BANGLADESH

Anti-Corruption Commission (ACC) Chairman Ghulam Rahman on Wednesday said their investigation into the alleged corruption in the Padma bridge project was on the right track.

"Regarding overall investigation into the Padma bridge graft, we want to say that everything is under control and things are going in the right way," he told reporters at the ACC headquarters.

Leaving no 'loophole' the inquiry is going on with maximum alertness, he added.

Some officials of the Integrity Department of the World Bank raised graft allegations in the country's largest-ever infrastructure development project in September last year.

The development partner wanted the government to send on leave all the government officials relating to the project.

As the government failed to meet the conditions, the multinational global lender cancelled its credit for the $2.9 billion project on June 29, saying it had credible evidence of a corruption conspiracy involving Bangladeshi officials, executives of Canadian engineering giant SNC-Lavalin and some private individuals.

It set several conditions to revive its pledged $1.2 billion loan.

Later, former Communications Minister Syed Abul Hossain stepped down while former Bridges Division Secretary Mosharraf Hossain was sent on leave. Prime Minister's Economic Affairs Advisor Mashiur Rahman who was the Integrity Advisor to the Padma bridge project went on leave in mid-September.

The multinational lender, which decided to revive its loan commitment on Sep 21 after the Bangladesh government agreed to its terms and conditions, appointed an external panel early this month to oversee the ACC investigation.

The three-member panel in mid-October visited Dhaka and held several meetings with the top ACC officials. The World Bank's second team will arrive early in November to work out the procurement modalities of the project.

ACC Commissioner M Sahabuddin told reporters on Oct 15 that the World Bank had assured the ACC of helping in quizzing former SNC-Lavalin executives Ramesh Shah and Mohammad Ismail who are now languishing in jail after being arrested by the Canadian police.

The first World Bank team asked the ACC to provide it with necessary documents on the investigation, but the ACC sought time to provide those. The antigraft watchdog on Oct 23 sent the documents, information and data to the panel.

ACC chief Rahman on Wednesday said that they are yet to receive any feedback from the external panel.

"But we're in constant communication with them. They may send information anytime,' he added.

The Parliamentary Standing Committee on the Ministry of Power, Energy and Mineral Resources on Wednesday suggested increasing the use of liquefied petroleum gas (LPG) cylinders instead of pipeline gas connection in the households.

After a regular meeting of the committee, its Chairman Subid Ali Bhuiyan told reporters that household consumption of natural gas supplied through pipelines was improper.

The meeting recommended reducing household gas connection gradually, he said.

"How long will gas be supplied through pipeline? The ministry has been directed to take measures to increase the use of gas cylinders instead of pipeline connection," the ruling Awami League MP said.

Bhuiyan expressed his dissatisfaction over the low tariff of pipeline gas. He also suggested adjustment of the tariffs of the LPG and gas supplied through pipeline since currently the tariff of LPG gas is costlier in the market.

"Tariffs of LPG cylinders are higher in the market while the tariff of household gas connection is remarkably low. The committee has asked for adjustment between the two," he said.

The meeting also expressed its displeasure at the fact that no legal measures had been taken against former Managing Director of Karnaphuli Gas Distribution Company Limited (KGDCL) Sanwar Hossain Chowdhury though the parliamentary panel had d found proof of corruption in its investigation.

The committee made fresh recommendation for legal steps against the former official.

Natural gas for household consumption is supplied either through pipeline connection or in the form of LPG gas in Bangladesh. The pipeline supply, starting in the late 1960s, had spread to major cities until the 2000s. Since its limited reserve was presumed, the concept of LPG was promoted over the last decade.

The state-owned Bangladesh Petroleum Corporation (BPC) supplies cylindered gas through the dealers of its oil company Padma, Meghna and Jamuna.

The government is intent on building the Padma bridge even if it means to scale down the design and let only cars use it, Prime Minister Sheikh Hasina told Parliament on Wednesday.

She said there were two options for the much-coveted 6.15km bridge over the Padma River — one for cars only and 'double decker' for cars and trains. "If needed, we will adopt the alternative plan," she said indicating that the government might go for the cheaper option responding to a supplementary question of Awami League MP Zunaid Ahmed Palak.

