US embassy cable - 05DHAKA2879

C O N F I D E N T I A L DHAKA 002879 
 
SIPDIS 
 
E.O. 12958: DECL: 06/20/2015 
TAGS: PREL, PGOV, ECON, BG 
SUBJECT: ENERGY STATE MINISTER RESIGNS; CORRUPTION CITED AS CAUSE 
 
Classified By: P/E D. Renz, Reason(s): 1.4(d) 
 
1. (C) Summary: Prime Minister Zia demanded Energy Minister 
AKM Mosharraf Hossain's resignation amidst corruption charges 
of accepting a luxury car from an energy firm.  Mosharraf 
defends himself saying that an energy partner properly 
provided the car to him and that "vested quarters" are out to 
get him.  While policy disagreements and friction with the 
Prime Minister may have been the underlying cause, the BDG 
will likely use his resignation following corruption charges 
to "prove" it is committed to fighting corruption.  End 
summary. 
 
2. (U) On June 18, State Minister for Power, Energy and 
Mineral Resources, A.K.M Mosharraf Hossain, resigned at the 
request of the Prime Minister.  The resignation followed 
press disclosures that Mosharraf received a luxury vehicle 
from a private Canadian firm, Niko Resources.  Niko Resources 
is a partner with Bangladesh Petroleum Exploration Company 
(BAPEX), the Bangladeshi partner in the joint venture with 
Niko, and subsidiary of Petrobangla.  At the time Niko 
provided the car to the State Minister, Mosharraf was ruling 
on liability for a gas blowout at facilities operated by the 
joint venture.  Mosharraf subsequently absolved Niko of 
responsibility, laying the blame instead on BAPEX and its 
Managing Director. 
 
3. (U) Mosharraf is the second minister in the BNP government 
to step down amid corruption charges.  In March 2004, 
Commerce Minister Amir Khasru Chowdhury resigned after 
charges of nepotism and failure to ensure the stability of 
consumer market essentials. 
 
4. (C) Mosharraf says his use of the car was authorized, 
citing BDG policy permitting senior officials to "commandeer" 
donor provided project vehicles when government vehicles are 
not available.  In practice, this policy has resulted in the 
routine conversion of project vehicles to the de facto 
personal vehicles of senior officials.  Mosharraf's case is 
different, however, because of the close nexus between the 
gift of the car for Mosharraf's use and Mosharraf's central 
role in ruling on liability for the gas blowout. 
 
5. (U) Newspapers reported the corruption charges as the 
official reason for the resignation, but cited various other 
factors as the underlying cause: discontent from Khandker 
Shahidul Islam, Secretary to the Prime Minister, who had been 
removed from the energy ministry when he tried to take action 
against corrupt officials against Mosharraff's dictates; 
Mosharraf seemingly always siding with foreign companies to 
the disadvantage of Bangladeshi interests; his resistance to 
assuring 20 years of gas supply for the Indian TATA deal 
while advocating another deal to export gas to India; and his 
recent trip to Canada underwritten by Niko but ultimately 
paid for by Bangladeshi consumers, causing embarrassment to 
the government. 
 
6. (C) Jatiya Party MP Ghulam M. Quader commented that 
Hossain's use of the car "was not a big crime" as he used the 
car for government business.  "While he may be corrupt", the 
issue, Quader said, probably was elsewhere.  Explaining that 
BDG decision making is highly centralized, he said Mosharraf 
as State Minister could not have acted without the 
concurrance of the Prime Minister's office, which would have 
demanded its share.  Someone wanted a bigger share, he 
speculated. 
 
7. (C) Comment: The BNP came to power promising to increase 
substantially electricity production, but has yet to bring 
new production on line.  As the election approaches, the 
Prime Minister's office has become increasingly anxious to 
address the power deficit.  Energy Ministry opposition to the 
Tata project and several other power projects with PMO 
support has created significant friction between the PMO and 
the Energy Ministry and led to the earlier replacement of the 
State Secretary for Power.  While the corruption charges 
officially responsible for the resignation appear to have 
merit, the Energy Ministry's obstruction of PMO power 
projects may be a significant factor underlying the State 
Minister's resignation.  Nonetheless, we expect the BDG will 
trumpet its actions as "proof" of its commitment to fight 
corruption. 
 
THOMAS