Tuesday, July 10, 2012

Space satellite tender : Sufficient evidence to trigger FBI corruption probe: US lawyer

The FBI should consider conducting an investigation into whether a US company, which won a contract to assist the Bangladesh government in launching the country’s first space satellite named Bangubandhu 1, had committed offences under the Foreign Corrupt Practices Act, a senior US corruption lawyer told New Age.

Dan Pickard, a partner in the Washington-based law firm, Wiley Rein LLP, and a specialist in US business corruption offences, said that the evidence about the $10 million deal, disclosed by New Age in a series of articles published in May, was sufficient to ‘trigger’ a US police investigation even though there was no evidence of corrupt payments.

‘In my view the circumstances that appear to exist in relation to this tender concerning the Bangladesh space satellite, where a US company has won a contract even though it reportedly did not meet the minimum tender requirements, itself should be enough to trigger an FCPA investigation,’ he said. ‘It is certainly reasonable to expect them to conduct an investigation.’

New age’s articles published in May showed that Space Partnership International not only failed to meet the minimum tender requirements but won the contract despite receiving a significantly lower score in the technical evaluation compared with another US company, Globecomm Systems Inc, which was then improperly disqualified.

The articles also revealed a network of family and business connections in which the vice-president of the winning company was related to Farid Khan, who is both the brother of minister Faruk Khan and also the director of Summit Communications which was a junior partner in the deal.

Both Space Partnership International and Farid Khan deny any wrongdoing. The company has stated that the selection process was ‘conducted properly’ and ‘we were  selected because we were the most qualified.’

Earlier, in response to a written parliamentary question about the tender, the posts and telecommunications minister, Rajiuddin Ahmed Raju, also denied that there was any ‘corruption and irregularities’ in the selection of the consultant. He pointed to a review panel of the Central Procurement Technical Unit which had concluded, after receiving a complaint from one of the losing consultants, that ‘the tender process was completed in an appropriate manner.’

The Foreign Corrupt Practices Act, which became law in 1988, makes it an offence for any US citizen or company to give bribes or offer any inducement to a government official of another country in order to obtain or retain business.

The US embassy, whose ambassador was present at the signing of the agreement between the government and Space Satellite International, has refused to comment on whether it has referred the case for investigation. ‘We do not comment on possible ongoing cases and matters of investigation,’ Kelly McCarthy, the embassy’s Press and Information Officer, told New Age.

‘The US embassy takes seriously any allegations regarding violations of US law, including the Foreign Corrupt Practices Act,’ she added. ‘We evaluate these allegations on a case-by-case basis to determine whether the evidence presented justifies a referral for further investigation.’

The Department of Justice also declined to comment.

Pickard, a corruption law expert who has written a manual about the legislation concerned, said that an FCPA investigation could be started even though there was ‘no smoking gun of evidence of a corrupt payment or an offer to pay.’

‘I wouldn’t be surprised if they investigate a case like this, particularly considering that Bangladesh is a country which has a high corruption rating by such organisations as Transparency International,’ he said.

However, another lawyer was more cautious. ‘What sometimes happens in these situations is that contracting rules are violated simply to award the contract to a friend or relative, but there are no “under the table” payments involved, and hence no FCPA implications,’ said Scott Thomas, the head of the political law practice at Dickstein Shapiro.

‘So, while I think there certainly are bases for investigation here — violation of contracting rules, conflict of interest rules, and providing false information rules — I’m not seeing a basis for an FCPA investigation yet,’ he told New Age.

The call for an FCPA investigation is likely to increase as New Age can reveal that in signing the contract with Space Partnership International, the Bangladesh government appears to have paid over $3 million more than the bid made by Globecomm, the company which was improperly disqualified after receiving the highest technical score.

A Globecomm official told New Age that its bid was about $6.5 million compared with Space Partnership International’s offer of around $10 million.

The claim could not be independently confirmed as its bid was not opened by the Bangladesh Telecommunication Regulatory Commission.

The claim, however, does correspond to the signed statement made by Globecomm to a procurement review panel that looked into the deal. This stated that ‘the company understands that the financial offer of SPI, USA is much greater than [Globecomm] has quoted in its financial offer.’

The company official also told New Age, ‘$10 million is a large amount of money for the actual amount of work that needs to be carried out.’

The Department of Justice has made enforcement of the FCPA one of its priorities.

In November 2011, assistant attorney general Lanny A Breuer told a conference, ‘The Justice Department has been vigorously enforcing the Foreign Corrupt Practices Act and achieving strong results. … [J]ust two weeks ago, we secured the longest prison sentence — 15 years — ever imposed in an FCPA case.’

Iftekharuzzamn, the executive director of Transparency International, told New Age that he supported a ‘credible investigation by the relevant US authorities, such as the FBI, to establish whether [Space Partnership International] was involved in any irregularities like influence peddling and conflict of interest with or without kickbacks.’

Two former officials of the large Canadian engineering company SNC-Lavalin, seeking a consultancy contract supervising the construction of the Padma bridge, have recently been charged in Canada for corruption offences similar to those contained in the FCPA. The officials are accused of trying to bribe Bangladesh government officials.

The World Bank formally cancelled its financial support for the project recently alleging ‘a high-level corruption conspiracy among Bangladeshi government officials’.