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ACC Launches Probe

Mercantile Bank director caught in embezzlement scam

2014-01-09 13:03:14
Mercantile Bank director caught in embezzlement scam

Amirul Islam Nayon, Thereport24.com, Dhaka:

A director of Mercantile Bank, violating all the banking rules and regulations, has taken illegal financial advantage from the bank in a way which the central bank says is a criminal offence causing crors of taka loss to the bank.

A report published by Financial Integrity and Customer Services Department of Bangladesh Bank (BB) unearthed the irregularities and found SM Ahshan guilty of more than Tk 100 crore embezzlement.

The Anti-Corruption Commission (ACC) has also been reinvestigating the matter and preparing to take legal actions against Ahshan for the misappropriation of such a huge amount of money following Section 19 and 20 of the Anti-Corruption Commission Law and Section 160 of the Code of Criminal Procedure (CrPC), said ACC sources.

BB officials told thereport24.com that the bank might not be able to recover the loans as it had no control and monitoring on the three companies involved in the huge money embezzlement scandal.

The three little-known and paper-based companies are Mismac Ship Braking Industry, Regent Corporation and Titas Agro Industry allegedly owned by SM Ahasan.

According to the report of BB inspection carried out in June-July last year, Agrabad and Madam Bibirhat branches of the Mercantile Bank disbursed the six-month loans for opening of letters of credit and 3-month term loan between 2011 and 2012.

The report said the bank opened three LCs (by granting six-month loan) worth Tk 136.21 crore in May and June of 2012 by taking 10 percent margin from Mismac.

Mismac failed to repay the loan amounting to Tk 122.59 crore (excluding the margin) in due time resulting that the bank created a fresh ‘forced loan’ against the company by allocating it six more months time to repay the loan.

Subsequently, the Mismac also failed to repay the forced loan within the stipulated time.

The Agrabad branch disbursed a separate time-loan amounting to Tk 20 crore to the company on September 30, 2012 without any mortgage.

The credit administration of the bank made a debit instruction to the branch to disburse the loan to Mismac without placing any proposal to its board of directors.

The bank also failed to recover the loan. The amount of the time loan with its interest stood at Tk 23.97 crore as of September 4.

After finding the anomalies, the central bank on September 4 this year asked the bank to bracket the LC loan as ‘sub-standard defaulted loan’ and time loan as ‘bad category defaulted loan’ by September 30.

A bank has to keep 50 percent provisioning against sub-standard loan and 100 percent provisioning against bad loan which hit the bank’s profit.

The Mercantile Bank, however, did not declare the loans defaulted and sought additional time.

The BB on November 14 asked the bank to recover the money by December 31 or declare the loans as bad category default loans if it fails to recover the loan by that time.

The BB report said that the bank had faced a loss amounting to Tk 146.56 crore due to the loan disbursement to Mismac.

In another incident, the Ahgrabad and the Madam Bibirhat branches of the bank opened 10 LCs against Regent Corporation and Titas Agro Industry in September 2011.

The two branches paid the import cost to the exporters by creating payment against documents on behalf of the two companies without taking any approval from the bank’s board, BB report said.

The bank failed to recover the loan and it had to declare Tk 19.60 crore as defaulted loan.

Meanwhile, the bank filed cases with the Artho Rin Adalat against the two companies.

The bank has been asked to inform the central bank by January 7, 2014 what kind of punitive measures would be taken against the anomalies and instructed the bank to recover the loans as early as possible.

According to ACC sources, SM Ahshan was the mastermind to emblaze the money from the bank through use of fake names and documents.

Bank officials of both the branches told ACC official Sahabuddin that Ahshan used to take loans using his name and account number using his position as director of Mercantile Bank.

ACC is also looking into the personal assets and properties of Ahshan and found properties beyond known source of his income. It has already found that SM Ahasan is the real owner of a multistoried Swadesh Property building at Purana Paltan.

Who is this SM Ahshan:

All financial scandals and embezzlement happens in Bangladesh with political influence and patronage, this common belief of people comes into play if we try to analyze SM Ahshan’s emergence as millionaires and big shot.

He used to introduce himself a close associate of BNP leader Barrister Moudud Ahmed during the 2001-2006 tenure of the four-party alliance government. But noticing different controversial and financial scandalous activities, Moudud Ahmed later booted out SM Ahsan from his close circle. After falls from the grace through various controversial activities and corruption, later SM Ahshan grew his relations with late Awami League leader Abdul Jalil and became a director of Mercantile Bank.

When Jalil was the commerce minister, Ahsha used to handle all the import business quota using the name of Abdul Jalil. He lost his post of directorship in the bank when Jalil came to know about his manipulations and embezzlement issues. Later he started working with another AL leader Amir Hossain Amu and established Desh General Insurance.

Later Ahshan came into the Mercantile Bank again after saying sorry to Jalil and started taking illegal bank loans in his name and using others name through forgery and using different fraudulent tactics from the bank being a key post holder of the bank.

When drawn his attention to the embezzlement and allegation of irregularities, SM Ahasan told threreport24.com, “Those who had brought all those allegations against me I am serving legal notices against them and I have already signed a contract with Barrister Rafiqul Haque regarding the issue.”

(This report has been translated by Imam Hossain and edited by Md Al-Amin for thereport24.com/English)

Ends/thereports24.com/IH/AMA/Jan 09, 2014

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