During the charge framing hearing of the Niko graft case, BNP Chairperson Khaleda Zia posed a question – why Prime Minister Sheikh Hasina was acquitted of corruption, while the former prime minister was being indicted. The answer can be found from the events surrounding Niko Resources Limited (Niko) during the two governments – the one led by Hasina from 1996 to 2001 and the one led by Khaleda from 2001 to 2006.
It is true that Niko, a Canadian company, first set its sights on Bangladesh’s natural resources during the tenure of Hasina in 1997. At that time the Bangladesh natural gas sector was attracting a lot of attention from international energy companies. The Awami League government appointed a reputed international consultant, Arthur Andersen, to evaluate the companies that were expressing interest in Bangladesh. In September 1997, Arthur Andersen gave a report which ranked all the energy companies by assessing their financial and technical capabilities. Of the seven companies evaluated, Niko was the least qualified.
Having failed to qualify in a transparent and competitive process, Niko sent an unsolicited proposal to carry out a joint study with BAPEX, partly funded by the Canadian International Development Agency (CIDA), and entered into a ‘Framework of Understanding for Study For the Development and Production of Hydrocarbon from Non Producing Marginal Gas Fields of Chhatak, Feni, and Kamta’ (“FOU”) dated Aug 23, 1999.
Chhatak East, an area in Tengratila, Sylhet, was an unexplored gas field with a huge potential for gas production and Niko had set its eyes on it. The BAPEX-Niko joint study itself did not grant any legal rights to Niko over any gas field in Bangladesh. The study was concluded in February 2000 and a report was prepared which stated that Chhatak East, a gas field in which Niko was particularly interested, was an “exploration structure or target” and not a “marginal and abandoned field”.
A “marginal field” refers to a gas field that may not produce enough net income to make it worth developing at a given time. However; should technical or economic conditions change, such a field may become commercially viable to explore. An “abandoned field” is a gas field which has been explored, gas produced from, and then abandoned after the gas has been extracted. Chhatak East was found to be neither marginal nor abandoned. Niko’s purpose of obtaining rights to the Chhatak East area was not achieved through the joint study.
Niko also knew it would not be able to get any gas field in Bangladesh through a competitive bidding process since it was both financially and technically incompetent. From 1997 to 2001 Hasina did not consent to the execution of a joint venture agreement with Niko without a competitive bid. In addition, BAPEX, Petrobangla, and the energy ministry were all in agreement that Chhatak East could not be given to Niko since it was not a marginal or abandoned field and that also any rights granted to Niko had to be through a competitive bidding process.
Thus, when Hasina left office in 2001, Niko had obtained no rights in Bangladesh to explore any gas field. It is for this reason no corruption case related to the Niko project could be sustained against Hasina.
Niko’s fortunes changed dramatically soon after Khaleda entered office as prime minister. Between 2001 and 2006, while she was prime minister, her son, Tarique Rahman, created a parallel regime which came to be known as the Hawa Bhaban. This Hawa Bhaban became notorious for being able to grant large government contracts to companies that were willing to pay bribes. With the creation of this kleptocratic regime. Niko found a solution to its problems since it was willing to pay large sums of money to obtain gas fields in Bangladesh without any competitive bidding.
Then Niko appointed as its agent in Bangladesh, Giasuddin al Mamoon, a close friend and business partner of Tarique. Niko also appointed as its agent, Selim Bhuiyan, a former president of Dhaka Club, who was known to be close to the state minister for energy AKM Mosharraf Hossain Bhuiyan.
However, as of 2003 BAPEX and Petrobangla officials were still holding on to their valid initial positions that Chhatak East was an exploration target and could not be granted to Niko as a marginal and abandoned field, especially without a competitive bidding process. Niko’s promise and payment of bribes reversed the consistent positions of the government, BAPEX, and Petrobangla. The energy secretary, who refused to approve the project for Niko, was swiftly removed from his post and replaced by a more one, who is now facing corruption charges in the Niko graft case. Petrobangla officials received direct instructions from Khaleda’s office to execute a contract with Niko granting them the gas fields requested and to do so without any competitive bidding. The law minister sent a legal opinion that Niko should be granted the gas fields without a competitive bidding process. The legal opinion concluded that Chhatak East was a marginal and abandoned gas field despite contrary views held by geologists in BAPEX and Petrobangla.
Niko’s corruption in Bangladesh has been investigated by the Royal Canadian Mounted Police (RCMP), the Federal Bureau of Investigation (FBI) of the United States, and the Anti-Corruption Commission in Bangladesh. The law enforcing agencies have traced payments from Niko to a minister in Khaleda’s cabinet and to a business associate of Khaleda’s son. Niko has admitted to a Canadian court of making corrupt payments for their business interests in Bangladesh. In the end, Khaleda, as prime minister, granted Niko the rights to explore gas fields in Bangladesh. That decision led to two huge explosions in 2005 and destroyed the gas fields resulting in damages to Bangladesh now estimated by experts to be over $1 billion.
Khaleda clearly needs to answer these allegations of corruption. There is no question as to why Hasina has been acquitted. Simply put, Hasina did not grant gas fields to Niko and the Bangladesh courts have acquitted her accordingly. It is now for the Bangladesh courts to decide whether Khaleda is guilty.