Bangladesh Country Profile

General Information

The Political Climate


Bangladesh faces huge challenges as one of the world's poorest countries and due to annual floods on its low-lying coasts, power shortages and rampant corruption. However, some recent political and economic developments are encouraging.

The political system in Bangladesh changed dramatically in January 2007 when a state of emergency was declared by the military-backed interim Government of Bangladesh (IG) under pressure from the military. Although civil and political liberties were subject to tight restrictions under the IG, the IG fought hard against the extremely high levels of corruption that have placed the country at or near the bottom of numerous accountability, transparency and corruption indices for several years. It acceded to the United Nations Convention against Corruption (UNCAC) on 27 February 2007. Further, it launched a campaign against corruption, and many businesspeople, high-level politicians and their family members were sentenced for corruption and other illegal acts by special anti-corruption courts set up to deal with the many corruption cases. This included charges against Prime Minister Sheikh Hasina Wajed, ex-Prime Minister Begum Khaleda Zia and about 150 other top political figures. The charges against Prime Minister Sheikh Hasina were dropped when, on 6 February 2008, the High Court dismissed the trial, ruling that she could not be prosecuted under emergency laws for alleged crimes committed prior to the imposition of the state of emergency. The state of emergency was in force until national elections were held on 29 December 2008, the first democratic elections in seven years. Prime Minister Sheikh Hasina and her Awami League party were declared winner of the elections by an overwhelming majority over the Bangladesh Nationalist Party (BNP).

Various sources, including the World Bank and the Transparency International Bangladesh National Household Survey 2007, report that corruption has a substantial negative effect on the Bangladesh's GDP and per capita income. Given a political environment rife with corruption, business executives surveyed by the World Economic Forum Global Competitiveness Report 2009-2010 report that the level of public trust of politicians is very low. According to the Transparency International Bangladesh National Household Survey 2007, Bangladeshis pay some bribes directly, while others are transferred through brokers, such as lawyers and agents, who facilitate contact with public institutions by bribing officials. The survey indicates that rural areas are slightly more prone to bribery than urban areas. According to the same survey, more than two thirds of households had experienced corruption when interacting with either public or private sector institutions. Corruption is found to be especially prevalent in law enforcement agencies, with 96.6% of households reporting that they experienced corruption in their interactions with law enforcement agencies. Political parties, land administration and the judiciary are other institutions where corruption and bribery is highly prevalent.

Business and Corruption

According to the World Economic Forum Global Competitiveness Report 2009-2010, the major constraint on foreign companies operating in Bangladesh is first and foremost the inadequate supply of infrastructure. This is followed by corruption, inefficient government bureaucracy, inadequate access to financing and policy instability. Bangladesh performs poorly across all institutional indicators covered by the report. Corruption is present in most interactions with public authorities. According to the World Bank & IFC Enterprise Surveys 2007, 85% of the companies surveyed expect to pay unofficial payments to 'get things done', while 55% identify corruption as a major constraint for doing business. According to the Ethical Corporation 2007, the perception of added risk in the wake of the IG anti-corruption campaign has in some cases led to the asking price for bribes to increase.

While laws on disclosure of assets and conflicts of interest exist, they are rarely enforced. Significant parts of the state budget (including state-owned companies) remain outside legislative control. Trade and business associations are often led by former government employees or politically active persons, leading to patron-client relations between government and business. Private sector corruption is also widespread, and Bangladesh performs poorly in relation to the ethical behaviour of companies in interactions with public officials, politicians and other companies, according to the World Economic Forum Global Competitiveness Report 2009-2010. According to a Transparency International Bangladesh Household Survey 2005, the private sector is one of the most corrupt sectors in the country. According to the World Economic Forum Global Competitiveness Report 2009-2010, business executives report that public funds are fairly commonly diverted to companies, individuals, or groups due to corruption. Therefore, companies are recommended to use a specialised public procurement due diligence tool in order to reduce corruption risks related to public procurement in Bangladesh. According to Transparency International Global Corruption Report 2009, despite the adoption of the Public Procurement Act 2006 and the Ordinance in 2007, the private sector has reportedly continued to engage in malpractices in the procurement process. While private-public sector corruption is illegal, business-to-business corruption is not. Audits cannot always be trusted, as auditors rarely conform to international standards and are known to produce reports according to the wishes of the client.

Bangladesh's formal economy is shadowed by a large informal sector. According to the World Bank & IFC Enterprise Surveys 2007, nearly 50% of service companies report that they must compete against unregistered or informal companies, and nearly 17% identify the practices of competitors in the informal sector as a major constraint. Furthermore, corporate and bureaucratic tax evasion is reportedly a common source of corruption. In order to better manage legal and financial corruption risks, companies are strongly recommended to develop, implement and strengthen integrity systems and to conduct extensive due diligence when planning to do or already doing business in Bangladesh.

Regulatory Environment

Bureaucracy in Bangladesh functions relatively unchecked by both government and civil society. High-level civil servants, in particular, constitute a strong interest group. The bureaucracy remains politicised in regards to recruitment and promotions, but lack of transparency and accountability seems to be the biggest problem. According to Transparency International Bangladesh 2007, corruption and undue political influence are rampant in the Public Service Commission (see more under 'Public Anti-Corruption Initiatives' in the Initiatives section). Officials sometimes obtain their positions and promotions through bribes and are not necessarily chosen on the basis of merit and skills. There are no rules limiting the acceptance of hospitality for civil servants. The combination of low salaries for public servants, the discretionary powers of the bureaucracy and the complexity of the regulatory environment encourages private-public corruption and the use of facilitation payments. Business executives surveyed in the World Economic Forum Global Competitiveness Report 2009-2010 perceive government administrative requirements to be quite burdensome. Moreover, business executives also report that government policy-making is fairly opaque and that government officials usually favour well-connected companies and individuals when deciding on policies and contracts. Commercial regulations can be ambiguous and inconsistent, and the Heritage Foundation 2010 notes that the lack of transparency increases start-up and overall operational costs. Moreover, according to the US Department of State 2007, foreigners often find that ministries require unnecessary licenses and permissions. In addition, problems such as an uncertain law and order situation, poor infrastructure, inadequate commercial laws and courts, inconsistent respect for contract sanctity, and policy instability contribute to an unfavourable business climate and corruption remains a serious impediment to efficient business operations.

