Full text of WB Panel's Letter to ACC

The World Bank

International Bank for Reconstruction and Development

International Development Association

1818 H Street N.W.

Washington, D.C. 20433 U.S.A

(202) 473-1000

Cable Address:INTBAFRAD

Cable Address: INDEVAS January 9, 2013

Mr. Ghulam Rahman

Chairman, Anti-Corruption Commission

1, Shegunbagicha

Dhaka-1000-Bangladesh Dear Mr. Chairman, The Padma Multipurpose Bridge Project

I would like to thank you for your warm hospitality during the last visit to Dhaka of the World Bank's External Panel of Experts (the Panel) on December 2-5, 2012. I am also grateful for your letter dated on December 19, 2012 attaching the copy of the First Information Report (FIR) filed by the Anti-Corruption Commission on December 17, 2012. Overview

The Panel has reviewed the FIR in accordance with the mandate received from the World Bank and agreed with the Government of Bangladesh to assess the investigation by the Anti-Corruption Commission of Bangladesh (ACC) into allegations of corruption in the Padma Bridge Project and to advise the World Bank on the completeness, correctness, transparency, adequacy and fairness of the investigation. The Panel considers the issuance of an FIR a positive first step by the ACC to take effective action against those persons allegedly involved in corrupt practices in respect to the Padma Multipurpose Bridge Project (PMBP). However, the sequence of events considered by the Panel and now established by the ACC suggests a criminal conspiracy that includes former Minister Hossain as the most senior official personally involved. The ultimate award of the contract required his approval. He met with SNC Lavalin managers during a reunion requested by Secretary Bhuiyan to negotiate the illegal payment. As a consequence of the meeting his name and the indication of a payment of 4% was included in a list of people that were to receive a compensation for their alleged involvement in the conspiracy. In order to achieve a complete and fair investigation, the serious allegations against the former Minister of Communications should be thoroughly investigated and he warranted inclusion among the accused. Nonetheless, the Panel is taking note of your observation that he will be under a rigorous scrutiny during the investigation. The Panel would appreciate receiving copies of any additional evidence collected by the ACC, as well as its investigative plans going forward. The Panel stands ready to assist the ACC in the fulfillment of its role and, if required, will seek to provide training for its staff and technical assistance such as forensic accounting, or to be available for investigative planning. 1) Expert Panel's Views after the December 2-5, 2012 Meetings.

Investigative matters including the situation of the former Minister of Communications were the subject of an extensive, open and frank dialogue between the ACC and the Panel at our meetings during the December 2012 visit. The Panel highly appreciated the frank and open attitude of the ACC during the dialogue. In order to keep our interaction candid and predictable, the Panel will summarize its opinion on the information collected before the issuance of the FIR. Significant Facts Identified from the information reviewed by the Panel

The Panel considers that the following facts have a significant bearing for further investigation by the ACC: a. During the procurement process two Bangladeshi public servants including Quazi Md. Ferdous (Member Secretary of the Evaluation Committee) divulged confidential information to SNC Lavalin's managers in violation of their duties and requested further instructions or support from them. ACC rightly considers that they should be under investigation for their involvement in the conspiracy. b. ACC also considers that Md. Mosharraf Hossain Bhuiyan, Secretary, Bridges Division and Executive Secretary Bangladesh Bridge Authority (BBA), was involved in the conspiracy. It should be noted that since June 23, 2010, Secretary Bhuiyan and Ferdous were members of the Evaluation Committee (for the technical and financial proposals). c. During the procurement process Ismail Hossain, director of an SNC Lavalin subsidiary, represented the company. In the opinion of an SNC manager “the Secretary and the Minister” were dealing with him. On March 14, 2011, Ramesh Shah, Vice President of SNC Lavalin International was asking for “the PCC cost on the project in detail.” PCC is a euphemism used by SNC Lavalin to indicate the cost of the bribes to be paid. d. The financial opening took place on March 28, 2011 and SNC Lavalin was placed second after Halcrow. e. This result greatly concerned SNC Lavalin. Mohammad Ismail was trying to change the situation. On April 1, 2011, he was planning to meet with Ferdous in New York. However by a letter dated April 5, 2011, Ramesh Shah, Vice President of the SNC Lavalin International subsidiary notified the Bangladesh authorities that Mohammad Ismail was no longer working for the company. f. On April 10, 2011, SNC Lavalin's local consultant wrote a “confidential” email to Kevin Wallace, then Vice President and General Manager of SNC Lavalin: “Halcrow's low bid has put us in second position. But, it is not over yet. A major forgery act has been detected in their proposal, and the client is considering re-verification of the Key Personnel's CVs. SNCs CVs will also be verified; SNC will be receiving a letter from the client to that effect shortly". g. The local consultant added "The entire marketing effort was done by Ismail and myself. The client was very comfortable dealing with Ismail; that includes the Secretary and the Minister. However, after receiving the notice [of Ismail's termination] they got very puzzled and are about to lose confidence on us. At this very critical stage we have to reestablish their confidence a.s.ap. As desired by the Secretary, you may have a conversation with him immediately. His name is Mosharraf Hossain Bhuiyan, cell +8801714079372. As mentioned to you earlier, the client will not accept Ramesh as the contact point because of previous experience and reputation." h. On April 12, 2011 one of the suspects, Quazi Ferdous of the BBA informed SNC Lavalin and Halcrow that the Evaluation Committee would be carrying out an evaluation of their proposals and requesting information about their personnel's CVs. i. On three different occasions the local consultant insisted that Secretary Bhuiyan was expecting a call from Wallace. He convinced Mr. Wallace of the need to visit Bangladesh "to seal" the project, indicating the interest of someone higher than Secretary Bhuiyan. The consultant wrote: "The top guy wants to meet/see a sada (white) Canadian" adding "Did you get a chance to talk to Mr. Bhuiyan?" j. On May 29, 2011, Kevin Wallace and Ramesh Shah visited Bangladesh and met with Secretary Bhuiyan, and Minister Hossain. After the meeting Ramesh Shah wrote on a notepad under the heading "PADMA PCC." "4% Min"; ... "1% Secretary..." k. A few days later, on June 13, 2011 the BBA submitted to the World Bank for non objection an Evaluation Report recommending that SNC Lavalin be awarded the CSC contract indicating "issues/concerns" regarding Halcrow's financial and technical proposals. l. On June 19, 2011 the SNC Lavalin managers recognized the privileged treatment that they received "BBA has already sent the final recommendation without our full compliance with the [CV] verification process." And confirming the collusion with Mr. Ferdous: "[Even though BBA has sent the recommendation they still need [the verification] for their records. ... Please try to arrange this otherwise Ferdous will be in trouble." The public Procurement Act

