The loan scam saga of Basic Bank seems to be far from over. The banks’ Gulshan, Dilkusha and Shantinagar branches became embroiled in Tk 3,500 crore loan irregularities between 2009 and 2012.
A few years after the then BASIC Bank Chairman Sheikh Abdul Hye Bacchu’s scams came to light, the bank disbursed a loan of Tk 117 crore to a company with a paid-up capital of only Tk 10 lakh. This loan was later defaulted, and the bank lost Tk 103 crore.
According to a latest compliance audit report of Comptroller and Auditor General of Bangladesh (CAG), published in its website, BASIC Bank was audited by the CAG in 2016, 2017 and 2018, and Tk 340.16 crore anomalies were found involved against 16 audit articles.
Severe irregularities, such as showing overvaluation of collateral against loans, insufficient collateral, misappropriation of funds, and irregular rescheduling of loans, came up in the compliance audit report of CAG.
In February 2016, Basic Bank’s Bangshal Branch approved a loan of Tk 117.50 crore in favour of Zeil Wears, an export oriented shoe maker, by acquiring liability from Dhaka Bank.
After examining various documents of the branch, the CAG audit team found that of the company’s authorised capital was Tk 20 crore, but the paid up capital was only Tk 10 lakh. Zeil Wears Chairman is Zaheer Uddin Tariq and Managing Director is Mohammad Al-Amin.
The Business Post had tried to track down the duo for comments on the matter, but their contact details were not publically available, and they could not be reached till the filing of this news article.
According to the CAG report, a demand loan of Tk 48.11 crore was generated due to non-payment of import liabilities from the export earnings of Zeil Wears. The company defaulted on the loan and now owes the bank Tk 103.21 crore.
The Bangladesh Bank had to pay $1,86,680 from the Export Development Fund (EDF) on behalf of Zeil Wears, when the company became unable to pay the debt.
The Cumilla-based company showed 461.75 decimals of land, factory infrastructure and machinery as collateral against the loan. The market value of the entire factory with land showed Tk 93.12 crore, but the actual spot price was Tk 71.03 crore, read the CAG report.
BASIC Bank’s reply
In an objection to the CAG audit, Basic Bank replied that the production of the company was disrupted due to labour unrest and a fire incident, according to the CAG report.
Apart from this, Zeal’s exports were disrupted due to various reasons, including bankruptcy of major customer SEARS, and complications of commission with export process intermediaries such as Programme.
After highlighting such circumstances, BASIC Bank specifically requested CAG to exempt them from these audit objections.
In response, the CAG report noted that these objections are not conducive to settlement. Because even though there is an opportunity to recover these loans, BASIC Bank opted for a loan reschedule facility instead of collecting the installments.
No further reply was received by the bank against this reply, according to the CAG report.
No shortage of anomalies
Under the latest CAG report, another audit claim mentions that Basic Bank’s Bangshal branch had posted a loss of Tk 64.59 crore due to LC opening liability in 2017.
The borrowers are Naseem Plastics and NG Composite. A case has been filed against these customers for recovery of this money.
Meanwhile, Bangshal Branch the bank could not recover Tk 40.62 crore from the FAS Finance & Investment, under a loan disbursed in 2015. Basic Bank wants to be released from this audit claim, but the CAG declined to consider this request, and asked the bank to recover this money.
The head office of Basic Bank has not been shifted to Zaman Tower within the deadline. But the price for this space has been paid before the completion of work.
Besides, Tk 18.06 crore was paid towards rent, so such an amount was a financial loss for the bank.
The audit report mentions that the loss was due to the large payment of money without closely checking the progress of construction.
