Flawed Incentive Programs

Corruption in social allowance
Lays bare government incompetence.
Public money in wrong hand
Poses risk and danger for the land.

In recent weeks, series of reports laid bare flaws and inefficiencies attached to social security programs and incentive packages designed to assuage Corona-battered business community. Built-in corruption in management and disbursement of funds of the programs, as exposed by the news reports, once again undermines people’s trust on government at a moment when it badly needed their support to mobilize resources on measures to restore COVID-hit economy.

A news report divulged that Ministry of Social Welfare detected some 87,000 fake beneficiaries who swallowed benefits under social security programs¹. The matter surfaced when the ministry is implementing digitization of accounts of beneficiaries. So far 7.6 million accounts have been digitized and 2 millions await to join the list.

Another program designed to augment income-earning opportunities for the poor has come under criticism after a government report found irregularities. The 12-year-long "Amar Bari ,Amar Khamar( My Home,My Farm)" benefited 5.7 million people,but 1 million beneficiaries were identified as affluent, not eligible for such program². Department of implement ation,monitoring and evaluation of Ministry of Planning in its report found that 1 million ,17% of the total beneficiaries, fake beneficiaries took interest-free credit reserved for the poor under the “Amar Bari,Amar Khamar” Project(2009-2021) ,costing TK 78.85 billion of taxpayer’s money. Some swindled the credit for 12 years.

Not only social security programs, irregularities can be traced even in Corona incentive packages for businessmen. Government allotted credit of Tk 300 billion for big businesses and credit of Tk 150 billion for SMEs at subsidized rate of interest. According to a news report, many businessmen misused the credit by repaying old debts,investing in share market and purchasing flat ³. It derailed the objectives,propelling economic activities, the credit package initially conceived of. Instead of bringing the pace in manufacturing, retail and SME activities, misuse of the fund makes it unlikely to avail more soft credit in the future. So cash-strapped SMEs will face further problems to manage working capitals for their businesses.

Earlier 22000 fake freedom fighters had been detected in freedom fighter allowance program. Facing a barrage of criticism, government hardened the procedures for identifying the true freedom fighters and discarded the fake ones from the list.

Even corruption mars "home for the homeless" project,which is being implemented by Prime Minister’s Office. Use of substandard materials, project site on flood-prone land and bribery called into question the objective of the whole project.Even PM' s office has started probe in 36 upazilas⁴.

My own survey on rickshawpullers for my site reveals that only a minority of the true target population receives the social security programs. I interviewed 43 rickshawpullers and only three subscribed to any of these programs. And all of them were relatives of local representatives who are responsible for running the operations of social security programs at grass root level. ⁵

The revelations expose inefficient management of public funds and waste of taxpayer’s money. This will further hold back widening of social security programs and implementation of post-COVID efforts.

One thing is apparent that most of the scams in social security programs got exposed while digitizing the database. If mobile operators and mobile financial service providers can able to sell SIM and open accounts with biometric verification why can the government not go for this step to identify the beneficiary population?Bangladesh runs an array of social security programs from allowance for senior citizens to allowance for freedom fighters.These programs cost Tk 641.76 billion in 2018-19(Source: Bangladesh Economic Review 2019) and in 2021 rose to Tk 955.74 billion¹. Even tiny scam could wipe out thousands of crores of taxpayer’s money. Seldom heard or reported in the press about the fact that other government agencies had given prior information about murky affairs or shoddy dealings in various programs run by ministries. This fund may fall in wrong hands and may be used to stir trouble at home or abroad or weaken democracy and democratic institutions. So there is no reason to take wasting of taxpayer’s money slightly.

Ensuring accountability of all government organizations is the key to plug the holes in leakages of management of public fund and resources. If this continues without any checks, people’s trust on government and government institutions will erode and their support on undemocratic forces may rise. Just throwing the money in gutters in the name of ineffective social security and corona incentives only swollen the pockets of a certain quarter who excel the art of misappropriating public funds and those who have evil intentions to cause trouble at home and abroad. Amending the laws to hold all the quarters accountable to constitutional bodies is the first step to stem corrupt practices.

Notes And References:

1.”87000 Bhatabhogir Khonj Nei(No Trace of 87000 Beneficiaries)”, Najnin Akhter,Daily Prothom Alo, July 26,2021.

2. “Gorib Sajlen 10 Lakh Sochchhol(1 Million Affluent People Played Poor)”,Arifur Rahman,Daily Prothom Alo,August 02,2021.

