Khaleda and BNP leaders exonerated by international arbitration tribunal

Major corruption trial against BNP leaders in question as international arbitration tribunal finds no corruption in Niko deal, while the Bangladesh government tries to keep the decision away from public eyes.

Khaleda and BNP leaders exonerated by international arbitration tribunal

The government of Bangladesh has sought to keep secret a decision of an international arbitration tribunal which ruled that the gas production contracts between the previous BNP government and the Canadian company Niko were “not procured through corruption.”

The decision was given by a tribunal set up by the International Centre for Settlement of Investment Disputes (ICSID) on February 25th 2019. However, tribunal officers have confirmed that the Bangladesh government refused to allow the ICSID to make the ruling public.

The tribunal not only found in favour of Niko, but the detailed analysis and conclusions in the 571 page decision, obtained by Netra News, conflict directly with prosecution claims made in the ongoing criminal trial of Khaleda Zia, the BNP leader, and nine other individuals who stand accused of corruption and bribery over investment deals with Niko.

“Allegations of bribes paid by Niko to the prime minister [Khaleda Zia] for her approval of the agreements have no evidential support,” the ICSID tribunal decision reads. “There is no independent evidence or even argument concerning corrupt payments to the prime minister in the context of the Niko Project.”

The tribunal also exonerated other individuals accused by Bangladeshi prosecutors, in particular the former law minister Moudud Ahmed, “[The tribunal sees] no irregularity or ground for concern in Niko’s payments to Moudud Ahmed and Associates law firm in connection with the [Joint Venture Agreement] and in the use by Niko of the legal opinion prepared by this firm. […] In the tribunal’s view there is evidence neither for a conflict of interest on the side of the minister nor for corruption in the preparation of these two opinions for the ministry.”

The ICSID decision is also highly critical of a 2017 Bangladesh High Court ruling against Niko, arguing that it was based on “inconclusive or constested evidence,” “factual assertions that are clearly erroneous,” and included “inflammatory statements […] without citation of evidence.”

The decision arises out of a 2003 Joint Venture Agreement (JVA) between Niko and the Bangladesh government to develop two inactive gas fields. In 2004, the Canadian company started to sell gas to the government though it took two more years before the parties signed a Gas Purchase and Sale Agreement (GPSA) which set out the price that the Bangladesh government would pay for the gas.

In 2010, Niko sought arbitration at the ICSID over two matters. The first concerned the claim that the state-owned companies Bangladesh Petroleum Exploration & Production Company (Bapex) and Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) had not paid for the gas Niko had provided. The second concerned the level of compensation Niko would pay the Bangladesh government for damages caused in two blowouts in one of its gas fields in 2005.

Following a number of rulings by the ICSID in Niko’s favour (including one in 2014 which held that the government owed the company a total of $33.4 million plus interest for the gas it had supplied), Bapex and Petrobangla put forward a new argument to the tribunal that the two contracts — the JVA and the GPSA — had been obtained through endemic corruption and were therefore voidable. It was this application that resulted in the latest decision.

The Bangladesh side’s claim of systemic corruption before the tribunal was based around evidence collected as part of joint investigations by the Bangladeshi Anti-Corruption Commission (ACC), the US Federal Bureau of Investigation (FBI) and the Canadian police, which took place between 2007 and 2009. Based on these investigations, in 2011, the Canadian authorities accused Niko of trying to bribe AKM Mosharraf Hossain, the Bangladeshi state minister for energy and mineral resources, in 2005, with a luxury SUV car and a trip to Canada and the United States. The Canadian prosecutors however stated that they had found no evidence that the bribe had any impact upon the agreements made with Niko.

At the ICSID, the Bangladesh side argued that it had much more evidence of corruption in support of its claim that the JVA and the GPSA too were procured through corruption. However, the tribunal comprehensively ruled against the claim, “The evidence does not establish that the agreement or governmental acts in their preparation were procured by corruption.”

The tribunal held that Niko did not hire a corrupt nexus of consultants, a key part of the Bangladesh side’s claims against the company, “The tribunals have found no evidence to support the alleged set up of a network of consultants for corruption. […] The evidence shows that it was not unreasonable in the circumstances for Niko to engage consultants to provide assistance in the negotiations for the agreements. There are in sum no evidential grounds, nor any warranted inferences for concluding that any of the four consultants Sharifuddin Ahmed (Four Feathers), Qasim Sharif (Stratum), Giasuddin Al Mamun and Salim Bhuiyan (Nationwide) was engaged for illegitimate purposes. […] The tribunals are not persuaded that any of them was engaged for the purpose of ‘layering’ in the sense of passing bribes from Niko to public officials.”

The arbitrators also ruled that the evidence presented before them did not support claims of corrupt payments being made to individuals with influence over the BNP government, including Tarique Rahman, the son of the BNP leader, “There is no evidence that [the money received from Giasuddin Al Mamun] was shared with Tarique Rahman and that Tarique Rahman had a role in the decisions concerning the conclusion of the JVA.”