According to the World Bank & IFC Doing Business 2010, the regulatory environment in Bangladesh has become relatively more burdensome for companies since the 2007-2008 year. Entrepreneurs can expect to go through 7 procedures and spend 44 days at a cost equal to 36.2 % of GNI per capita on average to start a company. While there is no minimum deposit requirement for obtaining a company registration number, the time required to start a company is nearly double the regional average. Overall difficulties related to trade have reportedly decreased since the 2006-2007 period. However, the country is reported to be performing relatively worse in this area compared to the 2007-2008 period, and continuing regulatory constraints on trade include high tariffs, inefficient and corrupt customs, and a relatively low level of international market integration compared to other countries in the region.

Property rights are legally protected in Bangladesh, but are reportedly not always well-defined or protected in practice, the result being that land purchase and leasing issues are plagued by uncertainties. According to the US Commercial Service 2007 and the Bertelsmann Foundation 2010, the situation persists because of antiquated real property laws. In addition, land registration records are deemed unreliable. Often parties do not register mortgages, liens and so forth because of expensive duties and fees. The uncertainties are further aggravated because the instruments only take effect from the date of execution and not the date of registration.

According to the World Bank & IFC Doing Business 2010, Bangladesh's legal system is inefficient. Business executives surveyed in the World Economic Forum Global Competitiveness Report 2009-2010 report that the judiciary is not independent from political influences of members of government, citizens or companies. The enforceability of contracts is characterised as unreliable. It is common to include an arbitration clause in commercial contracts, as Bangladesh is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and a signatory and contracting state of the New York Convention 1958. The enforcement of IPR is insufficient and few sentences have been made in relation to a large number of infringements. In the lower courts, where cases are first heard, corruption is perceived as a severe problem. The Bangladesh Export Promotion Bureau is known to offer assistance in dispute settlement of export-related transactions. Access the Lexadin World Law Guide for a collection of legislation in Bangladesh.

Judicial System

Individual Corruption

According to the Transparency International Bangladesh National Household Survey 2007, approximately half of the people in rural areas who have dealings with the lower courts experience corruption. In urban areas, incidences of bribery are of a slightly lower frequency (37.7%). Although these numbers are high, when compared to the Transparency International Bangladesh Household Survey 2005, they show a declining trend.

Some bribes are solicited by clerks responsible for registering, filing and processing cases, whereas other bribes are solicited by lawyers directly from the defendants and plaintiffs and are then passed on to judges or magistrates. The bribes are paid in order to gain information or favours from magistrates in criminal courts.

Business Corruption

Taken together, the World Bank & IFC Doing Business 2010 and the World Economic Forum Global Competitiveness Report 2009-2010 reveal Bangladesh's courts to be both inefficient and subject to political influences of members of government, citizens and companies. Companies involved in legal disputes generally try to avoid the lower courts due to the high frequency of corruption at this judicial level. The judiciary suffers from a heavy backlog of cases and no new appointments to the lower courts have been made since 1999 due to the lack of a judicial service commission. Companies should be aware that the system is prone to corruption and that lawsuits and commercial disputes are often delayed. Disputing parties are subsequently encouraged to pay 'speed money' in order to expedite the handling of cases. An initiative intended to speed up lawsuits has had the result that some of the selections of fast trials have been influenced by political considerations.

Political Corruption

The Supreme Court is the highest court in Bangladesh, and its judges are appointed by the President. Court procedures are often cumbersome, politically influenced and corruption prone. The Supreme Judicial Council is responsible for investigating allegations of misconduct by judges in the higher courts.

Political influence affects appointments, case selections and rulings, according to the Transparency International Global Corruption Report 2007. The US Department of State 2008 reports that the Appellate Division of the Supreme Court used to overturn politically charged decisions; however, since a new Chief Justice of the Appellate Division was appointed in April 2008, it has stopped doing so if the ruling is against the government.

Frequency

The World Bank & IFC: Doing Business 2010:
- Enforcing a commercial contract in Bangladesh requires a company to fulfil 41 administrative procedures, taking an average of 1,442 days and costing an average of 63% of the claim.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the independence of the judiciary from influences of members of government, citizens, or companies a score of 3.5 on a 7-point scale (1 being 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal system for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 3 and 3.1 respectively on a 7-point scale (1 being 'extremely inefficient' and 7 'highly efficient').

Transparency International Bangladesh: National Household Survey 2007 on Corruption in Bangladesh 2008:
- 41.7% of households interacting with the judiciary had to pay bribes, the average of which was BDT 4,825.

- In 45.2% of the cases interacting with the lower courts the plaintiff had to pay a bribe, the average of which was BDT 5,124.

- In 47.6% of cases involving the middle courts, the plaintiff had to pay a bribe, the average of which is BDT 5,516.

- Urban households paid an average amount of BDT 6,104, whereas rural households paid an average amount of BDT 3,966.

- Overall, the average amount of bribe paid was BDT 4,825.

Transparency International: Global Corruption Report 2007:
- There are 77 Supreme Court justices and 750 other judges to cover a population of more than 160 million.

- Two thirds of people who used a lower court in 2004 paid bribes, with the typical bribe amounting to 25% of per capita income.

