15250Published on February 6, 2018
The period 2001-06 is considered as one of the darkest chapters in the history of Bangladesh during which period large-scale corruption flourished with direct patronage from the highest level of the kleptocratic 4-Party Alliance Government led by Bangladesh Nationalist Party (BNP). During the reign of the then Prime Minister Khaleda Zia, the corrupt and criminal acts of her notorious sons, Tarique Rahman and Arafat Rahman Koko was largely responsible for Bangladesh suffering from the ignominy of being the most corrupt nation in the world for five years in a row as reported by the Corruption Perception Index (CPI) of Transparency International (TI). While some their misdeeds were vaguely reported during the tenure of this deeply corrupt regime, it was during the 2007-08 caretaker government that the full extent of the institutional corruption, sponsored and sanctioned from the very top of the regime, started to become clear. A number of these corrupt acts have been prosecuted and resulted in criminal convictions and penal sanctions, while others are pending trial. This document outlines the main corruption cases involving Khaleda Zia and her sons.
Koko and Siemens Corruption Scandal
Siemens has admitted and pleaded guilty to bribing Arafat Rahman Koko, the youngest son of the former Prime Minister of Bangladesh, Khaleda Zia. This led to the U.S. Department of Justice on 8 January 2009 filing an asset forfeiture case bearing No. 1:09-cv-00021(JDB) against accounts worth nearly $3 million related primarily to bribes paid to Arafat Rahman Koko in connection with the Siemens and China Harbor corruption payments. The DOJ asserted forfeiture jurisdiction because some of the funds in Koko’s bank account in Singapore came from a U.S. bank account and the bribes were paid in U.S. dollars through U.S. financial institutions. Money laundering laws in the U.S. cover financial transactions that flow through the U.S. involving proceeds of foreign offenses, including foreign bribery and extortion. In order to enforce the US confiscation order, a joint Mutual Legal Assistance was issued by the U.S. and Bangladesh in respect of monies held in the corporate account of ZASZ, a Singapore company ultimately owned by Koko and with the initials of Koko’s immediate family members - Zafira (Koko’s first daughter), Arafat (Koko himself), Shamila (Koko’s wife), and Zahiya (Koko’s second daughter) . About US$ 2 million was returned by Singapore to Bangladesh in 2013 since they were proceeds of bribes received by Koko. Koko was also convicted in absentia in 2011 by a Bangladesh Court and sentenced to serve six years in prison for earning illegal wealth and money laundering. Koko was fined US$5.2 million and certain other assets, including assets of another company in Singapore called Fairhill, also set up by Koko, were confiscated.
Tarique and Mamun’s Money Laundering in the Harbin Engineering Corruption
The U.S. Federal Bureau of Investigation (FBI) investigated bribery and money laundering activities of Tarique Rahman, Khaleda Zia’s eldest son and BNP’s Senior Vice-Chairman, and of his close business associate, Giasuddin Al Mamun. It was discovered that Tarique and Mamun received US$ 750,000 as bribe in a Singapore bank account from Khadiza Islam, Director of Nirman Construction Ltd. and local agent of Harbin Engineering Company of China, for granting a contract for installing an 80 MW power plant at Tongi. FBI Agent Debra LaPrevotte, who conducted the investigation of corruption in Bangladesh, testified before a Bangladesh court that the FBI had traced bribe payments from Khadiza Islam’s OCBC Bank account in Singapore to Mamun’s Singapore Citibank account No. 158052-016-008. That same bank account was used to issue a supplementary Gold Visa Card with No. 4568-8170-1006-4122 in the name of Tarique Rahman. A photocopy of Tarique Rahman’s passport (bearing Passport No. Y 0085483, with father’s name late Ziaur Rahman, and mother’s name Khaleda Zia) was submitted to Citibank Singapore during the issuance of the credit card. Tarique then used the credit card, to which the FBI traced bribe payments, for travels to Greece, Germany, Singapore, Thailand, and the U.A.E. Others such as Moazzam Hossain, Mayer Chire, and Marina Zaman also transferred bribe payments to Tarique into Mamun’s Singapore bank account to which Tarique had access. On 21 July 2016 the High Court Division of the Supreme Court of Bangladesh found Tarique Rahman guilty of money laundering charges and sentenced him to seven years imprisonment and further imposed a fine of Tk. 20 crores (Tk. 200,000,000). In awarding the punishment, the HC observed that his conduct was a ‘financial crime’ which hindered the sustainable economic development of the country. The Supreme Court found that the payment of US$ 750,000 claimed to be “consultancy fees” was, in reality, just a bribe.
