Online Desk  :  In violation of the Representation of the People Order, which prohibits loan defaulters from contesting in parliamentary elections, three Awami League candidates were allowed to participate in the last national election despite their defaulted loans. “Southeast Bank” concealed their loan default status, enabling their participation. This grave irregularity and forgery were uncovered in a recent inspection by Bangladesh Bank. The three individuals—Saber Hossain Chowdhury, Morshed Alam, and Mamunur Rashid Kiron—won seats in the one sided so called January 7 election. Meanwhile, another Awami League leader, Engr. Abu Noman Hawlader, a director at Bengal Bank, has concealed information about his non-performing loan and continues to hold his position as a director.

Bangladesh Bank’s recent inspection revealed these irregularities, prompting the central bank to direct “Southeast Bank” to identify officials involved in concealing loan defaults. Along with hiding default information, the inspection uncovered significant irregularities linked to loans totaling nearly 6,000 crore taka. Bangladesh Bank issued a letter on January 13, seeking an explanation from the bank’s MD regarding these discrepancies. “Southeast Bank” has been instructed to provide a detailed response by March 12.

According to regulations, loan defaults must be reported to the Central Bank’s Credit Information Bureau (CIB). Previously, if a loan’s classification changed, the bank branch would first notify its head office, which would then forward the information to Bangladesh Bank, following a set procedure to update the CIB records. However, just three months before the last election, Bangladesh Bank unexpectedly delegated the responsibility of updating this information to the banks themselves. “Southeast Bank” took advantage of this shift, concealing the loan default information of three parliamentary candidates. Central bank officials have expressed concerns that similar irregularities could occur in other banks as well.

According to the Bangladesh Bank’s inspection report, former MP from Dhaka-9, Saber Hossain Chowdhury, is the director of Performance Motors, a company with 34 term loans and one working capital loan from Southeast Bank’s principal branch. In total, the bank’s outstanding dues amount to 485 crore taka, and these loans were in default prior to the election. The report suggests that had the loan been classified properly, Saber Hossain Chowdhury would have paid it off in order to retain his parliamentary seat.Furthermore, these loans should have been categorized as corporate loans, with a 1% provision requirement of 4 crore 85 lakh taka. However, they were shown as small and medium enterprise (SME) loans, with only a 0.25% provision of 1 crore 21 lakh taka. The report also mentions that the working capital loan was not used for the company’s operations, but instead was given as a down payment for the rescheduling of a loan to an affiliated company.

Again, Former Mercantile Bank chairman and ex-MP of Noakhali-2, Morshed Alam, chairs Bengal Group was involved in serious irregularities. His group’s company, Power Utilities, had a loan of 7 crore 12 lakh taka with Southeast Bank, which was classified as defaulted in December 2023. However, the bank concealed this information and issued a ‘clean’ report in the CIB which gave him an unfair advantage. Additionally, Mamunur Rashid Kiron, former MP of Noakhali-3 and director of the family business AST Beverages, had defaulted on a loan with “Southeast Bank’s” New Eskaton branch. The bank concealed this information in the CIB, allowing him to participate in the election.

Furthermore, Engr. Abu Noman Hawlader, an Awami League leader and a director of Bengal Bank, owns Dynamic Cars, which defaulted on a loan of 13 crore 6 lakh taka with the bank’s principal branch. The concealment of this default enabled him to remain in his position as a director despite being a loan defaulter. Attempts to contact them for a statement were unsuccessful, with no communication available through any channels. It is reported that these individuals, linked to the Awami League, are currently in hiding.

Attempts to contact “Southeast Bank’s” Managing Director, Nuruddin Md. Sadeque, for a statement were also unsuccessful. Until April 2023, Southeast Bank’s Managing Director was M Kamal Hossain, who refused to comment officially, said that, in a bank, the managing director only acts as a bridge between the board and management. Personally I was not involved in any irregularities. Efforts to reach the then Chairman of “Southeast Bank”, Alamgir Kabir, for a statement were unsuccessful. Even when visiting his residence, it was informed that he is currently abroad. Arif Hossain Khan, Bangladesh Bank’s spokesperson and Executive Director, said that an explanation has been sought from “Southeast Bank”. Further actions will be taken after receiving their response.

TWO CARS KEPT DESPITE ABSENCE OF CHAIRMAN

According to Bangladesh Bank regulations, the chairman of the board is allowed to use one bank vehicle. However, during his tenure as chairman, Alamgir Kabir used two expensive cars for an extended period, disregarding the rules. One of the vehicles is a Harrier SUV with the number Dhaka Metro-Gha 13-8713, and the other is a Mercedes with the number Dhaka Metro-Bha 14-0054. Despite no longer being the chairman since September 29, the two cars were spotted parked at the garage of House 3/4 on Road 58 in Gulshan-2 last Tuesday.

