There have been allegations of money laundering of more than 500 crore taka under the guise of ‘Made in Bangladesh’ in the name of making smart prepaid electricity meters. In this process low quality meters are bought from abroad and made in Bangladesh is written on them. It is then sold to various companies as domestic products.
Government organization Bangladesh Smart Electrical Company Limited (BASICO), electricity distribution company West Zone Power Distribution Company Limited (OZOPADICO), Chinese company Hexing Electrical Limited and Shenzhen Star Equipment, a powerful syndicate formed by these four companies were involved in this looting and smuggling. .
At the forefront of this fraud ring was Nasrul Hamid Bipu, the former Minister of State for Power and Energy in the recently departed Sheikh Hasina government, his close friend and real estate businessman Alamgir Shamsul Alamin Kajal and Nasrul Hamid Bipu’s wife’s elder brother Mahbub Rahman Tarun. Among them, Alamgir Shamsul Alamin Kajal is the local representative of Hexing Electrical Limited, a Chinese company that has a joint venture with Basico, and Mahbub Rahman (young) is the local representative of Shenzhen Star Equipment, a Chinese company that has a joint venture with RPCL.
Anti-Corruption Commission (ACC) has recently accused this gang of buying prepaid meters using DPM (Direct Procurement Method) at twice the market price. Officials of the ACC said that this gang has stolen thousands of rupees through two organizations in various sectors including DPM trade, money laundering through LC, corruption, forgery. The government’s investigation committee and Jugantar’s own investigation found all the sensational information mentioned.
The investigation revealed that the government set up two separate companies a few years ago as part of an initiative to reduce costs and introduce smart prepaid meters in the country instead of imports. The institutions were formed on the basis of partnership with two institutions in China. These include Bangladesh Smart Electrical Company (BASICO), whose partners include Westjohn Power Distribution Company Limited and China’s Hexing Electrical Limited.
Another is the Bangladesh Power Equipment Manufacturing Company (BPEMC), a combination of state-owned Rural Power Company (RPCL) and China’s Sangen Star Equipment.
According to PPR 2008, there are clear guidelines for the government procurement process, but the Bangladesh Rural Electrification Board (REB) purchased 250,000 smart meters from BPEMC without considering the rules of PPRA. Basically, state minister Nasrul Hamid Bipur’s friend Alamgir Shamsul Alamin Kajal and wife’s brother Mahbub Rahman (young) completed the entire business in connivance with REB’s syndicate.
The picture of corruption has emerged in the two companies’ own audit (audit). A review of their balance sheets revealed huge irregularities in purchases and company management. It has been observed that the cost of smart prepaid meters installed in the country is higher than the imported similar meters. Raw materials have been imported directly from their partner Chinese companies at higher prices without going through competitive bidding. Information has been received that hundreds of crores of rupees have been stolen and smuggled due to such purchases.
Usually when goods are purchased from abroad, the supplier is required to provide free after-sales service, but money laundering has been done abroad by showing false documents in the name of training technical support or after-sales service. Besides, cases of misappropriation of money through fake bill-vouchers, forgery of signatures have taken place. Allegations of corruption have also been found in staff recruitment.
In this context, the current managing director of Ozopadiko, Engineer Md. Shamchul Alam told Yugantar, ‘These incidents did not happen during my tenure. A case has been filed. ACC is investigating. However, he said, we have a target to do something good in the future with Basico. Several orders are already coming. Fund has also been constituted.
He said, we also had a meeting with BASIC’s foreign partner Hexing Electrical Limited of China. They have been told that BASICO should be included in all the tenders for all the work to be done in Bangladesh. No tender can be participated alone. Failure to do so will result in losses for Basico. The Ministry of Power is also aware of this.
Former Executive Director (Finance) of Ojopadico Ratan Kumar Debnath told Jugantar that the irregularities and corruption of BASIC is one of the biggest scandals in the history of the country. There is no such thing as money laundering, corruption, forgery in this project.
As per the data till December 2020, five lakh 85 thousand smart prepaid meters have been purchased through DPM system in five distribution companies. Among them, three-phase meters were 68 thousand. The remaining five lakh 17 thousand meters are single phase. The total cost is Rs 668 crore. Average price of each meter is 11,500 taka. But it could have been bought at half the price if it had been bought through the open bidding process, said industry officials. In other words, the government has wasted about 334 crore rupees here.
Ratan Kumar Debnath replaced Basico’s Founder Managing Director Shafiq Uddin after his retirement. He wrote to Bangladesh Bank and said that the company has laundered money in the past by showing more bills against various products and paying LC bills by forging signatures. He requested the central bank not to pay those bills.
According to Debnath’s letter, arrangements were made to pay Tk 302.6 million to Chinese company Hexing through LC, which involved money laundering. BSECO is 51 percent owned by the state-owned Ozopadico. Therefore, if money is smuggled abroad, the interests of the government will be undermined.
The audit report has evidence of opening of LCs worth Tk 98 crore 8 lakh in 2019 and 2020. Of this, prepaid meters and parts worth Tk 73 crore 86 lakh were purchased. Prices are shown to be higher than the market rate and contract, which raises the risk of money laundering. Even after opening an LC of Rs 36 crore for purchase of software and training, no evidence of training was found, which could have been the motive for laundering the money.
