Thursday, June 20, 2024

Corruption Driven Investment in Bangladesh

Washington, DC – Beijing is trying hard to present itself as a partner for economic recovery after the Covid-19 pandemic. But just as Chinese medical equipment has often been faulty, its approach to economic recovery comes with waste, fraud, and political manipulation. Chinese-driven corruption now permeates into several layers of Bangladeshi business enterprises, even government transactions.

A stunning criminal case recently revealed that the Chinese were facilitating the illegal printing of ‘bandrolls,’ which are supposed to be exclusively printed by order of the Bangladeshi government. Bandroll is a small thin ribbon wrapped on a packet of Bidi & Cigarettes. A Bangladesh government organization, Security Printing Corporation of Bangladesh, prints these, and Cigarette/Bidi companies are supposed to procure these bandrolls by paying tax/VAT, known as cigarette tax. A Chinese company based in Shenzhen called ‘Digit Anti Fake Company Ltd’ (DAFC) had supplied these counterfeit band rolls/stamps to Chittagong-based Arafat Enterprise under the guise of supplying Art/ A4 size papers. The supply of fake bandrolls results in over BD Taka 250 crore fraudulent tax evasion for Bangladesh’s National Board of Revenue (NBR).

Furthermore, this Chinese company, ‘Digit Anti Fake Company Ltd’ (DAFC), is involved in printing other counterfeit documents, including passports, ballot papers, national identity cards, and birth registration certificates. The Bangladesh authorities detected a website run by DAFC mentioning bandroll with ‘Bangladesh’s National Board of Revenue, Customs Paid.’ But what is most disturbing in terms of investigation is that although the Bangladeshi port authorities suspect the involvement of other Chinese companies in such illegal activities, they were reluctant to take action due to ‘pressure’ from senior officials.

Reminiscent of how the China-backed Pol Pot regime turned farms into “killing fields” in strife-torn Cambodia, people in Bangladesh are dying at the workplace on an industrial scale. The difference is that now Bangladeshi workers are risking their lives in dangerous Chinese-run illegal factories in the country. In July 2021, a massive fire in a factory near Dhaka brought to the fore the existence of Chinese-run illegal factories. Large scale operations under which several unauthorized factories are involved in the dangerous task of manufacturing batteries and are in fact run by Chinese nationals in the heart of Dhaka. The massive fire that broke out at a factory in Bangladesh’s Narayanganj, killing at least several dozen people, should be a wake-up call for the South Asian nation. Once again, these illegal Chinese nationals who had no work permits are operating with the connivance of local Bangladeshis, who had procured the site for the unlawful factories as the Chinese cannot purchase land in Bangladesh.

The ill-treatment of workers is a significant concern regarding working conditions in the construction process of coal-fired power plants as part of the Chinese megaprojects in Bangladesh. Take, for instance, the increasing Chinese investment in coal plant construction. In April 2021, a group of workers of the SS Power Plant gathered in Chattogram to peacefully protest for higher wages and reduced working hours. Police authorities intervened to quell the protest through violent means. The Bangladeshi press recorded five deaths and a dozen injured people in the clash. Indeed, the coal plant and infrastructure implementations are causing widespread displacement of highly populated rural areas by endangering their ecosystem and water and air pollution resources. As a result, inhabitants of the impacted regions gathered in protests to stop the land seizing. Furthermore, the increase in the building of coal plants is failing to respect workers’ rights.

Under a government-to-government approved project, China manipulated that it would employ Chinese contractors without any opportunity to hire contractors for the projects through international tenders, and only Chinese contractors would be allotted work. Moreover, these companies increase the amount of expenditure by repeatedly extending the duration of the project on various pretexts. As more and more cases of Chinese embezzlement of funds in projects came to the forefront, China was forced to withdraw from financing three infrastructure projects in Bangladesh. The projects abandoned by China are related to the railway sector and included:

      1. Building a mixed gauge double line from Joydebpur in Gazipur to Ishwardi in Pabna near the capital Dhaka.
      1. Converting the meter gauge line from Akhaura to Sylhet.
      1. The construction of a mixed gauge double railway line from Joydebpur to Jamalpur via Mymensingh.

Reports indicate that the project involving the construction of railway lines at both ends of the Padma Bridge and of tanks at the bottom of the Karnafuli River in Chittagong – which is also part of the GTG system with China – are suffering significant delays and substantial cost overruns, with money spent more than doubling from the original estimate due to repeated extensions.

China is not only exporting steel and concrete but also corruption, opacity, and waste. Beijing pledged a new “Clean BRI” in 2019. But it is still unclear what concrete steps Beijing is prepared to take to truly eradicate corruption in its foreign dealings. In a post-pandemic situation where Bangladesh too is looking at economic recovery, it runs the risk of becoming even more dependent on Beijing, which is rife with systemic corruption, paired with a lack of accountability. Several detailed case studies of Chinese projects in Bangladesh demonstrate the consequences of China’s failure to engage in open and transparent conduct. Chinese investments in Bangladesh have systematically failed to respect human rights by creating long-lasting negative results for people and the environment. These features are not incidental side effects of working in countries where graft is already endemic, but rather an upside for China. Chinese projects in Bangladesh also show faulty payment, poor labor facilities, impracticality, and corruption. Beijing has never been committed to transparency, engaging in unequal trade relations with the relatively weaker states. Chinese syndicates and criminals have been highly efficient in creating loose, flexible multinational structures that are often linked with legitimate business enterprises and exploit weaknesses in Bangladesh’s law enforcement systems.

Author profile
Pia Sherman

Pia Sherman is a freelance writer. Views expressed are solely of the author.

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