AB Bank, the country’s first private sector bank, has approved Tk 350 crore in loans to Brandshare Trading Ltd, a shell company, by violating banking rules and regulations, a probe by Bangladesh Financial Intelligence Unit (BFIU) has found.
During the submission of the loan applications on January 10 this year, the manager and other officials of the bank’s Gulshan branch helped Brandshare get the massive amount by filing a fake audit report, according to the BFIU inspection report.
The Business Post has obtained a copy of the report, which said that the loans were approved on February 9 through corruption and forgery.
It said the loans were approved through collaborative efforts of the private commercial bank’s executive management and Board of Directors and Infratech Construction Company Ltd Managing Director (MD) and CEO Mohammad Ali Haider Ratan.
The loans’ actual beneficiary is Ratan but Brandshare Trading’s registration and trade licence have been made using the names of Md Ataur Rahman and Md Mamunur Rashid, the report said.
The BFIU team’s inspection found that Brandshare is a shell company and it exists only on paper.
BFIU did not find any connection between Brandshare and Ratan but the shell company is apparently located on a 300 sq ft space inside the rented office of Infratech Construction in the Midas Centre at Dhanmondi.
Moreover, all loan-related activities, from applications to submitting personal guarantees, were done by Ratan, the anti-money laundering agency said.
This Business Post correspondent tried to contact Infratech over the phone but no one from the company received the calls.
The BFIU report said that AB Bank’s credit division did not mention the actual information in the loan applications and did not raise any questions in the audit report, even though Brandshare has not carried out any import or export business since it registered with the Office of the Registrar of Joint Stock Companies and Firms (RJSC) in June 2022.
After the probe, BFIU on April 25 asked the AB Bank MD to provide an explanation and ordered the suspension of the loans’ disbursement to the shell company.
The agency on May 18 also requested the Anti-Corruption Commission (ACC) to take legal action against the bank.
Reached for comment, AB Bank President and MD Tarique Afzal told The Business Post, “I was on leave when our Board of Directors approved the loans. However, we have suspended the loans’ disbursement.
“We also froze the bank accounts of the company as per the board’s directive [following BFIU’s order].”
“BFIU and Bangladesh Bank’s Department of Foreign Exchange Inspection conducted the investigation. But we did not do anything wrong. If we did, why hasn’t the central bank punished us yet?” he asked.
When asked about Brandshare, Tarique claimed that it was not a fake company. “This is baseless information.”
The BFIU report also said that AB Bank issued a performance guarantee of Tk 16.13 crore to Ratan’s Infratech by violating the terms and conditions in the loan sanction paper and without a work order assignment.
Asked about the issue, Tarique claimed, “We issued a performance guarantee to Rapid Action Battalion (RAB) through the company. We have adequate collateral against the facility.”
However, the BFIU report has no mention of RAB receiving the performance guarantee.
BFIU on March 16 had also asked AB Bank to suspend all loan-related activities and accounts of Ratan and his companies Infratech and Brandwin Group.
The move came as the agency found that Ratan — who hails from Comapniganj, Noakhali — embezzled crores of taka from different banks using fake work orders and the same mortgage.
Financial condition of AB Bank
At the end of December last year, AB Bank’s total disbursed loans stood at Tk 31,013 crore, while its non-performing loans stood at Tk 3,997 crore or 12.89 per cent of the disbursed loans, as per Bangladesh Bank’s data.
AB Bank, formerly known as Arab Bangladesh Bank, started its effective operation on April 12, 1982. It currently has 104 branches across the country and one overseas branch in Mumbai, India.
The bank went through a big change in its directorship in December 2017 when then-chairman M Wahidul Haque, along with a vice chairman and a director, resigned from the bank’s board amid money laundering allegations against the bank.