TI Pakistan involves US Department of Justice

Transparency International Pakistan has involved US Department of Justice by forwarding the conviction awarded to Walters Power International by Supreme Court of Pakistan in the Rental Power Plants (RPP) case for taking action against the US firms under the anti-bribery provisions of FCPA Act 1977.
Transparency International Pakistan Adviser Syed Adil Gilani in a letter sent on April 9 to Denis J. McInerney, Chief Fraud Section, US Department of Justice, Washington has invited his attention to Walters Power International convicted on corruption charges in Pakistan in Human Rights Case No 7734-G/2009 & 1003-G/2010-Alleged Corruption in RPP and Human Rights Case No 56712/2010 Fraud in payment of RPP detected by Nepra.
Transparency International Pakistan, he said, in the national interest of Pakistan was reporting the case of corrupt practices adjudicated by the Supreme Court of Pakistan on March 30. Walters Power International and Pakistan Power Resources (PPR) - the two firms supposed to be registered US firms - are involved in this famous RPP scandal.
In 2006, Walters Power International formed an Oklahoma-based, limited-liability company for the purpose of developing power projects in Pakistan. Walters Power International, owns 35 percent of Pakistan Power Resources, is an Oklahoma-based company, with the remaining 65 percent owned by a Pakistan-based partner, Associated Group. The Court has also said the illegal RPP contracts awarded to two US firms in 2006 are the cause of derailing the energy policy of Pakistan, causing loss of billion of dollars and also causing shortage of electricity: Transparency International Pakistan quoted the verdict as follows"
84. Thus, in the light of the above facts and circumstances, we hold as under:
(i) Prior to the introduction of RPPs, the system of generation of electricity, under the control and management of Ministry of Water & Power, Wapda, Pepco, GENCOs, etc, had sufficient potential to produce more electricity, but instead of taking curative steps for its improvement, including clearance of circular debt of the IPPs or resorting to other means of generation of electricity, billions of rupees were spent on BHIKKI and SHARAQPUR RPPs, which proved complete failure because the object could not be achieved as the shortage of electricity persistently continued, and yet more RPPs were installed:
Transparency International Pakistan further referred to the following verdict of the alleged corruption cases, which also relate to Walters Power International and Pakistan Power Resources (PPR):
27. Naudero-II was sponsored by Walters Power International, whereas Guddu Rental Power Project was sponsored by Pakistan Power Resources, which had not so far been signed off. During the hearing of the case, it was noticed that the total rental value in respect of Guddu plant was determined at US 72.48 million dollars against which 14 percent down payment equal to US 10.15 million dollars, seven percent on 17.03.2008 and seven percent on 12.03.2009 had been made. But, when the plant was shifted from Guddu to Naudero, again for the second time 14 percent advance payment was made on 06.04.2010 to Walters Power International. Prima facie, it is a criminal act of extracting money from GENCOs on one pretext or the other, otherwise knowing well that PPR had already obtained 14 percent advance payment, therefore, in all fairness, the Gencos' ought to have pointed out in clear terms that as the said plant was not being installed at Guddu, therefore, the advance payment of 14 percent ought to be returned. Be that as it may, this Court, taking notice of this aspect of the matter, vide order dated 08.12.2010 directed as under:
"In response to order of this Court dated 07.12.2010 final statements have been made on behalf of PPR and Walters Power International. The documents being the negotiable instruments have been filed for effecting the recovery of the outstanding amount mentioned in the statements.
Learned counsel states that amount mentioned in the above statement has been arranged and shall be returned to Central Power General Company Ltd during course of the day. It is to be noted that according to learned counsel, the original amounts have been paid by both the companies along with mark-up up to date ie 08.12.2010.
