Padma Bridge and corruption

It is a sad state of affairs when an entire nation has to suffer for the actions of just a few. The World Bank has claimed to have found credible evidence of a high-level corruption conspiracy among selected government officials involved in the Padma Bridge project. The cancellation of the $1.2 billion credit for the Padma Bridge project will have an adverse effect on the Bangladesh economy for years to come. It will also make it difficult for the current government to begin what it thought would be one of its signature achievements. The government will look for alternative sources of funding for the Padma Bridge. Malayasia has shown some interest. However, the World Bank decision will surely affect the terms and conditions that any prospective donor would offer for funding the project. And it definitely would not go in our favour. The question now is whether the Padma Bridge would be viable given the high interest rates that any subsequent donor would ask for? Allegations of corruption in various projects are nothing new in Bangladesh. It has happened in the past and will continue to happen in the future. What is new this time is the pretension in certain quarters that nothing has happened. The government shares the blame for the predicament in which it finds itself today. Allegations of corruption in this project have been circulating in both the domestic and international arena for some time now. Credible evidences were presented to the government. But in a misguided effort to protect a few, attempts were made to sweep the allegations under the rug or question the motivation of the whistle-blowers. Instead of being proactive, the government was defensive. The indictment of two employees of SNC-Lavalin in the Canadian court for trying to bribe Bangladeshi officials is a sure sign that something was going on. It would have been nice if the government went after the alleged Padma Bridge bribe-seekers with the same tenacity that it had shown while going after, say, Arafat Rahman Coco for the Siemens bribe. Personal relationships and loyalty should have been secondary to national interests. The general public are not naive and understand the reasons for the AL government's (in)action. If the tables were turned, we would have expected the same from the BNP. So let us look at the big picture of corruption in Bangladesh. Bangladesh has been at, or near, the bottom of a number of accountability, transparency and corruption indices over the last decade. Corruption is one of the leading obstacles to political, economic and social development. On top of endemic corruption, the rule of law is weak, and there is limited bureaucratic transparency. The political machinery involves deep-rooted patronage systems and public officials often have vested interests in their positions. Corporate integrity is also very low, as scandals regularly highlight companies' payment of kickbacks both when operating inland and abroad. High-ranking officials and well-connected businesspeople enjoy virtual immunity from corruption charges. So what is the impact of this pervasive situation? It has undermined the rule of law and has weakened the institutional basis for good governance. It is the poor in the society that are often the hardest hit by the effects of corruption, being the most reliant on public services and the least capable of paying the high price for those services due to the associated fraud, bribery and other forms of corrupt activity. There is an increasing recognition in the public domain that corruption and other aspects of poor governance have substantial adverse effects on the distribution of income. Corruption is often viewed as exacerbating conditions of poverty in a country like Bangladesh which is already struggling with the strains of economic growth and democratic transition. I, along with my co-researchers Shakil Haider and Sourav Batabyal, have recently done some work on the impact of corruption in selected Commonwealth countries. We found some interesting results for Bangladesh. First, corruption affects poverty by influencing governance factors, which, in turn, impact poverty levels. For example, corruption erodes the institutional capacity of government to deliver quality public services, diverts public investment away from major public needs into capital projects (where bribes can be sought), lowers compliance with safety and health regulations, and increases budgetary pressures on government. These serious challenges to governance practices and outcomes affect poverty. Second, perpetrators of corrupt practices will try to escape detection by trying to hide their behaviour as much as they can. They do this by concealing their illegal income, investing this income separately from legal income and by changing their patterns of expenditure. For example, more than 30% of urban households were found to reduce electric and/or water bills by bribing the meter reader. Third, we found ample evidence to show that corruption has exacerbated income inequality in Bangladesh. Lower income households paid a high proportion of their income in bribes. Bangladesh faces significant challenges as one of the world's least developed countries. The business climate is hampered by a cumbersome bureaucracy and pervasive corruption at all levels of government. The government has been seeking to implement investor-friendly policies, but implementation has often proved complicated due to the fragile and shifting political situation, insecurity and pervasive corruption. As a first step in curbing corruption, we need to raise public awareness. Although I do not agree with all the positions taken by Anna Hazare's recent anti-corruption drive in India, he at least succeeded in bringing the corruption issue to the forefront of public discourse. We need to stop giving bribes and expose those who ask for them. Cynics will surely say that we can't get anything done in Bangladesh unless we bribe officials. Let us at least start changing our mindset. This could be a first step in what surely would be a long journey.

The writer is a Professor and Chair, Department of Economics, Marquette University. E-mail: [email protected]