1 April 2022
In a classic self-dealing scheme, a Bangladeshi minister assists a front company controlled by his own close aides and family members to clinch a $305 million deal in partnership with Marubeni and Vitol.
Power corruption: All the state minister’s men
Appeared in Netra News on August 11, 2021
Nasrul Hamid Bipu, the state minister at the Ministry of Power, Energy and Mineral Resources.
A front company controlled by the family members and close associates of an influential Bangladeshi minister has entered into a partnership with two major foreign contractors to secure a public-private partnership deal worth hundreds of millions of dollars.
In potential violations of relevant anti-corruption laws, regulations and practices, Nasrul Hamid Bipu, the state minister at the Ministry of Power, Energy and Mineral Resources, was intricately involved in the private partner selection process for the construction and operation of a liquid petroleum gas (LPG) terminal at Matarbari deep-sea port.
Internal government documents obtained by Netra News show that the minister personally handled the partner selection process that favoured a consortium of three companies: Marubeni Corporation, a Japanese trading company; Vitol, a Dutch-Swiss energy company; and PowerCo International, a company registered in Singapore and Bangladesh.
With a meagre paid-up capital of $100, PowerCo International is listed with Singapore’s Accounting and Corporate Regulatory Authority (ACRA) as a “wholesale trading and goods trading company”, and had no known prior record or experience in construction or energy-related businesses. Its only contribution to the consortium appears to be its hidden and undeclared connection to the state minister.
Excerpt from ACRA files.
The company, which together with Vitol will have a 30% stake in the LPG terminal project, is primarily owned by Bipu’s maternal uncle and operated by executives connected to his family conglomerate, Hamid Group. The family corporate group runs a variety of businesses through a network of subsidiary companies — Nasrul Hamid himself served as the managing director and owns shares in some of these businesses.
All the state minister’s men: PowerCo is operated by executives connected to Hamid Group.
The consortium is led by Marubeni Corporation, which in recent years has won contracts worth more than a billion dollars from Bipu’s ministry, including one after the formation of the consortium — to build Bangladesh’s largest solar power plant.
The other member of the consortium, Vitol, is a leading fuel supplier to Bangladesh Petroleum Corporation (BPC), a state agency under Bipu’s ministry. The company also supplies Petrobangla, a government-owned company under Bipu’s ministry, with liquefied natural gas (LNG).
The possible collusion between a company owned and operated by individuals close to Nasrul Hamid Bipu and major contractors in business with his ministry raises serious concerns about nepotism, hidden conflict of interest and potential corruption schemes.
“The allegation here is that we have a classic case of a consortium that gets awarded a major contract, and one of the key minority players in the consortium turns out to be directly related, in corporate ownership, to close family members of a minister sitting in power,” says James S Henry, an anti-corruption expert with whom we shared our findings. “If that’s substantiated and holds up, that’s a pretty clear cut conflict of interest — potentially a violation of Bangladesh’s own anti-corruption laws.”
Henry — currently a fellow at Yale University’s Global Justice Program — says this is a typical case of influence peddling that he has seen “time and time again” while investigating corruption cases in developing countries, and that there is “a strong prima facie case for a much more substantial anti-corruption investigation by law enforcement [agencies].”
As Bangladesh’s natural gas reserves deplete fast and funding for coal-fired power plants dry up, the country is expected to witness a massive increase in demands for imported natural gas in the coming years. In that context, the LPG terminal — which will have a capacity of processing around one million metric tons of gas per year — can be a major financial boon for the Marubeni-Vitol-PowerCo consortium that will likely build and operate it for the foreseeable future.
Documents reviewed by Netra News indicate that Marubeni Corporation, on behalf of the consortium, will be responsible for arranging $305 million for funding the LPG terminal project.
Although the Bangladesh government will likely not bear the bulk of the cost of the project, BPC has arranged a large piece of government land for the terminal — in return, the agency will get a 30% stake and eventually assume full ownership of the LPG reservoir after a yet-to-be-specified period.
