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Research

The Bangladesh Army: Documenting its Corporate Interests

BY OBSERVER RESEARCH FOUNDATION

Overview

Little is known and even less understood about the 2,00,000-strongBangladesh Army’s corporate interests. The importance of the subjectowes itself to the fact that the army has been a veritable power ofstability in a country that has been dogged by decades of unendingpolitical turmoil. The fact that the Army had to step in to keep thecountry from slipping into a political abyss in 2006 underlines thecriticality of its role in providing stability and security to the people ofBangladesh in times of crisis.

The army in Bangladesh is regarded as a powerful and politicallyinfluential institution. Hence, its attitudes and approaches need to beclosely scrutinized. Although the army’s dalliance with radical groupsand political parties with extremist dispositions has been the subject ofsome studies, there has hardly been any attempt within or outsideBangladesh to document and analyse its corporate interests.

This paper is an attempt to fill this gap. The primary endeavor of the paper is to document the various economic and corporate interests ofthe Bangladesh Army (or BA for brevity). However, since relevant datais either not available or can only be found as disjointed pieces of apuzzle, the documentation would at best be indicative. For a betterunderstanding of the issue, the paper has been divided in six sections.Section I gives an overview of the Bangladesh Army; Section II dealswith the theoretical underpinnings of the military’s business, followedby the history of BA’s corporate interests and its political connections.

The paper then maps the business interests of the army beforeattempting to lay out the implications of a corporate army.

Introduction

The two-year long military-backed caretaker government in Bangladesh(2007-08) aroused an interest amongst army watchers in the BA’scorporate dealings. It was observed that, during this period, the armyhad a presence in certain lucrative civilian sectors, such as thedistribution of rice, and a say in the appointment of officers tocommercial institutions like the Tea Board and the state-owned airlinecompany, Biman Bangladesh Airlines Limited.However, the corporate interests of BA are not new. It has beenrunning many profit-making businesses under its welfare trust, the SenaKalyan Sangstha (SKS).

The army’s involvement in the constructionand management of key infrastructures projects, including roads andports, is fairly extensive. These initiatives have opened up new sourcesof revenue generation, giving the BA greater leverage for fundingventures it would like to keep closely guarded even from the civilian government.Experiences from countries like Pakistan and Indonesia, wheremilitaries are known for running big corporate empires, suggest thatself-generated resources have prodded the armed forces to take anabiding interest in the politics of the country, often undermining theinstitutions that support and sustain public participation in the processof nation-building.

An attempt of this paper would, therefore, be tostudy the underlying motives of the BA’s increasing interest in runningcorporate entities and the impact of such a development on the futurecourse of democracy in Bangladesh. Such an assessment wouldnecessarily pursue the nature of the relationship between the Army andthe political parties, as also scrutinize the Army’s motives and activitieswithin the overall context of Bangladesh’s nation-building process.

Bangladesh Army—An introduction

The Bangladesh Army was the product of the 1971 Liberation War. Thenew born army comprised Bengali officers and men of the PakistanArmy (who participated in the freedom struggle) as well as civilian1 freedom fighters, members of the Mukti Bahini .Soon after Independence, BA was reorganized after the repatriatedarmy personnel from Pakistan were inducted into the force. In 1975,out of the 36,000 men in the armed forces, 28,000 were repatriates from2 West Pakistan . This dominance of repatriated officers and soldiers hada telling influence on the functioning of the force. For instance, thecountry’s military intelligence, the Directorate General of ForcesIntelligence (DGFI), was conceived on the lines of Pakistan’s InterServices Intelligence (ISI).

It would be erroneous, however, to assess the BA solely from thisperspective. There are two fundamental differences between the twoarmies. While BA was born out of an independence movement, thePakistan Army was created by dividing the British Indian Army in 1947and, unlike in Pakistan, BA does not encourage feudalism. Officers donot get land as grant. In fact, the feudal zamindari system was abolished3 in East Pakistan in 1951 .Since 1971, BA’s growth has been phenomenal. The army is the largestamong the three wings of Bangladesh’s armed forces. BA has 2,00,0004 personnel including 50,000 reservists , while the Navy and the Air5 6 Force have 24,000 and 17,000 personnel respectively.

