Padma Bank: Ex-chief says incumbent misused Tk 100cr funds

Muhiuddin Khan Alamgir, founder chairman of Padma Bank, has accused incumbent Chairman Chowdhury Nafeez Sarafat of misusing Tk 100 crore from the troubled lender.

Muhiuddin, who established Farmers Bank in 2013 that was later renamed as Padma Bank for gross financial irregularities, made the accusation in a letter to the central bank on March 7.

"In a board meeting in which I was not present as chairman in 2015, an amount of Tk 100 crore was sanctioned to Alternative Investment Fund of Bangladesh as equity and equity-related investment," he said in the letter.

As is understood, Nafeez as chairman or managing director of the Alternative Investment Fund of Bangladesh at the time received the sum in violation of the law that prohibited him from receiving any investment from the bank as he was a director of the bank, according to the letter.

The amount was disbursed to the company headed or managed by Nafeez, and it was never paid back in terms of dividend or return on investment, the letter said.

"The amount thus appears to have been unlawfully sanctioned and invested or channelled, constituting gross misuse or misappropriation of the bank's capital or fund."

Muhiuddin requested the central bank to investigate the matter and identify the unlawful users of fund of Padma Bank, which faced a net loss of Tk 151 crore last year, and arrange for its return.

He attached the memo of the board meeting with the letter.

"The bank is not allowed to invest fund in a company owned by a director of the lender. But Nafeez Sarafat was holding directorship at the bank when Tk 100 crore was invested," he told The Daily Star.

Contacted, Nafeez, who was made the chairman of Padma Bank in January 2016, denied the allegation and said he had no any connection with Alternative Investment Fund of Bangladesh.

"No individual can act as managing director or chairman at an alternative investment fund as per the practice," he said.

A financial institution is allowed to operate the fund in the name of a trustee, he said.

The Bangladesh Securities and Exchange Commission gave approval to Premier Bank to act as trustee of the fund, Nafeez added.

He also claimed that Alternative Investment Fund of Bangladesh had so far paid Tk 20.80 crore as dividend to Padma Bank.

Despite repeated attempts, Premier Bank Managing Director M Reazul Karim could not be reached over mobile phone.