The Chinese companies suffered from a poor image after the media reported about their tax evasion case in Bangladesh, but seems to have failed to deter them.
Last year, in December, Bangladesh authorities discovered that China Road and Bridge Corporation (CRBC), a subsidiary of China Communications Construction Company (CCCC), was involved in the tax evasion while importing the construction material for government projects, Bangladesh Live News reported.
After the case of embezzlement of funds in megaprojects came under the spotlight, the Bangladesh authorities forced the Chinese government to withdraw from financing three infrastructure projects.
But it seems that these media reports don’t stop Chinese companies from hiring the sub-contractors from Beijing and also show them as a part of the main company to avoid paying the taxes to the Bangladesh government, Bangladesh Live News reported citing some unconfirmed reports.
Chinese companies reportedly hired Chinese sub-contractors and showed them as a part of the main company in Dhaka-Chittagong Railway Line. A Chinese company working on this project has hired 16 Chinese sub-contractors and shown them as a part of the main company. Another project helmed by the Chinese company Tebian Electric Apparatus (TBEA) working with Dhaka Power Distribution Company (DPDC) has hired four Chinese sub-contractors.
A Chinese company has even taken a six-storey building on lease in Narayanganj in which employees working on the projects are kept. Besides, coal plant and infrastructure projects in Bangladesh are causing widespread displacement of highly populated rural areas and endangering their ecosystem, reported Bangladesh Live News.
It seems Beijing has failed to act against the corruption and malpractices of Chinese government-affiliated companies.
Corruption is often a key element of Chinese economic engagement in the South Asian region. Estimates suggest that Beijing was responsible for the largest Illicit Financial Flows (IFFs) related to corrupt business practices, by value globally, particularly in developing countries.
Meanwhile, in May, another case of tax evasion against the Chinese company, Sino-Kemmed Trading Co. unearthed by the Bangladesh authorities.
Sino-Kemmed Trading company, a subsidiary of Global Pet Products Co Ltd. located in Shenzhen, has declared to send a consignment of coated calcium carbonate to one of its Dhaka-based associates namely ‘NB Trading House’. However, on physical examination, the Bangladesh officials recovered 120 tonnes of high-value Dextrose Monohydrate. The Dextrose was concealed as the label was that of coated calcium carbonate inside, Bangladesh Live News reported.
According to the media report, the consignment arrived at Chittagong port and was carried in five containers under Vashi Shipping Pvt Ltd. If the authorities had not detected it at right time then it would have resulted in the loss of Bangladeshi Taka (TK) 42 Lakhs 13 thousand to the exchequer.
Some media reports suggest that the port authorities/ customs were under tremendous pressure from senior levels not to disclose the name and real identities of Chinese companies.
Though Beijing projects itself as a reliable economic partner, its economic partnership seems to be turning out as an albatross for the recipient countries.