BD to sue Philippine bank to recover stolen reserves: Muhith

BB says case will be filed in 2-3 months

FE Report | Thursday, 8 February 2018

Bangladesh will file case against Rizal Commercial Banking Corporation (RCBC) of the Philippines as a last resort to recover the former's stolen reserves, the finance minister said Wednesday.
"Yes, the case will be filed in New York. Fed will join us as a party in the case," AMA Muhith told newsmen after a meeting of the cabinet committee on public procurement at the Secretariat, as the lion's share of the money, stolen by trans-national cybercriminals from Bangladesh's account in the US Federal Reserve bank, couldn't yet been retrieved.
He said some lawyers are discussing the ways of filing case in a New York court.
Mr Muhith, replying to a query, however, said again that the report on the probe conducted by a committee headed by former central bank governor Dr Mohammed Farashuddin on the reserve heist would not be made public now.
"No, it won't be published now. We have not taken any decision until now on it," he said.
The cybercriminals in a digital break-in stole $101 million from the reserves deposited with the US Federal Reserve Bank in New York in February 2016 and channeled the money to accounts at RCBC in Manila.
The theft was committed by placing fraudulent order on the SWIFT payments system.
Nearly $20 million of the sum was recovered from Sri Lanka. The lion's share of the booty landed in the Philippines-and that is reported to have been squandered through gaming in casinos, among other matters of misdealing.
Later, another $15 million could be recovered from the Philippines and channeling back some more money in to Bangladesh is underway, according to officials.
Replying to another query Mr Muhith said the government has yet to decide on paying some loan to the problem-ridden Farmers Bank Ltd from the Investment Corporation of Bangladesh (ICB).
"No, we have not taken any decision."
To an observation that sometimes banks need financial assistance when they face difficulties, the finance minister said: "Yes, that is, in my opinion, in larger interest of the economy."
He elaborated on the logic behind bailout of banks: "A bank failure is a horrible pain for any country. I experienced it. I was a student then when a bank failed in 1948."
Meanwhile, Bangladesh Bank (BB) officials said the case will be filed in two months or three.
"We've already proposed to the Federal Reserve Bank of New York and SWIFT to file a case jointly against the RCBC," said Ajmalul Hossain QC, a senior lawyer, at a press briefing on the day at the central bank headquarters in Dhaka.
Mr Hossain is hired by BB to handle the legal aspects of the stolen-money-recovery issue. He also said before filing the case against the RCBC, it will be offered negotiation. "If it fails to agree, we'll move the legal process in New York."
The lawyer argued: "Actually, RCBC had laundered the money using its institutional or corporate knowledge."
Mr Hossain also said some 15-20 employees of the Filipino bank were involved in the long-distance heist.
He also said the Federal Reserve Bank of New York, Bangladesh Bank and SWIFT earlier had reaffirmed their commitment to working together to recover the remaining more than $66 million of stolen money from the Philippines.
The three parties had also decided to continue discussions about the cyber-fraud incident.
The first tripartite meeting was held in Basel of Switzerland on May 10, 2016 while second and third meetings were held in New York on August 16 last year and May 21, 2017 respectively.
He said Bangladesh had already tracked a total of $67million from a money-remitter company, a casino and a casino operator out of $81 million siphoned into the Philippines.
"We do not consider the probe report of Dr Farashuddin committee as legally admissible evidence," Mr Hossain said in reply to another query as the RCBC sought the investigation report.
Officials said Bangladesh could not trace more than $14 million out of $101 million stolen even after more than two years.
"Some portions of stolen money have already been frozen and the rest of the amount is now under process of freezing," BB deputy governor Abu Hena Mohd Razee Hassan said in the briefing.
He said the process of recovering some $7.2 million more from the Philippines is almost finalized.
The court in the Philippines, where the hacked amount landed, has issued an asset- preservation order to return $1.2 million to Bangladesh and a civil forfeiture case has been filed for recovering another chunk of $6.0 million.
The cyber-fraud took place on the night of February 04, 2016 through sending a total of 35 transfer orders into the US Federal Reserve Bank where the central bank of Bangladesh maintains its foreign-exchange account.
Of the 35 transfer orders placed, 30 were blocked. Four transfers into the Philippine bank for a total of $81 million went through. The rest $20 million transferred to a Sri Lankan non-government organisation was reversed because the hackers misspelled the name of the entity.
[email protected]
[email protected]