PRESSURE MOUNTS ON THE TWO LADIES

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 001009

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/13/2017
TAGS: PGOV BG
SUBJECT: PRESSURE MOUNTS ON THE TWO LADIES

REF: DHAKA 0907

Classified By: DCM Geeta Pasi, reason para 1.4 d.


1. (C) Summary. Sensational allegations of personal
misconduct, public moves to form a new political party, and
new initiatives for political party reform have escalated the
pressure on the "two ladies" to quit politics. Although the
future looks bleak for Sheikh Hasina and Khaleda Zia, and the
parties that once revolved around them, who or what might
replace them remains unclear. End Summary.

Legal Leverage
--------------


2. (SBU) For the past two weeks, local media have trumpeted
the often lurid details of alleged corruption and other
misconduct by Awami League (AL) President Sheikh Hasina, the
family of Bangladesh Nationalist Party (BNP) Chairperson
Khaleda Zia, and many of the two ladies' personal and
professional confidants. Journalists have received edited
tapes of interrogations to substantiate the reports.


3. (C) The first two waves of corruption arrests focused on
the BNP, but the latest, in May, featured Hasina loyalists
while conspicuously excluding her party critics who in some
cases have strong reputations for corruption. Hasina has
been named as a defendant in an extortion case filed by the
agent of the company that built a power plant during her
administration. She has also been blamed by a police
investigation for deadly street violence in the run-up to the
first caretaker government last October, and, during the BNP
government, with corruption pertaining to the purchase when
she was prime minister of a frigate from South Korea and
MiG-29 aircraft from Russia.


4. (SBU) Hasina also faces possible extortion charges
involving several other business dealings. Businessman Nur
Ali, whose interests include the local Westin Hotel
franchise, has reportedly told investigators he gave Hasina
50 million taka (about USD 830,000) to gain her approval for
a power project and one million taka (about USD 75,000),plus
real estate, to her son Joy and her detained cousin Sheikh
Salim from his commission on the MiG purchase.


5. (SBU) While her sons Tarique and Koko have been implicated
in numerous scams, Zia herself has apparently not been
directly linked to corruption. However, she still has been
accused in two cases, including one filed by someone who
claims to have been injured in the August 21, 2004, grenade
attack that killed 22 at an Awami League rally in Dhaka; the
complainant, whom Hasina claims not to know, says Zia and
other senior BNP figures orchestrated the attack. The second
case was filed by the Joint Stock Company against the
directors of the company that publishes the BNP's party
newspaper for failing to file annual service returns as
mandated by law.

Gleam of a Party
--------------


6. (C) General Bari of the Directorate General-Forces
Intelligence continues to recruit and promote for a new
party, according to multiple contacts (reftel). As many as
100 BNP leaders, mostly members of the past parliament, have
given him undated letters of resignation to position
themselves for joining the new party, according to a former
BNP minister.


7. (C) Over the weekend, local media reported that Ferdous
Quershi, a founding member of the BNP who retired from
politics when he lost in the 1996 election, organized several
meetings at local restaurants of minor political figures from
the BNP, the Jatiya Party, and the AL. Two of the better
known participants are Rawshan Ershad, the wife and sometimes
Jatiya Party rival of General Ershad, and Saeed Khokon, an
Awami League youth leader and son of a former AL mayor of
Dhaka. Quershi told reporters his party has no name or
platform other than a commitment to "clean" politics.

Party Reform Initiatives Reignite
--------------


8. (C) Dissidents in both parties have gone public with
reform proposals. BNP SYG Mannan Bhuiyan is spearheading a
move for Zia to resign and inject more collective

DHAKA 00001009 002 OF 002


decision-making into the party. Zia told The Daily Star that
she is open in principle to reform while insisting the party
is already democratic and collegial. Asked about Bhuiyan's
initiative, Zia expressed doubt that Bhuiyan would want the
responsibility of fracturing an "historic" party like the BNP.


9. (C) Hasina's rivals on the Presidium launched a 21-point
reform proposal which has been hijacked by Hasina when she
took it two steps further: Instead of mandating a two-term
limit for just the party president, and barring the party
president from serving as head of government, she said, the
term limit should apply to all party positions and all
central committee members should be barred from becoming
ministers or state ministers. At least one Hasina rival,
Tofael Ahmed, felt obliged to welcome the proposal, and,
according to press reports, party reformers have called for
party unity under Hasina.

What's Next?
--------------


10. (C) Anti-Corruption Commission contacts tell us they are
working on 27 cases against Hasina, including a sedition
charge for her threats to topple the previous BNP government
by "people's pressure" if it failed to resign by April 30,

2004. The two cases against Zia may be designed to suggest
political balance for the possible arrest of Hasina.


11. (C) Zia continues to live in isolation on the cantonment
while giving the impression she is more interested in saving
her family than re-energizing her leadership of the party.
Her statements to The Daily Star came in written answers to
submitted questions because the journalist, according to the
paper, was not allowed access to her residence. Similarly,
when we contacted Zia's daughter-in-law on the day of the
Embassy's Independence Day reception, on June 14, to check
whether Zia planned to attend, it developed Zia had never
received the invitation.


12. (C) Hasina's upping of the ante on her critics' reform
proposal suggests she is not ready to pack her bags since she
must know that barring party leaders from the rewards of
political office is unacceptable to her rivals. The
government has already blocked her travel abroad on the
grounds she faces two extortion charges. The next step could
be arrest, the filing of government charges against her, and
new allegations of misconduct. Saeed Khokon, the AL youth
leader tied to the new political party, has been charged in
connection with the firebombing of a bus on the eve of an AL
general strike in 2004; according to ACC and other contacts,
Khokon, who is out on bail, was expected to confess to a
judge that Hasina ordered the attack to scare people off the
streets, a potential political bombshell.


13. (C) If Hasina is arrested, street violence or
demonstrations are not expected, at least for now. The
potential organizers of such agitation are mostly in jail or
underground, and there is broad feeling that Hasina is not a
victim of "false" charges.

Comment
--------------


14. (C) The government has almost certainly orchestrated a
three-pronged assault -- court cases, a new party, party
reform initiatives -- to force the two grande dames of
Bangladeshi politics to step aside. Bhuiyan, fearful of
arrest, would not be acting without a military nod, DGFI is
intimately tied to the new party, and a large majority of the
cases against political leaders have come from persons just
after they had been interrogated. For years, Hasina and Zia
have benefited from the perception they are essential to
their party's unity and hence future. If they are finally on
the way out, and the parties that once revolved around them
are in danger of being eclipsed, there will be a huge gap in
the political landscape that no one in sight -- certainly not
a new party of has-beens and unknowns -- could easily fill.
BUTENIS