Ex-PM’s son jailed for taking kickbacks from CJIA contractor

Jun 07, 2012 News

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A son of the former Prime Minister of Bangladesh, Khaleda Zia, was last year jailed for laundering millions of dollars in bribes taken from the Chinese company that has been handed a US$150M contract to rebuild the Cheddi Jagan International Airport (CJIA).
It is among the latest in a series of shocking revelations about China Harbour Engineering Company (CHEC), the parent company of which has been debarred by the World Bank for participating in any of its contracts until 2017.

According to Bangladeshi press reports, the case had attracted widespread coverage as it involved Arafat ‘Koko’ Rahman, the son of former Prime Minister, Khaleda Zia.
Rahman was jailed, in absentia, for six years for laundering money he received as kickbacks from CHEC and the Bangladesh subsidiary of Germany’s industrial giant, Siemens AG.
CHEC is currently under fire in Jamaica after an independent probe revealed suspicious discrepancies over a US$400 million contract awarded, on a sole-source basis, by the Government, to execute its Jamaica Development Infrastructure Programme. The loan agreement between the China Exim Bank, which financed $340 million of the contract sum, and the Government, was signed in February 2010. Both agreements were executed several months after CHEC had been debarred by the World Bank.
Days before President Bharrat Jagdeo left office and before the November 28 General Elections in Guyana, his administration signed a US$138M contract with CHEC in Jamaica. The secret signing was only brought to light after the story broke in the Jamaican press.
The project will be the biggest capital project in the country after the US$200M Skeldon factory, which was built by the Chinese and is still plagued by problems.
Revelations earlier this week by Jamaica’s Contractor General, Greg Christie, that the World Bank has banned CHEC and its parent company, China Communications Construction Company Limited, from its projects, have prompted calls for Government to pull back the CJIA contract.
Laundering
According to Bangladeshi press reports, Rahman was given six years in jail for laundering money taken as bribes from two global companies.
In June last year, Judge Mohammad Mozammel Hossain said in his verdict Rahman was guilty of smuggling more than 200 million takas (US$2.089M) to Singapore. The judge also fined Rahman 190 million takas (US$1.6M) and asked authorities to get the smuggled money returned.
Rahman was accused of taking bribes from CHEC and the Bangladesh subsidiary of Germany’s industrial giant Siemens AG for helping them win Government contracts during his mother’s 2001-2006 premiership.
The United States, who was involved also in the investigations, had alleged that Siemens and CHEC bribed Rahman to secure the contracts.
The U.S. said the bribes were routed through U.S. financial institutions, giving it jurisdiction.
Charging Rahman of money laundering, the Bangladeshi Anti Corruption Commission (ACC) case pinpointed his illegal dealings with CHEC in relation to a Tk 351 crore contract for constructing New Mooring Container Terminal at Chittagong Port.
The prosecution had said that Rahman obtained the money from CHEC in three installments– on May 6, May 31, and August 1, 2005.
Reporting on the case, The Daily Star online newspaper said that CHEC was awarded a contract to construct New Mooring Container Terminal in Chittagong Port through a competitive tender on January 29, 2004 with a budget of Tk 351.41 crore.
Secret Deal
When the tender was floated by the Chittagong Port Authority (CPA) in mid 2003, CHEC quoted Tk 331.41 crore for the job, and got it. But when the company was asked to sign the contract, CHEC proposed a budgetary increase of Tk 25.64 crore.
This “value engineering proposal” and relevant correspondence of China Harbour were then incorporated in the agreement with the Chinese company. The Cabinet’s purchase committee then approved the proposal.
ACC in its investigation found that China Harbour employed retired Brig Gen Md Zillur Rahman as its local agent in November 26, 2001. When the tendering process was at its final stage in 2003, and CHEC was sure to get the job, Rahman reportedly placed “undue pressure” on Zillur Rahman to arrange a commission of Tk 19 crore.
Rahman said Zillur would get Tk 3.5 crore as his commission. Zillur compelled the ex PM’s son to sign a memorandum of understanding (MoU) with China Harbour on January 13, 2004 stating that the remaining commission money would be given to Musa.
The MoU indicated that the total commission through the revised budget for construction of the container terminal was Tk 19 crore.
Of the amount, China Harbour itself kept 8.5 percent, China Harbour company officials received Tk 60 lakh, Zillur got Tk 3.5 crore, and Musa the remaining Tk 13.28 crore.
In defending the CJIA contract to CHEC days after it was exposed in the Guyana media, Jagdeo had said that to secure the loan from China, Guyana had to commit to award the contract for the CJIA expansion to a Chinese company.

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