The World Bank & IFC: Enterprise Surveys 2007:
- 28.5% of companies surveyed believe that the court system is fair, impartial and uncorrupted.

- More than 18% of companies surveyed identify the functioning of the courts as a major business constraint.

Police

Individual Corruption

Police administration in Bangladesh has a generally poor image and, according to the Transparency International Bangladesh National Household Survey 2007, law enforcement agencies represent the most corrupt institution in Bangladesh.

The solicitation of bribes takes place in cases of unfounded arrests. The average bribe paid to avoid arrest in 2007 was BDT 10,927. The extortion of bribes during document verification is common. This occurs when an applicant fails to satisfy a specific set of official criteria or even when the criteria for verification are actually met. The US Department of State 2008 reports that victims rarely file complaints against the police for fear of retaliation.

Business Corruption

Companies should be aware that households surveyed in the Transparency International Bangladesh National Household Survey 2007 report that, in the vast majority of cases (97%), interaction with law enforcement agencies involves corruption and harassment. Business executives surveyed by the World Economic Forum Global Competitiveness Report 2009-2010 report that the police cannot consistently be relied upon to enforce law and order. This is corroborated by the World Bank & IFC Enterprise Surveys 2007 which reveals that 77% of companies pay for security in Bangladesh while nearly 12% of companies identify crime, theft and disorder as major constraints to doing business in the country.

Vehicles transporting goods are sometimes forced to buy unofficial 'coupons' from the police in order to move from one police district to another without harassment. Transport from ports of arrival is especially targeted by this kind of extortion.

Political Corruption

The police force has not grown at a rate proportional to that of the population. Consequently, understaffing is a problem. Each year, around 80,000 cases are filed against personnel in the police headquarters and between 50,000 and 60,000 police officers are punished. Some of them even go to jail. However, the situation has not improved according to Transparency International's Corruption in Public Administration 2009.

Position buying, which seems to be prevalent at all levels of the police administration, is often the object of bargaining using political influence. According to the Transparency International Bangladesh National Household Survey 2007, a culture of corruption has permeated the police administration, and political use of the police force by the government has provided the police with an environment of impunity that facilitates the extortion of bribes in exchange for protection of the offenders.

Frequency

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the reliability of police services a score of 2.8 on a 7-point scale (1 being 'cannot be relied upon to enforce law and order' and 7 'can be relied upon to enforce law and order').

Transparency International Bangladesh: National Household Survey 2007 on Corruption in Bangladesh 2008:
- 96.6% of household respondents experienced corruption and harassment when interacting with law enforcement agencies.

- The overall average amount of a bribe when interacting with police was BDT 3,940.

- The average amount of a bribe paid to avoid arrest was BDT 10,927.

- The average amount of a bribe paid for filing a complaint or charge was BDT 3,983.

- The average amount of a bribe paid for obtaining a police verification or clearance certificate was BDT 2,605.

Licences, Infrastructure and Public Utilities

Individual Corruption

Great irregularities exist in the provision of utilities and in the settlement of accounts in Bangladesh. For instance, in electricity, metre readers are reported to solicit bribes directly when reading electrical metres. If the customer does not pay a bribe, the customer can face a sudden disconnection. Unofficial payments for new connections are also common.

Irregularities are also seen in the process of attaining a passport, according to the Transparency International Bangladesh Passport Delivery Service 2006 report. According to the report, it is not uncommon to make unofficial payments in order to obtain passport without delay or harassment.

Business Corruption

Companies should be aware that it is generally both expensive and difficult to obtain access to public utilities, as reported by the World Bank & IFC Enterprise Surveys 2007. Furthermore, companies are often faced with irregularities in the provision of utilities and in the settlement of accounts. These utilities include electricity, water and telephone connections. Some companies have unauthorised connection facilities in their shops or workshops and therefore pay bribes to prevent being reported to the authorities.

Inflated billing by telephone companies is also common. The bills often show more calls than were actually made or international calls that were never placed. Challenging a bill is a cumbersome process and reactionary threats to disconnect telephone service if bribes are not paid are common practice. According to Transparency International Global Corruption Report 2009, the revenues of the Bangladesh Telegraph and Telephone Board (BTTB) fell sharply between 2002 and 2007. The key reason for this is corruption in private telecommunication through the growth of illegal VoIP (Voice over Internet Protocol) operations by private cell phone operators. This is a trend facilitated by deliberate inaction to regulate or legalise the VoIP business by the government. Although no authorisation was granted to any mobile phone operators, they have used their equipment for 'internet telephony' by terminating incoming international calls.

Biman, the national Bangladeshi air carrier, which is fully owned and operated by the Government of Bangladesh, suffers from mismanagement and corruption in its organisation, according to a Transparency International Bangladesh Biman Bangladesh Airlines Diagnostic Study 2007. The Board of Biman is neither directly accountable to any other body, nor is it under obligation to report to any other authority concerning its activities and performance because the Chairman of the Board is also the Minister of Aviation.

Political Corruption

The World Bank cancelled 14 road projects in Bangladesh in 2006 due to corruption related to infrastructure projects. Corruption has been detected in the Annual Development Programme that allocates funds for minor infrastructure projects. Many of the bridges constructed have collapsed, due partly to corrupt practices in building and inspections.

The former military-backed interim Government of Bangladesh anti-corruption drive resulted in more than 100 employees of the state-owned gas company, Titas, agreeing to return their illegally earned assets (estimated worth of USD 58 million) to the state on the condition that they would be safe from corruption charges.

In December 2007, the Anti-Corruption Commission sued the former Post and Telecommunication Minister Aminul Haque and one of his aides on charges of misuse of government funds for personal purposes and money laundering in connection with kickbacks. Since he fled the country to evade these charges, Haque's whereabouts are unknown.