The primarymission of BA is to defend the country’s territorial integrity; in times ofwar the army is authorized to mobilize national resources by assuming direct control over the paramilitary forces and the police, as well as thecivilian transportation and defence industries. Besides, BA isconstitutionally obliged to assist the civilian administration in times of7 crisis .BA has seven infantry divisions with 25 Infantry Brigades deployedacross the country. It has one each of Armoured Division, ArtilleryDivision, Engineering Division, Commando Brigade, Air DefenceArtillery Brigade and Eleven Aviation Squadrons. BA also has a divisionfor training and doctrinal policy formulation called the Army Trainingand Doctrine Command (ARTDOC) Division and a number oftraining institutions to supplement its combat capability. As themilitary capability and training are managed by a particular corps,

BA isdivided into 16 administrative corps:

1)Armored 2)Artillery3)Engineers 4)Signals 5)Infantry 6) Army Service Corps 7) OrdnanceCorps 8)Electrical and Mechanical Engineering Corps 9) SpecialOperations 10) Aviation 11)Military Police 12) Army Dental Corps 13)Army Education Corps 14) Army Corps of Clerks 15) RemountsVeterinary and Farms Corps 16) Army Nursing Corps.The basic hierarchical structure is similar to other professional armies.Under the Chief of BA, there are Commanders who hold key positionsat the headquarters—Chief of General Staff, Quarter Master General,Adjutant General, Master General of Ordinance, Engineer in Chief andMilitary Secretary. Besides, there are General Commanding Officers of9 Infantry Division at Saver, 11 Infantry Division at Bogra,19 InfantryDivision at Ghatail, 24 Infantry Division at Chittagong, 33 InfantryDivision at Comilla, 55 Infantry Division at Jossore and 66 InfantryDivision at Rangpur.An introduction of BA will be incomplete without reference to its rolein the United Nations Peace Keeping operations (UNPKO). It is one of the biggest contributors of troops to the UNPKO. It has established theBangladesh Institute of Peace Support Operation Training to orient itstroops for UN missions.

Conceptualising Military’s Business interests

Before looking at the extent of BA’s corporate interests, it would beuseful to clarify certain underlying factors that propel some of themilitaries of the world to indulge in the business of profit making.A military is said to have corporate interests when it is involved invarious profit making businesses. But unlike a corporate entity, itsfinancial transactions are not subjected to public or any other scrutinyand largely remain outside the purview of the civilian government. Thescope of the military’s business interest is not limited only to thoseinitiatives which are directly under its control, but also those which areunder its implicit and explicit patronage. According to the BonnInternational Centre for Conversion (The Military as an Actor: Soldiersin Business), military business is defined as economic activities fallingunder the influence of the armed forces, regardless of whether they arecontrolled by the defence ministries or various branches of specific8 armed units or individual officers .But various scholars have pointed out that such a linear definition doesnot take into account the dark areas of illegitimacy and nontransparencyin the world of military business. Dr. Ayesha Siddiqa, inher book Military Inc defines military business (Milbus) as “…militarycapital used for the personal benefit of the military fraternity, especiallythe officer cadre, which is not recorded as part of the defence budget ordoes not follow the normal accountability procedures of the state,making it an independent genre of capital. It is either controlled by the9 military or under its implicit or explicit patronage” .

Siddiqa’s definition projects three essential elements of an Army’s corporate interests the purpose of the economic activities, the subject of the’milbus’ and the accountability mechanism. This definition includes allactivities, such as the transfer of resources including money, land oreven state-run industries to private individuals and entities for thegratification of one particular group, overriding all established norms.This also points out that costs of these financial transactions are notalways recorded in the defence budget. Since the military is at the core ofsuch corporate entities, the chief players are the individuals or groupswho form part of the military fraternity, including those who areretired and rehired.It would be interesting, at this point, to study how Milbus has beendefined in other countries where the armed forces have similarcorporate interests. For instance, the National Team of Tentara10 Nasional Indonesia (TNI) Business Activity Transfer defines militarybusiness as business activities that cover foundations, cooperatives, theuse of state assets and other activities outside the main task and function11 of TNI (Indonesian military) . This definition takes into accountbusinesses run by military foundations in social and educational areas,housing advance payments, health support and commercial activitieslike farming, construction and trading.

Another important feature of the military’s businesses is that thesefinancial activities are not always publicized and hence, as pointed outearlier, relevant data remain inaccessible.This brings us to the basic question—why do armed forces dabble inbusiness? The reasons could be quite varied. It could be for socialwelfare purposes, creating resources to support the retired or servingpersonnel or to help in the overall national economic development.Another important reason could be the need to cover the deficits or lackof funds for the modernisation or welfare of its personnel. Many military officers get involved in businesses after their retirement. Forexample, in the US, France and South Africa scores of retired armypersonnel form companies that provide training and sell equipment tonational and foreign countries.What is of real concern is not the profit margin of these militaryenterprises, but the fact that such a pursuit gives the military a kind ofautonomy from the federal government, encouraging directinvolvement in domestic politics. The unaccounted military capitalencourages military personal to use their organisational influence togain monetary and political benefits. For example, it was the Turkishmilitary’s financial autonomy that helped it to increase its clout in thecountry’s political circles.

