A curious case of swindle at BASIC Bank

For most, it might take a lifetime to manage a bank balance of Tk 1 crore. But thanks to BASIC Bank's reckless lending practice, a select few gobbled up hundreds of crores of taka—in just a few days.

All of them presented supporting documents of companies that do not exist: frauds could easily have been detected if the state-run specialised bank had the intent to find out.

For instance, one borrower withdrew Tk 338.07 crore from BASIC Bank's Gulshan branch in 2012 and 2013 in the name of five fake companies. The borrower is yet to be identified.

One of the fake companies was Surma Steel and Steel Trading Company, for which the BASIC board approved a loan of Tk 64.05 crore on March 3, 2013.

In a letter attached with the loan proposal, the bank's Gulshan branch wrote to the head office stating that Surma Steel's business did not warrant a huge loan and that there was no information on the client.

Neither could it visit the client's office nor could it collect a CIB report, legal opinion on collateral, stock report, vetting and searching.

Curiously, the head office instructed the branch to resend the loan proposal—with a back date and no mention of the negative reports. The branch duly obliged and the board approved the loan, said a central bank report.

The company took out Tk 30.5 crore through 10 cheques a day after the sanction letter was issued on March 10, 2013; another Tk 20 crore through three cheques three days later and Tk 14.05 crore shortly afterwards.

There had been no transactions in the account after the loans were withdrawn. Furthermore, the central bank never received any suspicious transaction report on the account.

Later, the branch imposed Tk 9.04 crore interests on the loan and transferred the amount to the bank's income. BASIC Bank is yet to realise any fund from the client, the report said.

Surma Steel's account identifier was SFG Shipping Lines, another fake company.

From the Gulshan branch—prior to Surma Steel's loans—SFG Shipping Lines took Tk 67.97 crore loans, S Suhi Shipping Lines Tk 59.7 crore, Shifan Shipping Lines Tk 77.41 crore and S Resource Shipping Lines Tk 68.94 crore.

One person named Jewel withdrew the entire amount through cheques.

Despite this, the BASIC board allowed the person to appropriate a fresh amount by approving the loan proposal for Surma Steel, the Bangladesh Bank report observed.

In another case, the bank has allowed three members of a family to swindle Tk 247.68 crore from its Gulshan branch through three non-existent companies, according to the report.

In 2012, two companies, Enterprise and Brothers Enterprise, owned by an uncle and a nephew took out Tk 106 crore and Tk 69 crore respectively from the branch.

As in the previous cases, the entire amount was withdrawn and no transactions took place in the accounts after that, the central bank inspection report said.

Later in 2013, Monica Trading International, a company owned by another uncle, opened a current account with the Gulshan branch, of which ARSS Enterprise was the identifier. The company withdrew Tk 72.68 crore from the branch between January and May last year.

Although the bank knew there was no possibility of realising the previous loans from the uncle and nephew, the board gave the opportunity to another member of the same family to gobble up a huge amount in the name of fresh loans, the BB report observed.

The report also found that the Gulshan branch allowed fake and defaulting companies to swindle Tk 1,000 crore in 2013, defying the central bank's instructions to rectify its irregularities in disbursing around Tk 1,300 crore a year ago.

It said the branch also made forgery in its classified loan statement to hide the real picture.

The Gulshan branch's classified loan was Tk 1,009.67 crore as of September 2013 but it was shown to be Tk 545.66 crore as of December 2013 in the CL report. In other words, it showed that the bad loans were reduced by Tk 464.01 crore.

The branch officials informed the central bank inspection team that the classified loans were doctored following telephonic instructions from the head office. Without any rescheduling, the branch showed Tk 464.01 crore in unclassified loans. “The bank management is responsible for this,” the BB said.

The central bank first opened a probe into BASIC Bank's Gulshan branch in 2012. It ran another investigation between January and June this year. The latest report was forwarded to the Anti-Corruption Commission on July 15, and the anti-graft body has engaged an officer to investigate the matter.