Dilemma of hard facts and morality

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Shamsul Huq Zahid
The statement made by the newly appointed, soft-spoken chairman of the National Board of Revenue (NBR), Muhammad Abdul Mazid, at a press briefing last Monday would, at least partially, help restore business confidence.
Mazid, according to newspaper reports, said the process of releasing the frozen bank accounts of businessmen suspected of tax evasion would start soon and there will not be any 'indiscriminate' freezing of bank accounts in future.
There is no denying that the NBR is legally authorised to examine and freeze bank accounts of the suspected tax evaders. But the two- pronged onslaught by the NBR and the Anti-corruption Commission (ACC) on a number of leading businessmen as well as politicians-some of whom have dual identity-triggered panic all around in recent months. The situation turned worse with the arrest of some businessmen and a few others deciding to evade arrests.
The absence of the owners itself has created serious disruptions in the operation of business houses that have come under scrutiny of various government agencies. In most cases, executives of these organisations are not adequately empowered to take decisions independently. Handling the financial matters particularly of the business houses whose bank accounts have been frozen has become a daunting task. Not only these organisations are facing liquidity problem in paying salaries and wages to their staff members but also finding it hard to keep the industrial units under them operational.
The freezing of bank accounts is not the only source of problems that the business houses in question are facing. In the day-to-day operation of the trade and industrial units under them, bank loans play a major role. No bank under the prevailing circumstances would extend loan to these entities. The problem of huge surplus liquidity-estimated at more than Tk 150 billion-that the country's banking system is facing now partly originates from the reluctance or inability of the banks to extend loans to the business houses experiencing government actions.
A case in point is the Beximco Group, one of the leading business houses of the country. Salman F Rahman, vice-chairman of the group is now in jail and Sohel F Rahman, chairman of the group is staying abroad to evade arrest. About 30,000 officials and employees have not been paid their monthly emoluments for the last three to five months.
Most of the units under the ownership of the group, according to a newspaper report, might face closure if they fail to have access to bank loan facilities within a couple of weeks.
During the recent floods, the officials and employees of Beximo Pharma, one of the leading pharmaceutical companies of the country, themselves mobilised funds to import raw materials necessary for the production of intra-venous (IV) fluid. The opening of letters of credit (LCs) by the company that needs to procure raw materials worth Tk 250 million per month had to be suspended for a period of last five months.
The closure of the units under the business houses whose owners have been accused of tax evasion or corruption would not only make thousands of people jobless but also cause huge financial loss to a large number of general shareholders of the companies that are listed with the bourses. For instance, about 49000 general investors are the owners of 79 per cent stake of the Beximco Pharma. Most of the units owned by the groups are also listed public limited companies having thousands of general shareholders.

The reason for citing the Beximco example is not at all to generate sympathy for businesses suspected of tax evasion or corruption but to point out the hard realities that are not at all palatable so far as economic management is concerned.
It is a fact that the country cannot afford the loss of several thousand jobs or closure of business establishments and industrial units that generate revenue for the government and, in some cases, earn foreign exchange. But, an administration that believes in transparency and good governance cannot also allow the people, businessmen or otherwise, involved in massive irregularities, including large-scale tax evasion, to go scot-free. This is the dilemma that, it seems, has been bothering the present government most.
The idea of constituting a 'Truth Commission" has, possibly, emerged to resolve the crisis. However, use of such commission as an escape route might not be that easy. Some other issues that many consider quite relevant to the objective of such commission could complicate things.
The government needs to devise ways and means to help the business establishments and industrial units owned by the businessmen suspected of wrongdoing overcome their financial hardship and other operational problems. The proposed Business Forum could be extremely helpful in finding an answer to the problem. So, there should not be any further delay in constituting the same.