Legacy of Pakistan

The BA’s business dealings are a legacy of the Pakistan era. In theundivided Pakistan, Fauji Foundation of East Pakistan was the flagshipof the army’s business interests. It was established in 1954 as a charitabletrust dedicated to the welfare of ex-servicemen and their dependents.Earlier it was known as the Post War Service Reconstruction Fund,(PWSRF), set up during World War-II by the British-Indiangovernment to provide for the post-war welfare and rehabilitation ofsoldiers.The Fauji Foundation of East-Pakistan received Bangladesh Taka12 (BTK) 52.22 lakh as its share from PWSRF . At its inception thefoundation purchased a commercial property at Dhaka that cost BTK3.50 lakh and BTK 1.50 lakh was spent on the rehabilitation of the ex-13 serviceman .14

The Foundation ventured into the industrial field in the mid ’60s .Various business units were established in accordance with the policy ofPakistan’s military regime to enhance economic self reliance of the armed forces. Another motive that pushed the military’s businessinterests in East Pakistan was to accumulate support for Ayub Khan’smilitary regime. These industrial ventures provided lucrative careeralternatives to both serving and retired army personnel. The profitsearned were also spent on the welfare of the service personnel.In 1967-68, the investment of the Foundation in industry was BTK15 24.00 lakh, which grew to a phenomenal BTK 2.40 crore in 1969-70 .Prior to Independence, the foundation invested in the Fauji Chatkal(jute mill) at Dhaka, Fauji Floor Mill at Chittagong, a three-storiedbuilding at Dhaka and in buying shares of Bangladesh Lamps Limited,Bangladesh Electric industries (Philips) and British Tobacco Company16 limited .These business successes in no way mollified the feeling ofdiscontentment that persisted in East Pakistan as a result of the over-allpolicy of inequality towards Bengalis practiced by the Islamabadregime. This resentment was felt no less by the Bengali personnel of thearmy. Thus, when the struggle for freedom was launched, a largenumber of Bengali men in uniform revolted and joined the movement.Although the Pakistani regime failed to reap the desired benefit fromthe expansion of Milbus in East Pakistan, its experiences served as asource of motivation and guidance for the BA when it set up its ownbusiness structure under the flagship Sena Kalyan Sangstha, which is buta reincarnation of Pakistan’s Fauji Foundation.In the following section, we shall look at the status the army’s businesswing had under different regimes, both military and democratic, for abetter understanding of its growth and influence.

Political- Military Nexus of BA

For Sheikh Mujibur Rahman , the founding father and the leader of thenewly independent nation, the top priority was reconstruction of hiswar-ravaged country; the military and its welfare got lower priority during his rule. This attitude and policy of the Mujib governmentcaused serious rifts in the civil-military relations. Frustration ran highamong the rank and file of the BA as majority of them were PakistanArmy products who found it highly uncomfortable to be suddenlydependent on a civilian government for their welfare. There was, ofcourse, one positive development, the establishment of the Sena KalyanSangstha, which was to have a lasting impact on Milbus in Bangladesh.Among other reasons, the government’s apathy towards BA’scorporate interests acted as a catalyst in bringing the curtains down onMujib’s democratic rule and change the course of the country’s politics.An assessment of the civil-military ties during Mujib’s era could providean insight into how such a transformation took place.Mujib’s experience of the Pakistani era made him skeptical of the army.His reluctance to strengthen the armed forces angered the top brass ofthe BA. They criticised the government for the delay in reconstructionand rehabilitation of training institutes and cantonments. The militaryexpenditure also declined gradually. In the 1973-74 budget, revenueexpenditures on defence was little more than 16 per cent of the totalbudget expenditure. In 1974-75 it was reduced to 15 per cent and, in18 1975-76, it was less than 13 per cent . All these developments led themilitary to conclude that its corporate interest could never be secure inthe hands of the civilian government.Another reason that further frustrated the BA was Mujib’s decision toestablish the Jatiya Rakkhi Bahini (JRB). It was a special paramilitaryforce directly under Prime Minister’s Office. JRB was trained by theIndian Army. The force was alleged to be close to the Awami Leagueand was reportedly being used by the party to intimidate its opponents.The government took special interest in the development of JRB. It wasplanned that JRB would annually add enough numbers so that the force19 would have a strength of 1,20,000 by 1980 .

