The White Paper on the state of Bangladesh’s economy will include a review of “smuggled money”, according to the head of the committee, Debapriya Bhattacharya, entrusted to prepare the White Paper.

Anis Chowdhury

Previously Bhattacharya referred to the issue of bringing back siphoned money as “a complex issue”; but this should not dampen the resolve to strongly pursue this important matter. It will likely take many years of sustained efforts to repatriate a significant portion of such assets and the current interim government led by Professor Muhammad Yunus should put in place an action plan supported by necessary mechanisms, including international cooperation arrangements, which would be continuously pursued over the coming years. Strong and sustained political will be critical to the success of these efforts.

Bangladesh can learn from other countries in in its pursuit of recovering stolen assets.

Success cases: A positive trend
It is encouraging that despite complexities and difficulties, there have been cases of significant success based on international cooperation. Over US$10 billion of stolen assets have been returned between 1997 and 2023. Since its inception in 2007, the UN-World Bank joint “Stolen Asset Recovery Initiative” (STaR), helped recover close to US$2 billion stolen assets.

Khalilur Rahman

• In January 2024, a court in the US ruled that stolIn 2020, the US and Jersey returned US$311 million to Nigeria, traced back to former president Sani Abacha
• By 2004 the Philippines was able to repatriate US$683 million of Ferdinand Marcos money held in Swiss Bank accounts;
• Between August 2001 and 2004, Peru recovered nearly over US$180 million stolen by Vladimiro Montesinos from several jurisdictions such as Switzerland, Cayman Islands and the US;
• Between 2005 and 2006, Nigeria recovered US$505 million of the Sani Abacha money frozen and forfeited by Swiss authorities;
• en assets worth £6.9m should be returned to Nigeria;
• In 2022, the US transferred over US$20.6 million to Nigeria, traceable to the kleptocracy of former Nigerian Dictator General Sani Abacha and his co-conspirators;
• In 2021, the UK returned £4.2 million to Nigeria related to former Governor of Delta State James Ibori and his associates;
• In 2021, the UK returned around £450,000 to Moldova, forfeited from the son of Moldova’s former prime minister, Vladimir Filat;
• In 2006, British authorities returned US$1.9 million to Nigeria illicitly gained by Diepreye Alamieyeseigha, governor of the oil-rich Bayelsa state in Nigeria.
• In 2007, the US and Switzerland repatriated US$84 million to Kazakhstan

As of year-end 2020, the Philippine government recovered P174.2 billion in Marcos ill-gotten wealth and as of 2021, 35 years since the people power revolution, the Presidential Commission on Good Government (PCGG) that Cory Aquino established, has been running after P125.9 billion more in ill-gotten wealth from the Marcos family.

Ziauddin Hyder

Nigeria and Peru have taken an average of five years to achieve successes. This reflects improvements in the processes and increased international efforts as well as cooperation in recent years.

Haiti cannot be Bangladesh’s role model
The main challenge is the weakening of political will to continue pursuing illicit assets as it happened in post-Jean Claude Duvalier Haiti. The Duvalier case has been a slow and laborious process taking decades to unfold.

Haiti’s lack of political will was highlighted in 1989 by an attorney working on Duvalier’s case on behalf of the Haitian government. According to The New York Times, despite sending twenty-five requests for assistance to Haitian officials regarding cases in New York, by September 1988, Haiti’s government had “inexplicably stopped cooperating—and, not so incidentally, stopped paying its legal bills.”

Renewed asset recovery efforts in the US by the Haitian government of President Aristide yielded only minimal results, with the most well-known being the recovery of US$350,000 from Duvalier’s wife’s account at the Bank of New York.

Some believe that, had Haiti not dropped the original Duvalier asset recovery, the Haitian government could have recovered between US$25 and US$75 million by 1990. However, the resulting debacle left Duvalier free and the majority of his assets untouched. Meanwhile, Haiti had to face a US$1.2 million legal bill and with justice denied.

Why Bangladesh must persist
Notwithstanding complexities, in recent years there have been significant successes due to enhanced law enforcement tools and improved international cooperation from well-meaning countries and financial centres. These help the fight against corruption and impunity.

Recovering stolen assets should not be focused simply on money. It must also be seen as a tool of deterrence as well as fighting the impunity. Stolen asset recovery serves three distinct purposes: (i) recovering monies to fund governments programmes, especially helping the victims of the fallen regime;(ii) providing a semblance of justice for victims of a political culture of impunity; and (iii) deterring officials and politically connected elites from engaging in corruption.

Therefore, the efforts to bring back lost assets should not be regarded as a stand-alone undertaking; but should become an integral part of the agenda of reforming the state so that incentives and opportunities of siphoning off scarce resources are effectively removed.

Anis Chowdhury, Emeritus Professor, Western Sydney University (Australia) & former Director of UN-ESCAP’s Macroeconomic Policy & Development Division.

Ziauddin Hyder, Former Director Research BRAC and Adjunct Professor, University of the Philippines at Los Banos

IPS UN Bureau

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Bangladesh bleeds as over US$3 billion drains from Bangladesh annually through offshore accounts. According to a recent report, close to US$150 billion was siphoned off the country during 15 years of kleptocratic Hasina regime’s mis-rule. Nearly US$50 billion went out of the country in the first six years (2009-2015) of the Hasina regime.

Anis Chowdhury

Corruptions and illicit transfer of funds
Bangladesh has been a fertile ground for corruption and usurpation of public money. A 2011 UNDP report ranked Bangladesh at the top along with Angola among least developed countries (LDCs) for “illicit financial flows”.

