Site workers in debt even in death

Hundreds of migrant Indian construction workers lose their lives in the Gulf every year, and for their relatives, the impact of the bereavement is magnified by the loss of the main breadwinner. But for many families, the problems really begin when the village moneylenders come knocking, says Conrad Egbert.

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By  Conrad Egbert Published  September 16, 2006

When 16 Indian construction workers died in a blaze at their Bahrain labour camp in July, the government of the Indian state of Tamil Nadu took the unusual step of paying US $4,000 (INR184,280) to each of the dead men’s families. But it wasn’t long before local moneylenders, who had funded their trip to Bahrain, came looking for their cash. The case highlighted the scourge of inherited debt, which can condemn the dependents of construction workers who are killed on sites throughout the region to a life of bonded poverty, as they struggle to pay off unregulated loan sharks operating on the fringes of the law. It is common for construction workers travelling from India to take out loans to pay for what are often artificially inflated visa, travel and accommodation costs. When Construction Week contacted the families of the Bahrain blaze victims, it emerged that some had been approached by moneylenders, just days after the tragedy. “My son took a loan of about $3,900,” says Shri Poomalai, father of 23-year-old Poomalai Udiyar Muthuvel, one of the 16 men who died. “We’ve paid back $2,150, as the rest was lent to us by someone in our family who has written off that debt. We were told that we had to pay the other money back or else our personal property could be taken away. We’re just happy that it’s over.” In the case of Rengasamy Ramachandran, another victim, his wife refused to part with the compensation money and instead opened separate accounts in their two children’s names. According to Aruna Sharma, joint secretary at the National Human Rights Commission in New Delhi, the families are obliged to pay back loans taken out if the moneylenders have official documents stating they lent that money to the deceased. “If there is no official document with their signatures, the families are not indebted to pay anyone back at all,” she says. UAE-based lawyer Musthafa Zafeer adds that under Indian law, while debts are passed on to the legal heir, this only applies if the money is borrowed from a regulated bank or lender. He says: “The law states that any civil liabilities, which includes money borrowed from a legal source in the form of a loan, will have to be cleared by the legal heir, whoever it may be. “But having said that, money lending by anyone other than licensed lenders like banks, is illegal in itself, which negates everything if that holds true.” The practice of illegal money lending is widespread in India and well established within many of the rural communities that supply construction labour to the Gulf. “It is rampant over there,” says Anwar Basha, president of the Tamil Cultural Association. He says: “There are so many illegal moneylenders that live off these poor unsuspecting workers and even more families that are in debt due to their main breadwinner either having died or absconding.” Without property to use as collateral, many labourers are forced to accept loans with extortionate terms – sometimes carrying interest of more than 100% a year. *Additional reporting by Amrutha KP.

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