The military viewed JRB as a threat to its existence. The BA’s antipathyto the Mujib government and the JRB deepened after the formation of20 Bangladesh Krishak Sramik Awami League (BASKAL) . It was decidedthat a unit of JRB was to be placed under the command of each districtgovernor. This move was far more than a hint that the BA was notindispensable.Initially, BA’s resentment hardly had any impact since the force itselfwas going through internal schisms and factionalism. BA was dividedover the structural set up it should adopt. There was a section in the BA,led by former officers of the Pakistan Army turned freedom fighters,Abu Taher and Ziauddin, who advocated a production-oriented armywhich could be the major driver of the country’s socio-economicdevelopment, on the lines of People’s Liberation Army of China. Theother group was in favour of retaining a traditional army. Mujib,apprehensive of radicalism in the military, saw to it that Abu Taher andZiauddin left the force. Soon Abu Taher joined a radical undergroundunit of the leftist political party called the Jatiya Samajtantrik Dal.Besides, the force was also divided between the freedom fighterpersonnel and the ‘repatriates’. The former questioned the loyalties ofthe latter as they did not take part in the freedom struggle and had stayed”safe and sound” in West Pakistan during the struggle. The lattercountered with the accusation that the former were pro-India andquestioned their compatibility. They claimed that the Indian Armygave victory on a platter to the freedom fighters. The government’spreferential treatment to ‘freedom fighters’ only added to the schism.They enjoyed special privileges in terms of transfers and postings. Therepatriates complained that they were not treated at par with their rankand experience and felt humiliated. These initial dissensions weakenedthe BA.

The BA began to regain its unity from 1973, after it was deployed inactivities for maintaining internal law and order. The experience gave itan insight into the weaknesses of the government. It was this experiencewhich encouraged BA to conceptualise its corporate ventures. Thisambition could have been one of the major reasons for the 1975 coup.Professor Emajuddin Ahmed, a commentator on BA’s corporateinterests, remarked that the military realized its corporate interest were21 not secure in the hands of the political elite . “Hence, the armed forcesemerged as the ruling elite in Bangladesh in 1975, first through thebloody coup of August 15 and finally by throwing away the slenderparliamentary façade which hung loose from August 15 to November22 3, 1975 .”The assassination of Mujibur Rahman in the 1975 coup turned the BA’sfortunes for the better. It began to consolidate its position after Gen.Ziaur Rahman took control in 1976. Zia was quick to create a politicalframework that assured a permanent role for the BA in the country’spolitics. In 1978, to give democratic colour to his rule, Gen. Zia floated the Bangladesh Nationalist Party (BNP) which later evolved as a majorpolitical force in the country. Many of the influential leaders of theparty continue to be retired BA officers.Zia also positioned several serving BA officers in key leadershippositions in the civil administration which helped BA in extractingspecial concessions from the civilian government in the subsequentyears. According to records, as on March 1, 1979, 25 out of the 625officers in the senior policy pool (responsible for policy-making in the23 secretariat) were military officers . In June 1980, 42 out of 101 chairmenor managing directors of public corporations were military officers or24 retired servicemen . Similarly, 22 of the 40 district superintendents andadditional superintendents of police were army officers in January 1981 .

Nearly 500 retired military officers were employed in industry,indenting business, foreign trade, and supply and contracts under thepatronage of the government. Also, many military officers wereallotted residential plots in the developed areas of the city and were even26 granted liberal loans by the House Building Finance Corporation .Many serving and retired military officers were inducted into theForeign Service.The extent of the benefits enjoyed by the army can only be ascertainedfrom the sudden rise of the defence budget. The military budget grew byaround 186% between 1972-1981.Although much of this power was lost after Zia’s assassination in 1981,the army saw to it that it did not remain out of power for long. In 1982,General Hussain Muhammad Ershad took over the reign of the countryby removing the elected government on charges of incompetence.Ershad’s regime played a catalyst role in promoting BA’s corporateinterests. Since the General lacked popular support, he undertook apolicy of appeasing the BA for supporting his rule. The corporatizationof the BA was the obvious tool to attain the desired objective. Measuressuch as rejuvenating the Sena Kalyan Sangstha and encouraging profitmaking businesses helped BA to consolidate its financial autonomy. Itwas during Ershad’s period that Bangladesh started sending troops tothe United Nations Peace Missions, which became another source ofrevenue for the BA.The period also marked a steady increase in defence expenditure. Thedefence allocation was increased to nearly 18 percent annually.However, the total allocation of the budget was increased by 1427 percent . Special initiatives were also taken to channelise additionalresources for the armed forces by investing in areas like security andintelligence. Large portions of the budget allocated for the construction of housing, highways and roads were spent in the cantonment areas.