The ICSID also found that the Bangladesh government had failed to present the factual context of the case accurately. It found that contrary to the Bangladesh government’s assertions, Niko was “qualified to implement” the project; the inclusion of the undivided Chhatak gas field in the agreement “was legally justified and indeed advantageous to Bapex and Petrobangla”; there was “no basis for the assertion” that there was a violation of Bangladeshi procurement regulations in the awarding of the contract to Niko; and, the GPSA was “manifestly favourable to Petrobangla” as it received gas at a price far below the price it paid to other suppliers.

A curious part of the dispute also concerns Tawfiq-e-Elahi Chowdhury — currently the most senior official at the Bangladeshi energy ministry and the energy advisor to the prime minister. Chowdhury too was, surprisingly, accused by Petrobangla and Bapex of involvement in the ostensibly corrupt Niko nexus.

The state-owned energy companies claimed to the tribunal that between December 1999 to November 2000, during Sheikh Hasina’s very first term as the prime minister, Niko had given $54,000 to Jahangir Elahi Chowdhury as a bribe for his brother Tawfiq-e-Elahi Chowdhury, who at that time was the energy secretary of the government.

As set out in the ICSID decision, the Bangladesh government argued that the payments to Jahangir Elahi Chowdhury were made to ensure that his brother Tawfiq-e-Elahi Chowdhury would provide “support for Niko’s unilateral proposal to develop marginal fields and the FOU [Framework of Understanding]” and “put Niko’s proposal through.” This, the Bangladesh side argued, constituted a conspiracy under the Bangladeshi penal code. In support of this claim, Petrobangla and Bapex quoted an FBI investigator stating, “There was probable cause to believe that these payments were bribe/kickback payments in exchange for favourable rulings for Niko.”

The tribunal, however, did not accept these claims, “Apart from entries in the investigator’s tables, there is no evidence that the payments were actually made [to Jahangir]. […] [No one] seems to have questioned [Tawfiq-e-Elahi Chowdhury] about the alleged payments to him through his brother.” It also notes that he was not made available to the tribunal as a witness, although he retains a senior position in the current government.

The arbitrators also ruled that the chronology of events did not support the allegations against Tawfiq-e-Elahi Chowdhury, “[The] evidence produced does not justify assuming that Niko paid $54,000 to [Tawfiq-e-Elahi Chowdhury] indirectly through his brother. [In] any event, even if such a payment had been made, it did not procure the conclusion of the FOU by Niko.”

Apart from Khaleda Zia and Moudud Ahmed, other individuals being prosecuted in Bangladesh for corruption in connection with the Niko contracts are former State Minister AKM Mosharraf Hossain, former Principal Secretary Kamal Uddin Sidduqui, former Secretary Khandaker Shahidul Islam, former Senior Assistant Secretary CM Yusuf Hossian, former managing director of Bapex Mir Moynul Hoque, former secretary of Bapex Shafiur Rahman, the businessman Giasuddin Al Mamun, former president of the Dhaka Club Salim Bhuiyan, and Niko’s vice president for South Asia Kashem Sharif.

The criminal case was first filed in 2007, but it was stayed by the High Court for a number of years. The case is now undergoing the process of framing charges, before Judge Sheikh Hafizur Rahman of the Dhaka Special Judge Court. Sheikh Hasina, the current prime minister, was also among those accused of corruption in this case, but her name was removed following an application to the High Court.

The ICSID tribunal comprised of three members: Michael E. Schneider (president of the tribunal) who was appointed by both parties; Professor Campbell McLachlan QC who was appointed by the Bangladesh side, and Professor Jan Paulsson who was appointed by Niko. The decision taken by the arbitration body is final and there is no right of appeal.

At the tribunal, Bapex and Petrobangla were represented by Foley Hoag, Imtiaz U Ahmad Asif, Moin Ghani, the managing director of Bapex, and the secretary of Petrobangla. Niko was represented by Dentons Europe, Dentons Canada, Rokanuddin Mahmud, and Mustafizur Rahman Khan.

Anisul Huq, the Bangladeshi law minister, when asked for his comment about the ICSID ruling against Bangladesh, and how it could impact the ongoing criminal trial against Khaleda Zia and others, told Netra News, “I don’t know about that. Who are they [ICSID] to say this? The crime was committed in Bangladesh and we are trying her [Khaleda Zia] in Bangladesh. Thank you!”

Asked by Netra News to comment on the allegations against him and the tribunal’s response, Tawfiq-e-Elahi Chowdhury quoted from Shakespeare’s Hamlet, referring to the limitations of human knowledge, “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.”●

David Bergman (@TheDavidBergman) — a journalist based in Britain — is Editor, English of Netra News.

🔗 ICSID decision (PDF), obtained by Netra News.
🔗 Case details on ICSID website.