Next BB board meeting to decide on Hallmark scam

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Siddique Islam and Rezaul Karim
The central bank will need to strengthen further its supervisory and monitoring role, for preventing occurrence of financial irregularities like that of Hallmark loan scam in Sonali Bank.
The observation came at a meeting of its board of directors Wednesday. Chairman of the Board and Bangladesh Bank (BB) Governor Atiur Rahman presided over the meeting.
"We've apprised the board of the latest situation of Sonali Bank loan scam," a BB senior official told the FE, adding that the board will discuss in details the matter in its next meeting.
BB director Prof. Hannana Begum said the central bank board has been apprised of the Sonali Bank incident.
"A decision on the matter will be taken in the next meeting of the BB board after a proper scrutiny of the report of the central bank," she told reporters after the meeting.
Talking to the reporters, BB General Manager AFM Asaduzzaman said the central bank placed the findings of its inspection team, regarding the loan scam in the Sonali Bank in the meeting of its board of directors.
"The members of the board will cross-check the findings and give their opinions in the next meeting," he noted.
A total amount of Tk 35.47 billion has been misappropriated from the Ruposhi Bangla Hotel branch of the Sonali Bank through different kinds of forgery. Of the total amount, the Hallmark Group alone managed to embezzle Tk 26.86 billion.
In its probe report, the central bank has also detected financial irregularities in two other branches of the bank -- at Gulshan and at Agargaon in the city.
The BB probe report said the money had been 'swindled' out by some companies, including Hallmark Group, in connivance with the senior management staff of the bank. It also identified monitoring failure of the board of directors of the country's largest state-owned commercial bank which aided the swindling out of the money.
The board of directors of Sonali Bank categorically denied allegations of their failure in managing the bank properly, saying that they are performing in line with the BB's directives.
"The then managing director of the bank did not inform the board about the loan scam," a Sonali bank statement said on Wednesday, adding that such a scam could have been prevented if the authorities got information earlier.
A director of the Sonali bank told the FE that the bank would request the ministry of finance (MoF) to take actions against the former managing director in this connection.
The country's largest state-owned Sonali Bank Limited has taken moves to realise their loan from Hallmark Group, along with taking actions against its 32 officials allegedly involved in loans scam.
Managing Director and Chief Executive Officer of the bank Pradip Kumar Dutta disclosed this at a press conference held at its headquarters in Dhaka Wednesday after a meeting of its board of directors.
"We've started discussions with Hallmark Group for documentation, securitization and realisation of the amount of the loan to protect depositors' interest," Mr Dutta said, adding that the Sonali Bank has already been able to recover Tk 3.77 billion from the Hallmark Group.
He also said the Hallmark Group has already accepted the liabilities of their loans.
"We're now working with full vigour to take action against the alleged officials. But we need some time to prevent any loophole before going for actions, both departmental and legal, against the alleged officials," he said while replying to a query relating to the central bank's directive, issued on August 26 last.
The central bank asked on August 26 last the MD of Sonali Bank to suspend temporarily 31 more officials including two deputy managing directors (DMDs), suspected of being involved in the Hallmark loan scam.
The central bank has also asked the MD to inform it by August 30 about actions taken against the officials.
Directors of the bank Kashem Humayun and K.M. Zaman Romel also spoke on the occasion.
The Sonali Bank authorities have taken some steps including suspension of disbursement of Tk 10.00 billion, which was sought to be embezzled from the bank's Rupushi Bangla branch through fake LC (letters of credit) documents.
The Sonali Bank said a group of traders including Hallmark embezzled a large amount of money, in connivance with some corrupt/dishonest officials of the bank.
Of them, the Hallmark group swindled out over Tk 26.67 billion, T & Brothers Group Tk 6.85 billion, Paragon Group Tk 1.44 billion, DN Sports Group 280 million, Nakhi Knit Group Tk 650 million and others, Tk 150.12 million. Of this amount, Tk 19.45 billion was funded loan and Tk 16.60 billion was non-funded ones.
Besides, a directive has already been issued to realise 25 per cent of disbursed amount in cash form and the remaining 75 per cent, through collaterals.
Shafiqul Islam Jibon adds: The central bank of Bangladesh alerted its relevant department about timely audit and inspection of all commercial banks in the country, following the detection of gross financial irregularities involving a large sum of money at the state-owned Sonali Bank Limited.
The board of directors of the Bangladesh Bank (BB) gave the instruction in its 332nd meeting held Wednesday at the BB as the central bank's audit department recently unearthed the financial irregularities.
At least six of the nine BB directors attended the meeting.
If the audit and inspection could be done early, the central bank's inspection team could have saved a large sum of money swindled out of the bank, the meeting sources told the FE.
However, it was a commendable achievement of the DBI (Department of Bank Inspection) team of the BB that they could uncover such a massive corruption in a state-owned commercial bank, the sources said.
But the board of directors observed that the inspection at the Sonali Bank was not done timely. If the inspection and audit procedures were regular and well-timed, the BB could have averted the scam, the meeting said.
However, the board of directors approved the annual report of the BB in its meeting. The net operating profit of the central bank for the financial year of 2011-12 stood at Tk 70.32 billion.
The figure is 20.48 per cent lower than that of Tk 88.43 billion of the last fiscal year. The operating profit of the central bank decreased in fiscal year 2011-12 mainly due to the fall in values of gold and silver in the international markets.
However, the net operating profit of the BB in the fiscal year (FY) 2011-12 was about 123 per cent higher than the projected one.
The board also discussed CAMELS rating, off-sight supervision of state-owned commercial banks, amendment to the reserve management guidelines etc.