Some informed estimates put the increase in overt and covert defence28 expenditure to at least 25 per cent ever since 1982 .Another significant measure was the increase in perks and privileges ofthe military personnel. In 1985, new pay scales were enforced; salaries inthe armed forces were brought on parity with those of the civiliancounter-parts in the government. In addition to their regular salaries,the defence personnel were also entitled to special benefits. Forinstance, allowances and benefits for an army officer included serviceallowances amounting to 11.5% of their original pay, free medicaltreatment, servant allowances and subsidised ration. All theseallowances made the pay packet higher or at least similar to that of thehighest ranking civil servant. The facilities and benefits were alsoincreased in the lower ranks. Entitlements for the lower ranks includedservice allowances amounting to 20 per cent of their original pay, freefood and accommodation, allowances for good conduct, efficiency andfor their children’s education. Thus, privates and NCOs got four times29 the pay of their civilian counterparts. Such initiatives not only helpedthe army to gain monetary benefits but also contributed to establishingits primacy in the society.After the ouster of General Ershad from power in 1990 through ademocratic movement, the BA, by and large, decided to keep away frompolitical matters. The BA accepted the dominance of the successivedemocratic governments (BNP government 1991-96/2001-2006 andAwami League government 1996-2001/2009-still continuing). The onlyexception was when the BA decided to back a caretaker governmentfrom January 2007- December 2008.A close scrutiny of Bangladesh’s politics, however, shows that the armyhas a substantial presence both inside and outside the government as many of the retired officers are in the political arena; some of them areministers.

The BNP, a byproduct of the military rule which was inpower during 1991-96 and 2001-06, has several former BA officers in itsleadership. Even Awami League has many retired officers in its ranks.As a natural corollary to this development, BA’s corporate interestswere protected and promoted even during civilian rule. Even theseemingly more progressive parties such as the Awami League have notrestrained the military’s direct and indirect influence on the country’spolitics and economy. Further, giving the military control of certaininstitution—the Khulna Shipyard and the machine tools factory—in thename of greater discipline and efficiency, has strengthened themilitary’s hold on the country. Indirect penetration has taken the formof greater number of retired military personnel joining political parties,30 running for elections and being absorbed into the private sector .Ayesha Siddiqa’s finding that financial autonomy goes hand in handwith the growing social significance of the armed forces is of relevancehere.Both the Awami League and Bangladesh Nationalist Party havemaintained the rising curve of the defence expenditure. In 1996, thedefence expenditure of the country was 579 million USD. In 2006 it was31 720 million USD . Again, like the military regimes, the democraticgovernments have allowed the defence expenditure to remain opaque32 and there is hardly any meaningful debate on the subject . Thus, boththe democratic and the military regimes have contributed tostrengthening the BA’s corporate world.The military-backed caretaker regime (2007-2008) also encouraged thistrend and hence needs a brief evaluation. The political situation inBangladesh turned volatile after October 2006 when the outgoingKhaleda Zia government appointed former Supreme Court Judge K.M.

Hasan as the Chief of the caretaker government. According to theConstitution of Bangladesh, the elected government hands over powerto a non-party impartial caretaker government once its term is over.The main function of the caretaker government is to hold free and fairelections and hand over power to an elected government within threemonths from the date it takes charge. The opposition objected to K.M.Hasan’s appointment as he was known to be close to BNP. Hasandeclined to take up the responsibility.Meanwhile, President Iajuddin Ahmed, for want of otherconstitutional alternatives, decided to take up the role himself. Theopposition objected, saying Ahmad was partial to the BNP. Theopposition also expressed concern over the impartiality of the ElectionCommission. The situation deteriorated on January 3, 2007 as theopposition political parties, led by the Awami League, decided toboycott the election. Soon, violent clashes broke out between the rivalpolitical parties.As the situation became grave, President Ahmed resigned from the postof Chief of the caretaker government, creating a constitutionaldeadlock. With no other alternative, the BA stepped in and, instead oftaking power into its own hands, it installed a civilian caretakergovernment.Dr. Fakhruddin Ahmed, a former World Bank ecomomist, wasappointed the Chief Advisor to the caretaker government. The refusalof the military to take up power directly and opting to stay in theshadows surprised many. The popular argument was that the BA hadrealized the unpopularity of military regimes and decided not to repeatthe mistake of previous military rulers.