The court orders contained following verdict; which also involves:
84. Thus, in the light of the above facts and circumstances, we hold as under:
iii) The contracts of all the RPPs - solicited and unsolicited, signed off or operational, right from Bhikki & Sharaqpur up to Piranghaib, Naudero-I & Naudero-II were entered into in contravention of law/PPRA Rules, which, besides suffering from other irregularities, violated the principle of transparency and fair and open competition, therefore, the same are declared to be non-transparent, illegal and void ab initio. Consequently, the contracts of RPPs are ordered to be rescinded forthwith and all the persons responsible for the same are liable to be dealt with for civil and criminal action in accordance with law;
ix) All the Government functionaries, including the Ministers for Water & Power holding charge in 2006 and onward and from 2008 to onward, during whose tenure the RPPs were approved/set up and Minister as well as Secretary Finance holding the charge when the down payment was increased from sven percent to 14 percent, prima facie, violated the principle of transparency under Articles 9 & 24 of the Constitution and section 7 of the Act, 1997, therefore, their involvement in getting financial benefits out of the same by indulging in corruption and corrupt practices cannot be overruled in view of the discussion made hereinabove. Consequently, they are liable to be dealt with under the National Accountability Ordinance, 1999 by the NAB;
(x) All the functionaries of Pepco, Gencos, PPIB and Nepra along with sponsors (successful bidders) who had derived financial benefits from the RPPs contracts are, prima facie, involved in corruption and corrupt practices, therefore, they are also liable both for the civil and criminal action; and
(xi) The Chairman NAB is directed to proceed against all the persons referred to in subparagraphs (iii), (ix) & (x) above forthwith in accordance with law and submit fortnightly progress report to Registrar for our perusal in Chambers.
Adil Gilani requested that Transparency International Pakistan would like US Department of Justice to specially consider paragraphs 81, 82 and 84, from which it may be said that due to two illegal RPP Contracts in 2006, (both US firms sponsored) proper energy projects to reduce the electricity shortage could not be taken up, and government of 2008 continued this scheme, and yet more RPPs were installed:
81. Thus, all the Government functionaries, including the Ministers for Water & Power holding charge from 2006 and onward up to 2008 during whose tenure the RPPs were approved/set up, prima facie, violated the principle of transparency, therefore, their involvement in getting financial benefits out of the same by indulging in corruption and corrupt practices cannot be overruled in view of the discussion made hereinabove. Consequently, they are liable to be dealt with under the National Accountability Ordinance, 1999 by the NAB. Similarly, all the functionaries of Pepco, Gencos and Nepra along with sponsors who had derived financial benefits from the RPPs contracts are, prima facie, involved in corruption and corrupt practices, therefore, they are liable both for the civil and criminal action 82.
In conclusion, it may be mentioned that Bhikki RPP was paid Rs 8,698.46 million against 811.605 mkWh electricity whereas Sharaqpur RPP was paid Rs 13,941.82 million against 1520.42 mkWh electricity.
NAB has started anticorruption action against the RPP firms according to following newspaper reports: "In pursuance of the Supreme Court's verdict, the federal government has placed the names of 14 senior management officials of rental power companies on the Exit Control List (ECL), including a close aide of President Asif Ali Zardari, Iqbal Z Ahmed.
According to an official handout of the NAB, the names of chief executive officers of rental power projects as well as the owners of power companies have been placed on ECL. These include Muhammad Anwar Khan, CEO Techno-E-Power; Muhammad Rafiq Butt CEO Young Gen; Muhammad Jamil Arain, CEO Karkey; Ghulam Mustafa Tunio, CEO Gulf Rental; Tariq Nazir CEO Walters Power; Gulzar Muhammad CEO Alstome Power Rental; Abid Ali CE Techno-E-Power; Habib Ullah Khan CE Young Gen; Iqbal Z Ahmad Principal Officer Pakistan Power; Orhan Remzi Karadeniz Chairman Karkay; Haseeb Ahmad Khan CEO Gulf Rental; Shah Faisal CEO Reshma Power; Muhammad Nasarullah Baig Principal Officer Walters Power; and Naeem Shafique Country Manager General Electric Power. Notices under National Accountability Ordinance have been issued to four companies which are to refund the down payment along with the mark up. These include Techno-E Power, Walters Power Naudero-I, Karkey Rental Power and Gulf Power Project. These companies have been directed to deposit the money within three days."
Transparency International Pakistan requested Chief, Fraud Section US Department of Justice Criminal Division to examine this case and take action against the US firms under the anti-bribery provisions of the FCPA Act 1977, which make it illegal for US persons to bribe a foreign government official for the purpose of obtaining or retaining business.
Copies of the letter have been forwarded for information to the following: Chairman, Public Accounts Committee, Islamabad; Secretary of State, US Government, Washington; US Ambassador, Islamabad; Registrar, Supreme Court Pakistan, Islamabad; Chairman, NAB, Islamabad, and Managing Director, PPRA, Islamabad.