a. The Public Procurement Act (PPA) 2006 sets out the public procurement process and specifies the duties, responsibilities and powers of various public servants. Public servants acting in violation of the PPA will render themselves liable to disciplinary proceedings on the charge of professional misconduct. b. It would be important to make a determination whether the professional misconduct charge would be applicable to those of ministerial rank. In practice, civil servants in Bangladesh clear all procurement decisions (e.g. prequalification lists, contract awards) with relevant ministers. Under any circumstances, the PPA provisions are appropriate guidelines for conduct of any Bangladeshi official, including those of ministerial rank. Following its principles, the Minister should not have engaged in the public procurement process before a report complete with the recommendation of the Evaluation Committee was submitted to him for final approval. Furthermore, the Minister is not immune from the offence of "criminal misconduct" under section 5(1)(d) of the Prevention of Corruption Act. Other provisions, including sections 5(1)(a) and (b) of the Prevention of Corruption Act, may also be applicable. Preliminary conclusions of the Panel

Based on these facts and at the time of its visit to Dhaka, the Panel assessed that at least four individuals working for the Government of Bangladesh, including the former Minister of Communication, should be named as accused in the FIR. The Panel was very grateful for the opportunity provided by the ACC to discuss in detail the evidence surrounding the former Minister. Some of the arguments provided by the ACC to exclude the former Minister are, in the Panel's opinion, contradicted by the evidence or based on a distorted interpretation of Bangladeshi law. ACC representatives acknowledged that the Minister's actions were not "above board", recognizing that there were suspicions against him, but stated that "suspicion was not sufficient for launching an investigation". In fact, the legal threshold to initiate an investigation under Bangladesh's law is indeed "reasonable suspicion", not conclusive evidence. The ACC's argument that including Minister Hossain in the FIR would cause a political uproar was deeply disturbing to the Panel. The Panel could understand that great care and prudence should be exercised in examining the grounds for reasonable suspicion against a former Minister. Such prudence might require the ACC to exercise extra care in examining the facts that give rise to reasonable suspicion. However, it does not absolve the responsibility of the ACC to launch proper investigations where investigation is due. If after careful examination of the evidence, the ACC reaches the conclusion that reasonable suspicion does exist, it must proceed to investigate irrespective of a person's political status or possible political ramifications. Otherwise the investigation cannot be considered complete and fair. In Summary the Panel has reached the view that:

a. The sequence of events considered by the Panel suggests a criminal conspiracy that includes former Minister Hossain as the most senior official personally involved. The ultimate award of the contract required his approval. He met with SNC Lavalin managers during a reunion requested by secretary Bhuiyan to negotiate the contract. As a consequence of the meeting his name and the indication of a payment of 4% was included in a list of people that were to receive a compensation for their alleged involvement in the conspiracy. b. Both the subjective criteria (that the investigators ought to have found reasonable suspicion that former Minister Hossain was involved in the conspiracy) and the objective test (that they will be able to demonstrate to any reasonable person, and hence to the court, that there are grounds to conclude the existence of reasonable suspicion) are already satisfied and justify inclusion of the former Minister as an accused individual in the FIR. c. The expert Panel is obliged by the absence of the former Minister as one of the persons accused in the FIR to consider that ACC is not conducting a complete and fair investigation. 2. First Information Report.