This opinion was verified byLieutenant General Moeen Ahmed, the then army Chief, when hestated that “the country had three options in front of it: the first was to go for elections that was scheduled on January 22, 2007; the second wasto proclaim martial law and the third option was to protect the nationalexistence by establishing an acceptable Caretaker Government byquickly promulgating emergency… everybody in the world includingBangladesh at that time was apprehending that martial law wasimminent. But we decided not to follow the footsteps of our33 predecessors and the third option was adopted… ”There were some who believed that the General was not interested intaking over power and others saw the influence of strong internationalpressure against a military takeover. The UN, for instance, indicatedthat all Bangladeshi troops in the UN Peace Keeping Operations wouldbe withdrawn if the army took over power.Opinions on the issue might vary, but all agreed on the point that theBA was firmly behind (or controlling, as some would opine) thecaretaker government. The army was involved in activities likedistributing relief to the victims of Aila cyclone and the preparation ofvoter lists. At times, the army behaved like a guiding force to thecaretaker government. Addressing a function in April 2007, GenMoeen not only said that the country must develop its own brand ofdemocracy, but also underlined the priorities of the government.Making such political statements went far beyond the scope of the34 duties of the military, as defined in the Constitution .35 An analysis of events like the infamous ‘minus two formula’, efforts tolaunch political parties and the arrest of political leaders on variouscorruption charges, suggested that the army Chief’s speech was, in fact,a blueprint for the future activities of the caretaker administration.Commenting on the civil-military relations during the caretakergovernment, the BBC reported that, in practice, it was Gen. Moeenwho was calling the shots and Dr Fakhruddin was simply following the

General’s lead . No wonder the General categorically declared that he37 had no intention of becoming the President . Why bother, manywondered, when without sitting on the chair of power he enjoyed allthe power.The reason for the cozy ties between the BA and the caretakergovernment was that the latter couldn’t care less what the BA’s interestswere, corporate or otherwise. In 2007, the post of the army Chief,which was a Lieutenant General rank, was elevated to that of a fullfledged four-star General. Subsequently, this helped in promoting other38 senior officers . Officers, both retired and in service, were appointed tohigh offices in the government and in various public sector39 institutions . There was also a significant increase in the defencebudget. The allocation for defence was BTK 64.080 billion for 2008-09,40 around BTK 1000 crore more than the previous year .During this period, there was a tendency of portraying the superiorityof the army as a disciplined and organised force and these selfproclaimedattributes prompted the government to give specialprivileges to BA, like handing over the control of many state-ownedindustries. For instance, in July 2008, the Industry Ministry proposedthe reopening of three state- owned industries and handed over at leastone of them—the North Bengal Paper Mills—to the army. BA’scorporate growth was not restricted to acquiring and operating Staterunentities. There were reports that many State-run programmes likethe anti-corruption drives were exploited by the intelligence agencies toacquire shares in many private media houses, in exchange for freeing thedetained media owners.

Mapping the business empire

The army’s corporate interests are primarily spearheaded by the SenaKalyan Sangstha (SKS). The SKS network includes hospitality, import and export of products like food, iron scraps, banking, manufacturingand real estate. Apart from SKS, the BA is both directly and indirectlyinvolved in different segments of the country’s economy. The BA’sdirect involvement can be seen in the management of infrastructure likeshipyards, ports, construction of roads and embankments etc in whichit employs serving military personnel. Its indirect involvement isthrough appointment of various retired officials to the public sectorinstitutions which offer lucrative post-retirement benefits for the selectfew and also help the army to exercise control over these organisations.

Sena Kalyan Sangstha—SKS, which originated from the East PakistanFauji Foundation, was worth 25 million Bangladeshi Takas (BTK)when it began operations in 1972. Today, the organisation is the main41 business wing of the army and its worth in 1996 was 987 milion BTK .Although SKS is controlled by the Ministry of Defence, which isdirectly under the Prime Minister’s Office, the actual control of theorganisation is in the hands of an eight-member Board of Trusteesappointed by the government. The composition of the board is asfollows: the Chief of Army Staff, or his nominee (not below the rank ofMajor General) is the Chairman. The Adjutant General of the BA is theVice Chairman and other members include a nominee of the Chief ofNaval Staff not below the rank of Commodore, a nominee of the Chiefof Air Staff not below the rank of Air Commodore, the Director of theBangladesh Armed Services Board and a nominee of the DefenceSecretary not below the rank of Joint Secretary. The ManagingDirector of SKS acts as the Member Secretary. The day-to-daymanagement of SKS is carried out by the management committee,comprising the Vice Chairman (Adjutant General of BA), ManagingDirector, Deputy Managing Director and six directors (administration,finance, marketing, production, procurement, welfare).

SKS operates in the private sector and claims that it generates its ownresources to carry out all its welfare, commercial and industrialactivities. The revenue earned from the UN missions is a major fundsource for SKS. It also receives 30 million BTK as yearly grant from thegovernment.Its business ventures have greatly helped in providing timely help to thearmy personnel and their dependents. The different business initiativeshave provided post-retirement employment opportunities for many ofthem. Besides, SKS also arranges stipends for the education of childrenof the army officers and soldiers and helps in providing access to qualitymedical facilities.According to an estimate, SKS’ gross turnover was nearly 2 billion BTKin 1995 when it owned 15 industrial and two commercial units, five sales42 outlets and 15 real estates . Since then the SKS’ empire has grownsignificantly, so has its turnover. Today it fully owns nine industriesand two commercial units. In addition, it owns four sales promotionoffices, 28 real estates ventures and holds shares in three internationallyreputed enterprises.

