The Bangladesh Bank (BB) yesterday removed Premier Bank Managing Director (MD) Kazi Abdul Mazid as its probe into the private bank's IPO (initial public offering) scam detected his involvement with opening of fake bank accounts.

Mazid can appeal to the BB board against the removal order.

"I have been meted out injustice. The central bank order allows me to lodge an appeal and I will appeal to the BB board against the order," he told The Daily Star.

BB sources said Mazid was removed for one year in accordance with Clause 46 of the Bank Companies Act 1991. The clause empowers the central bank to remove an MD if it finds him involved in activities harmful to depositors' interest.

BB sources said Mazid can never become an MD because according to the 'fit and proper test' of the central bank, the central bank cannot approve appointment of a person to the post of MD of a bank if he has been removed or punished.

The central bank is also likely to take stern action against branch managers and other high officials of the private bank found involved in the irregularities.

The BB launched the probe on February14 after the Securities and Exchange Commission (SEC) on February 12 suspended Premier Bank's Tk 55 crore IPO. The capital market watchdog froze the IPO following the unearthing of 25,000 fake beneficiary owners' (BOs) accounts in its preliminary investigation.

Meanwhile, at a farewell meeting with journalists yesterday, outgoing BB Governor Fakhruddin Ahmed said people expect the central bank to take stern action in case of any irregularities in the financial market. It will continue to do so to increase its reputation, he added.

On completion of its probe, the BB on March 13 served a show cause notice on the Premier Bank MD asking him to explain in a week why he should not be removed from job.

The MD sent his reply to a three-member BB standing committee headed by Deputy Governor Allah Malik Kazemi.

The committee also conducted a personal hearing of the MD but found his explanation unacceptable. It then recommended to the BB governor that the MD be removed.

The removal order mentioned that the MD's version was not acceptable to the committee.

Article 2 of clause 48 of the Bank Companies Act 1991 provides that sacked chief executive of a bank can appeal to the BB board but its decision will be final. According to article 3 of clause 48 of the Act, no party can challenge the final BB action in any court, tribunal or other authorities.

The BB investigation into the Premier Bank IPO scam found gross violation of banking rules in the opening of around 17,000 accounts with different branches of the bank. The accounts were later found to be fake.

During the probe, branch managers of the bank told the investigators they were forced to open these accounts after they got verbal instructions from Mazid and manager of the bank's Banani branch Syed Nowsher Ali.

Sources said, the BB investigators did not pinpoint the mastermind who backed the MD in the mischief. "But we know there is a powerful person behind him. The central bank may file a case with a civil court, and follow-up investigations will unearth the powerful person's involvement," said a high official of the BB.

The SEC probe also held several directors and top management of Premier Bank responsible for the scam apparently to grab a major portion of the public offer.