The FIR sets out the circumstances in which a criminal conspiracy has been detected in relation to the selection of the Construction Supervision Consultant for the Padma Multipurpose Bridge Project (PMBP). Seven persons are accused for their involvement in the conspiracy including the former Secretary and the former Superintendent Engineer of the Bangladesh Bridge Authority, an Executive Engineer of the Roads and Highway Division and four SNC Lavalin representatives. They are accused of having attempted to obtain financial gains for themselves and others by favouring SNC Lavalin in the tender process thereby violating the relevant laws and regulations. Section 161 of the Penal Code and Section 5(2) of the Prevention of Corruption Act of 1947 are believed to have been violated, and the crime is punishable under Section 120(B) of the Penal Code. The Panel notes that mention is made in the FIR of the roles of former Minister Hossain and former State Minister for Foreign Affairs Mr. Abul Hasan Chowdhury as follows (the Panel's translation): "During the enquiry phase, it was also noted that the then Minister of Communications Mr Syed Abul Hossain had met with representatives of competing bidding entities. In the case of his meeting with SNC Lavalin, former State Minister for Foreign Affairs, Mr Abul Hasan Chowdhury, played the role of facilitator. They were also mentioned in Mr Ramesh Shah's notebook in reference to percentage allocation in the form of Padma PCC (Project Commercial Cost/Project Commitment Cost) after award of contract. However, at the enquiry stage it has not been possible to gather corroborative evidence, witness statements, circumstantial evidence or complementary statements on Mr. Abul Hasan Chowdhury and Mr. Syed Abul Hossain with regard to their involvement in this act of conspiracy case. At the investigation phase, the roles of Mr. Hasan and Mr. Hossain in this conspiracy would be scrutinized." The Panel would like to know how the ACC proposes to take forward its work in the investigation phase. To this end, the Panel would appreciate if the ACC could provide the Panel with a written reply to the following questions as soon as practicable: a) With reference to the Panel's observations above concerning former Minister Hossain's probable involvement in the conspiracy, what is the ACC's assessment of Mr. Hossain's role? In this context, what is the ACC's view of the significance of: i. the meeting held on 29 May 2011 between the SNC representatives and the Government officials; ii. Mr. Hossain's attendance at that meeting; and iii. the subsequent event that SNC Lavalin moved to the top of the tender list, and the reference on the notepad to "4% Min"? b) It is stated in the FIR that "the then Minister of Communications Mr. Syed Abul Hossain met with representative of SNC Lavalin and other representatives of competing bidding entities." Can the ACC provide the Panel with all information it has already collected with respect to the relevant meetings, including the dates, the venue, the names and the positions of the persons whom Mr. Hossain met, and the purposes of these meetings? Are there further investigative plans to collect additional information concerning these meetings? c) It is stated in the FIR that "at the investigation stage, the roles of Mr. Hasan and Mr. Hossain in this conspiracy will be scrutinized." Can the ACC share with the Panel its investigative strategy for doing so, including, in particular, whether the ACC will invoke its investigative powers and if so what powers, and keep the panel apprised of progress? d) The FIR mention that "During interrogation, committee member Mr. Tarun Tapan Dewan, Project Director Mr. Rafiqul Islam, Dr. Professor Ishtiaque Ahmed, Mr. Moqbul Hossain stated that from the very onset the secretary Mr. Mosharraf Hossain Bhuiyan and Mr. Kazi Md. Ferdous expressed that the government was primarily interested to award the work order to a Japanese Company Oriental Consultant Company Ltd and Mr. Kazi Md. Ferdous unsuccessfully attempted to obtain signatures of other members on an erroneous evaluation sheet prepared by himself on his own initiative." Can the ACC provided a copy of such statement to the Panel? e) It has been publicly reported that Ex-secretary of Bridges Division Mosharraf Hossain Bhuiyan and Superintendent Engineer of Bangladesh Bridge Authority Kazi Mohammad Ferdous have been arrested and interviewed. Can the ACC provide the Panel with records of such interviews and any other investigative step taken or anticipated since the issuance of the FIR? f) During our December's meetings the evidentiary process to make documents from outside Bangladesh admissible in a court of law was discussed. Has the ACC taken or will the ACC take all necessary steps to ensure that the evidence and information supplied by the World Bank and any other third parties will be admissible in any subsequent legal proceeding in Bangladesh? g) What is the status of any efforts to receive or obtain evidence and any other relevant information from Canadian authorities? h) What is the status of efforts to access deleted emails from computers and/or email accounts of relevant parties? I should be grateful for a reply to the above questions at your earliest convenience. In the course of the ACC's on-going investigation, please do not hesitate to let me know if the Panel can assist you. The Panel stands ready to provide training for ACC staff and technical assistance such as forensic accounting, or to be available for investigative planning should you find this useful. I would like to extend to you and through you to all ACC colleagues the Panel's best wishes for your good health, great happiness and every success in 2013. Yours sincerely, Luis Moreno Ocampo

Chairman

External Panel of Experts