Hasina hinted that the cheaper option would perhaps be taken up if foreign funds became unavailable.

The World Bank that agreed to contribute about $ 1.2 billion in $ 2.9 billion project announced that it was pulling out in end-June. But the government is still said to be working on getting the lending agency back on board.

As regards which option to go for, Hasina said, "The Bridges Division is working on this."

She, however, said the government is weighing different options to build the bridge and it would opt for the most viable, cost-effective and swift alternative.

"But we will build the bridge at any cost," she said reiterating her strong resolve regarding this project.

The government is scrutinising a Malaysian proposal while the process to construct the bridge with domestic funds is still on-going, she added.
The Prime Minister said Malaysia submitted its concessional offer on Padma bridge on Aug 27 and the government was still analysing it.

Hasina said it was not appropriate on the World Bank's part to cancel its loan pledge without discussing the issue at the lending agency's board.

"Due to the cancellation, project implementation has been delayed."

She said the government spent Tk 15 billion on land acquisition and rehabilitation and on different occasions, World Bank officials inspected the programme.

"But they did not find any corruption in the programme and yet they found corruption where no money was disbursed," she wondered.

The World Bank, Asian Development Bank, JICA and Islamic Development Bank did not disburse a single penny for the project, the Prime Minister said.
The Asian Development Bank (ADB) pledged $610 million. The Jeddah-based Islamic Development Bank is also to provide $140 million and Japan International Cooperation Agency said it would contribute $ 400 million to the project.

Integrity advisor

Her Economic Affairs Advisor Mashiur Rahman was appointed integrity advisor to the project to ensure transparency in line with World Bank recommendation, Hasina said.

The lending agency put forward four conditions but so far the government has fulfilled three of them. The government is, however, reluctant to give in to the last one – sacking Masiur Rahman.

A former World Bank official was also appointed as member of the evaluation committee as per recommendation from the lending agency, the Prime Minister said.

The Anti-Corruption Commission is independently investigating a corruption allegation for appointing a consultant, she added.

Amid whispers ruling out a return for the World Bank in Padma bridge project, Malaysia on Monday submitted to Bangladesh its final proposal on construction of the bridge.

Now bridging the mighty river with assistance from Malaysia requires only the government's consent.

S Samy Vellu, special envoy of the Malaysian government for South Asia, formally handed over a copy of the final proposal to Communication Minister Obaidul Quader at the Setu Bhaban in Dhaka.

The minister said: "A technical committee will scrutinise the proposal and put forward its recommendations to the highest decision-making body."

He said construction would begin within this fiscal year.

Quader declined to disclose the content of the agreement or when the government would take decision on the Malaysian proposal.

"It is a draft agreement and Bangladesh will negotiate on the terms and conditions included in the proposal," the minister said.

Quader said if there was any agreement, the bridge would be built under a build, own, operate and transfer (BOOT) basis and Malaysian Exim Bank will be the lead arranger.

Bangladesh is desperately looking for alternatives to bridge the river Padma after the World Bank refused to lend $1.2 billion in June.

The minister said: "Economic and public interests will be given priority while considering the proposal and agreement will be signed if it doesn't go against national interest."

On the scope of a settlement with the World Bank, Quader said; "You better ask this to the Finance Minister or ERD Secretary."

"The door is still open to any party as we can't say that dispute with World Bank is over."

The global lender in October last year suspended its pledged $1.2 billion fund for the $2.9 billion project to build the first bridge raising corruption allegation. The funds pledged by the other donors also remain suspended.

After the suspension of the World Bank funds, the Malaysian government expressed its interest in the construction of the bridge.

The governments of Bangladesh and Malaysia on Apr 10 signed a memorandum of understanding in Kuala Lumpur on cooperation in the construction of the Padma Bridge and associated facilities.

A domestically financed Padma bridge could slow down economic growth by drying up funds for crucial sectors like health and education, says a monetary economist who has worked for central banks and the UN.

Currently Chairman of the Department of Economics at Marquette University in Milwaukee, US, Abdur Rahim Chowdhury said diverting funds for bridge would also compel stiff austerity measures and hinder social development.