The Transparency International Bangladesh Report on the Power Sector 2007 reveals a number of problems in the power sector. These include, among others, widespread presence of corruption in the procurement and distribution network, poor commercial and day-to-day services, consumer harassment and absence of accountability and transparency.

Frequency

The World Bank & IFC: Doing Business 2010:
- Building a warehouse in Bangladesh requires a company to go through 14 administrative procedures, which takes an average of 231 days and costs 645% of income per capita.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the government administrative requirements (permits, regulations, reporting) in Bangladesh a score of 2.5 on a 7-point scale (1 being 'burdensome' and 7 'not burdensome').

The World Bank & IFC: Enterprise Surveys 2007:
- A little more than 85% of companies expect to make informal payments to public officials in order to 'get things done'.

- 23% of companies surveyed identify business licensing and permits as major constraints to doing business.

- 32% of companies surveyed expect to give gifts to obtain an operating licence.

- Approximately 23.5% of companies expect to give gifts to obtain a construction permit.

- A little more than 42% expect to give gifts to obtain an electrical connection, 53% for a water connection, and 76% for a telephone connection.

Land Administration

Individual Corruption

According to the Transparency International Bangladesh National Household Survey 2007, more than half of the households that have dealings with the land administration experience corruption. Bribes are paid for allotment of land as well as registration of land and land tax.

According to the Asia Human Rights Commission 2008, there are examples of the police forcefully harassing people to give up their land in order to assist land grabbers.

Business Corruption

Property rights are legally safeguarded, but problems remain in practice, especially in rural areas. According to Bertelsmann Foundation 2010 implementation problems are acute in rural areas because patronage networks linking landowners, the police and state bureaucrats make it difficult for peasants and minorities to assert property rights. Solicitation of bribes is widespread in the buying, selling and surveying of land. According to the Transparency International Bangladesh National Household Survey 2007, the average size of bribes related to land is BDT 4,409. Land surveyors typically solicit the bribes directly.

During the time of the state of emergency which ended in December 2008, the high-end property market reportedly slowed. This was because the military-backed interim Government of Bangladesh anti-corruption drive had damaged the profitability of illicit activities related to land, resulting in less capital being channelled into the property sector.

Registries of property are inadequate and unreliable, which can cause problems when transferring ownership of land and property. Parties avoid registering various land and property-related issues because of the high stamp duties and other charges.

Political Corruption

According to the Transparency International Global Corruption Report 2008, it is not uncommon for powerful and influential people to easily obtain a court injunction on illegally squatted land. Businesspeople and government officials, especially officials from the Capital Development Authorities, have been known to collude to illegally obtain protected land and use it for construction purposes. These land plots are on lake shores and river banks, thereby threatening the environment, water supply and drainage in the cities etc.

Former Chief Conservator of Forests Osman Gani, who is also accused of wide-ranging corruption related to illegal logging (see 'Environment, Natural Resources and Extractive Industry' in the Corruption Levels section), is accused of having accumulated large sums of money in private accounts by allowing land grabbers to build structures on forest lands in the Bhawal National Park.

Frequency

The World Bank & IFC: Doing Business 2010:
- Registering property requires a company to go through an average of 8 administrative procedures, taking an average of 245 days at a cost of 10% of the property value.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the protection of property rights in Kyrgyzstan, including financial assets, a score of 3.5 on a 7-point scale (1 being 'very weak' and 7 'very strong').

Transparency International Bangladesh: National Household Survey 2007 on Corruption in Bangladesh 2008:
- Of all household respondents who were involved with the land administration, 53% reported having had to pay bribes, of which the average was BDT 4,409.

- In connection with allotment of land, the average size of a bribe amounted to BDT 5,680.

- In connection with registration, the average size of a bribe amounted to BDT 4,237.

- In connection with having a land survey conducted, the average size of a bribe was BDT 3,857.

- In connection with selling and buying of land, the average size of a bribe was BDT 1,857.

- In connection with assessment of land tax, the average size of a bribe was BDT 1,170.

Tax Administration

Individual Corruption

According to the Transparency International Bangladesh National Household Survey 2007, approximately one-fifth of the tax payers surveyed stated that they paid bribes in connection with tax payments. Two-thirds of these respondents report that they pay bribes in order to avoid harassment. The tax imposed on similar households differs widely because of illicit dealings between households and tax officials.

Business Corruption

Tax procedures are bureaucratic and slow, and while tax laws are complex, the authorities have extensive discretionary power in assessing levels of taxation. This makes the sector susceptible to corruption. According to Global Integrity 2008, tax laws are not always enforced uniformly and without discrimination. Tax payers are often forced to appeal through the legal system, which is cumbersome and time-consuming.

The Tax Ombudsman reports that corruption in relation to tax officers and tax administration, delays in decision-making and delays in tax refund payments is caused by several factors. Among these are the improper maintenance of taxpayer records, neglect in responding to taxpayer's applications and inquiries, illegal decision-making, reluctance to issue determined tax refunds, subversion and neglect of prescribed procedures, and a deficiency of knowledge and skill.

Political Corruption

In September 2007, Afroza Abbas, wife of the detained former Minister of Housing and Public Works, was sentenced to a total of 16 years in prison and a substantial fine in two tax evasion cases. She was charged with concealing information about wealth on tax returns and for providing false information on the returns.

Frequency

The World Bank & IFC: Doing Business 2010:
- Companies are required to make 21 tax payments and spend 302 hours on average at a total tax rate of 35% of profits annually to manage the burden of paying taxes.

Transparency International Bangladesh: National Household Survey 2007 on Corruption in Bangladesh 2008:
- 21% of households that paid tax had to pay bribes, the average size of which was BDT 5,282.

