only 116 cases. They investigated 23
cases and filed charges against 86 cases. The number of chargesheet
(five), initiated by BAC, was very low.
ACTION TAKEN AGAINST REPORTED CASES
|Type of Action||Action Taken by
|Charge Sheet||5|| 1
|Reported to the Authority ||0
|Transfer|| 0|| 2
|| 4|| 0|| 0
|| 0|| 6|
|Grand Total|| 116
|| 20|| 188|| 46
|| 64|| 19|| 453
NB: Charge sheeted by BAC and Convicted by court.
The concerned ministry dealt with only 20 cases, while the
concerned department dealt with 188 cases. They suspended (permanently
and temporarily) 49 persons for conducting corruption, investigated
63 cases and submitted charge sheet against 28 reported cases.
Police also dealt with 46 reported cases.
The information/data to be found in the news scan report
has been collected from newspapers only. People often do not remember
the variety of different news published in the newspapers. Working
as watchdog, TIB monitored the news, added value to the news published
by compiling them over a given period of time and subsequently
analyzed them. Through the compilation of data we tried to:
measure the pervasiveness of corruption;
identify the levels of corrupt officials;
define the loss to the government from reported
identify the most corruption-prone area (thana
and district) of Bangladesh;
identify the role of BAC and other government
agencies in curbing corruption;
inform the government and the people of the extent
of corruption in various government departments.
ConclusionThe Role of Civil Society
Bangladesh is not alone in the fight against bad governance.
Due to the collusive nature of corruption-relationship and a distinct
lack of incentive to change such behaviour it is far too important
a task to be just left to politicians. As poor political governance
is at the heart of the present malaise in Bangladesh, as in so
many other countries, the civil society will have to be involved
with the process to regenerate public opinion to curb corruption.
Everyone seems to know about corruption, often from hearsay,
but solid documentary evidence is, in the nature of things, hard
to find. Surveys, if credibly undertaken, are invaluable in providing
hard data in answer to such questions as "did you have to
bribe an official to get your driving license, or land title,
or passport?". Armed with such data, it is much harder for
officials simply to brush the matter aside as baseless. Moreover,
the public relations impact is always much greater.
Surveys and diagnostic studies provide the grist for the
mill of public opinion, but TIB also recognizes that it needs
to also work to organize lobbies around the country. The long-term
target would be to have a presence in every parliamentary constituency.
As a start it has begun setting up a network of Committees of
Concerned Citizens (CCCs). These are seen as self-sustaining groups
of individuals who, with the support of TIB's central organization,
will campaign locally against corruption. They may also prepare
regular "report cards" on the performance of local government
departments and service agencies, and lobby for improved local
service delivery. Thus, reducing corruption would be just one
part of a larger set of concerns of interest to the local population.
Winning over the minds of the young so that they see corruption
not as an inescapable fact of life, to which one accommodates
oneself, but rather as cancer in society that threatens their
future and should be challenged at every opportunity. TIB has
sponsored an essay competition among schoolchildren in conjunction
with a national newspaper.
Greater access to information is critical for
citizens to assert their rights.
Electronic and printed media have to strengthened.
Members of Parliament and Parliamentary committees
to be provided with institutional capacity to investigate and
disseminated their findings.
Forging Partnerships to Fight Corruption
TIB recognizes that a key to its effectiveness will be its
ability to create a strong civil society coalition to fight corruption
as a common cause. This coalition will comprise not only NGOs
interested in human rights and environmental issues and the numerous
private voluntary development organizations active at the village
and district level, but many other groups: professional and business
organizations, private research institutes, and the Press.
TIB's dialogue with the business community is principally
through the Chambers of Commerce and Industry. The aim has been
to encourage the chambers to propagate a clear message to their
members on the importance of adhering to honest business practices
in order to gain the respect and the trust of the community and
to reduce the cost of doing business. The business community can
identify the ways their members encounter corruption and joint
programs to combat corruption developed.
NGOs are already playing an impressive role at the grassroots
level making the poor aware of their rights, helping them to organize
and providing voter education. In the 1996 general election the
NGOs encouraged voters to ask whether candidates were loan defaulters
or had any criminal convictions or were known to be corrupt. The
defeat of over twenty Ministers was in no small way due to the
enhanced awareness of their reputation for venality. The NGOs
are the natural allies of the CCCs.
An area of cooperation still to be explored is with local
professional groups such as accountants, lawyers and the like.
Working with trade unions will be another challenge, to convince
the workers that they would benefit from a society freer of corruption
and encourage them to tackle their leaders notorious collusion
with corrupt officials in public agencies.
Greater emphasis on creating a conducive environment
to encourage ethical behaviour amongst civil society stakeholders.
Greater emphasis on human resource development
(as opposed to creating new institutions and laws) to secure human
TIB has clearly understood that mere exhortation is useless
in achieving change. Not only must one build public opinion through
data collection, press campaigns and nurturing a powerful civil
society coalition, but one must also identify a set of credible
measures to reduce corruption. The public must be convinced that
there are practical actions that would indeed reduce corruption.
So far TIB has highlighted a number of such measures, including
most importantly: repealing the Official Secrets' Act; requiring
Ministers and Members of Parliament to make a public declaration
of their assets every year; appointing an Ombudsman; enacting
a Freedom of Information Act; making public the deliberations
of Parliament's Public Accounts Committee; creating an independent
television and radio broadcasting authority; separating the Judiciary
from the Executive; and having the Anti-Corruption Bureau report
directly and publicly to Parliament, not secretly to the Prime
Development assistance has to take into account
the long term nature of good governance reform.
Donors' awareness of holistic nature of reform
agenda, and also informing their taxpayers.
Public Opinion and Parliament
Ultimately it is Parliament that must hold the government
accountable for its performance. And, in turn, the electorate
holds Parliament accountable. Consequently, the link between civil
society and the goal of reducing corruption should be above all
through Parliament. At present this link in Bangladesh is particularly
weak. This underlines the importance to be attached, on the one
hand, to Parliamentary reform and, on the other, to the role of
CCCs, NGOs, and other civil society organizations, which are active
at the constituency level. As part of TIB's holistic approach
it is critical that crystallization of political will is seen
as both "bottom-up" and "top-down" process.
Changing the attitudes and behavior takes time. So far TIB
cannot claim that any concrete success in reducing corruption
in Bangladesh. However, the activities of TIB in building a strong
partnership with civil society have firmly placed corruption on
the public agenda. Parliamentarians have a pivotal role to play
and they will ignore this fact at their peril.
Encourage a synergy between public opinion and
Members of Parliament.
Encourage reform within present political institutions.
Expand the scope of international conventions
to address issues such as foreign donations to political parties,
stricter banking laws to discourage money laundering and secret
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