The financial regulators and the government organisations are still struggling to resolve the much-talked five financial scams in the country as the embezzled fund worth Tk 18,253 crore are yet to be recovered.
High officials of three banks and two multilevel marketing (MLM) companies — Sonali, BASIC, Farmers, Destiny and Jubok — were involved with the corruption.
In some cases, the prime accusers of the scams were not even the main accused in the lawsuits due to strong links with influential quarters.
The three lenders are yet to get back both their previous business image and restore financial health due to the wide range of the financial scams while clients of the two multilevel marketing companies did not return their hard-earned money.
For instance, BASIC Bank, which was once one of the top-rated banks until Sheikh Abdul Hye Bacchu was appointed board chairman in 2009, has been facing reputation crisis at home and abroad after the financial scams that took place between 2009 and 2014.
Since 2013, the state bank has been in the red.
The bank has yet to get a turnaround from the disaster, said its Managing Director Md Rafiqul Alam, adding that foreign banks show reluctance in doing business with the lender.
The board of directors and management then had helped nearly 100 little-known and non-existed companies swindle about Tk 4,500 crore from the state-owned bank.
“We have yet to trace out 8 per cent of the companies, which has harmed our recovery process,” Alam said.
The bank is now running after the plunderers to recover the funds and regularised Tk 2,100 crore last year under the central bank’s relaxed rescheduling loan facility that offered a 10-year repayment tenure with 2 per cent down payment of the outstanding loans.
“We will be unable to make a profit in the days ahead due to the burden of the large amount default loans,” Alam said.
The lender will try to write off its defaulted loans within a month or two by way of taking regulatory forbearance from both the central bank and the government, said an official of the bank wishing not to be named as he is not authorised to speak with the media.
If the government allows it, the local businesses and its foreign lenders might get their confidence back on the bank, Alam said.
Under the regulatory forbearance, the bank should be allowed not to keep any provisioning against the written-off loans. Multiple investigations found that Bacchu had plundered public funds from the lender with the help of other board of directors.
The Anti-Corruption Commission (ACC) has so far filed 60 cases in connection with the scam, but ironically Bacchu was not accused of the lawsuits.
“It is highly frustrating that the ACC has yet to finalise any charge sheet of the cases. This means the organisation has not taken the issue much importance,” the official added.
While Bacchu and his co-conspirators were indulging in all sorts of malpractices at BASIC Bank, a little-known Hall-Mark Group was up to similar mischief at another state bank.
Both the then board and the management of Sonali Bank were largely responsible for the scam that caught the imagination of the nation.
Based on forged documents, Sonali’s Ruposhi Bangla Hotel branch lent Hall-Mark Group and five other companies Tk 3,547 crore between 2010 and 2012 on fake documents.
Of Tk 3,547 crore, Hall-Mark Group alone took away Tk 2,686.1 crore, T and Brothers Tk 609.7 crore, Paragon Group Tk 146.6 crore, Nakshi Knit Tk 66.4 crore, DN Sports Tk 33.3 crore and Khanjahan Ali Tk 5 crore.
But the bank has yet to recover a single penny from the scammers.
Sonali has filed 16 cases at the Artha Rin Adalat (also known as the money loan court) to recover the fund, said its MD Md Ataur Rahman Prodhan.
The state lender will be able to get back a portion of the swindled funds if the courts allow it to sell the Hall-Mark Group’s mortgaged assets, he said.
Asked how much fund the bank would be able to recover by selling the assets, he said the value of the properties could be Tk 500 crore to Tk 700 crore.
This means the asset value is much less than the amount swindled. So far, Sonali has arranged more than 60 auctions to sell off the assets but has yet to find a taker.
The state lender is trying to recover the fund by way of using different methods, but the process is highly tough as Hall-Mark’s MD Tanvir Mahmud and Chairman Jasmine Islam are now in jail, Prodhan said.
“The group had earlier deposited Tk 86 crore with Janata Bank. And we wrote a letter to the lender in the first week of this month to transfer the fund to our account,” he said.
