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The fascinating Niko graft case

  • Published at 07:00 pm November 11th, 2018
Justice

A case study in how personal greed can take precedence over national interests

The Niko graft case has finally commenced after several years of delay, caused primarily by numerous dilatory tactics employed by the high profile accused individuals. 

The case has a fascinating history -- Niko had first wanted to enter the Bangladesh energy market in 1997. However, the then Awami League government appointed international consultants Arthur Andersen, which found Niko to be technically and financially disqualified for exploration of gas fields in Bangladesh. 

The position of the Awami League government was that the gas fields should only be given through a competitive bid. By mid-2001 when the Awami League left office, Niko was unable to get any gas fields in Bangladesh

This position taken by the outgoing government was supported until 2003 by all the relevant BAPEX and Petrobangla officials and geologists. No one was in favour of granting gas fields to Niko. 

Yet, within two years of BNP assuming office, on October 16, 2003, this same company managed to procure a lucrative joint venture with BAPEX, the state-owned gas company. This agreement gave Niko control of two vast gas fields, one in Chattak, Tengratila and the other in Feni, with a potential value of about $750 million.

On January 7, 2005, while carrying out drilling activities in the Chattak gas field, Niko caused a huge blowout, destroying not just the gas field, but also the surrounding environment. As Niko was trying to contain this first blowout, it set off another explosion on June 24 of the same year.

The two fires destroyed billions of cubic feet of gas and forced thousands of nearby villagers to evacuate. Damages caused by Niko to Bangladesh has since been estimated to be over $1bn.

The first incident of Niko’s corruption came to light in June 2005, when the press reports surfaced that Niko had provided a luxury car to the then Bangladeshi Minister for Energy, AKM Mosharraf Hossain. 

This incident led to the Canadian High Commissioner in Bangladesh at the time, David Sproule, to alert the Canadian Department of Foreign Affairs and International Trade which in turn informed the Royal Canadian Mountain Police (RCMP) regarding Niko’s corruption in Bangladesh.

RCMP started an investigation which lasted for several years in various jurisdictions including Canada, Barbados, the Cayman Islands, the US, Switzerland, Singapore, and the UK. The RCMP investigation was joined by the FBI and Bangladesh’s Anti-Corruption Commission (ACC).

Despite widespread condemnation of Niko’s corruption, as well as its responsibility of causing the blowouts, Niko, yet again, managed to obtain a gas purchase and sales agreement with Petrobangla during the last days of the BNP-led government in 2006.

In 2007, following the end of the BNP regime, joint international investigations of the RCMP, FBI, and ACC revealed a web of corruption involving individuals at the highest levels of power of the BNP government.

These investigations uncovered a trail of nefarious deals for bribery involving millions of dollars. 

Niko had hired businessmen to pay off corrupt officials and politically influential persons to win its natural gas contracts. 

The evidence implicated former law minister Moudud Ahmed. It was discovered that the joint venture agreement of 2003 was given to Niko by then prime minister Khaleda Zia on the basis of a legal opinion from Moudud Ahmed and another similar legal opinion from his law firm -- Moudud Ahmed and Associates -- both of which concluded that Chattak East was a marginal and abandoned field, despite opinion from geologists that Chattak East was, in fact, an unexplored gas field with a potentially large reserve of gas.

Niko also obtained the contract without any competitive bids based on those legal opinions. 

The joint international investigations revealed that Niko had entered into a $4m deal with an agent, Qasim Sharif, who undertook to procure Niko’s contract with BAPEX. 

Niko also appointed former Dhaka Club president, Selim Bhuiyan, as its local agent for his political influence and entered into an agreement to pay him $1m. After Niko managed to get the gas fields in Bangladesh it made the payments promised under these arrangements. 

The FBI traced a chain of bank transfer payments from Niko’s bank account in Canada to Niko’s bank account in the Caymans Island, then to Niko Barbados’s First Caribbean International Bank, for onward payment to Qasim Sharif’s Union Bancaire Privée (UBP) account in Switzerland. 

Qasim Sharif then transferred the money to exchange houses in Singapore for payments to Selim Bhuiyan’s Standard Chartered Bank account in Bangladesh. 

The RCMP and the FBI also traced payment by an account payee cheque from Selim Bhuiyan to Giasuddin Al Mamoon, who admitted to having acted as a sub-agent for Niko to ensure that Niko was granted the gas fields by Begum Khaleda Zia.

Giasuddin Al Mamoon, in a videotaped interview to the RCMP, admitted to having received payments for the Niko project. Mamoon also claimed that the source of his power was his friendship with Tarique Rahman, son of Khaleda Zia.

Niko’s corruption in obtaining gas fields in Bangladesh has been admitted before a Canadian court which has fined Niko about Canadian $9.5m for its corrupt practices in Bangladesh. 

A High Court Division of the Supreme Court of Bangladesh has also declared Niko’s contracts in Bangladesh as void on the grounds that they were procured by corruption. 

As high profile Bangladeshi individuals finally face trial before Bangladeshi courts for the Niko graft, one is reminded of Malcolm X: “I’m for truth, no matter who tells it. I’m for justice, no matter who it’s for or against.”

Moin Ghani is a lawyer specializing in international arbitration, prevention of corruption, and multi-jurisdictional law enforcement.