3 bank MDs axed for hundi links

The Bangladesh Bank yesterday removed managing directors of three private commercial banks for involvement in hundi transactions and irregularities in sanctioning loans to three business groups.

The three MDs - Mirza Ejaj Ahmed of One Bank Limited, Anwar Ahmed of National Credit and Commerce Bank Limited (NCCBL) and Mokhlesur Rahman of Dhaka Bank Limited - cannot have links with any bank for the next two years.

Two years over, they will have to seek the central bank's permission should they want any position in any private bank.

The action came after the BB found out these three banks and National Bank Limited (NBL) had flouted rules in foreign exchange transactions and failed to properly monitor the loans sanctioned to Giridhari Lal Modi and his Uttara Group, Om Prakash Agarwal and his business enterprises and Ashok Kejriwal and his Doel Group.

The central bank is still investigating the case of NBL MD Rafiqul Islam Khan, who has recently retired, and has not taken any action against him.

The BB removal order says the MDs as the chief executive officers have failed to protect the interest of the banks in sanctioning and monitoring loans. They have sanctioned loans to four different organisations against the guarantee of a single person and not sent the loan information to the cnetral information bureau (CIB) of the BB.

"In this context to ensure the interest of the bank depositors, stop harmful activities and in the interest of the people for ensuring proper management at those banks," the MDs are removed for under the Bank Companies Act, it says.

The BB governor yesterday gave the order as per a probe of a standing committee of the central bank formed under clause 48 (1) of the Bank Companies Act. However, the removed MDs have the chance to appeal.

Earlier, the BB issued show cause notices on the MDs of the four private banks on September 2 asking them why they should not be held responsible for irregular transactions.

After press reports on the financial scam, the BB started investigation into the bank transcations of Giridhari Lal Modi and Uttara Group, Om Prakash Agarwal and Ashok Kejriwal's Doel Group on August 10.

The BB investigation unearthed dubious transactions through different bank accounts, suggesting links with hundi business. Also, the BB probe found that the business groups did not bring in proceeds of apparel exports into the country, a punishable offence under foreign exchange regulations.

The probe revealed shady transactions of huge amount through different unapproved accounts of the banks and in many cases the bank officials did not know the account holders, the nature of their businesses or what the reasons were for such huge transactions.

It found transactions to the tune of Tk 62.11 crore took place through an unapproved account of one of the bank branches. And through two more shady accounts of the same branch transactions of nearly Tk 138 crore and Tk 17 crore took place within a very short span of time, according to central bank sources.

The central bank probe has revealed that the banks have given loans worth more than Tk 330 crore to those business groups, flouting rules on many occasions.

Meantime, the BB yesterday issued show cause notices on the chairman and five directors of the First Security Bank to explain why they would not be removed from the bank board for their alleged involvement in hundi transactions.

Going through records, a BB inspection team has found abnormal transactions in foreign exchange remittance at the Dilkusha branch of the private commercial bank and also found clues to involvement of the bank chairman, five directors, two bank officials and two other persons, according to banking sources.

The BB served show cause notices under Section 46 of the Bank Companies Act on the bank chairman, Nasim Sikder, and five directors - ZH Sikder, Shahidul Huq, Zahidul Huq, Mahbubul Huq Sikder and Salahuddin Ahmed. And they will have to reply in 15 days, sources said.

However, through a statement signed by the vice-president of First Security Bank, Kamal Sharif, the bank said the allegations brought against their chairman and other directors are 'false' and 'brought by a certain quarter to tarnish their image.

The statement said some of them have foreign currency and RFCD accounts and they have 'legally' brought in foreign currency properly filling in FMJ forms. And then they sent those foreign currencies to their own accounts for their own necessities.