Probe into First Solution's inability to pay begins

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FE Report
First Solution Money Transfer, a company used by members of the Bangladeshi community in the United Kingdom to remit money, has collapsed, depriving at least 2,000 families of funds back home and causing despair in some of Britain's poorest areas, said a report of UK's Times Online.
Police and detectives from the Insolvency Service are investigating why the company was unable to deliver at least £1.7 million intended principally for the Sylhet region of Bangladesh.
The MPs told Parliament about their concerns over the way the company's directors had acted, saying that it should have been impossible for a money transfer company to lose customers' money.
The directors strongly deny wrongdoing, blaming the speed at which the company expanded as well as the exchange rate fluctuated.
The case has also raised jitters about the rapid growth of the money-transfer business, which does not come under the remit of the Financial Services Authority.
Tower Hamlets Trading Standards initially said that the matter was "too big" when asked to investigate, while the police first referred the matter to Revenue & Customs.
The role of a local TV station serving the Bangladeshi community in the East End is also under the spotlight. Fazal Mahmood, one of the three directors of First Solution, was also the managing director of Channel S until the day before the money-transfer business collapsed.
Ofcom, the broadcasting regulator, has been asked to investigate whether the channel "assiduously and ruthlessly promoted as a community service" First Solution and whether the advertisements were properly billed and paid for.
The station's bosses described Dr Mahmood's position as "honorary" and Channel S has said that it has had nothing to do with the money-transfer business.
The money-transfer industry, which is not subject to the same regulation as banks, is growing at 20 per cent a year and is now worth £145 billion, according to the World Bank. It grew quickly after September 11, 2001, when the western countries wanted to discourage informal money transfers across national boundaries. The UK Department for International Development gave £7.5 million to the Bangladesh Bank to enourage the switch. This led to the extremely rapid growth of companies such as First Solution, which grew from a turnover of £4 million in 2004 to £87 million in 2006-07.
It was popular in the East End of London because it advertised higher exchange rates for lower fees and a quicker service to more outlying areas of Bangladesh than those of its rivals. The company, whose Brick Lane office claimed to take up to £50,000 a day, according to the East London Advertiser, stopped taking orders on June 27 and went into voluntary liquidation.