Bank takeover with bank loans.
Fish fried in fish oil – The notorious loan fraudster S Alam Group based in Chittagong used a strategy similar to this proverb to take over Islami Bank Bangladesh. In September 2015, the group took a loan of Tk 1,750 crore from Islami Bank and anonymously bought about 9 percent of Islami Bank’s shares with that money. The then board of directors and management of the bank did not care about the rules and regulations in giving loans.
The loans were given without objection, ignoring the opinions of the investment and legal departments of the bank. Adequate collateral was not taken. The advice of the Bangladesh Bank observer assigned to the bank was not taken into account. This trick was resorted to because the single customer limit was exceeded. Even a foreign director was detained by intelligence agency officials in a hotel in the capital to keep him absent from the meeting.
Even after officially taking control of the bank, the group continued to loot anonymously in the name of loans and the bank’s shares were bought at various times with the looted money. Our investigation has confirmed the truth of these incidents from the bank’s internal audit and intelligence agency reports. Economists have stated that this incident is unprecedented in the banking sector.
S Alam Group, a customer of the Khatunganj branch of Islami Bank in Chittagong since 2002. With the special favor of the previous Awami League government, the group was able to take over seven banks, including Islami Bank, one by one. Including these, the group’s executives fled abroad after stealing more than lakhs of crores of taka from various banks under different names and identities. After the change of government, the central bank dissolved the boards of the banks and freed S Alam. Along with this, special audits have been taken to verify the quality of the banks’ assets. Separate investigations are also being conducted by Bangladesh Bank and BFIU.
According to the Bank Company Act, a single individual, family or interest-related organization cannot hold more than 10 percent of the shares of any bank. With the special favor of the Awami League government, the S Alam Group was able to take control of the entire bank by purchasing a handful of shares of Islami Bank and appointing a representative director against these shares. The investigation revealed that in late 2015, a loan of Tk 1,750 was taken from Islami Bank in the name of three companies – S Alam Vegetable Oil and its affiliate Sonali Traders, S Alam Refined Vegetable Oil and S Alam Super Edible Oil – in violation of the rules. Later, S Alam Group bought about 9 percent of Islami Bank’s shares in the name of three other anonymous companies. Out of this, Islami Bank gave a loan of Tk 5 billion to S Alam Vegetable Oil and its affiliate Sonali Traders. With the money from Sonali Traders, 2.01 percent of Islami Bank’s shares were purchased in the name of ABC Ventures Limited. A loan of Tk 850 crore was given in the name of S Alam Super Edible Oil. With this money, 2.01 percent of Islami Bank’s shares were purchased in the name of Paradise International Limited. A loan of Tk 4 billion was given in the name of S Alam Vegetable Oil Limited. With this money, 4.67 percent of Islami Bank’s shares were purchased in the name of Uniglobe Business Resources. Apart from this, benami shares were also purchased in the name of Armada Spinning Mills, JMC Builders, Excel Dyeing and Printing, Grand Business Limited and Blue International by 2016.
A review of the information shows that after the formal takeover of the bank on January 5, 2017, directors were appointed to the bank from these benami shareholding institutions. Among them, Joynal Abedin representing ABC Ventures and Maj. J. (Retd.) Abdul Matin representing Paradise International were appointed as directors. And Professor Dr. Sirajul Islam from Excel Dyeing and Printing, Mizanur Rahman from Grand Business Limited and Syed Abu Asad from Excelseer Impex Company Limited were appointed as directors. Apart from this, former bureaucrat Arastu Khan representing Armada Spinning Mills was appointed as the chairman of the bank and Md. Shahabuddin was appointed as the vice chairman on behalf of JMC Builders. Later, Jamal Mostafa Chowdhury was appointed as director from Uniglobe Business Resources.
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