Ill-earned money of corrupt politicians flies abroad

Be it shutdown or blockade, their fortune is safe. A section of Bangladeshi politicians, young or old, who have made easy fortunes, are increasingly investing their questionable wealth abroad to ensure a secure future for their families.

A number of leaders of both the Awami League and the BNP—from the central level to associate student bodies of the two parties—are learned to have secured their future overseas, by winning citizenship for their families through investment visas or business migration schemes.

The list is getting longer every month, given the political instability in the country, a good number of politicians, businesspeople and bureaucrats have told The Daily Star.

money“Many politicians—from top to mid level—have invested in properties abroad. They have made the investments in the names of their wives and children,” said an AL central committee member, seeking anonymity.

An influential AL leader has allegedly bought a mansion in Canada. Another leader of the party, who holds the position of a state minister, has invested in properties in London and Malaysia.

There are other AL men who did the same, said party insiders and immigration consultants.

Not only ruling party leaders, a number of BNP leaders have also made investments abroad.

A minister of the last BNP-led government has made considerable investments in Singapore.

The BNP leader and his family spent most of the last six years there.

Sources close to him told The Daily Star that his son invested in a private port in Sri Lanka.

Another former minister of the party and his son have made sizeable investments in properties in the US.

Such properties are bought mostly with ill-gotten money, which is being siphoned off from Bangladesh through unauthorised financial channels to countries that openly offer fast immigration opportunities through investment.

Canada, followed by Malaysia, is by far the top choice of these leaders.

An area in Toronto is known as “Begum Para” among expatriate Bangladeshis there. Begums (wives) live with their children there and the husbands run political activities and businesses in Bangladesh.

According to Bangladesh High Commission in Canada, more than 10,000 Bangladeshis now live there.

Canadian government statistics show that the number of Bangladeshi immigrants was 33,230 till 2006.

It means around 70 per cent of these Bangladeshis left for Canada in the last 10 years to settle there as entrepreneurs or family class and independent immigrants.

The other major destinations of the capital flight from Bangladesh are the UK, the USA, Australia, Singapore, the UAE and Thailand. Money is being invested in properties and businesses also in countries such as Sri Lanka, Nepal and Mauritius.

The unlawful practice became rampant in recent years but remains beyond the reach of law, as money is being transacted through unrecognised channels, say central bank officials.

Data of the Washington-based Global Financial Integrity shows that capital flight shoots up in tandem with political instability, and in the election year.

According to the GFI report last year, of the illicit capital flight of $13.16 billion from Bangladesh between 2003 and 2012, $2.67 billion flowed out of the country in 2006 alone when political instability was at its peak.

But before 1/11 in 2007, the common practice of corrupt politicians was to legalise black money through amnesty.

For example, 46.03 billion taka (US$592 million) was laundered in fiscal 2005-06 on payment of 7.5 per cent tax.

Things have changed now, and it is evident in the black money holders’ lukewarm response to the government’s repeated offers of amnesty on black money.

In fiscal 2013-14, only 2.47 billion taka crore was legalised.

The response was better in the previous four fiscal years — 4.51 billion taka was legalised on average each year, according to the National Board of Revenue.

That, however, doesn’t mean the volume of black money in the country is declining. In fact, it is the other way around.

Latest data of the Swiss central bank shows that Bangladeshi nationals’ deposits with various Swiss banks rose by over 36 per cent year-on-year in 2014.

The amount increased to 42.83 billion taka last year from 31.49 billion taka in the previous year. It was 19.91 billion taka in 2012.

Prof Mustafizur Rahman, executive director of the Centre for Policy Dialogue, said, “When uncertainty looms large over the political situation, not only legal invest-worthy funds flow out of the country but also ill-gotten money finds a safe haven.

“Black money holders do not feel safe to keep money in the country as there will be questions when the money is invested, be it in property or business.”

Many Bangladeshis are keeping their money abroad even without any return—at zero interest—though they know if invested in Bangladesh, it could fetch them huge profits, he told The Daily Star.

Malaysia has become a key destination for capital from Bangladesh.

More than 3,005 Bangladeshis availed themselves of the Malaysia My Second Home (MM2H) facility until December 2014, securing the third position after Chinese and Japanese citizens on the list of foreigners enjoying the MM2H facility, according to the Malaysian government’s website.

Immigration consultants and businesspeople, who frequently visit Malaysia, said a far greater number of Bangladeshis obtained business visas by opening up companies in Malaysia.

Many politicians started businesses such as hotels and trading firms there, and made investments in properties in the names of their wives and children, they said.

“But information on this type of visa is not made public by the Malaysian government,” said a Bangladeshi, who availed himself of the opportunity in 2013.

Opening up a firm, which requires only around 30,000 taka, could guarantee a person a Malaysian visa for one year.

Upon making some investments, he could obtain a five-year visa, which could be extended to 10 years, said the Bangladeshi.

Using similar methods, many Bangladeshis, including politicians, have invested and bought second homes in the USA, the UK, Australia, the UAE, Singapore and New Zealand.

Analysts say capital flight and millionaire migration are normal consequences of rising wealth in any country.

According to the US-based Wealth Insight, globally 20 to 30 per cent rich people have their wealth overseas.

But much of Bangladesh’s offshore wealth is moved illegally or in the shadow economy.

A Bangladeshi citizen is not permitted to move more than $5,000 out of the country at a time.

But through illegal means, one can siphon off capital very easily, no matter how large the sum is.

Anti-Corruption Commission officials say they are investigating money laundering cases that have been on the rise in recent years.

According to the ACC annual report in 2013, the commission received several hundred allegations of money laundering, and investigated 118 cases.

The figure was 39 in 2012. Many of these cases involved politicians, said commission officials.

The ACC is yet to come up with its report for 2014, but the officials hinted that the number of money laundering cases was going up.