- Of 14% of the respondents paying holding tax, 3% had paid bribes averaging BDT 619.

The World Bank & IFC: Enterprise Surveys 2007:
- 30% of companies surveyed consider tax administration to represent a major constraint to doing business.

- 86% of companies expect to give gifts in meetings with tax inspectors.

Customs Administration

Business Corruption

Many companies consider the customs to be among the most corrupt institutions in the country. Customs procedures in the ports of Chittagong and Chalana, as well as in the airports, are complicated, slow and bureaucratic. According to Global Integrity 2008, customs and excise laws are not always enforced uniformly or without discrimination. Public officials have considerable discretionary power in estimating the value of goods and are able to delay clearance procedures, which leaves room for corruption. The US Department of State 2007 reports that businesspeople often complain of petty corruption, such as the need to make unofficial payments to obtain customs clearance services.

Chittagong Port is known as a corruption-prone and risky port, according to Transparency International Bangladesh Problems and Potentials of Chittagong Port 2007. The Chittagong Port, which handles 85% of the country's total imports and exports, is considered to be one of the most inefficient and corrupt ports in Asia. According to the report, corruption has become institutionalised in the offices of the port where bribes or facilitation payments are expected if a task or procedure needs to be completed. In order to submit or amend a mandatory Import General Manifesto (IGM) or Export General Manifesto (EGM), bribes are paid in virtually all transactions. It was observed in March 2007 that paying bribes at numerous locations in order to anchor a ship in the port was not unusual. The report states that bribery takes place outside the port by reaching an understanding through agents. The pilots of the port take BDT 10,000 as tips for anchoring a ship and then for taking it to outer anchorage. In case of overdrafting of ships, the rate can rise to more than BDT 100,000.

According to Transparency International Bangladesh 2005, the import and export process, including clearance, loading, unloading and release of goods is extremely bureaucratic, and bribes are solicited at several administrative points. On average, more than half the costs incurred to release containers at Bangladeshi ports are bribes. The most costly type of imported goods in terms of bribes is electronic equipment (BDT 3,000 per ton on average), while among export items, the most costly items are vegetables (BDT 1,700 per ton).

Political Corruption

According to the US Department of State 2007, businesspeople consider customs to be a very corrupt institution in which officials routinely exert their power to influence the tariff value of imports and to expedite or delay import and export processing at the ports. To help reduce the discretionary power of customs officials and lower costs and improve efficiency at Bangladesh's trade entry points, a pre-shipment inspection system of import valuation was introduced in 2001. However, the system has not proved efficient.

The Chittagong Port administration and customs officials took an estimated total of BDT 8 billion in bribes in 2004, according to Transparency International Bangladesh 2005. More recently, in May 2008, nine employees of the customs department were detained on charges of irregularities and corruption.

Frequency

The World Bank & IFC: Doing Business 2010:
- A standard export shipment of goods requires 6 documents and takes an average of 25 days at a cost of USD 970 per container.

- A standard import shipment of goods requires 8 documents and takes an average of 29 days at a cost of USD 1,375 per container.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Bangladesh a score of 2.8 on a 7-point scale (1 being 'extremely inefficient' and 7 'extremely efficient').

The World Bank & IFC: Enterprise Surveys 2007:
- A little more than 51% of companies report that they expect to give gifts to obtain an import licence.

- The average time to clear direct exports through customs is 8 days.

- The average time to claim imports from customs is 10 days.

- Slightly more than 11% of companies surveyed identify customs and trade regulations as a major constraint to doing business.

Public Procurement and Contracting

Business Corruption

According to the US Department of State 2007, companies complain that high-level corruption is common in the awarding of public and private tenders. According to the US Commercial Service 2006, many local agents have admitted to paying bribes and using undue influence to win public procurement contracts. Moreover, Global Integrity 2007 reports that the public procurement process is very slow, and that the average time from inviting bids to awarding a contract is 14 months. Procurements are required to be advertised, but tenders can be rejected without issuing any official explanation. According to Global Integrity 2008, conflict of interests regulations for procurement officials are not well-enforced in practice, asset monitoring mechanisms for procurement officials are ineffective, and companies guilty of major violations of procurement regulations (i.e. bribery) are not always prohibited from participating in future procurement bids. Business executives in the World Economic Forum Global Competitiveness Report 2009-2010 report that government officials often favour well-connected companies and individuals when awarding contracts. Rules and criteria are frequently manipulated to fit specific providers. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Bangladesh.

Read more about public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

Reports of corruption in the awarding of public and private tenders are frequent. Collusion between political leaders and bureaucrats in public contracting occurs in order to favour a particular bidder. Graft in public purchasing is estimated by the World Bank at more than USD 3 billion per year.

In the beginning of 2009, the son of former Prime Minister Khaleda Zia, Arafat Rahman Koko, was charged with corruption. He allegedly received payment of USD 180,000 in connection with public projects awarded by the Government of Bangladesh to Siemens AG.

Read more about public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.6 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials when deciding upon policies and contracts a score of 2.3 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2007:
- 34% of companies expect to give gifts to secure a government contract.

- Bangladesh tops the South Asian region for the average value of a gift expected to secure a government contract at 1.28% of the contract value.

Environment, Natural Resources and Extractive Industry

Business Corruption

Widespread corruption exists among public officials in the environment sector, especially in conjunction with Environmental Impact Assessments (EIA). In particular, there is widespread corruption in the water sector that has resulted in increased revenue loss for the government, additional public expenditure and environmental degradation. According to the Strategic Foresight Group, investigations undertaken by the Anti-Corruption Commission in the water sector have revealed that corruption in different projects run by the Ministry of Water Resources was estimated to be approximately USD1.5 billion during 2001–06. An important reason for corruption is the creation and existence of monopolies in the water sector because of the power and control exerted by the public sector over water delivery systems. This monopolistic nature has progressively encouraged bribery and red tape to become institutionalized within the water sector.

