In April 2007, Hasina was charged with graft and extortion by the military backed Caretaker Government during the 2006–08 Bangladeshi political crisis. She was accused of having forced Bangladeshi businessman Tajul Islam Farooq to pay bribes in 1998 before his company could build a power plant. Farooq said that he paid Hasina for approving his project.
On 18 April 2007, the Government barred Hasina from returning, saying that she had made provocative statements and that her return could cause disorder. This was described as a temporary measure. The Caretaker Government had also been trying to get Khaleda Zia to leave the country. Hasina vowed to return home, and on 22 April 2007, a warrant was issued for her arrest for murder. Describing the case against her as "totally false and fake", Hasina said that she wanted to defend herself against the charges in court. On 23 April 2007, the arrest warrant was suspended, and on 25 April 2007, the ban on Hasina's entry was dropped. After spending 51 days in the United States and the UK, on 7 May 2007 Hasina returned to Dhaka, where she was greeted by a crowd of several thousand. She told reporters that the Government should not have delayed her return.
On 16 July 2007, Hasina was arrested by police at her home and taken before a local court in Dhaka. She was accused of extortion and denied bail, and was held in a building converted into a jail on the premises of the National Parliament. AL said the arrest was politically motivated. On 17 July 2007, the Anti-Corruption Commission sent notices to both Hasina and Khaleda Zia, instructing them to provide details of their assets within one week. Hasina's son Sajeeb Wazed Joy was out of the country, and said he would try to organise worldwide protest. These arrests of the political leaders were widely seen as a move by the military-backed interim Government to force Hasina and Zia out of the country and into political exile. United Kingdom MPs condemned the arrest. On 11 April 2007, the police filed murder charges against Hasina, alleging that she masterminded the killing in October 2006 of four supporters of a rival political party. The four alleged victims were beaten to death during clashes between AL and rival party activists. Hasina was visiting the United States at the time.
On 30 July 2007, the Dhaka High Court suspended Hasina's extortion trial and ordered her release on bail. On 2 September 2007, an additional case was filed against Hasina by the Anti-Corruption Commission regarding the awarding of a contract for the construction of a power plant in 1997, for which she allegedly took a bribe of 30 million takas and kept the contract from going to the lowest bidder. Six others were also accused of involvement. A graft case was filed against Zia on the same day.