The Niko Corruption Scandal
On 23 June 2011 Niko Canada pleaded guilty before a Canadian court and admitted to providing, as a bribe, a vehicle costing Canadian dollars $190,984 to A.K.M. Mosharraf Hossain, Khaleda Zia’s State Minister for Energy and Mineral Resources. Niko Canada also paid US$5000 as a bribe, and paid for travel and accommodation expenses for A.K.M. Mosharraf Hossain for his personal travels to the USA to meet his family. Niko paid the bribes “to ensure that Niko was able to secure a gas purchase and sales agreement” as well as to gain concession to Bangladesh’s claims for compensation for the blowouts caused by Niko. In a judgment delivered dated 24 August 2017, in Writ Petition No. 5673 of 2016, the Supreme Court of Bangladesh (High Court Division), on the basis of evidence collected from the Royal Canadian Mounted Police (RCMP), the FBI of U.S., and the Anti-Corruption Commission (ACC) of Bangladesh concluded that during the period 2003-2006 (i.e. Khaleda Zia’s regime) a scheme of bribery and corruption was set up for payment of bribes by Niko which was unearthed by international law enforcing authorities acting in close co-operation for the purposes of fighting the global menace of corruption. The Bangladesh Supreme Court noted that Niko brazenly admitted to making payments of US$ 4 million through Qasim Sharif (agent of Niko who was later appointed as Vice President of Niko) and US$ 500,000 through Salim Bhuiyan (former President of Dhaka Club). These payments were made as consultancy fees for their services in making payments to Government officials and for arranging meetings with Government officials. Evidence collected by the FBI and RCMP established the trail of the bribe payments from Niko Canada, through a Barbados bank, then through a Swiss bank account of Qasim Sharif, then to Salim Bhuiyan, and finally to the eventual recipients in Bangladesh including Giasuddin Al Mamoon, close friend and business partner of Tarique Rahman, son of the then Prime Minister Khaleda Zia .
FBI Testimony on BNP and Zia Family’s Corruption
As part of assisting the Bangladesh authorities in a number of corruption investigations, former Special Agent of the FBI Ms. Debra LaPrevotte investigated the systemic corruption which took place in Bangladesh during the 2001-06. In November 2011 she testified before a Bangladesh court in the Tarique Mamun money laundering case. In another witness statement dated 21 November 2016 FBI Agent LaPrevotte stated, inter alia, the following:
“Bribes were paid to government officials through "on the ground" consultants who then funneled the money to government officials and their adult children. Front-men, like Giasuddin at Mamoon and his brother Hafiz Ibrahim, serve as intermediaries to channel money from companies to the sons of people in power, like Tarique Rahman and other adult children of government ministers who then exercise political influence to ensure contracts are awarded to the paying company. Companies seeking contracts in Bangladesh hire these intermediaries as "consultants" even though they often have no expertise in the relevant field (such as telecommunications, hydropower, or oil and gas) and use them as the conduits for bribes because of their well-known connections to family members of public officials....
Several interviewees told me that in order to obtain any contract in Bangladesh, companies had to get money to Mamoon and/or his brother Hafiz Ibrahim, who would then get the money to the Prime Ministers' sons. Each of the corruption cases we investigated revealed this to be true and revealed that payments also had to be made to the relevant ministers and were often paid to lower-level officials as well.