3. “Pronodonar Taka Noy Chhoy(Misuse of Incentive Money)”, Daily Prothom Alo,July 26,2021.

4 “ Ashrayan-2 Project Scam: 36 Upazilas Under Scanner”,Ali Asif Shawon, Dhaka Tribune,July 06,2021.Link here

5 “Live Stock”,Rezaul Hoque,https://hoquestake.blogspot.com/2020/01/live-stock.html?m=1,January 11,2020.

LNG Blunder

Disagreement between PetroBangla and ministry
Unravels the flaws in LNG policy.
Energy deals offer clue of corruption,
Eschewing that questions docu's true intention.

Recent news reports reveal some problems within government's LNG policy. It has not been a long time that Bangladesh embarked on LNG age. Two years ago Bangladesh received its first LNG supply after completing appropriate infrastructure. Recently Ministry of Finance asked PetroBangla to send its unused Tk 40 billion to the government as part of a new policy. PetroBangla declined. Instead, it demanded Tk10.94 billion to finance the operations of two floating storage units , operated by Exelerate and Summit, citing volatile nature of the LNG market. Government refused to pay the sum.

Last week government inked a deal with Vitol Asia, a subsidiary of Dutch Vitol. According to a news report, the company has been blacklisted in several countries. On many occasions, the company was found to win government contract through unfair means. It is not yet known how the company bagged the contract of supplying two cargoes of LNG from the spot market. Earlier government had signed several contracts for long term LNG supply. Qatar's Ras Laffan Liquefied Natural Gas Company is one of them. It pledged to supply between 1.8 and 2.5 MTPA of natural gas for 15 years.The deal was signed in September 2017.

LNG is a cheap mean for power generation. As demand for LNG is rising , government has opted for LNG import to produce electricity, to produce fertilizer and industrial good. Stat furnished by PetroBangla reveals that demand for natural gas is projected to be 3463 MMCFD in 2021 and 3554 MMCFD in 2025 (Source: Bangladesh Economic Review 2019). A large part of this demand will go for power generation. A news report claims power generation using natural gas costs Tk 4 per unit. Meanwhile, power generation using diesel costs Tk 22 per unit. Cheaper electricity means lower production cost, more concentration on product quality and grabbing more market share. In 2013-14, 337.4 billion cubic foot of natural gas was used in power generation. In 2017-18, it rose to 398.6 billion cubic foot (Source: BER 2019).

Growing importance of LNG led the government to build LNG infrastructure. Two floating storage and regasification units were installed in Moheskhali. One of them operated by a company having close ties with a ruling party leader. Seeking money for their operations clearly aroused suspicions. In Bangladesh such business and operations are not scam free.

By the same token, there is little reason to believe that just concluded deal with Vitol Asia is not free of any murky affair. It is interesting to see the reaction of the Finance minister when Vitol's past was brought to his attention. He played ignorant about wrongdoings of Vitol Asia in other countries and kept insisting that the deal was struck in a fair and transparent manner.

The September 2017 deal RasGas made with Bangladesh took place at a time when the government lacked international recognition due to its opposition-boycotted election,heavily criticized at home and abroad. The nittty-gritty of the deal is also not known to public. How was the pricing of LNG gas fixed?Such deal could contain ample ammunition of corruption that could draw a widespread media attention. Access to those critical information is kept within the party cronies and government officials. The controversial 2018 general election shed some light. BBC World was more outspoken and open in revealing election irregularities like stuffed ballot-box at the beginning of election day at a polling center in Chattogram and severe beating of a reporter in Shewrapara in Dhaka. Reelection did take place in Chattogram polling center but no action taken against the men who beaten the reporter. Al Jazeera did report on election fraud but it was not as open as its British counterpart.

This kind of energy deal is the allegation weapon that has the potential to disturb a government and the information is readily available to Al Jazeera. Is it because that the deal happened between government-to-government and it could harm the reputation of both governments , so better remained silent?

Focusing on settling down of personal scores that only establishes the credible threat protagonists face at home hardly unsettles any ruling regime.

Our opaque energy and power deals offer many hints of corruption, as no saint involved in such deals.

