That over-invoicing is the widely used tool for transferring funds abroad illegally was not any revelation made by the head of the country's anti-graft watchdog at an event last Monday. The issue is more or less known to all, courtesy of the US-based Global Financial Integrity (GFI). Yet given its enormity and impact on the economy, the problem needs to be discussed until it is adequately contained through appropriate actions on the part of the relevant agencies. So, the chairman of the Anti-corruption Commission (ACC) is justified in raising the issue during a view-exchange session with 'senior journalists'.
It had been suspected for long that a large volume of funds was being taken out of the country through illegal means. But none knew its size. When the GFI revealed that US$ 75 billion had flown out of the country illegally between 2005 and 2014, meaning more than $7.0 billion a year, everybody was shocked. In 2015, nearly $6.0 billion was siphoned off using illegal routes, over-invoicing being the principal one. Following the publication of the GFI estimate of capital flight, the government and the central bank were found engaged in a flurry of activity to stem the illegal capital outflow. But the reality is that there has not been any notable improvement either in stopping the illegal capital outflow or getting back the funds that were taken out of the country in the past years. Inaction and lack of coordination, in most cases, are found to be major barriers.
The dissatisfaction that the ACC chief vented over lack of response on the part of the National Board of Revenue (NBR) to the commission' s request to send a report on businesses involved in over-invoicing is a pointer to the state of coordination. The NBR, reportedly, has penalised a number of business firms for their involvement in over-invoicing. If the ACC seeks to know about those errant businesses and take a few actions to retrieve the funds taken out of the country, there should be no reason for the NBR for not responding to the former's request.
Capital flight via trade transactions, according to the GFI findings, is quite common, particularly in the case of developing countries where scope of amassing wealth through corrupt means is wide open. The state of corruption in Bangladesh does not need any elaboration. The size of the shadow economy, as figured out by none other than the Ministry of Finance some years back, does speak volumes about it. It is natural that a part of the tainted money would be taken out of the country and accumulated in safe havens.
However, these so-called dishonest businesses do deserve severe punishment. The coordination between the ACC, the NBR and the central bank is very important in the event of any serious attempt for retrieval of siphoned-off funds. But ensuring such coordination is found to be a difficult task. Unless they are pressed hard by the powerful quarters in the government none is found willing to cooperate. Moreover, the extent of over-invoicing in trade transactions could be reduced to a notable level, if the banks concerned exercises vigilance while opening the import letters of credit (LCs) and the customs meticulously tallies goods on their arrival with the LC documents.
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