Some Bangladesh Bank officials feed off scams

The High Court yesterday came down heavily on a section of Bangladesh Bank officials over their alleged links with financial scams involving People's Leasing and Financial Services Ltd (PLFSL), a non-bank financial institution.

The court also said since the central bank started the process of liquidating the ailing NBFI in June 2019, it has hardly done anything to recover depositors' money from those who defaulted on loans from PLFSL.

The liquidation process began after the board of PLFSL informed BB in April 2019 about its inability to pay back the depositors' money despite the maturity of the deposits.

The HC also said Anti-Corruption Commission (ACC) and Securities Exchange Commission (SEC) have not taken appropriate action against the wrongdoers in most cases as well.

The HC bench of Justice Muhammad Khurshid Alam Sarkar made the observations during the hearing on a petition filed by the central bank in 2019 seeking permission to liquidate PLFSL.

It said a section of BB officials, from general manager to deputy governor, who served the departments responsible for monitoring NBFIs, gained undue benefits from scammers between 2002 and 2019.

Taking the benefits, the officials remained silent regarding different irregularities in the NBFIs, it said.

At least 10 of 36 NBFIs operating in the country have been in dire straits in recent years as they reel from various financial scams.

While holding hearing on the petition, the HC bench also termed SK Sur Chowdhury, a former deputy governor of BB, and Shah Alam, a sitting executive director, "thieves and robbers" over their alleged links with the fraudsters.

SK Sur and Shah Alam, who played roles in monitoring the NBFI sector at different times, neglected their responsibility of protecting the NBFIs from the irregularities, the HC bench said.

The Daily Star tried to contact the two for their comments on the issue, but they did not pick up calls last night.

The names of the two came to the fore after Rashedul Haque, a former managing director of International Leasing and Financial Services (ILFS), an NBFI, and Uzzal Kumar Nandi, chairman of PLFSL, have recently given confessional statements to lower courts regarding financial scams.

Justice Muhammad Khurshid Alam Sarkar said the ACC does not arrest the errant people in most cases as well.

"We are now forced to spend time in dealing with the misdeeds done by SK Sur Chowdhury and PK Halder [Prashanta Kumar Halder] as the regulators [BB and SEC] have not done anything," the judge said.

The ACC has been investigating Halder's involvement in siphoning off around Tk 10,000 crore from four financial institutions -- PLFSL, ILFS, FAS Finance, and Reliance Finance -- between 2009 and 2019.

PK Halder left the country after embezzling a huge amount of money, but the ACC and the BB took no steps against him, the HC said.

The officials concerned of the central bank are not doing anything to pay back the depositors' money, which cannot be allowed, it added.

In reply, BB's lawyer Tanjib-Ul-Alam told the court that his client was working to that end. He, however, said it cannot be done without assistance from the authorities concerned.

During the court proceedings yesterday, 51 of 143 people who defaulted on loans from PLFSL, the  beleaguered NBFI, appeared before the HC bench in line with its January 21 order.

The borrowers who did not appear before the court yesterday will be given another chance to provide explanation to the court within two weeks.

If they fail to do so, a directive will be passed to arrest them, Justice Muhammad Khurshid Alam Sarkar warned.

Some 137 defaulters will have to be present before the HC bench tomorrow when the judge will discuss with the BB governor, the chairmen of the ACC and the SEC on exploring ways to recover non-performing loans (NPLs).

As many as 280 defaulters have been asked to appear before the court in connection with the scams involving PLFSL.

PLFSL is a listed company with the capital market, meaning that 80 percent of its shares are owned by common people, the HC bench observed.

The court said depositors and shareholders of the NBFI are facing deep trouble as they have not yet got back their hard-earned money.

Some defaulters even told the HC bench that they had not opened any accounts with PLFSL.

The management of the NBFI opened accounts in their names illegally without informing them, they said, adding that the management even transferred funds from one account to another in order to trade shares.

For instance, the wife of a former PLFSL managing director, who died in 2018, said she never knew that she had a beneficiary owners' (BO) account with the NBFI.

"My husband had operated the account using my name and transacted shares without informing me," she said.

Meanwhile yesterday, the same HC bench reconstituted a BB's fact-finding committee to look into the financial scams in the NBFI sector.

The central bank had formed a five-member committee, led by one of its deputy governors, on February 15.

Yesterday, the HC bench included two persons -- Moyeedul Islam, a former district and sessions judge, and Dr Nurur Rahman, a former secretary -- in the committee so that the inquiries can be done properly.

The body will also investigate whether the central bank officials' had any involvement in the scams since 2002 till date.

The committee will be allowed to interrogate any official of the BB.

Lawyers Mejbahur Rahman appeared for PLFSL while Khan Mohammad Shamim Aziz, Tanjib-Ul-Alam and Kazi Ershadul Alam represented the central bank and several lawyers argued for defaulters in the court.

PLFSL, which commenced its operation in 1996, faced a wide range of financial scams from 2004, which forced the central bank to appoint an observer in 2015.

In addition, the central bank removed five directors of the NBFI in 2015 for their alleged involvement in embezzlement of Tk 358 crore.

Despite that, the central bank failed to restore corporate governance in  PLFSL. In the meantime, the financial health of the NBFI continued to worsen.