The Bangladesh Bank has made Muhiuddin Khan Alamgir very unhappy and he is not taking it sitting down.
The BB fined his bank, Farmers Bank, and appointed an observer to the bank when it found the bank had broken rules in approving and giving loans. The fine was just a slap on the wrist.
Alamgir, a ruling Awami League lawmaker, has hit back at the central bank's move by using his parliamentary office.
Being the chairman of the parliamentary standing committee on the public accounts, he led his committee on Sunday to ask the Comptroller and Auditor General to conduct a special audit on the functions of the central bank and report back.
His move is a glaring example of abuse of power for personal pecuniary interest as the move came right after the central bank's actions against Farmers Bank.
The committee's move also runs counter to section 188 (2) of the rules of procedure of Jatiya Sangsad which reads:
"No member shall be appointed to a Committee who has a personal, pecuniary or direct interest in any matter which may be considered by that Committee."
In views of parliamentary expert Nizam Ahmed, a professor of Chittagong University, Alamgir's move is unethical and also tantamount to an offence.
"The public accounts committee may ask the CAG to conduct a special audit on the central bank's functions. But its latest move is completely unethical because of the involvement of Muhiuddin Khan Alamgir's bank," says Prof Nizam, who has done extensive research on the functions of the parliament.
Hafizuddin Khan, a former advisor to the caretaker government, termed Alamgir's action “retaliatory”.
"As the regulatory body, the central bank has every authority to take action against any commercial bank on ground of irregularity. Everyone should accept it and take corrective measure accordingly. But taking retaliatory action against the central bank looks unusual," he told The Daily Star yesterday.
Hafizuddin, also a former Comptroller and Auditor General, said the office of the CAG is a constitutionally independent organisation and nobody can direct it to carry any audit. One may request the CAG to do something, he asserted.
Nothing, however, could stop Alamgir from making the public accounts committee ask the CAG to carry out the audit on the central bank.
Why did the central bank take actions against Farmers Bank?
An investigation by the central bank's team has detected gross violation of banking rules in sanctioning and disbursing loans and incidents of hiding default loans amounting to around Tk 400 crore in some branches in between September and November of 2015.
Before appointing the observer on January 13, the central bank issued a letter in October last year to Alamgir to take actions against the officials involved in the irregularities. But his bank did not take any actions.
Then, the central bank appointed the observer to help Farmers Bank develop loan discipline and improve risk management and internal control.
The central bank on January 3 also imposed a fine of Tk.10 lakh on the Farmers Bank under section 109 (11) of Bank Company Act 1991 and asked to pay the fine in cheque within the next 10 days.
The Farmers Bank, however, refused to pay the fine and moved the High Court and got a stay on the central bank's decision on fine for four months, which appears unprecedented.
Alamgir had also sparked controversy with the very formation of the bank and his taking over as its chairman while still in a ministerial position, an act that is unconstitutional and illegal.
When he proposed himself for the office of the chairman, he was constitutionally disqualified for holding the post as he was a minister then in 2012.
Article 147 (3) of the constitution strictly imposed a bar on him like some other constitutional officials from holding any office, post or position of profit or emolument or taking any part whatsoever in management or conduct of any company, association of body having profit or gain as its object.
Therefore, let alone the chairmanship, the constitution in no way allowed him to be involved in the management or conduct of the proposed bank.
Initially, the central bank was unwilling to give approval to his bank. But following reported undue pressure from government high-ups, it on April 8, 2012 gave approval to nine new banks, including the Farmers Bank. At the time of its approval, Alamgir, also chairman of the parliamentary standing committee on public accounts, was one of the 13 directors of the bank.
When the necessary documents were submitted to the central bank on October 16 the same year for purposes of acquiring a licence, the name of Alamgir was proposed as its chairman.
The central bank found itself in a complicated situation with the proposal. Alamgir had taken oath of office as a minister on September 13 which automatically disqualified him from being the chairman of the bank.
In the past, AL leader Abdul Jalil and BNP leader Mirza Abbas had to resign from the chairmanship of two banks, Mercantile Bank Ltd and Dhaka Bank Ltd, when they were appointed ministers during the previous Awami League-led and BNP-led governments.
But Alamgir did not resign from his minister's post to become the chairman of his bank. He continued as the home minister until formation of the polls time cabinet in November 2013.
This time around, he seems ready to lock horns with the Bangladesh Bank on its lawful step against his bank.
Which one will win--lawful actions of the central bank or abuse of power by Alamgir?
The government must stand by the central bank to uphold the rule of law.