A bank official revealed that while the chairman is entitled to one car, Alamgir Kabir misused his position to use two cars. Even four months after losing his position, he has not returned the vehicles. A letter was sent last week requesting the return of the cars, and if they are not returned promptly, appropriate action will be taken as per the rules.

BORROWED AT HIGH INTEREST, LENT AT LOW

Bay Leasing & Investment, one of the country’s distressed financial institutions, is chaired by Suraiya Begum, the wife of Alamgir Kabir. The vice-chairman of the institution was Zubair Kabir, Alamgir Kabir’s nephew. As of September last year, Bay Leasing & Investment had 492 crore Taka in deposits, with 232 crore Taka (47%) held by Southeast Bank, and 66% of its total loans, amounting to 551 crore Taka, were non-performing. As of December 2023, Bay Leasing & Investment’s accumulated losses stood at 172 crore taka. According to a comprehensive review by the central bank, Bay Leasing & Investment lacks the financial capacity to repay its dues to “Southeast Bank.”

In 2022 and 2023, when these funds were provided, the bank itself was facing a liquidity crisis and had to borrow from the call money market. Despite borrowing at a certain interest rate, the bank provided Bay Leasing & Investment with a loan at a lower rate. A report dated December 27, 2023, states that on that day, “Southeast Bank” borrowed 82 crore taka from the Mercantile Bank at an interest rate of 9.5%. On the same day, Bay Leasing & Investment was lent 62 crore taka at an interest rate of 9.25%. In addition to the call money, the bank had placed 124 crore 50 lakh taka as fixed deposits with Bay Leasing & Investment. The bank foundation had also deposited 24 crore taka, while Southeast Bank Green School holded 57 lakh taka.

EXTENSIVE FRAUD ACROSS LOANS

According to the Banking Companies Act, a single individual, institution, or group can be granted a loan by a bank up to a maximum of 15% of its total capital. However, “Southeast Bank” has violated this directive by providing loans to various groups. As of December 2023, Southeast Bank’s total capital was 4,580 crore taka, which would allow for a maximum loan of 687 crore taka to a single group. But Bangladesh Bank’s report has revealed that Southeast Bank’s Gulshan branch and the DEPZ Offshore Banking Unit alone provided a loan of 1,699 crore taka to the struggling Keya Group. Despite the loan being in default since 2019, the bank continued to report it as a regular loan. During a board meeting chaired by Alamgir Kabir in 2022, further benefits were extended to the loan.

A Southeast Bank official said that, due to the deteriorating condition of Keya Group, while other banks ceased providing loans, Southeast Bank’s then Chairman Alamgir Kabir granted the loan for personal interests. After the loan was provided in 2019, Keya Cosmetics was insured with Asian Insurance, which is under the control of Alamgir Kabir, generating a commission income of 68 crore taka. At the bank’s Principal Branch, there is an outstanding loan of 1,122 crore taka for Deshbandhu Sugar Mills. The central bank has identified various irregularities related to this loan also.

Similarly, there are irregularities in the loan given to Splash Works Water Park in Gajaria, Munshiganj. Before the loan was sanctioned, the branch projected the first-year income of the park to be 211 crore 32 lakh taka. However, from the park’s opening in September 2023 to May of the following year, the actual earnings amounted to only 5 crore 98 lakh taka . Again, at the bank’s principal branch, a loan of 500 crore taka is held by the widely discussed S Alam Group, with only 97 crore taka in collateral. Though the loan turned non-performing in June 2023, it is still shown as regular. At the corporate branch, loans of 754 crore taka are held in the name of Capital Banani One and its associated companies. In violation of regulations, the bank waived 11 crore 38 lakh taka in interest in July 2021. The chairman of this group is Amin Ahmad, who is also the chairman of Best Holdings Group.

As of the latest data from September, Southeast Bank’s total deposits amounted to 39,741 crore taka, while its loans stood at 36,785 crore taka. Of this, only 3,308 crore taka (8.99%) was shown as non-performing. However, before finalizing the 2023 annual report, the central bank identified at least 6,074 crore taka, or 17.29% of total loans, as non-performing. Under the direction of then-Deputy Governor Khurshid Alam, only 1,425 crore taka was shown as non-performing, and a provision for 330 crore taka was waived. As a result, the bank reported a net profit of 209 crore taka. Without these special provisions, the bank would have faced a capital deficit of 592 crore taka. Additionally, non-performing loans totaling 1,277 crore taka were being shown as regular due to a high court stay order. A further 612 crore taka was given to companies whose business activities had ceased. Beyond this, rescheduled loans amounted to 12,761 crore taka, meaning 36.31% of the bank’s loans problematic. Among the rescheduled loans, 1,479 crore taka rescheduled more than three times.