Black money, “white” owners, and “blue” tenants in the Bangladesh housing market. Where corruption makes the difference as protectors turn predators

Date03 May 2016
Published date03 May 2016
AuthorS.M. Solaiman
Subject MatterAccounting & Finance,Financial risk/company failure,Financial crime
Black money, “white” owners,
and “blue” tenants in the
Bangladesh housing market
Where corruption makes the difference as
protectors turn predators
S.M. Solaiman
School of Law, University of Wollongong, Wollongong, Australia
Purpose The main purpose of this paper is to critically examine the impact of black money
whitening opportunity on the Bangladesh housing market and its ramications for honest taxpayers
and criminal conduct of the people in the country.
Design/methodology/approach – This paper relies on both primary and secondary materials and
carries out an archival analysis of the resources available in libraries and online databases.
Findings – It demonstrates that black money whitening opportunity has failed to create additional
demands for housing property, rather it encourages money laundering, corruption and other criminal
activities. Hence, a set of specic recommendations have been submitted to effectively deal with the
prevention of generation of black money instead of allowing them to be invested in properties with
Research limitations/implications – The discussions are concentrated on the legality of offering
amnesty to black money holders and the impact of such indemnities on the housing market in
Bangladesh; hence, it does not consider impacts on other economic sectors. It is expected that the
publication of this paper will stimulate the government of Bangladesh to discontinue the disputed
amnesty in Bangladesh, and other nations having similar problems with black money will be
encouraged to follow suit.
Practical implications – It is anticipated that the implementation of the recommendations furnished
in this paper will contribute to signicantly decreasing money laundering, corruption and other
offences involving money in Bangladesh and in other countries.
Social implications – Prevention of corruption and other nancial crimes.
Originality/value – This paper represents its originality in its critical analysis of frequent offerings of
the opportunity for whitening black money and their unfair impacts on honest taxpayers and resultant
stimulation for engaging in money laundering, corruption and other felonies. It evidently justies the
assumption that such amnesties to wrongdoers are contrary to the national constitution, anti-corruption
and anti-money laundering legislation and they wound the sense of ethical behaviour of human beings.
Moreover, it proves the hypothesis that such opportunities being offered to black money holders have
no positive contribution towards creating additional demands in the country’s property markets.
Keywords Bangladesh, Financial crime, Black money, Housing markets
Paper type Research paper
Bangladesh is a South Asian country which is the home of the poor who outnumber their
equivalents in the entire sub-Saharan African countries (Staff Correspondent, 2014d)
The current issue and full text archive of this journal is available on Emerald Insight at:
Journalof Financial Crime
Vol.23 No. 2, 2016
©Emerald Group Publishing Limited
DOI 10.1108/JFC-02-2015-0009
and constitute six per cent of the world’s total poor population (FE Report, 2014a). A
joint study conducted by the Bangladesh Bureau of Statistics, World Bank and the
United Nations World Food Program reveals that there are presently 49.4 million of its
(Bangladesh) total 160 million people who are poor and 15.9 million of them live in the
capital city alone (Haider, 2014). There are 17.5 million (13 per cent of the total
population) in Bangladesh having per capita income of Tk32 (US$0.40) (Daily Star,
2014). Despite these facts, paradoxically, the people of Bangladesh had deposited
Tk3,236 crore (US$ 407,449,000) in Swiss banks in 2013 alone escalating an incredible
rise of 62 per cent compared to its previous year’s deposits as reported by the Swiss
National Bank (Halder, 2014a). On the other hand, from 2002 to April 2014, a total of
2,874 Bangladeshi people had laundered Tk3,506 crore (US$441,445,000) to settle in
Malaysia (second home) constituting 11 per cent of some 25,500 migrants from across
the world in the country (Malaysia) during this period (Byron and Rahman, 2014a).
Following the Swiss National Bank’s above disclosure of deposits of the Bangladeshi
nationals in different Swiss banks at the end of 2013, the United Nations Development
Program (UNDP) added fuel to this explosive news item when it publicised that the illicit
nancial outows from Bangladesh account for 30.4 per cent of its gross domestic
product (GDP) (Halder, 2014a). Another research carried out by the London-based Tax
Justice Network nds that a total of US$24.7bn illicit money has been laundered from
Bangladesh to foreign countries between 1976 and 2010 (FE Report, 2013). Alongside
Swiss banks, a Swiss subsidiary of the Hong Kong & Shanghai Banking Corporation
Holdings Plc (HSBC), a multinational British bank, is also reportedly involved in this
malpractice as discovered recently, and Bangladeshi citizens have deposited US$13m
into their 31 accounts with this errant nancial institution (Kibria, 2015).
All these are reasonably believed to be black money.
Bangladesh is perhaps the sole country in the world, which earned the reputation of
championing corruption in consecutively ve years from 2001 to 2005 as assessed by the
Berlin-based Transparency International (TI) (Islam, 2014b). One commentator remarks
[…] corruption has turned out to be a permanent malady […]. In most of the cases, corrupt
people are either protected by the government or its allies. This is popularly called corruption
by government patronisation (Hossain, 2014).
Nevertheless, the successive governments have been fostering corruption by granting
amnesty to black money holders (BMHs) on the plea of developing, amongst other
things, securities markets and residential properties[1]. Ironically, the market reality
and the governmental ndings concurrently tell a different story, because the Finance
Minister himself frequently admits that “the opportunity had not yielded the desired
results” (Byron and Ali, 2014). This double standard of the successive governments has
rendered the black money a driving force of the national economy of Bangladesh for
decades. The situation is getting gradually from bad to worse with the continued
patronisation of BMHs by the governments though they seek people’s verdict by
declaring war against corruption in their election manifestos[2]. As the renewal of this
pardon as an incentive for the housing market in 2014 through the national budget, the
housing price is falling because of lack of demand (Saha, 2015), whereas corruption is
rising in both score and ranking as declared by the TI in its Corruption Perceptions
Index 2014 released in December 2014 (Iftekharuzzaman, 2014;Staff Correspondent,

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