He said that even though Bangladesh had witnessed a steady six percent growth, this growth was yet to be inclusive.

In an email interview with bdnews24.com, the former researcher for the Finnish central bank also warned that high inflation was in the offing due to a likely food price hike triggered by a draught.

"Second, the quick rental plants have increased our import bill for petroleum products. This will gradually pass through to domestic inflation rate," says Chowdhury.

Also a former chief economist for the United Nations Economic Commission in Europe, the international finance specialist does not take well to the central bank's contractionary monetary policy as it "is not helping the economy very much".

The former member of the Chicago Federal Reserve Bank's academic advisory council said, "The contractionary monetary policy would lead to a drop in economic growth and further increase the fiscal mismanagement."

While he acknowledged that this might help 'contain inflation', "Continued government borrowing would result in increased domestic debt which will crowd out private investment. It may also create a liquidity crisis in the banking sector."

The economist said he believed that Bangladesh Bank could have taken a more selective approach as regards 'import demand for raw materials, intermediate goods and capital goods; and also increase the flow of credit to productive sectors such as garments'.

A former visiting professor at Johns Hopkins University, Chowdhury raised a couple more concerns for building the Padma bridge with own funds.

He said this would likely result in a weaker taka against the dollar since most of the investment would have to be in that currency. Furthermore, he said, foreign aid could shrink as donors become cautious fearing corruption in the 6-km mega structure to bridge the Padma.

Asked about Bangladesh's challenges ahead, Abdur Rahim Chowdhury reeled off a number of points.

Referring to Bangladesh's moderately high growth level, he said, "We should emphasize more on the quality of growth rather than the rate of growth. Our economic growth should be inclusive so that a larger proportion of the population could enjoy the fruits of growth. Also growth should be environmentally sustainable."

He noted that Bangladesh government still lived off taxes paid by the entire populace rather than the richer sections. "There should be more emphasis on direct tax collection including avoidance of tax evasion. In Bangladesh, the rate of increase in income tax collection is less than that of the domestic VAT."

Chowdhury cautioned that Bangladesh may not be able to sustain its current economic growth since there has not been enough investment in infrastructure.

Communications Minister Obaidul Quader said on Sunday Malaysia will submit a final proposal on the Padma bridge project in three weeks.

After meeting Malaysia's Special Envoy to South Asia on Infrastructure S Samy Vellu, Quader told reporters, "The Malaysian delegation has placed the concession agreement of the [Padma bridge] project on the costs during and afterwards the construction and how it will be returned."

He would not be drawn on the specifics of the concession agreement before the final proposal is in.

"There are some strategic problems if I talk about it," Quader added.

The meeting between the Communications Minister and a seven-strong Malaysian delegation, led by Vellu, began around 11:45am and ran for an hour.

The envoy also met Finance Minister Abul Maal Abdul Muhith on Sunday noon on the proposal submitted on Jun 28 to build the Padma bridge.

But the Finance Minister declined to say anything about their meeting. He told reporters, "I won't say anything. The Communications Minister will say what is necessary."

Quader said the final proposal will be screened. "The evaluation committee headed by Dr Jamilur Reza Chowdhury will examine Malaysia's final proposal. Then it will be sent to the law ministry for vetting. The Cabinet will take the final decision about the proposal after that."

Though he did not say anything clearly about what the Malaysians proposed, the minister said the final proposal will be a 'win-win' one for both countries.

Asked whether the government has abandoned the idea of building the bridge with its own funding, Quader said, "The government has ditched the Cabinet's decision. But why would we say no if anybody wants to help?"

He also said the possibility of establishing a consortium, led by Bangladesh, to build the Padma bridge cannot be ruled out.

Asked whether the Malaysian envoy said anything about beginning the bridge's construction, Quader told reporters, "They want to begin the work within this year."

Earlier, Quader had told reporters that he will take iftar with the Malaysian envoy and have a second meeting with them at 3pm Monday.

Dhaka had contacted Kuala Lumpur to construct the 6.15-kilometre long Padma bridge, which would connect the capital with 16 districts of backward south-western region, after the Bangladesh government ran into a dispute with the World Bank.