It is hard to believe that government did not reckon with need of sudden demand of fund to purchase LNG when the LNG plan was conceived. Projection was there, contract was there. And it is neither believable that a public corporation lying on Tk 40 billion of excess fund suddenly needs fund to finance the operations of two floating storage units. Making deals with companies with less transparent business only puts question marks on gov't intention. Responsibility lies with the concerned section of the government to douse the suspicion of unfair means.

Cost Of Hiding The True Cost

Funds allocated to flood-hit roads.
True cost of damage often remains untold.
Stealing public fund gains acceptance in society.
Independent body can reveal project's nitty-gritty.

A news report says government allocated Tk 59.06 billion to 390 upazillas, administrative units bigger than village, in a bid to repair damaged roads, bridges and embankment. Frequent flooding, torrential rain and cyclone Amphan inflicted serious damages to rural infrastructure. The allocation will address the losses resulting from calamities and bring back them to operational level, as anticipated by the policy makers. Post-disaster period sees this kind of damage-repairing investments. We are accustomed to it. Will that money be spent properly and to the projects for which the money is assigned? Past experience does not leave reason to be optimistic. Free season of corruption is going on.

In the first week of November, Transparency International Bangladesh in one of its reports found that 54% of the funds allocated to 7 climate change related projects were misappropriated. Management of the projects based on political consideration, swindling of money, nepotism and deception are common characteristics of the doomed projects. Governance has not improved at a remarkable level that assures one that similar fate does not await the road-repair projects.

Another thing to take note is how the assessment of the damage was done. If news report was the source of the damaged figure then how did the cost of the damage apprise? Often the houses do not have means to verify the claims of the damage independently. If the government officials did the damage assessment then inflating the damage figure went along well with their interests. It ensures relatively bigger share of the pie for the cohorts. Government has a monitoring and evaluation department. But rarely it appears with embarrassing findings and shares it with the press. Private NGO like TIB takes the onus of revealing the uncomfortable findings of public office.

It is obvious that there is no transparent and trustworthy mechanism within the government that spills the beans of impartial investigation / evaluation.Lack of political will also remains a source of worry and pain. Entrenched political atmosphere made even that prospects grimmer.

Back in 2009-10, Annual Development Expenditures (ADP) on transport and communication were Tk 22.42 billion and Tk 2.71 billion respectively. The expenditures stood at Tk 216.57 billion and Tk 22.69 billion respectively in 2016-17. (Source: BER 20 The figures capture commitment of the government to these two sectors. Spending increased couple of times more than what it was in 2009-10. It is important to note that many development partners also invested in these two sectors and credit they gave also reflected in ADP(revised). Government is merely an implementing / supervising body of the projects here. People of the country have to repay the loans and interests irrespective of quality of the projects. Now here comes the million dollar question: did the people get desired utility from the spending on transport and communication sector?

Ease of travel, hassle-free travel sound like bygone era talks to regular travelers. Safety is not ensured as more and more precious lives perish on roads every day. Consumers and producers of vital goods and services do not get benefit from linking of growth centers and consumption centers. Natural calamities, river erosion could be mentioned as reasons for damages to roads and communication infrastructure. But it does not necessarily mean that our roads will become useless in such a short span of time. Flash flood does not mean to wash away a road.

Quality of projects and reporting of the true cost/ damage have remained serious concern to those who feel pretty bad about waste of tax payers' money. It has been taken as granted that the public fund is meant to be stolen. So the cost of a project or damage to an infrastructure remains buried deep down the list of priority.

At a time when the media is coerced and cornered, no one bothers about a report on washed away embankment cost an astonishing sum. While hard working and true Tax and VAT payers pay the price of such corrupted projects out of their own pockets, precedents of future corruption are set.

In a country where corruption is rampant and society tolerates stealing of public fund , creation of a strong evaluation and reporting body of public fund financed projects is call of the hour.

In Bangladesh we see some state organs are accountable, but some remains immune from any kind of accountability. Let's elaborate the point with an hypothetical example. Think of an office with many departments that are accountable to management except one department.

Corrupt officials of that department will use the leverage to spread corruption within the department and to other departments. They will find kindred spirits in other departments and in connivance with them they will start to swell cosmetically the spending of the departments. At the end of the day, cost of no accountability in one department increases spending of the company many times and fills the coffer of the corrupts. This is not desirable at all.

In Bangladesh, we have a tendency to copycat anything from the West. Unfortunately, we do not take cue from the West the shining examples of governance and accountability. Unchecked project implementation is tantamount to waste public money and a great disservice to the taxpayers.