State-owned BASIC Bank, which earned notoreity for loan forgery involving billions of Taka in recent years, has lost Tk 760 million on the pretext of purchasing office space for the bank.
This scam has been revealed by a finance ministry investigation that also found the bank’s controversial former chairman, Abdul Hye Bachchu, involved.
For purchasing a building for the BASIC Bank head office, it paid Tk 760 million although the building was on a disputed plot of land, according to the investigation. Still, the bank has not been handed over a single floor of the building.
Seven years ago, BASIC Bank had signed a deal with a certain Sinku Akramuzzaman for the purchase of 12 floors of a building opposite Bangladesh Bank and Sena Kalyan Sangshta for Tk 810 million. The bank paid money and construction begun accordingly.
Now the finance ministry sees the deal has no legal bindings. Even the land on which the building has been constructed, is abandoned property. There is a case in court regarding the land, shows the record.
According to the rules, permission must be taken from the president (presently the prime minister) for the construction of a new building for a state-owned bank or financial institution, or for the extension, renovation and maintenance of an old building for the purpose.
The government issued directives twice in this regard, in 1985 and in 1998. But, as it is found, BASIC Bank did not comply with the procedure.
After the meeting of the cabinet committee on purchase this Thursday, finance minister Abul Mal Abdul Muhith was asked about this scam which took place during the tenure of Abdul Hye Bachchu.
The finance minister said to Prothom Alo that all his (Abdul Hye Bachchu) dealings in BASIC Bank were sheer robbery. “And it is not just one incident,” he added.
Secretary of the financial institutions division of the finance ministry Mohammed Yunus Rahman, while talking to Prothom Alo before Eid, also said, “We're extremely concerned about this. It is unfortunate that the contract isn’t registered. I blame the authorities of the bank at that time for such a large sum of money going out of the bank.”
This beginning of this underhand deal transpired three months after Abdul Hye Bachchu joined BASIC Bank as its chairman in September 2009. In the minutes signed by him of the 261st board meeting of the bank held on 13 December 2009, it was stated that he had expressed surprise at the meeting that the bank did not have its own building after 20 years. A decision was adopted at the meeting for the bank to have its own building.
On 1 April 2010, BASIC Bank signed a contract with Sinku Akramuzzaman to purchase space of 51,500 square feet in Motijheel of the capital city Dhaka. This tripartite deal stated that BASIC Bank would give Tk 810 million to Akramuzzaman and he would construct a 15-storey building, of which 12 floors would be given to BASEC Bank. The building would be named Zaman BASIC Bank Tower.
The finance ministry now finds that Akramuzzaman himself was two of the three parties involved in the deal. His company, Business Resources Limited, was constructing the building.
Recent communication between BASIC Bank and the financial institutions division revealed that the bank paid Akramuzzaman Tk 400 million on the very day that the deal was signed. Then, in instalments, the bank paid him another Tk 360 million. In 2013 a structure of the building was somehow completed.
Despite having paid Tk 760 million, not a single floor has been handed over to the bank as yet. As for Akramuzzaman, he has fled abroad.
Akramuzzaman has purchased a home in Malaysia and has settled there with his family, according to persons in the bank who have knowledge of the matter. It was not possible to get him over the cell phone. He has not replied to repeated emails either.
It was at the behest of Abdul Hye Bachchu that half the payment was handed over on the day that the deal was signed.
Foul play is suspected here too.
At the time, none of the board members spoke up. The bank’s managing director (MD) at the time, AKM Sajedur Rahman, was kept behind the scenes of the matter.
In the meantime, in a spate of unprecedented irregularities between April 2012 and March 2013, the board under Abdul Hye Bachchu pilfered over Tk 34.93 billion through loans to various persons.
Bangladesh Bank had investigated the matter and observed that it would not be possible to recover these loans. And indeed, the loans are yet to be recovered.
The BASIC Bank officials point out that there are further complications pertaining to the building. For example, they say, Akramuzzaman constructed seven more floors on the building and has been pressuring the bank to purchase those too. He estimated the cost to be Tk 1.62 billion with the seven new floors and demanded an advance of another Tk 810 million. The bank did not agree.
The financial institutions division on 7 August this year issued a letter to the present chairman of BASIC Bank, Khandakar Mohammed Iqbal, asking for a detailed explanation about the purchase of the building without government approval.
The government in July 2012 dissolved the BASIC Bank’s board of directors due to rampant corruption and irregularities which had swamped the bank.
But Abdul Hye Bachchu took the liberty to submit his resignation to the finance minister a day before the term of the board expired. The government then revamped the board and appointed the bank’s previous MD Alauddin A Majid as the chairman.
The financial institutions division also wanted to know why there had been such a long delay in revealing the matter of this large financial involvement despite the board being in place for three years now. The division was not satisfied with the explanation submitted by the MD on 21 August.
In his explanation, MD Khandakar Mohammed Iqbal said that the land was abandoned property since 1989. There was a case as to whether the government or Akramuzzaman was the proprietor of the land. Last year the verdict was passed in Akramuzzaman’s favour, but the problem remained unresolved due to his stubborn attitude.
BASIC Bank chairman Alauddin A Majid told Prothom Alo this was just one incident in many. The present board is having to bear the brunt of this incident which took place seven years ago.
During a recent visit to the site in Motijheel, this correspondent saw the structure of a 22-storey building, with a signboard, ‘Zaman BASIC Bank Tower Bhaban’.
Along with Abdul Hye Bachchu, on the bank board at that time were the present vice chairman of the Export Development Bureau (EDP) and joint secretary at the time Bijoy Bhattacharya, former DG of the prime minister's office Nilufar Ahmed, chairman of BSCIC chairman at the time Siddiqur Rahman, chairman at the time of Kushtia Islamic University’s accounting and information systems department Kazi Akhter Hossain and others.
Though AKM Sajedur Rahman was the bank’s MD at the time, he had gone abroad on medical treatment. The acting MD was Sheikh Manzur Morshed. Bijoy Bhattacharya then left for Switzerland due to his job and the present commerce secretary Subhashish Basu took his stead.
Bijoy Bhattacharya told Prothom Alo, he had stopped attending board meetings towards the end as he was fed up. Subhashish Basu said it was not possible for the board to verify the details of the land. That was basically the responsibility of the management.
Several attempts to contact Abdul Hye Bachchu over phone have failed. He did not reply to any SMS either. The supervisor at his house in Banani DOHS said he was out and does not always stay at this house.
The finance minister even in parliament had held Abdul Hye Bachchu responsible for the corruption in BASIC Bank.
However, the Anti-Corruption Commission has done nothing in this regard. The finance minister has not lost hope and told Prothom Alo, “I think ACC is doing something about the matter.”
According to Bangladesh Bank, BASIC Bank’s default loans stand at 53 per cent (Tk 73.9 billion), higher than the default loans of any other bank in the country.
*The article, originally published in Prothom Alo Bangla print edition, has been rewritten in English by Ayesha Kabir