Take immediate steps against Uttara Finance scamsters

The central bank should take legal steps immediately against the scamsters involved in irregularities amounting to Tk 5,100 crore in Uttara Finance and Investment Ltd (UFIL) to protect the interest of depositors, two former governors said.  

"The central bank should give its utmost importance to protect the depositors from the plunderers," said Salehuddin Ahmed, a former governor of the central bank.

An administrator should be appointed at UFIL in the quickest possible time and declare a deposit scheme for the depositors, he said.

Mohammed Farashuddin, another former governor, said the central bank should take prompt action to protect the depositors by appointing an administrator and dissolving the board of directors.

"There is no scope to waste time as this will help money plunderers launder the money."

In many cases in the past, the central bank delayed in taking actions, which helped delinquent borrowers embezzle money, he said.

Ahmed and Farashuddin also lambasted the central bank higher-ups for their failure to monitor UFIL, which helped the scamsters siphon off the money since 2013.

Their fury came after a central bank probe found that the board and management of UFIL committed irregularities involving Tk 5,100 crore.

Although the central bank had completed the investigation in November 25 last year, it is yet to take any punitive action against the wrong-doers although UFIL admitted the irregularities.

On December 1, the central bank asked UFIL to come up with explanations for the irregularities.

In response, UFIL Managing Director SM Shamsul Arefin wrote a letter to the BB on January 5 where he confessed to the irregularities.

"No explanation is sufficient in response to the queries about the irregularities found by the central bank's investigation and audit. We are offering you an apology with folded hands and state that such mistakes will not take place in the future," the letter said.

Yesterday, Md Serajul Islam, a spokesperson and executive director of the BB, said the central bank was now examining the findings.

"The central bank will take action against the responsible persons after completing the scrutiny," he said.

One of the irregularities is that UFIL concealed the actual amount of term deposits mobilised from clients.

The financial statement of the non-bank financial institution said the total amount of term deposits was Tk 1,877 crore as of December 2019. But the BB discovered that the actual amount was Tk 2,603.20 crore, the BB probe found.

The undisclosed funds amounting to Tk 726 crore were diverted to other sectors to help the scamsters plunder the money.

Among other irregularities Tk 521 crore were siphoned off in the name of buying shares, Tk 1,224 crore were embezzled in the form of fake loans, Tk 1998 crore were lent, but the amount was not included in the financial statement, and Tk 236 crore were issued in favour of UFIL directors in fake term deposits.

The BB carried out the investigation between October 7 and November 25 last year.

"The central bank should take measures to make the board ineffective because of its involvement in the scam," Ahmed said.

A question would naturally surface on what the central bank did when the financial health of UFIL started to deteriorate since 2013, he said.

Farashuddin said the scam had happened as previous incidents of financial crimes were not brought to justice.

"Had the scamsters in the banking sector been brought to justice, the latest scam would not have happened."

The fund that was plundered from UFIL should be confiscated from the scamsters to pay back to the depositors, Farashuddin said.

UFIL is the latest edition of the sad state of the NBFI industry, said Khondker Ibrahim Khaled, a former deputy governor of the central bank.

The Department of Financial Institutions and Markets (DFIM), a central bank wing responsible for monitoring and making polices for non-banks, can't deny its responsibility for the scams happened in recent years, he said.

The senior officials who worked at the DFIM in recent years neglected their duty grossly, creating a haphazard situation in the NBFI sector, he said.