Political Corruption

Bangladesh faces serious corruption problems in relation to the environment, according to the Transparency International Global Corruption Report 2008. Industrial pollution and biodiversity laws are not implemented as intended, partly due to pervasive corruption. In June 2008, former Chief Conservator of Forests Osman Gani was sentenced to 12 years in prison for illegally amassing wealth and withholding information in an asset statement he submitted to the Anti-Corruption Commission. Gani had already been found guilty in a departmental investigation and by the now defunct Bureau of Anti-Corruption in 2003, but was not sanctioned. Sources in the Department of Forests say that a system was established in the department through which the chief conservator automatically received money, making coercion unnecessary. It is alleged that station officers at forest checkpoints never clear a truckload of wood unless bribed.

Public Anti-Corruption Initiatives

  • Legislation: Bangladesh accessed the United Nations Convention against Corruption in February 2007. The Prevention of Corruption Act 1947, the Penal Code 1860, and the Money Laundering Prevention Act 2002 criminalise corruption related to the public sector. Business-to-business corruption is not covered by Bangladesh's current legislative anti-corruption framework. However, attempted corruption, extortion, active and passive bribery, bribing a foreign official, abuse of office or public resources for private gain, and money laundering are criminalised. In April 2008, the definition of money laundering as given by the 2002 act was modified by the enactment of the Money Laundering Prevention Ordinance 2008. The definition of money laundering has been extended to cover various processes through which the crime is being committed, including 'predicate offences', such as corruption and bribery, forgery of currencies and documents, extortion, cheating, dealing in illegal arms and drugs, smuggling, abduction for ransom, murder, and the transfer of concealed money to other countries from Bangladesh or receiving such money from other countries into Bangladesh. The Anti-Corruption Commission Act 2004 provides the legal framework for an independent commission to ensure transparency in the public sector. The Voluntary Disclosure of Information Ordinance was approved in May 2008, forming the basis for the establishment of the so-called 'corruption truth commissions'. These corruption truth commissions allowed for corrupt businesspeople and politicians to avoid serving jail time if they confessed and refunded assets that were obtained illegally. This ordinance was one of 114 promulgated by the military-backed interim Government of Bangladesh (IG) led by Fakhruddin Ahmed over 2007 and 2008 and handed over to the Awami League-led government in January 2009. The IG made amendments to the Criminal Procedure Code Ordinance in February 2007 as a part of the process of separating the judiciary from the executive branch of the government. However, after the Awami League won the elections and Sheikh Hasina again became Prime Minister, the measures approved by the IG to separate judicial functions from the executive branch were rejected. Other significant ordinances, including the Right to Information Ordinance 2008, have been ratified by Parliament. The Right to Information Act 2009 (view a summary of the Right to Information Act 2009) is intended to play an important role in ensuring transparency and accountability. Access the Lexadin World Law Guide for a collection of legislation in Bangladesh.

  • Government Strategies: The IG, which stepped down in December 2008, conducted an aggressive anti-corruption drive that targeted high-level politicians, officials and private actors. Many prominent politicians and businesspeople have been detained and charged with corruption. Furthermore, many have been convicted of these charges. It remains to be seen how the new administration will handle the corruption issue. Early signs indicate that Prime Minister Sheikh Hasina and the Awami League-led government are pursuing certain aspects of the IG's anti-corruption drive, including strengthening the Anti-Corruption Commission and prosecuting businesspeople and politicians targeted by the IG anti-corruption drive.

  • National Coordination Committee (NCC): The NCC was constituted to lead the countrywide operation to curb corruption. The NCC is manned by all general officers commanding (GOCs), secretaries to the Chief Advisor's office and the Anti-Corruption Commission, the Chairman of the National Board of Revenue, the Director General of the Central Intelligence Cell of the National Board of Revenue, and other top government officials. The IG also set up a Financial Intelligence Unit to investigate financial crimes, recover assets, as well as money that had been laundered abroad. In May 2007, the Anti-Money Laundering Department (AMLD) of the Central Bank was designated as Bangladesh's financial intelligence unit (FIU).

  • Anti-Corruption Agency: The Anti-Corruption Commission (ACC) was established in accordance with the Anti-Corruption Commission Act 2004 and replaced the defunct Bureau of Anti-Corruption, which had suffered from ineffectiveness and lack of independence. Although the ACC failed to file a single case in its first few years of existence, it was restructured to perform more effectively in February 2007. The ACC receives regular funding, but, despite having a professional full-time staff, it is not enough to effectively fulfil its mandate. The ACC receives tens of thousands of corruption reports annually. It is accountable to the President and publishes annual reports on its website. The ACC maintains an online list of the number of corruption reports submitted to it, as well as the prosecution status of corruption cases, but these have not been updated since fall 2008. Public service oriented institutions in government and private sectors have been the main targets of investigation. Since the reconstituting of the ACC, the number of ACC investigations leading to trials and convictions has been remarkable. A collection of corruption case verdicts of members from the public and private sectors between April 2007 and December 2008 can be accessed on the ACC website. In association with Transparency International Bangladesh, the ACC has held awareness campaigns against corruption as part of its programme to hold seminars, symposiums and workshops related to the issue.

