Attaching importance to infrastructural investment, the government set up Bangladesh Infrastructure Finance Fund Limited (BIFFL) in 2011 with Tk 1,600 crore in paid-up capital.
It all went well until 2015 when BIFFL had Tk 1428.94 crore investment as Fixed Deposit Receipt (FDR) in public banks and another Tk 546.41 crore in private banks.
But things started going south when SM Farmanul Islam assumed office as the government-owned financial institution's executive director and CEO in June that year.
Violating directives of the Finance Division, Farmanul invested hefty amounts in Non-Banking Financial Institutions (NBFIs) and pushed the BIFFL into danger, ACC sources said.
"Without approval from the [BIFFL] board of directors, he invested Tk 643.03 crore as FDR, going beyond the investment limit, in two troublesome private banks and 12 NBFIs that do not have the capability to return the money," the sources said, adding that there was no possibility of getting back Tk 584.67 crore.
The two private banks include the now-defunct Farmers Bank and ICB Islami Bank, and the 12 NBFIs include Peoples Leasing, Reliance Finance Limited and Union Capital, added the sources.
Anti-Corruption Commission Assistant Director Saiful Islam yesterday filed a case against Farmanul Islam and BIFFL's Head of Treasury Nisarul Kabir Siddiqui with its integrated district office for misusing power and for misappropriating about Tk 584.67 crore.
This correspondent got a copy of the First Information Report.
As per Finance Division directives, only 25 percent of the total capital could be invested as FDR in NBFIs before 2018. In 2018, the Finance Division amended rules and raised it to 50 percent, reads the FIR.
In the 23rd board of directors meeting on April 11, 2015, Farmanul was appointed as BIFFL's CEO and executive director. He assumed office on June 1, 2015.
After joining office, he allegedly started pulling out money from public banks and investing more at low-grade private banks and non-banking financial institutions, violating directives of the Finance Division.
Between June 1, 2015 and December 5, 2017, BIFFL's investment as FDR was Tk 838.79 crore. Of the amount, 52.72 percent was invested at private banks and the remaining 47.28 percent, which is Tk 396.57 crore, was kept at NBFIs, reads the case statement.
Between December 2017 and December 2018, the total investment stood at Tk 761.74 crore. Over 62.13 percent of the investment was made at NBFIs.
By July 2019, the volume of investment at NBFIs shot up to 72 percent and the amount of FDR was Tk 463.94 crore. The remaining Tk 179.09 crore was kept at private banks.
According to the FIR, BIFFL invested about Tk 55 crore at Peoples Leasing and Financial Services Limited, an NBFI that has already gone through liquidation.
"With the help of Nisarul, the former CEO invested capital at these B-grade private banks and NBFIs. They got benefits in return," an ACC source said.
All of a sudden, on July 28 last year, during a board meeting, Farmanul submitted his resignation on personal grounds.
On August 7 that year, the finance ministry issued him a show-cause notice, asking him to explain his role in the incident.
When the BIFFL was launched, its goal included providing long-term finance to critically important infrastructure projects, catalysing co-financing from private financial sources, and providing a unique vehicle for capital market development by exploring a number of avenues to capture domestic and foreign investment, according to its website.