BASIC chairman bows out

With the clamour for his dismissal growing louder, Sheikh Abdul Hye Bacchu, the main accused behind BASIC Bank's current financial straits, has stepped down from the post of chairman.
The resignation, handed to Finance Minister AMA Muhith on Friday night, comes just two months before the expiry of his second term as chairman of the troubled bank.
By resigning from the post, Bacchu has not gotten away with his misdeeds, the minister told reporters at his office yesterday. “Resignation does not give a solution -- the prosecution will go on.”
Muhith said the Anti-Corruption Commission (ACC) had already started investigation into the issue, and those found liable would be brought to trial, as was done in the case of Sonali Bank.
Asked if he had asked the controversial BASIC Bank chairman to step down, Muhith said: “I don't want to talk about it.
“He will be relieved of his duties, just as he sought. He would have been dismissed anyway -- we nominated him [for the bank] after all. In a sense, it was wise [of him].”
Meanwhile, a close aide to the departing BASIC Bank chairman told The Daily Star that Bacchu had always intended to see out his second term but changed his mind after the government higher-ups asked him to quit without further delay.

One of the best-run banks until 2009, BASIC Bank has been mired in financial irregularities since Bacchu assumed office in 2009.
During his tenure, the bank's indicators -- from capital adequacy ratio to nonperforming loans and credit rating -- went on a free fall. Curiously, despite this dismal performance, Bacchu was offered a second term in office in 2012.
It was in his new term that the magnitude of irregularities committed by the BASIC Bank board spearheaded by Bacchu grew larger. The irregularities amounted to upwards of Tk 4,500 crore, according to Bangladesh Bank (BB).
Said to be very close to the inner circles of the ruling Awami League, he single-handedly controlled the bank and granted loans in defiance of the recommendations of the bank's credit committee.
In other words, loans were extended to defaulters, and there were instances where loans were issued even before clients opened their bank accounts. Mortgage prices were shown at inflated prices to allow clients appropriately more money from the state-run bank.
Now, the whole board will be reconstituted, and a new chairman, who has experience of performing the role of managing director in different banks, will be appointed today, as part of the central bank and the government's efforts to resuscitate the specialised bank.
BB last month ordered BASIC Bank to stop loan activities at its Dilkusha, Shantinagar and Gulshan branches, where most of the anomalies took place. Earlier in May, it fired Kazi Faqurul Islam, BASIC Bank's managing director, for his failure to arrest the irregularities.
Muhith said the new chairman could form a committee or commission to get a clear picture of the irregularities and the individuals involved.
In response to a query on how to check irregularities in the banking system, the minister said there was a method to arrest the anomalies.
“But it can't be successfully applied all the time,” he said, adding that the answer to the problem lay in ensuring that no troublemaker was appointed a board member.
Muhith said the government selected certain members of state-run banks' boards, which also consist of bankers and bureaucrats, on political considerations. “People selected on political considerations are more humane and can take new initiatives.”
The finance minister acknowledged that the government would have to shoulder some of the blame for the irregularities committed by the boards of state banks as it handpicks the members.
“In such cases, the government is forced to admit liability -- the government has to pay the price for a mistake in the selection process.”
Meanwhile, Salehuddin Ahmed, a former governor of BB, said the government should take action against those who have damaged the state-owned specialised bank -- and that the chairman cannot go scot-free.
“Immediate and visible action should be taken against him. Otherwise the banking sector, which is in trouble, would be affected further.”
Khondker Ibrahim Khaled, a former deputy governor of the central bank, said it was not proper to allow the BASIC Bank chairman to resign.
“He should have been sacked. Allowing him to resign may create a perception in the public mind that he enjoyed support at the high levels of the government.”
Khaled said the central bank now needed to form an investigation team comprising of highly honest and efficient officials. The team will conduct a thorough enquiry and send the report to the ACC on the irregularities detected and the individuals found responsible.
The former BB deputy governor also said the new chairman's immediate task would be to identify those who committed the irregularities in collusion with the bank chairman and expel them.