While both the lawyer and Janata have reached a consensus to transfer the fund, the process is yet to take place.
“If we get the fund, this will become a positive matter for us,” Prodhan said.
The ACC also filed 11 lawsuits against the involved persons with the scam, of which two cases are now in the final stage.
It was not just the state banks where financial irregularities were taking place. Established in 2013, Farmers Bank became a hotbed for financial irregularities in less than three years of operation.
The scammers plundered more than Tk 3,500 crore from the bank with the help of the other board of directors, according to an investigation carried out by the central bank.
Muhiuddin Khan Alamgir and Md Mahabubul Haque Chisty, the then board chairman and chairman of the audit committee respectively, were forced to resign from their respective posts in November 2017.
The ACC filed 15 cases against the connected persons with the irregularities, but Alamgir was not accused in any of the lawsuits due to his strong connection with influential quarters.
As of June, defaulted loans in the bank stood at about Tk 3,300 crore, up from Tk 723 crore at the end of 2017.
So dire did the bank’s financial health become that it needed to be bailed out by the government in 2018. State-owned financial institutions Investment Corporation of Bangladesh, Sonali, Janata, Agrani and Rupali banks bought 60 per cent stakes in the bank that got a licence in the first place on political consideration. The stakes were valued at Tk 715 crore.
Then in January last year, it changed its name to Padma Bank with the hope of shaking off the image crisis.
The beleaguered lender has so far filed nearly 1,000 cases under the Negotiable Instruments Act, 1881 to recover funds from the plunderers, said its MD Md Ehsan Khasru. It has also filed about 400 cases in the Artha Rin Adalat.
Khasru says the lender has now turned a corner. It has already recovered a good amount of funds from the defaulters.
“But it is too tough to realise the existing defaulted loans as the money was given out by grossly breaching the banking norms,” he said.
In January 2017, with the view to stemming the corruption, the Bangladesh Bank even imposed an embargo on disbursing fresh loans.
“The central bank will permit us within this month to disburse fresh loans, a sign that the bank is now in a good shape,” Khasru said.
Another sensational financial scam that rattled the entire country involves Jubok (Jubo Karmasangsthan Society), an MLM company that started in 1994 by providing micro-credit to its members and went on to set up more than 20 business outfits.
The organisation — which spread its tentacles to telecommunications, housing and real estate development, tourism, health, ceramics, seafood, IT, nursery, agro-biotech industry and capital management by 2006 — owes a staggering Tk 2,588 crore to its clients, according to probe reports.
And the clients may never see their money back as the government does not think it is worthwhile to pursue the issue.
A six-member probe body that was formed in January 2010 led by former BB Governor Mohammad Farashuddin recommended the government to constitute a permanent commission to return the money to the depositors.
Subsequently in 2011, the government formed another commission led by former Joint Secretary Rafiqul Islam to find ways to return the swindled funds.
In August 2014, the government formed a seven-member inter-ministerial committee to review the recommendations of the previous two commissions.
The committee, which handed in its report to the commerce ministry in December 2014, too called for a permanent commission. That commission has not been formed yet.
In September 2016, an inter-ministerial meeting took place at the finance ministry, where it was learnt that the government never pursued the issue with much seriousness.
“It’s a dead issue,” the then Finance Minister AMA Muhith told reporters after the meeting. “There’s no scope to do anything about it afresh.”
And the government has been silent on the matter since.
Another MLM was operating at the same time as Jubok and indulging in the same form of duplicity. That MLM was called Destiny Group and between 1998 and 2012 it made off with Tk 4,118 crore of clients’ money.
The clients are yet to get back any fund.
Destiny Group MD Rafiqul Amin and Destiny Multipurpose Cooperative Society Chairman Mohammad Hossain have long been facing cases of fund embezzlement and money laundering.
The alleged persons also laundered money worth Tk 96 crore abroad.
In 2012, the ACC filed two separate cases against 53 involved people with the Destiny scam. But the cases are still pending and the ACC claimed it has yet to complete the process of the testimony of the lawsuits.