A web of nepotism
Nasrul Hamid Bipu personally oversaw the negotiation and selection process that favoured the Marubeni-Vitol-PowerCo consortium over two other consortiums. This was despite the close albeit undeclared ties the state minister has with PowerCo.
According to regulatory filings submitted in Singapore and Bangladesh, the principal shareholder of PowerCo is Kamruzzaman Chowdhury. Through a review of identity documents and social media posts, Netra News was able to establish that Chowdhury is Nasrul Hamid Bipu’s maternal uncle.
Kamruzzaman Chowdhury
We found evidence that Chowdhury himself was involved with the Hamid Group — at least in the past. We also found evidence that his son holds a senior management position in the conglomerate. Some of Bipu’s other uncles and their children also have held senior positions within the group.
In a recorded conversation with Netra News, Chowdhury told us that he does not know much about the company which he owns on paper — he just signed company registration documents, as requested by his nephews, “They are my relatives. I am their maternal uncle. They asked me to sign [the documents], I signed. I didn’t even read closely what [I was signing].”
Chowdhury claimed he is no longer a shareholder of PowerCo, “I don’t know the details. In fact, I don’t know anything. I was told ‘you have some shares in this company, sign here’ — I signed. Then, [after some time], they told me, ‘you no longer have shares, sign here’ — I signed. That’s it. I don’t know anything beyond that.”
PowerCo is further connected to the state minister through Mohammad Murad Hassan, who is listed as its alternative director in the Singaporean filing. Hassan is also the Chief Executive Officer (CEO) of Delco Business Associate, a subsidiary of Hamid Group.
Murad Hassan
The connection between PowerCo and Delco runs deeper.
During its formation phase in Bangladesh, PowerCo’s registered address in Dhaka was “32, Pragati Sharani” in Baridhara, a posh neighborhood in Dhaka. When Netra News visited the address, we found three luxury office furniture brand showrooms occupying the building. The furniture brand showrooms — Camerich, Sunon and Euro — are operated by Delco. On its website, Delco lists “32, Pragati Sharani, Baridhara” as the address of its showroom. In other words, PowerCo used Delco’s address in Baridhara as its first address in Bangladesh.
32, Pragati Sharani
According to affidavits that Nasrul Hamid Bipu submitted to the Bangladesh Election Commission before the 2014 parliamentary election, he himself served as the managing director of Delco and held a significant number of shares in the company. Subsequently, the ownership of the company was transferred to his son Zareef Hamid and brother Enthekhabul Hamid.
Nasrul Hamid Bipu’s affidavit (in Bengali), declaring his position at Delco.
Mohammad Murad Hassan, once the CEO of Delco, is now the Chief Operating Officer (COO) and alternative director of PowerCo. As a document prepared by BPC shows, Hassan attended at least one negotiation meeting with the state agency on behalf of the company.
We contacted Murad Hassan to get his and PowerCo’s comments for this story, but he did not respond.
In a filing submitted to the Registrar of Joint Stock Companies and Firms (RJSC) in Bangladesh during the incorporation of PowerCo, two witnesses were listed: Jahangir Alam and Ruhul Amin. Based on Jahangir Alam’s identity documents and his LinkedIn profile, Netra News was able to confirm that he worked as an assistant manager of Hamid Group. The mobile phone number of Ruhul Amin, given in the RJSC document, was found in Truecaller (a caller identification app popular in Bangladesh) as “Ruhul Hamid Group”.
Another person associated with PowerCo is Tarek Khalil Ullah, who is the assistant general manager of the company. Ullah is a former employee of Hamid Group and a close associate of the state minister’s younger brother, Enthekhabul Hamid — the managing director of Hamid Group. The younger Hamid is also the honorary consul general of Botswana in Bangladesh. Until recently, the consulate general’s website listed Tarek Khalil Ullah as its only employee, manager of office operation.
Tarek Khalil Ullah
The managing director of PowerCo is Nabil Khan, an Indian national who runs the Dubai-based investment company Ascentis Capital. Khan and Enthekhabul Hamid were “friends” on Facebook, until Netra News contacted Nasrul Hamid Bipu, seeking his comments for our story.
