For years corporate corruption has thrived as an open secret in
this poor congested nation, a force as destructive as the cyclones
that ravage the coastline and the arsenic that poisons people's
drinking wells. Last week, Bangladesh's newly elected government
took its first high-profile swipe at the problem.
Arafat "Koko" Rahman, the son of former Prime Minister Khaleda
Zia and a prominent businessman, was formally charged with
laundering nearly $2 million in kickbacks, including $180,000 from
Siemens Corporation, the German electronics giant. Mr. Rahman and
his brother Tarique, although allegedly at the center of many
corrupt deals in Bangladesh, were considered untouchable between
2001 and 2006, when their mother held office. The charges against
Arafat Rahman are the first involving foreign bribery and could
result in a jail sentence of seven years if he is found guilty.
The case highlights a determined move by Bangladesh's government
to root out corruption at the highest levels, while tracing its
sources through financial institutions and multinational companies
abroad. In so doing, it also sheds light on the little studied dark
side of international business: the practice of foreign bribery,
whereby some of the world's richest companies directly contribute to
instability in the developing world by paying off corrupt
"This issue of foreign companies using bribery to get contracts
has been a kind of public knowledge," says Iftekhar Zaman, the
executive director of Transparency International Bangladesh, the
Bangladesh chapter of the Berlin based anti-corruption watchdog.
"It's a failure of the companies to oblige the rules and
regulations, but it's also incumbent on the government to be able to
prevent those avenues of corruption."
The case against Siemens portrays a typical pattern for graft
here. Between 2004 and 2006, as mobile phone use soared in
Bangladesh, Siemens was pushing for a $40 million telecommunications
contract with the Bangladeshi government, according to a case filed
by US investigators against Siemens. To outbid its competitors, it
hired a Bangladeshi consultant with links to the Prime Minister's
son, as well as the telecommunicatons minister and at least four
others. A payment of $180,000 was arranged and sent to Arafat
Rahman's Singapore bank account, according to public statements made
by Siemens as well as the case filed by Bangladesh's Anti-
Corruption Commission (ACC), which is tasked with investigating
graft and preparing charges.
"Over a period of time, as we were investigating some of our
cases, we could see that, yes, Siemens ... was paying money to some
of our people here. This was all put into a bank account in
Singapore, so we had to get the cooperation of that government,"
says Hasan Mashhud Chowdhury, the chairman of the ACC.
It is not a problem specific to Bangladesh. Corporate foreign
bribery is a thriving global business, according to studies by the
World Bank, which estimates that foreign companies annually pay $1
trillion in kickbacks to corrupt government officials. …