During the Siemens investigation, for example, law enforcement officers in Singapore investigating bribe payments to Arafat Rahman conducted a search on an office in Singapore and found a "consultancy agreement" between Warid Telecom, a United Arab Emirates (U AE) telecom company operating in Bangladesh, and Arafat Rahman (Tarique's brother) as a consultant. Arafat Rahman had no background in the telecom industry and he was not qualified to be hired as a consultant. My investigation revealed that Arafat Rahman had purchased a residence in the UAE and funds from the UAE were traced into an account belonging to Arafat Rahman in Singapore.
Wikileaks on Tarique Rahman’s Corruption
In a confidential cable from the US Embassy in Dhaka (Nov. 3, 2008) from the then Ambassador James F Moriarty to the US State Department, the following assessment of Tarique Rahman was given in recommending a ban on his entry into the United States:
"Tarique (Rahman) is guilty of egregious political corruption that has had a serious adverse effect on US national interests...
Tarique Rahman is the notorious and widely feared son of former Prime Minister Khaleda Zia and a symbol of kleptocratic government and violent politics in Bangladesh...
Tarique Rahman’s flagrant corruption has also seriously threatened specific US mission goals: democratization, development, and denial of space to terrorists………. his flagrant disregard for the rule of law has provided potent ground for terrorists to gain a foothold in Bangladesh"
Other Corruption Cases Under Trial
Apart from the cases where the fact and trail of corruption of the Zia family have already been established, a number of similar corruption cases are pending in various courts against Khaleda Zia, Tarique Rahman and others. All of these cases have been filed by Anti-Corruption Commission (ACC) during 2007-2008 when the Caretaker Government regime, and not the current Awami League Government, was in power. The following is a summary of the five of those cases:
Zia Charitable Trust Corruption Case: This case was filed by the ACC on 8 August 2011 in Tejgaon Police Station. The case relates to the illegal transaction of nearly TK 31.55 million in the guise of forming a charitable trust by Khaleda Zia bearing the name of her late husband and former President Ziaur Rahman. Subsequently, charges were filed against four people including Khaleda Zia.
Zia Orphanage Trust Corruption Case: The ACC filed the Zia Orphanage Trust corruption case on 3 July 2008 with Ramna Police Station accusing Khaleda Zia, her eldest son Tarique Rahman, and four others for misappropriating over Tk 21.0 million that came as grants from a foreign bank as a donation for orphans in Bangladesh. Charges were filed with the court on 5 August 2010. The case has been concluded officially and judgment is due to be delivered on 8 February 2018.
Barapukuria Corruption Case: This case was filed by the ACC on 26 January 2008 with the Shahbagh Police Station against 16 people including Khaleda Zia on charges of irregularities and misuse of power in the appointment of the contractor for the Barapukuria Coal Mine and bribery of around Tk. 1.59 billion. The case is currently pending with a Dhaka court. Khaleda Zia had challenged the legality in the proceedings in the High Court Division earlier, which had been dismissed on 25 May 2016. The case may now proceed.
GATCO Corruption Case: On 2 September 2007, the ACC filed the case against Khaleda Zia and 14 others on charges of causing loss of Tk. 1.45 billion to the national exchequer by improperly awarding the contract of container handling at Chittagong port and Inland Container Depot at Dhaka to GATCO. Khaleda Zia challenged the case in the High Court Division by two petitions, which were rejected. The case now awaits charge framing.
NIKO Corruption Case: On 9 December 2007 the ACC filed the Niko corruption case against Khaleda Zia and others in connection with the Niko corruption case. On 5 May 2008, the ACC submitted charge sheet against 11 people including Khaleda Zia. Khaleda filed a petition with the Supreme Court challenging the legality of the case against her. On 18 June 2015, the High Court rejected the petition following which Khaleda filed a leave-to-appeal petition before the Appellate Division of the Supreme Court on 8 December 2015. On 24 November 2016, the Appellate Division dismissed the Khaleda Zia’s petition and directed the trial court to commence proceedings. The charge framing hearing of the Niko corruption case is now awaited.