Khan is also the managing director of the Middle Eastern branch of Seatrek shipping company based in Singapore, which is an associated company of a Chittagong-based shipping line.
Nabil Khan
“I think it’s a classic case. Companies that are set up to obscure family connections, using a straw man to front for the ultimate beneficial owners are a very common setup used in illicit deals and fraudulent practices elsewhere,” Georg Neumaan, spokesperson of the anti-corruption network Open Contracting Partnership, told Netra News. “This is especially true for countries, at national or local levels, where there is a small group of elites controlling the government.”
“Family empires are built with multiple interlinked companies of uncles, daughters, daughters-in-law etc. Family members can have official but also unofficial roles. You never know what is discussed during a family celebration, at the next gathering. It can be very hard to investigate and prove. But, what we see here in this story, is a huge amount of red flags that show something is very fishy,” Neumaan added.
Conflict of interest
Given his close ties with PowerCo, Nasrul Hamid Bipu’s handling of the contract awarding process was in potential violation of sections 24 and 25 of Bangladesh’s Public-Private Partnership Act (2015).
Section 25 stipulates that if any person involved in the evaluation of bids in the selection process of the private partner has a direct or indirect conflict of interests with any organisation or person associated with the project, he shall withdraw himself from the process. If he does not, the law states, it shall be deemed as a “collusive practice”, liable to be prosecuted under anti-corruption laws.
However, far from recusing himself despite his business, financial and family ties with PowerCo, Nasrul Hamid Bipu was intricately involved in project-related official procedures, including evaluation of bids, potentially having committed what the law defines as “collusive practice.”
He chaired the ministry’s meeting that evaluated various proposals for the LPG terminal project, including the proposal from the Marubeni-Vitol-PowerCo consortium.
He also signed the project brief prepared by BPC for the prime minister’s approval — Prime Minister Sheikh Hasina is also responsible for the power, energy and mineral resources portfolio, and her office has overseen the evaluation process.
Documents obtained by Netra News also show that Nasrul Hamid Bipu’s private secretary at the ministry was copied in major correspondence related to the LPG terminal project between different wings of the ministry including BPC, the Energy and Mineral Resources Division (EMRD), and the Power Division.
It also appears that Nasrul Hamid Bipu used his position as a state minister to suppress public discussion about the LPG terminal project. When The Business Standard, a Bangladeshi business newspaper, published an article raising questions about Vitol and PowerCo’s competence for the project, Hamid is said to have called the newspaper’s owner and asked him to remove the article from its website.
According to two journalists aware of the conversation, the state minister issued threats that failure to remove the article may negatively affect the newspaper owner’s lucrative power businesses with his ministry. The paper complied, removing the article from its website.
Sharier Khan, Executive Editor of The Business Standard, told Netra News, “We have no knowledge on whether the state minister had called the newspaper’s owner regarding the report or not.”
Embroiled in controversy: Marubeni and Vitol
The partnership between Marubeni, Vitol and PowerCo, in which Nasrul Hamid Bipu has a hidden interest, raises concerns about other projects in the power and energy sector — because Marubeni and Vitol are two of the major contractors at Bipu’s ministry.
According to a summary report prepared by BPC, the Marubeni-Vitol-PowerCo consortium was formed some time before June 2019. After the consortium was set up, in May 2021, Marubeni independently signed a Memorandum of Understanding (Mou) with Electricity Generation Company of Bangladesh (EGCB), a state-owned company under Bipu’s ministry, to build a 100 MW solar power plant in Feni. While the project is still in its early stage and project costs remain undisclosed, a review of similar solar power projects in Bangladesh suggests that it may be worth up to $200 million.
Kaori Terauchi, from Marubeni’s Corporate Communications Department, told Netra News that Marubeni has a “zero-tolerance policy” towards bribery and corruption. “We have in place robust anti-bribery and corruption policies and procedures, and undertake anti-bribery and corruption due diligence on our potential business partners,” Terauchi said.
