BANGLADESH: 527 REPORT

UNCLAS SECTION 01 OF 02 DHAKA 001126

SIPDIS

SIPDIS
SENSITIVE

DEPARTMENT PLEASE PASS TO EB/OIA HEATHER GOETHERT

E.O. 12958: N/A
TAGS: CASC EINV KIDE OPIC PGOV BG
SUBJECT: BANGLADESH: 527 REPORT

REF: STATE 55422


1. (SBU) The United States Government is aware of three (3)
claims of United States persons that may be outstanding
against the Government of Bangladesh (GOB).


2. a. Claimant A

b. 1979

c. In 1977 Claimant A entered into an agreement with
the GOB Ministry of Agriculture. The agreement granted
Claimant A a ten-year franchise to trap and export rhesus
monkeys, with the obligation that Claimant A would build
monkey-breeding farms in Bangladesh. The dispute began in
January 1979 when the GOB terminated the contract after
alleging that Claimant A had failed to begin building the
breeding farms as agreed.

Claimant A immediately sought to resolve the dispute through
direct discussions with Bangladesh, but those efforts failed.
Claimant A then sought arbitration in accordance with the
contract. In 1986, after the GOB failed to appoint an
arbitrator, Claimant A appointed a sole arbitrator and
received an arbitral award of over $16 million. Claimant A
then sought to enforce the award in Bangladeshi courts for
ten years. In February 1996, a lower court ruled against
Claimant A. Claimant A appealed the lower court decision to
the High Court.

On March 14, 1999, the Bangladeshi High Court in Dhaka ruled
in favor of Claimant A, but on November 2, 1999, the GOB
filed an appeal in the Supreme Court. No hearing has yet
been held on the appeal.

Since the early 1980s, the US Embassy has been in contact
with the Government of Bangladesh to facilitate discussions
with Claimant A. In 1995, the Embassy contacted the GOB to
express concern that access to Bangladeshi courts was being
denied. After the 1996 judgment, the US Embassy again
contacted the GOB to encourage settlement. Since then, the
Embassy has continued to monitor developments in the case.

Claimant A's representatives met with Ministry of Agriculture
officials during the December 2-3, 2001 US Bangladesh
Business Council's (USBBC) delegation visit to Dhaka.
Claimant A continues to maintain its flexibility in
negotiating a reasonable settlement, assuming the GOB is
willing to begin such negotiations promptly, either in
Washington, D.C. or in Dhaka. Early in 2002, Claimant A
representatives met with GOB officials in Washington, and
expressed Claimant A's preference for resolving the matter
amicably, but Claimant A officials also expressed firm plans
to pursue all legal and political means to reach resolution.
Claimant A has followed up with calls and letters to the
Bangladesh Embassy asking for an update on the GOB's
position, but received no response.

According to Claimant A's attorney, the case remains pending
on appeal before the Bangladesh Supreme Court and no date has
been set for a hearing. Stateside counsel met with the local
attorneys in September/October 2006 in an attempt to expedite
hearings on the appeal, but local counsel continues to feel
that GOB does not view this as a high priority matter.


3. a. Claimant B

b. 1995

c. Claimant B, a US citizen, borrowed $2.5 million
from a Bangladeshi bank in 1989 to perform research and
development, and to set up a factory to produce cataract
lenses in Bangladesh. Claimant B apparently did not make his
scheduled payments, and when his political connection fell
from power, an anti-corruption case was filed against him (in
1992). Claimant B was arrested in 1995 and, after
considerable US Embassy effort and congressional interest, he
was released from jail and allowed to leave Bangladesh. Over
the years there have been efforts to establish a reasonable
payment plan, however Claimant B states that his factory,
which employs 90 people, has never made an operating profit
and that in order to pay more than $5000 a month, he needs to
be able to go to Bangladesh and run the factory without fear
of arrest.

DHAKA 00001126 002 OF 002



A civil case against Claimant B, won by the bank for recovery
of its funds, is on appeal and continues at an extremely slow
pace. On Feb. 28, 2001, the Anti-corruption court delivered
a guilty verdict, and sentenced him to seven years in prison
and a $4.63 million fine. In order to appeal, Claimant B had
to surrender himself to arrest and imprisonment within 60
days. From March 2001, the US Government has received no
further information on the criminal case.


4. a. Claimant C

b. 2004

c. From November 2001 to October 2004, Claimant C
implemented a $3.9 million judicial reform project pursuant
to a contract supported by a loan from the World Bank to the
GOB. Claimant C was not able to advance reforms as
envisioned. As a result the GOB holds Claimant C responsible
for non-performance and, pointing to an external evaluation
prepared by a competitor of Claimant C showing only 41% of
the contract was completed, is withholding the balance of
$1,194,725 due on the contract. Claimant C asserts that it
produced significant deliverables where it was permitted to
deliver under the contract, and that explicit limitation
placed on it by the courts, along with other obstructions and
delays from the GOB, frustrated its ability to perform in
other areas.

The World Bank is actively seeking to resolve this matter,
and has made several attempts to bring a mediator to
Bangladesh to resolve this. Claimant C has sent a signed
Advocacy Questionnaire to the US Department of Commerce's
Advocacy Center, and Embassy Dhaka's commercial section is
also actively engaged in attempting to resolve this claim.
Most recent contact with the World Bank was in June of 2007.


5. (SBU) Claimant A: MOL, Bangladesh; (US investment); no
known privacy act waiver
Claimant B: Dr. Mohammad Rafiquzzaman; US citizen;
no known privacy act waiver
Claimant C: IRIS Center at the University of
Maryland; US entity; no known privacy act waiver


6. (SBU) COMMENT: Claimant B's dispute involves a claim
against him by a government-owned special purpose bank for
repayment of a loan with interest due as per the loan
agreement. Claimant B apparently does not dispute the
underlying claim or the amount due, but sought to reach
agreement on a payment plan to clear the debt. The parties
have thus far been unable to negotiate a settlement of the
debt, and the bank has obtained a judgment for the amount due
against Claimant B. Based on information contained in paras
9 and 11 of reftel, Post believes this case is not an
"investment" within the meaning of Section 527.


7. (SBU) Claimant C's dispute is included based on reftel's
request to err on the side of inclusion. While the GOB's
reliance on an external report prepared by a competitor of
Claimant C is dubious, it is undeniable that the inherent
objective of the contract was not reached, leaving at least a
colorable dispute between the parties.
PASI