  • Anti-Money Laundering Department (AMLD): The AMLD is faced with a huge backlog of corruption cases since the IG set up reconciliatory corruption truth commissions in May 2008 through which politicians and businesspeople could confess corrupt acts, refund the illicit money and thus avoid imprisonment. This measure was supposed to ease the pressure placed on the courts to deal with corruption cases. Results are still to be published. According to Transparency International Global Corruption Report 2009, the Money Laundering Prevention Ordinance 2008 provides that the courts will not take into consideration any money laundering case without approval from the Anti-Corruption Commission. In addition, this ordinance provides for the Bangladesh Bank to seek help from countries or agencies to investigate and recover assets through memoranda of understanding, contracts and conventions with governments or organisations.

  • Office of the Ombudsman: The Constitution of Bangladesh and the Ombudsman Act 1980 contain provisions for the establishment of an Office of the Ombudsman; however, only an Office of the Tax Ombudsman has been set up in practice. The quasi-judicial mandate of the Office of the Tax Ombudsman is to receive taxpayer complaints in relation to income tax, value added tax and customs duties, and to investigate and make recommendations based on these complaints in order to hold the National Board of Revenue accountable for malpractices. Sources differ on their analyses of the effectiveness of the Office of the Tax Ombudsman. Some claim that its recommendations are followed by the National Board of Revenue, while others argue that the institution is little more than a 'watch-dog in chains'. Transparency International 2007 reports that the Office of the Tax Ombudsman does not function effectively, as it lacks the necessary institutional capacity and resources.

  • Auditor General: The Office of the Comptroller and Auditor General (CAG) is a functionally independent organ that works as the supreme audit institution of Bangladesh. The CAG is important of identifying financial irregularities. The Comptroller and Auditor General is appointed by the President, charged with auditing all the expenses of all government bodies. The CAG is required to publish reports; however, the government often does not act on the findings. Projects funded by foreign assistance do not fall under the purview of the CAG.

  • Public Service Commission (PSC): The PSC is mandated to ensure fair and transparent public sector recruitment, but has been criticised for a lack of independence, its vulnerability to partisan influence, and for its inefficiency. Bribery and the sale of undue advantages to applicants have been reported, mostly due to the lack of internal integrity and deterrence systems. The reporting of the PSC has been reported as inadequate in connection with the Official Secrets Act, which has been used to withhold information. However, the Right to Information Act 2009 overrides the Official Secrets Act and several other restrictive acts. It remains to be seen whether reforms to the PSC and a new operative environment under the Right to Information Act 2009 will have a positive influence on the institution's performance. See the Transparency International Bangladesh Public Service Commission Diagnostic Study 2007 for more information.

  • E-Governance: In Brown University's Global E-Government Study of 2007, Bangladesh is ranked 155th out of 198 countries, indicating that e-governance is still in need of development. Development is proceeding, albeit at a slow pace, partly due to the lack of access to the Internet among many Bangladeshis. However, most ministries and government institutions have launched their own websites, such as those of the Ministry of Finance and the Office of the Comptroller and Auditor General. Furthermore, people can declare their taxes online and register to vote through the Bangladesh Development Agency. In the capital, Dhaka, people can handle birth registrations and apply for licences, such as trade licences, online.

  • Public Procurement: In an effort to make public procurement more accountable and transparent, a Public Procurement Act was passed in 2006 and a new set of Public Procurement Rules was issued in 2008. Both were made effective on 31 January 2008. The Public Procurement Act 2006 has unified public procurement procedures for all government procuring entities. The regulations have been framed in order to ensure fair, transparent and non-discriminatory public procurement, and they explicitly address corruption issues. According to the public procurement regulations, procurement officials should all receive training in how to correctly apply the regulations and procedures. Companies that violate the procurement regulations risk being blacklisted. The public procurement legal framework is sufficient, but evidence of bribery and collusion in the procurement process nevertheless demonstrates that enforcement is lagging behind. According to the Transparency International Global Corruption Report 2009, despite the adoption of the Public Procurement Act 2006, the private sector has reportedly continued to engage in malpractices in the procurement process. According to the Planning Commission's Implementation, Monitoring and Evaluation Division, eighty-five contractors/companies/bidders faced punitive exclusion from the bidding process on account of fraudulent practices and collusive activities. The government publishes a debarment list on the Central Procurement Technical Unit website. On this website, companies also can find tenders advertised, standard tender documents, public procurement regulations and acts, including the Public Procurement Act 2006 and Public Procurement Rules 2008.

  • Whistle-Blowing: Several pieces of Bangladeshi legislation provide a framework for the protection of whistleblowers in the public and private sectors. These include the Bangladesh Constitution and the Anti-Corruption Commission Act 2004. However, according to Global Integrity 2008, there seems to be problems with the enforcement of the law, as private and public sector whistleblowers sometimes experience retaliation for reporting corruption. Cases of corruption related to the public sector can be reported to the Anti-Corruption Commission by post or by e-mail.

  • General Comments on the Public Anti-Corruption Initiatives: When the IG came to power in 2007, it initiated a massive anti-corruption drive. By the time it stepped down in December 2008, many court trials had taken place and many businesspeople and politicians had been convicted for corruption crimes. However, corruption remains a serious issue in Bangladesh. Even though the current government has not entirely embraced the ordinances promulgated by the IG, it appears as if the new administration is trying to carry forward the momentum created by the IG anti-corruption drive and has ratified several other IG ordinances to strengthen the anti-corruption framework.

Private Anti-Corruption Initiatives

  • Media: The constitution provides for freedom of expression and freedom of the press. Tight media constraints were put in place during the military-backed interim Government of Bangladesh (IG) state of emergency. In September 2008, the IG passed the Right to Information Ordinance 2008, granting journalists and citizens increased access to information. Using the Right to Information Ordinance as a foundation, the current government passed the Right to Information Act 2009 (view a summary of the Right to Information Act 2009) in March 2009, which should allow civil society and the press to better play a role in ensuring government transparency and accountability. Some privately owned newspapers do write critical articles on government policies and activities, although persecution of journalists and self-censorship is not uncommon. It remains to be seen how press freedom will or will not develop within the new political and legal environment. Reporters Without Borders 2009 ranks Bangladesh 121st out of 175 countries, while Freedom House 2009 ranks the country 138th out of 195 countries and describes its press environment as 'not free'.