Corruption and illicit transfer of funds reached an unprecedented level during the fallen Sheikh Hasina’s autocratic regime as the regime’s survival became increasingly reliant on letting its cronies and kleptocrats rob banks. A staggering US$8.4 billion was misappropriated from banks alone through irregularities, misuse of powers, and money laundering.

Another major source of corruption by kleptocrats has been grossly inflated aid- and foreign debt-funded mega projects. Tax evasion by politically connected elites has been a major source of revenue loss, estimated at US$703 million a year.

A 2017 Global Financial Integrity Report found illicit financial flows from Bangladesh the highest among LDCs. On average as much as US$8.3 billion per year has been laundered from Bangladesh through trade mis-invoicing alone – by inflating import price and under-pricing exports – between 2009 and 2018.

Khalilur Rahman

It is reported that 252 Bangladeshi bureaucrats, police and other officials bought houses in the United States by laundering the country’s money. Bangladeshis top the list of foreign buyers of real estates in Dubai. Canada’s “Begumpara” has become the “forbidden paradise” of wealthy Bangladeshis. One ex-minister of the previous regime alone owns 350 properties, worth approximately over US$264 million, in the UK.

The offshore financial wealth of Bangladeshis is estimated at 0.7% of the nation’s GDP. Illicit fund transfer from Bangladesh is estimated at 2.2% of the country’s total revenue in fiscal year 2019-20, and deprives Bangladesh of over US$700 million worth of revenue income.

Kleptocracy: Rule by thieves
Under Sheikh Hasina, state institutions served regime elites or kleptocrats to exploit citizens. This undermined democratic norms and weakened economy’s foundation. Kleptocrats often stash their ill-gotten gains outside the country.

Ziauddin Hyder

Recovering stolen wealth for sustainable development
Corruption and illicit transfer of funds are a major drag on development. Therefore, asset recovery is included in the Sustainable Development Goals (SDG) under Goal 16.4 and in the commitments under the Addis Ababa Action Agenda on Financing for Development.

The recovery of stolen assets is a fundamental principle of the UN Convention against Corruption. Chapter V of the convention provides a framework for the return of stolen assets, requiring states parties to take measures to restrain, seize, confiscate, and return the proceeds of corruption.

However, there is no single international authority responsible for recovering laundered money. Several mechanisms and institutions work together to address this issue. There are a number of international laws and conventions that can be used to claim laundered money. These agreements provide a framework for cooperation between countries in combating money laundering, terrorist financing, and other financial crimes.

Bangladesh can seek assistance of the United Nations, the World Bank and Interpol. The United Nations Office on Drugs and Crime (UNODC) and the World Bank have a joint Stolen Asset Recovery Initiative (StAR) to support international efforts to end safe havens for corrupt funds. Since its establishment in 2007, StAR has assisted over 35 countries in drafting legal frameworks, setting up the institutional structure, and building the skills necessary to trace and return stolen assets.

Interpol assists countries to recover and return assets obtained corruptly. Interpol works closely with a number of national, regional and international bodies such as the International Anti-Corruption Coordination Centre, which brings together specialist law enforcement officers from multiple agencies around the world to tackle allegations of grand corruption and help bring corrupt elites to justice.

Political will is critical
The recovery and return of criminal assets is a complex process. It can take many different shapes, depending on the type of corruption offense, how the recovery effort is initiated and by whom. It also depends on whether a criminal conviction exists in the state of origin, whether criminal or civil process is used – or both; as well as which legal mechanisms to restrain assets are available in the destination state. Whether the state harmed by corruption has requested a return of their stolen assets is fundamentally important.

However, the most critical factor is political will. Collusive abuse of power is the most important reasons why nothing happens to the perpetrators of high-level corruption and illicit transfer of funds.

Bangladesh itself has the Money Laundering Prevention Act, which criminalises laundering and authorises the confiscation of laundered assets. Bangladesh has also signed mutual legal assistance treaties (MLATs) with other countries.

Sadly, the country does not effectively use any of the tools to recover laundered money, whether during Hasina’s autocratic rule or prior to it. Bangladesh is yet to sign MLATs with popular money laundering destinations – Australia, Canada, Cyprus and Switzerland.

Time to act now
The leading national dailies have recently carried editorials highlighting the urgent need to recovering the country’s smuggled money. Politicians are also raising the issue with important countries, such as Switzerland. The President of the Bangladesh Economic Association has urged for the formation of a separate commission to stop corruption, money laundering and recovery of undisclosed money.

There is also momentum in some destination countries. For example, Sheikh Hasina’s niece, Tulip Siddiq, a British Bangladeshi Labour Party lawmaker and a minister, is being investigated by the UK parliament’s standards for a London property.

Bangladeshi diaspora community has been active in exposing money laundering and real estate investments by corrupt Bangladeshi politicians and elites in various countries; and is campaigning to confiscate their assets.

Thus, there is a momentum; and the interim government must act now. This is the best opportunity for the country to recover its billions of dollars of stolen asset. The head of the interim Government, Professor Yunus, must use his international standing and good will to request the United Nations, the Interpol and destination countries to assist Bangladesh in this regard.

The interim Government should also initiate MLATS with missing popular destination countries and become a party to the OECD’s Convention on Mutual Administrative Assistance in Tax Matters and “Common Reporting Standard”. This will allow Bangladesh to obtain the bank account and other financial information of Bangladeshis living in the signatory countries.

Anis Chowdhury, Emeritus Professor, Western Sydney University (Australia) & former Director of UN-ESCAP’s Macroeconomic Policy & Development Division.

Ziauddin Hyder, Former Director Research BRAC and Adjunct Professor, University of the Philippines at Los Banos