Some of the business entities in the SKS empire are listed below.

Industrial units·

· Mongla Cement Factory, Mongla, Bagerhat.

· Fauji Flour Mills, Chittagong.

· Diamond Food Industries, Chittagong.

· Chittagong Flour Mills, Chittagong.

· SK Electric Industries, Chittagong.

· Enesel Textile Mills, Chittagong.

· Savoy Ice-Cream Factory, Tejgaon, Dhaka

· Eastern Hosiery Mills, Tongi, Gazipur.

· SK Fabrics, Tongi, Gazipur.

Commercial Units

· Sena Filling Station, Chittagong

· Sainik Lamps Distribution Centre, DhakaSubsidiaries

· Bayazid Industries· Savoy Bread and Confectionery

· SKS AC, IT & Communication Ind· SK Textiles

· SKS Trading House

· Sainik Lamps Distribution Centre

· Apang Food Industries

Real estate

· Sena Kalyan Bhaban, Dhaka

· Amin Mohiuddin Foundation, Dhaka

· Mohakhali Land & Building, Dhaka

· Mohakhali Plot No. 7, Dhaka· Shyampur Ghat, Dhaka

· Premises of Weather Proof Packing Materials Industries, Dhaka

· SKS Commercial Complex, Tongi, Gazipur

· Premises of Nazir Industries, Tongi, Gazipur

· Enesel Mansion, Chittagong

· Premises of Tyresoles (BD) Ltd. Chittagong

· Mehdibagh Rest House, Chittagong

· Steel House, Chittagong

· Commercial Plot at Agrabad C/A, Chittagong

· Premises of J J Rehbach (BD) Ltd., Chittagong

· Kalurghat Plot, 8P Heavy I/A, Chittagong

· Sena Kalyan Bhaban, Khulna

· Shiromoni Industrial Plot, Khulna

Given below are some brief details of some of the BA’s businesses.

Sena Hotel Development Limited (SHDL)

Formed in 1995, the SHDL is a joint venture between the ArmyWelfare Trust and the SKS with a partnership of 80 per cent and 20 per43 cent, respectively . The BA Chief is the chairman of the SHDL Boardof Directors. The group presently owns the luxurious Radisson WaterGarden in Dhaka. It is constructing Chittagong’s first five-star hotel.The group also runs a hotel management institute called the Sena HotelManagement Institute. The group’s earning from the hotel at Dhaka44 was 9.52 million US dollars in 2006-07 .

Trust Bank Bangladesh Limited

BA runs its banking business under the Trust Bank Bangladesh Limited.The Bank was established in 1999 and is supported by the Army WelfareTrust. The bank operates as a private bank and 50 per cent of its shareare held by the Army. The bank has 39 branches across the country. It isone of the biggest private sector banks in the country. In 2008, its gross45 income was 1,172.42 million BTK . The bank is managed by a Board ofDirectors comprising a Chairman, Vice Chairman and five Directors;all positions are held by army officers with the Army Chief being theChairman. Civilians with proven ability in the banking sector areincorporated as members. The managing director of the bank looksafter its day-to-day management.

Bangladesh Machine Tools Factory

In 2000, BA took over the management of the Bangladesh MachineTools Factory (BMTF), a public sector company which was closeddown on July 14 1994. BA turned it around and repaid the factory’s46 outstanding debt of 443.48 crore BTK . In February 2005 the company47 earned a profit of 6.03 crore BTK . The BA Chief is the Chairman ofBMTF. The factory manufactures and assembles vehicles like trucks,jeeps, pickups, ambulances, mobile vans, fuel tankers, and power tillers.It also manufactures different kinds of cutter tools, gears, machine toolslike Celtic Lathe, Bench Drill, power tillers, etc. One of the majorsuccesses of the company was the Memorandum of Understandingsigned with Bangladesh Railways to supply track components and spareparts.

Bangladesh Diesel Plant (BDP) Ltd.