About the LPG terminal project, the spokesperson said, “We stress that we do not condone and are not aware of any bribery and/or corrupt conduct in connection with the Matarbari LPG project.”
As Marubeni takes “allegations of bribery and corruption very seriously,” Terauchi requested Netra News to share with the company “the detailed information upon which you have raised [..] your allegations.”
Vitol, for its part, is a major player in the Bangladeshi energy sector. It delivered Bangladesh’s first spot LNG cargo in September 2020 — a government purchase that was repeated in February 2021, and again in March 2021. All of these deliveries, worth more than $100 million, took place after Vitol entered into a partnership with PowerCo.
Andrea Schlaepfer, Head of Corporate Affairs at Vitol, told Netra News that, “It is inaccurate to state that Vitol is part of a consortium that has been awarded a contract. There has been no contract award that we are aware of, and only a non-binding MOU has been signed between parties to explore the feasibility of a terminal in Bangladesh. The feasibility study is ongoing, Vitol has not made any binding commitments and we are not aware of other parties having done so.”
Schlaepfer, however, did not address the company’s relationship with PowerCo.
Marubeni and Vitol are two of the major foreign contractors in business with Bipu’s ministry.
Both of these companies were previously embroiled in bribery and corruption scandals in other developing countries.
Marubeni was implicated in corruption charges in Nigeria and Indonesia, for which it had to pay more than $100 million to the US Justice Department — in 2014, the company was barred by Japan International Cooperation Agency (Jica) for nine months from projects funded through its ODA (overseas development aid) programs.
Vitol, the Dutch-Swiss partner in the Marubeni-Vitol-PowerCo consortium, also has a history of corruption. As recently as in December 2020, Vitol’s subsidiary in the United States agreed to pay a staggering $164 million fine as part of a deferred prosecution agreement with the US Justice Department into the company’s payment of bribes to public officials in Brazil, Ecuador and Mexico.
Who is Nasrul Hamid Bipu?
Nasrul Hamid Bipu inherited his politics from his father, Hamidur Rahman — a close associate of Sheikh Mujibur Rahman who served as the treasurer of the Awami League before Bangladesh’s independence. Hamid won his parliamentary seat — Dhaka 3 — in 2009, and was appointed the state minister at the Ministry of Power, Energy and Mineral Resources in 2014.
The ministry has always been a priority for the Awami League government, as reflected by the fact that the prime minister herself holds the portfolio of the ministry. It also has a full-time adviser, Tawfiq-e-Elahi Chowdhury, who has the status of a cabinet minister. Nasrul Hamid Bipu is the minister-in-charge responsible for executive operations of the ministry.
While the Awami League government has been credited with resolving Bangladesh’s persistent power crisis, its success has been marred by corruption allegations and the introduction of the controversial Quick Enhancement of Electricity and Energy Supply Act (2010), which grants immunity to government officials and others involved in certain power and energy deals.
A patron of art and culture, Nasrul Hamid Bipu represents a new breed of suave Awami League leaders who excel at using innovative campaign tactics and value the power of digital media. He is a trustee of the Centre for Research and Information (CRI), the Awami League think-tank led by Sheikh Hasina’s nephew Radwan Mujib Siddiq. He is also involved with Youth Bangla — a partisan promotional program under the auspices of Sajeeb Wazed, the prime minister’s only son and heir apparent.
Nasrul Hamid Bipu is a trustee of the Centre for Research and Information (CRI), the Awami League think-tank.
Response by proxy?
Netra News contacted Nasrul Hamid Bipu, for his comments for this story. In a WhatsApp message, he asked us to email him our questions to his official email address, “After receiving and perusing your questions, I will decide whether they merit any responses and get back to you accordingly.” We did not receive any response from him after we emailed him our questions.
Following our enquiries sent to Bipu, individuals affiliated with CRI have launched a campaign on social media against Netra News and its editors. The verified Facebook page of Bangladesh Chhatra League, the student wing of the Awami League, also circulated several sponsored posts targeting Netra News and its editors. Many other fake Facebook pages engaged in this campaign in a seemingly coordinated manner.●
