Corruption in Cyclone Relief and Reconstruction: Evidence from a Public Fund Distribution in Bangladesh

After the 2009 cyclone ‘Aila’, the Prime Minister of Bangladesh announced a special assistance of Tk. 20,000 (∼$300) to rebuild the houses of the affected households. We examine the role of networks in determining the incidence and extent of corruption associated with this grant by using two rounds of a household-level survey collected before and after the announcement and distribution of the grant. Our results inform that although bribery and missing grants were considerably lower in the rebuilding grant than the generally perceived level of corruption, network formation played an important role in the grant allocation and distribution process. In fact, households endogenously developed political networks to be able to bribe for enlistment for and receipt of the grant, as evident from the positive and significant influence of political networks on the probabilities and amounts of bribes and missing grants. Consequently, although the fund was channeled to disaster-affected villages, household-level allocation and distribution may have suffered from considerable irregularities. Our research may provide guidance for curbing corruption as it highlights the hindering yet central role of political connections in the distribution of post-disaster relief funds.