On November 30, 2007, BA took over the management of BDP. It hadbeen commissioned in 1980 and was an enterprise of the Bangladesh Steel and Engineering Corporation under the Ministry of Industry. Thecompany was shut down as it incurred huge losses. The company washanded over to BA to turn it in to a model state run profit makingenterprise. Presently, BDP is under the Ministry of Defence. The boardof directors is responsible for the management of the company. Theboard is comprised of one Chairman and eight directors. According tothe information provided in the website of BDP http://bdp-bd.comdated August 2, 2010 the majority of the top management members arefrom the army. Quarter Master General of BA, Lieutenant GeneralIqbal Karim Bhuiyan, is its Chairman. Many of the directors are alsofrom the army, such as Brigadier General Md Tawfiqul Anam,Brigadier General Sohail Saifdin Sabir and Brigadier General NazrulHasan. Its managing director is Colonel Mirza Md Munzur Kadir. BDPORF

is involved in the field of assembling engines, manufacturingtelecommunication towers and various engineering items. Thecompany is also involved in the renewable energy sector. The companyclaims to be a market leader in environment friendly electric vehicles.BDP has also ventured into the power sector. In June 2010 it signed anagreement with Bangladesh Power Development Board for installing a48 50 mega watt rental power station for commercial production .

Infrastructure development

To date, the Engineering Corps of the Army has been involved in 16projects for the construction and repair of roads across the country.These large-scale infrastructure projects have helped the Army toestablish itself as a credible construction ‘company’.Some of the important road projects are: Rangamati-Chandroghona-Bandarban-Bangalhalia Road ,Chittagong-Hathazari – Rangamati Road,Baghaihalia-Rajasthali Road, Baghaichari-Naniarchar-Longodu Rd,Cox’s Bazar-Teknaf Marine Drive Road, Ramu-Naikhangchari Road,Alikadam-Thanchi Road, Chimbuk-Tonkabati-Lama Road, Baghaihat-Masalong-Sajek Road, Khagrachari-Dighinala-Baghaihat Road,Dighinala-Chotomerung-Longodu Road, Mohalchari-Sindukchari-Jaliapara Road, Panchari-Gaurangapara Road, Rajasthali-Bilaichari-Jurachari-Barkal Road, Airport Road(Zia Colony)–MirpurCantonment.Besides, BA is also involved in construction, repair and protection ofvarious flood protection embankments across the country. Some of themajor projects are: Meghna Flood Protection Embankment, ADP forPrevention of Jamuna and Bangali River Unification Guthail HardPoint, Gumti Flood Protection Embankment, Dhaka–Narayangonj–Demra (DND) Embankment. Narayangonj–Narshingdhi–

Demonstration Project (NNDP), Meghna-Dhonagoda Project,Comilla.Bhuapur–Tarakandi Embankment, Jamalpur, Chadpur TownProtection Embankment and the Gongachara Flood ProtectionEmbankment.

UN Peace Operations

UN Peace Keeping operations (UNPKO) are the biggest source ofrevenue for Bangladesh. Military ruler Hussain Muhammad Ershad was49 the first to offer troops to the UNPKO, sending batches for operationsin Iraq and Namibia. Since then, around 73,176 Bangla soldiers and50 officers have taken part in 41 UN missions in 30 countries . Thesecountries include Namibia, Cambodia, Somalia, Uganda, Rwanda,Mozambique, former Yugoslavia, Liberia, Haiti, Tajakistan, WesternSahara, Sierra Leone, Kosovo, Georgia, East Timor, Congo, Cote d’51 Ivoire and Ethiopia . In January 2010, Bangladesh became the topcontributor to the UNKPO with 10,641 personnel participating indifferent peace keeping operations globally. On such missions, asoldier, on an average, earns nearly 1100 US dollars monthly, i.e. 75,68052 BTK, a princely sum for a country like Bangladesh or, indeed, for anydeveloping country. The officers’ pay depends on the rank. BA earns53 about 200 crore BTK yearly from these operations . A substantialportion of it is invested in various SKS projects. For instance, RadissonWater Garden, Dhaka, was built from the contributions made bymembers of Bangladesh Army from their earning of UN peace keeping54 missions .

Conclusion

The basic motivational factor behind the Bangladesh Army’s corporate interests is to ensure the welfare of the military fraternity , as also tostrengthen the army’s influence on the civil society. To pursue this goal,the BA has created a network of business entities that not only provide

essential services but also generate employment and revenue. Thesefactors have given the army a strong political leverage.Whether such a strong military influence on the political affairs of thecountry poses a threat to the democratic process in Bangladesh isdebatable. At least some sections of the intelligentsia believe that theBA’s dependence on the revenues earned from the UNKPO missions asan alternative source of revenue might work as a deterrence to anydirect military intervention in the future. The BA’s decision, forinstance, to remain behind the throne in 2007 partially supports such ahope, but it must be kept in mind that it could very well have been theUN’s ‘warning’ against intervention that made the army keep its handsoff the governance pie.Given its corporate as well as political clout, it will be reasonable toconclude that Bangladesh Army will remain a strong and influentialpower base in the country in the foreseeable future.

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