The global lender in Jun 29 pulled out of the $2.9 billion project raising corruption allegations, throwing funds pledged by the other donors into uncertainty.

The governments of Bangladesh and Malaysia on Apr 10 signed a memorandum of understanding in Kuala Lumpur on cooperation in the construction of the bridge and associated facilities.

On May 28, a delegation of the Malaysian government, led by Samy Vellu, had submitted a proposal to the Communications Minister to build the country's largest infrastructure.

Meanwhile, Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) extended their loan deal for the project by a month last Wednesday after the government had written to the three other donors including Islamic Development Bank (IDB) to keep the funds available.

Of the proposed $2.9 billion project, the World Bank had agreed to provide $1.2 billion and ADB pledged $610 million. The Jeddah-based IDB is to provide $140 million and JICA said it would contribute $400 million in the project.

On Jul 1, Muhith in a press conference refuted the corruption charges the World Bank had levelled against the government in cancelling its loan and urged the global lender to review its decision.

Malaysia's Special Envoy to South Asia on Infrastructure S Samy Vellu is meeting Communications Minister Obaidul Quader on Sunday to discuss details on its proposal to build the Padma bridge.

The meeting began around 11:45am. Vellu is leading a seven-member delegation.

The envoy will also meet Finance Minister AMA Muhith on the proposal submitted on Jun 28, according to the programme schedule of the ministers.

Vellu is also scheduled to visit the project site.

Malaysia expressed its interest in financing Bangladesh's largest infrastructure project after the World Bank cancelled its pledged $1.2 billion fund.

Dhaka and Kuala Lumpur signed a memorandum of understanding on Apr 10 in presence of the Malaysian Prime Minister. On Jun 28, Malaysia submitted a draft proposal to Bangladesh government to sign the agreement.

A Chinese company, incorporated in Australia, is keen to build the Padma bridge with a financing option that look better than that of the traditional multilateral lenders led by the World Bank.

"The company will provide 70 percent of the $2.9 billion required for the project without any interest," a senior official of the Economic Relations Division told the bdnews24.com after reviewing a proposal presented last week.

Asked, Communications Minister Obaidul Quader neither denied nor confirmed the development. "I shall not speak about this Padma bridge project and not go beyond what the Prime Minister has said."

Quader told bdnews24.com: "I can talk about the Second Padma Bridge."

World Bank's $1.2 billion loan bears 0.75 percent service charge while Asian Development Bank would have charged less than one percent for its promised $ 615 million.

"The great thing about the Chinese proposal is it is interest-free, quality would be ensured and the government will not need to spend foreign currency for the project," said the official, who spoke on condition of anonymity because there was no official decision to make the offer public.

"The 30 percent of the project cost would be financed by the government in local currency as lots of materials would be procured domestically."

"The company will form a consortium of three companies for main construction, river training and rail link and it would complete the entire work in less than three years," the official said.

In the original project proposal based on which the WB-led donor consortium agreed to fund the project, the bridge construction is supposed to take five years to complete.

The cancellation of the World Bank loan has made the Padma Bridge project uncertain, and the government is desperately looking for other financing options.

The bridge, an election pledge of the Awami League government, will connect Dhaka with 16 south western districts, home to about 60 million people, is estimated to contribute 0.6 per cent to the economy.

Last week, top ERD officials heard senior representatives from the Australia-based company with such details of the proposal as the plan to widen the road to six lanes instead of the originally proposed four lanes.

"It could be a blessing in disguise," the official said.

"In the presentation, we asked the company representatives about ensuring the quality and they said that they wouldn't have any problem if Bangladesh appointed an independent monitoring agency to keep an eye on their work," the official said.

"But the government will have to make separate arrangement for paying the independent body as the cost will not be included in the $2.9 billion that the Chinese are talking about," the official explained.

After the bridge opened to traffic, the government would pay the loan amount in the following 20 years with the earning from the bridge, the official added.

Prime Minister Sheikh Hasina has said, the government will build Padma bridge for which the World Bank cancelled its pledged fund, with its own fund, if necessary.

She again outright rejected the World Bank's allegation of corruption in selection of the consultant for the coveted project and reaffirmed her government's position in Parliament that action will be taken against the guilty if charges of corruption against them are proved.

