Home ›› 28 Nov 2022 ›› Front
Sharpe Knitting & Dyeing Industries – an apparel exporter who shut their doors for good around a year ago – had opened 889 back-to-back letters of credit (LCs) worth nearly $1.6 billion between 2015 and 2021 with the Social Islami Bank Ltd (SIBL).
Curiously, during this period, this company’s exports did not reach even a fraction of the LCs, and their warehouses do not have any imported raw materials, or finished goods, reveals an inspection report of the Bangladesh Bank, of which The Business Post has obtained a copy.
A central bank inspection team, which recently visited Sharpe Knitting’s factory in Gazipur’s Tongi area, has strong suspicions that though the company opened back-to-back LCs worth over Tk 16,500 crore [converted from USD], it did not import raw materials or produce goods.
In light of such irregularities, a number of experts and central bank officials suspect that the money has been laundered abusing the bonded warehouse facility.
SIBL’s Banani Branch had provided the back-to-back LC facility to the company under the duty concession facility, but its bonded warehouse has no valid license, which is yet another severe violation of regulations, mentions the central bank report.
A bonded warehouse is a building or any other secured area in which dutiable goods may be stored, or they may undergo manufacturing operations without payment of duty.
The licensing tenures of a bonded warehouse are valid for two years for 100 per cent exportable companies, as per the National Board of Revenue’s (NBR) bonded warehouse licensing regulations.
Sharpe Knitting & Dyeing Industries Ltd did not renew the license after securing it back in 2003. A Bangladesh Bank inspection team has found that the knitting company has now shut their doors.
‘A serious irregularity’
Commenting on the matter, Association of Bankers, Bangladesh (ABB) former Chairman Mohammed Nurul Amin said, “A bank cannot issue back-to-back LCs to a company if it has no valid licence for the bonded warehouse facility. So this is a serious irregularity.
“If the imported raw materials come to the country, they have to send the bill on entry to the central bank. If there were any money laundering activities through the back-to-back LCs, the concerned bank and the central bank cannot avoid responsibilities.”
Amin, also a former Managing Director of Meghna Bank, pointed out, “An influential quarter may have gotten involved in the loan process.
“The Bangladesh Bank should strengthen its monitoring system and launch further investigation into the matter to find out how such an ailing company managed to borrow such a large amount of loans.”
When approached for comments, SIBL Banani Branch Manager Amzad Hossain said, “I recently got appointed in this branch, and I am still unaware about the issue.”
Meanwhile, the bank’s Managing Director Zafar Alam said, “We are trying to recover the money from Sharpe Knitting & Dyeing Industries. We have already filed lawsuits against them to recover the money, and the borrower has been maintaining contact with us.
“We had provided back-to-back LC facilities to this company back in 2015, but they have since closed their doors.”
When The Business Post reached out to Sharpe Knitting & Dyeing Industries Ltd Chairman Col (Retd) M Anwarul Azim over phone for comments, he said, “I had handed over this company to another person a few years ago.
“I have no clue what is happening in the company.”
Irregularities in SIBL Mirpur Branch too
Between 2015 and 2018, the SIBL Mirpur Branch issued 123 back-to-back letters of credit (LC) worth over $5.5 million to another ailing apparel company Blithe Fashion Ltd, under the duty concession facility.
This company’s bonded warehouse facility did not have any valid license either.
A central bank inspection found that the company did not export against LCs worth more than $842,663. The company, located in Gazipur’s Kashimpur area, was closed for several years.
SIBL had approved Tk1,120cr to Nabil Group
The Shariah based bank recently came under regulator scanner for providing large amounts of loans to Nabil Group – an obscure business conglomerate based in Rajshahi.
On May 30 this year, SIBL – in its 481th board meeting – had approved Tk 1,120 crore (both funded and non-funded) in loans to Nabil Feed Mills Ltd, Nabil Naba foods Ltd and its associate companies.
A central bank observation report mentions that the SIBL had eased its regulations and conditions for approving loans to businesses under Nabil Group, and the loans are risky.
The lender lowered LC commission, and provided relief from depositing collateral and personal guarantee, the report added.
Central bank officials say the regulator plans to launch an investigation to find out whether the SIBL is offering any kind of illegal benefits to this client, and whether the company is an affiliated institution of any directors of this bank. At the end of September of this year, the non-performing loans of SIBL stood at Tk 1,669 crore, show central bank data.