  • Civil Society: Freedom of association is constitutionally provided for and this right is generally respected. Under the emergency regulations of the IG, freedoms of assembly and association were suspended and all political activity was banned, including indoor meetings, marches, and rallies. With the return to a civilian government, operational conditions for civil society have normalised. Numerous NGOs operate in Bangladesh, and the country has a strong tradition of private initiatives for humanistic and voluntary work for people's welfare, according to Transparency International Bangladesh Report on NGO Governance 2008. Global Integrity 2008 reports that NGOs and CSOs promoting good governance and anti-corruption face difficulties or harassment in becoming registered. According to Freedom House 2009, the organisations that focus on sensitive political and religious topics do so at some risk. NGOs that are critical of the government and those that deal with human rights issues are under supervision from the authorities, and are subject to harassment. This may take form as arbitrary arrests, torture, threats and even assassination.

  • Transparency International Bangladesh (TIB): TIB is a local chapter of Transparency International. TIB conducts campaigns, issues reports and conducts awareness-raising in relation to corruption. TIB also carries out research on corruption and publishes surveys and analyses of corruption in various sectors in Bangladesh. TIB was on occasion consulted by the IG, for instance, in connection with reviewing the Public Procurement Act 2006. In November 2007, TIB hosted the South Asia regional workshop on transparency and integrity in the water sector and it held three seminars around Bangladesh at the end of 2008 on corruption in public administration.

  • Bangladesh Enterprise Institute (BEI): The BEI promotes issues of importance to the private sector and seeks to influence policy for the development of a market-oriented economy. It is a project oriented institute which works with projects to promote transparency and fight corruption.

Resources

The websites listed below provide useful facts on Bangladesh as well as contacts and tools for companies operating in Bangladesh:

 

Sources for further reading:

Conventions and Indices

UNCAC Status: Accessed 27 February 2007.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read more about the UNCAC.

 

Other Relevant Conventions or Treaties:

 

Transparency CPI: 2009: 139/180 (Score: 2.4)

Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.

 

World Bank CORR Index (-2.5 - +2.5): 2008: -1.10

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2008.

 

OECD Country Risk Classification (0-7): 2010: 6

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.

 

Data Verification:

Latest update: October 2009

Data verified by: Global Advice Network

Information Network

 

Relevant Organisations

 

Transparency International Bangladesh (TIB)

Progress Tower (5th & 6th Floors)
House 1, Road 23
Gulshan 1
Dhaka 1212

Tel: +880 2 988 7490 / 882 6036
Fax: +880 2 988 4811
E-mail: info(at)ti-bangladesh.org

NGO. Transparency International local chapter.

Bangladesh Enterprise Institute (BEI)

House 200, Road 5
Gulshan 1
Dhaka 1212

Tel: +880 2 989 2662/63
Fax: +880 2 988 8583
E-mail: bei(at)bol-online.com

A non-profit, non-political research centre.

ICC Bangladesh

DCCI Building (Ground Floor)
65-66, Motijheel C/A
GPO Box 3861
Dhaka 1000

Tel.: +880 2 955 7478 / 966 7273
Fax: +880 2 955 7429
E-mail: iccb(at)bdmail.net / info(at)icc-bd.org

Chamber of Commerce. Business confederation.

 

Partner Embassies

 

Embassy of Denmark

House 1, Road 51
Gulshan Model Town
Dhaka 1212

Tel: +880 2 882 1799
Fax: +880 2 882 3638
E-mail: dacamb(at)um.dk

Embassy.

Embassy of the Netherlands

House no. 49, Road No. 90
Gulshan,
Dhaka

Tel: +880 2 882 2718
Fax: +880 2 882 3326
E-mail: dha(at)minbuza.nl

Embassy.

Embassy of Sweden

House 1, Road 51
Gulshan 2
Dhaka 1212

Tel: +880 2 883 3144/45/46/47
Fax: +880 2 882 3948
E-mail: ambassaden.dhaka(at)foreign.ministry.se

Embassy.

Embassy of Norway

House 9, Road 111
Gulshan
Dhaka 1000

Tel: +880 2 881 6276
Fax: +880 2 882 3661
E-mail: emb.dhaka(at)mfa.no

Embassy.

British Embassy

United Nations Road
Baridhara
P.O. Box 6079
Dhaka 1212

Tel: +880 2 822 2705/2706/2707/2708/2709
Fax: +880 2 822 3437
E-mail: Dhaka.Consular(at)fco.gov.uk

High commission.

Honorary Consulate of Austria

Safura Tower, 5th Floor
20 Kemal Ataturk Avenue
Dhaka 1213

Tel: +880 2 986 1707/1708/4329
Fax: +880 2 989 0836
E-mail: austriancon(at)quasemgroup.com / tasvir(at)quasemgroup.com

Honorary consulate.

Country Profile Sources

General Information Sources

Corruption Levels Sources

Judicial System

Police

Licences, Infrastructure and Public Utilities

Land Administration

Tax Administration

Customs Administration

Public Procurement and Contracting

Environment, Natural Resources and Extractive Industry

  • Transparency International: Global Corruption Report 2008.
  • The Daily Star: 'Gani's shenanigans', 1 June 2007.
  • Illegal-logging.info: 'Depletion of forests by the forest lord! Indiscriminate exploitation must stop', 8 June 2007.

Public Anti-Corruption Initiatives Sources

Private Anti-Corruption Initiatives Sources