The Prime Minister responded to a supplementary question from independent lawmaker Fazlul Azim during her question-answer session on Wednesday.

Hasina said following the World Bank's fund cancellation, she already had a meeting with the Bangladesh Bank Governor, the Economic Relations Division and Finance Secretary regarding funding of the project.

"I've discussed with them how the construction work of the project can be started on our own fund. We must build the Padma bridge. It's not very much difficult to use our own reserve for this purpose by taking one billion dollars a year," she asserted.

Hasina further added: "We'll build the Padma bridge by any means Inshallah. It's possible if our economy moves on the right track despite the global economic meltdown."

"The World Bank has cancelled its funding. It's their will anyway. Others (lending agencies) can follow suit. We've a population of 160 million and 8 million expatriates to build the bridge."

She said the governments of many countries including Malaysia and many international agencies were interested in building the bridge under Public Private Partnership and under the Build-Own-Transfer basis. "Whatever decision we make, public interests will be given priority."

In her first reaction following the fund cancellation by the Washington-based global lender, the Prime Minister alleged that the World Bank came forward to pour money in the communications sector, but raised corruption allegations without any evidence.

"They didn't release even a single penny, then how can they say that corruption was committed [in the project]? Instead you'll find that it itself corrupt."

"It's essential to scrutinise who are behind it and what are their motives," she added.

Hasina urged all to go through the Wall Street Journal and Forbes Magazine to know about the World Bank's corruptions.

She `pointed out that the World Bank had suspended funding in the power, energy and communications sectors due to corruptions of the BNP-led four-party government. She added that her government started the work to upgrade the Dhaka-Mymensingh Highway into four-lanes with its own fund.

She said the Bank suspended funding for seven projects including Dhaka-Mymensingh Four Lane Project. But, she noted, the BNP-led government did not change any minister over the Bank's allegation of corruption.

The Prime Minister said her government during her first spell in power in 1996- 2001 had envisaged the Padma bridge project, but the subsequent BNP government suspended its construction.

"None could raise any question about the transparency at any stage of the land acquisition and rehabilitation programmes involving Tk 15 billion. Even the World Bank report says that no corruption was committed in the acquisition process."

Referring to the communication with the World Bank officials on the Padma bridge issue, Hasina said after the Awami League-led coalition took office in 2009, senior consultant of the World Bank Isabella Lawen arrived Bangladesh. "She gave me two papers containing allegation of corruption in two projects during the time of the previous BNP government."

"Even so, as the World Bank was insisting, we changed the Minister concerned, the Secretary and the Project Director without any proof of corruption against them," the Prime Minister said.

Hasina alleged that the World Bank had proposed the name of a company as the consultant to the project. "They had sent us letters thrice. Our special committee found that the company was fake. If it's a fact, how was corruption committed in the project?"

Amid dispute with Bangladesh over funding the Padma bridge project, the World Bank says the annual total disbursement for the World Bank–supported projects in Bangladesh has seen an upward trend over the past four years.

The World Bank's current portfolio in Bangladesh consists of 34 active projects with a commitment of $5.8 billion, the highest-ever for the country, a media release of the bank said on Sunday, referring to a portfolio review completed jointly with the government.

The total disbursement for all World Bank-financed projects in the current fiscal until Apr 30 was worth $400 million while the disbursement for the same period in the last fiscal was $305 million, it said.

The portfolio review found satisfactory progress in many projects and noted the need to speed up implementation in others, it added.

The release, however, did not say anything about the $2.9-billion Padma bridge project, halted after the global lender suspended $1.2-billion fund alleging corruption.

"We are encouraged to see results in many areas such as increase in girl's enrolment in schools; schooling, reduction in under-five child mortality or better disaster preparedness that have made Bangladesh a role model for its neighbours," it quoted World Bank Bangladesh's Operations Advisor Christine E Kimes as saying.

"The Government of Bangladesh is fully committed to ensure that external financing is well utilised and for the purposes intended," it said quoting Economic Relations Division's Additional Secretary Arastoo Khan.