For example, according to the report, Hexing is supposed to pay Tk 1.2 million as per the contract for purchasing the MDM/HEM system. But on January 26, 2020, an LC of Tk 10 crore 37 lakh was opened in a bank. That is, money laundering is arranged by paying additional bills of Tk. 9 crores and 17 lakhs.
Former managing director Shafiq Uddin, finance director Abdul Motaleb and deputy managing director Ye Wenju were accused of these irregularities in the report, but they were acquitted with the intervention of the then state minister.
Import of meters by breaking the conditions: On May 30, 2019, the then senior secretary of the electricity department. In a letter signed by Ahmed Kaykaus, the supply of Basico meters was stipulated that the meters must be assembled and supplied in Bangladesh. In view of this, in 2020 Westzone Power Distribution Company (Ozopadico) placed an order to supply 69,160 meters to Basico. However, Basico imported ready-made meters made in China, which was a direct breach of contract. Imported meters are mentioned as ‘Manufactured in Bangladesh’ but they are not manufactured in Bangladesh.
Besides, Ojopadico would have saved about Tk 18.38 million if the meter was purchased through open tender method (OTM). This is because BASICO pays 15 percent duty instead of 10 percent duty on import of manufactured meters, resulting in additional cost to the government. It was alleged that 2 crore rupees were smuggled abroad through Sea Freight and Transportation, although no shipping memo or documents of the shipping company were found. Actually the import of 1 lakh 90 thousand piece meters was supposed to cost more than Tk 37 lakh on sea freight, but Tk 2.5 crore was billed.
Laundering of Tk 33 crore by showing smart meter as service purchase sector: There was no mention of any kind of service sector in BASIC’s meter purchase agreement with Ojopadico. But information was found that 31 crore rupees were smuggled abroad through 6 LCs of only one bank in this project. This includes 10 crore 36 lakh in MDM and HESS system sector, 3 crore 14 lakh in installation testing for MDA and HESS system sector, 5 crore 52 lakh in project management and technical support service sector, 2 crore 97 lakh in overseas training sector, 3 years warranty sector 7 crore 21 lakh and 2 crore 97 lakh for 3 years operation support sector.
On October 25, 2020, Basico opened an LC for MDM and Hess System software for Rs 10.37 crore, while its actual contract was Rs 1.20 crore. As a result, an additional Tk 9.17 crore was smuggled. According to Ojopadico’s audit report, installation and testing expenditure of Tk 3 crore 15 lakh was shown but there was no allocation in this sector. Besides, the allocation of Tk 2.97 crore was shown for the training sector abroad, but the actual training cost was Tk 42 lakh. None of Ojopadico’s staff have been sent for training abroad. Besides, an LC of Rs.7.22 crore was opened for a three-year warranty, though there was no agreement regarding the warranty.
Basico sold each single phase meter to DPDC at Tk 4,500 and Ozopadico at Tk 5,889. As a result, each meter is charged Tk 1,389 more. This resulted in a financial loss of 24 crores to the government. According to Ojopadico’s report, the actual profit of BASICO should have been Tk 23.6 crore, but only Tk 7.38 crore is shown, which is mainly for the purpose of money laundering. In this incident, a significant amount of money was smuggled abroad, which is an offense punishable under the Money Laundering Act.
Bill 18 crores without training: According to the audit report, BASICO has trained the officers and employees at home and abroad to improve the quality of customer service through smart prepaid electricity meters. It shows the cost of 18 crore 14 lakh taka.
Multiple investigations by Power Division and ACC have also found evidence of laundering crores of rupees to LCs through hexing companies by showing fake documents in the name of training. There was no cost to the training though. Hexing Electrical Company and Sengenstar used their JV companies Basico and BPEMC to procure DPM work directly from the government electric company. According to rules, procurement of meter parts is through open tender. But instead of doing that they imported meter parts from Chinese factories. Most of which were Newman’s. Then these products are brought to the country and supplied to the government electric companies by showing the nominal assembly. Thus, on one hand, the companies were supplied with Neumann products, on the other hand, money was laundered through over-invoicing.
Besides, when various electric companies call for tenders through open tendering system, these two Chinese companies participate directly in the tenders. At the time, their Bangladeshi JV company was prevented from participating in open tenders. Because if done through JV company, dividend has to be paid. They used to take the entire dividend abroad with this work.
The experts demanded the Ministry of Power to immediately monitor all activities of these two companies. They also demanded legislation to disqualify foreign companies participating in direct tenders in joint ventures. Also, in any open tender, companies with joint ventures must participate through their JV companies located in Bangladesh.
So that government companies or government can benefit. It will create employment in the country. Also the parts of the meter have to be imported from third party sources. Meter parts cannot be procured through direct purchase without tender. Otherwise money laundering cannot be stopped. The Anti-Corruption Commission should also be vigilant in this regard. Currently ACC is aware of these issues but no action has been taken so far.
Center for Policy Dialogue (CPD) research director Khandaker Golam Moazzem told Jugantar that ‘a cycle had developed’ in the power and energy sector. This circle was made up of people from the private sector, bureaucrats at the government policy-making level, and even people from the Prime Minister’s Office. In this way, some important institutions have been turned into dwarf institutions during the previous government. As a result, policies of national demand were never formulated. Decisions are made in the interest of an individual or in the interest of a group. We want to see this cycle broken. The government will clarify its position in taking policies and laws.
Despite attempts to contact housing businessman and FBCCI leader Alamgir Shamsul Alamin Kajol, he was not available. His phone was found switched off.