Denying the World Bank allegations, Communications Minister Obaidul Quader said earlier in the day, "Construction of Padma bridge will begin with our own funding if we cannot find alternative financier."

Finance Minister AMA Muhith on Thursday said the government plans to start construction work on the Padma Bridge project, the largest ever infrastructure project in the country, in the next fiscal year.
“We firmly believe, we’ll be able to start the construction work in the next fiscal year,” he told at a pre-budget discussion at Sonargaon Hotel in the city.
The Finance Minister also said he does not think there is any reason to worry about the financing of the Padma Bridge.
On GDP (gross domestic product) growth projection for the next fiscal, he said the 7.2 percent GDP growth projection should not be considered as “too much ambitious.”
On black money, Muhith said: “We didn’t show too much dependence on the black money in the previous fiscals. Since, we’ve big reforms plan regarding the stock market in the next fiscal, we don’t want to touch it.”
He indicated that investments of black money in the capital market would continue through the next fiscal year, considering the sensitive nature of the stock market. Currently, black money is allowed to be invested in stocks by paying tax at 10 percent.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the National Board of Revenue (NBR) jointly arranged the function titled ‘The 33rd Consultative Meeting of National Board of Revenue’ with AK Azad in the chair. The even was telecast live by private television channel NTV.
NBR chairman Dr Nasiruddin Ahmed, FBCCI first vice president M Jashim Uddin and vice president Mostafa Azad Chowdhury Babu, former FBCCI president Akram Hossain, BGMEA president M Shafiul Islam Mohiuddin, DCCI president Asif Ibrahim, Standard Bank chairman Kazi Akramuddin Ahmed, BARVIDA president Abdul Mannan Chowdhury, actor Elias Kanchan, and leaders of different district chambers, among others, spoke on the occasion.
Unveiling the government’s plan for the upcoming budget, Muhith said the neglected communications sector especially railways would get special allocation in the next budget to ensure smooth communication system in the country. “Railways sector remained neglected for long… we’ll look into it.”
He said the next budget will have specific directions for the next five years on the use of energy resources and electricity generation. He admitted that all the quick rental power plants could not come into generation timely.
The Finance Minister also said that the government will keep significant allocation for four areas –- skill development, maize production, poultry industry and beet sugar.
He assured the entrepreneurs that the government would consider a stimulus package for setting up Effluent Treatment Plant (ETP) in industrial areas.
About pre-shipment inspection (PSI), Muhith said: “We want to say bye to the system. Hope it will go soon.”
He said the key objective of the next budget will be to maintain the growth trend and the government will try to make a balance between demand and supply. “To maintain the balance, some may be benefited and some may be affected.”
The Finance Minister also assured the business leaders of accommodating their proposals in the next budget. “If not possible, we can bring changes after the budget placement.”
FBCCI president AK Azad sought a provision for imposing penalty with regular tax on whitening undisclosed income.
He also said the businesses do not favour the government decision allowing the investors to invest black money in stocks by merely paying tax at 10 percent.
“We’re urging the government to withdraw the proposal as it’ll surely discourage honest taxpayers and hurt them… it won’t be a good example for future either.”
The FBCCI chief said those who have undisclosed money can be brought under the income tax net through imposing appropriate penalty.
He also urged the Finance Minister to take initiatives and sit with Prime Minister Sheikh Hasina to find out a way to resolve the ongoing political conflict in the country.
“You’re a senior minister of the government… I request you to take steps to find out a solution,” he said, adding that confrontational political programmes hit the economy hard.
Azad alleged that some ‘top dogs’ shattered the country’s capital market and sought a legal provision in the next budget to bring back into the market the money they had taken out as hefty profit.
The FBCCI president also sought permission for investing abroad and urged the Finance Minister to give specific directives for that.
He said: “No Bangladeshi investor is now allowed to invest abroad…but there’s ample scope to invest in many countries, including neighboring Myanmar. We want an announcement in the next budget in this regard.”
Mostafa Azad Chowdhury Babu demanded special allocation for railways to cut pressure on roads and reduce road accidents.
Jashim Uddin said the government needs to generate additional 2000 to 3000 megawatt of electricity to achieve the projected 7.2 percent GDP growth for the next fiscal.