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The basic bank scam

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Md. Naveed Tasnim
Md. Naveed Tasnim

Basic Bank as a state sector bank was doing satisfactorily well. Within a couple of years, the bank is steeped in scandal. Involving the misappropriation of 45 billion tk.

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The basic bank scam
 establishes as a banking company under the companies Act 1913 launched its operation in 1989.  It was incorporated under the Act on the 2nd of August, 1988. The Bank started its operation from the 21st of January, 1989.  Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares.
 The BCCI, the Government of Bangladesh took over 100 percent ownership of BASIC on 4th June 1992.  Thus there is state-owned. However, the Bank is not nationalized; it operates like a private bank as before.
No. Directors Name Designation Year 1. Mr. Sheikh Abdul Hye Bacchu Chairman 2009 -13 2. Mr. Fakhrul Islam Director 2009 -13 3. Mr. Shubhashish Bose Director 2009 -13 4. Mr. Shyam Sunder Sikder Director 2009 -13 5. Ms. Neelufar Ahmed Director 2009 -13 6. Ms. Quamrun Haher Ahmed Director 2009 -13 7. Mr. Akm Rezaur Rahman Director 2009 -13 8. Mr. Md. Anwarul Islam, FCMA Director 2009 -13 9. Mr. AKM Kamrul Islam, FCA Director 2009 -13 10 Mr. Anis Ahamad Director 2009 -13 11 Mr. Kazi Faqurul Islam Managing Director 2009 -13
No. Directors Name Designation Year 1. Mr. Alauddin A. Majid Chairman Present 2. Mr. Kazi Shfiqul Azam Director Present 3. Begum Parag Director Present 4. Mr. Hasan Mahmood, FCA Director Present 5. Begum Raihana Aneesa Yusuf Ali Director Present 6 Mr. Md. Mamun Al Rashid Director Present 7. Mr. Khondoker Md. Iqbal Managing Director Present
 Basic Bank as a state sector bank was doing satisfactorily well. Within a couple of years the bank is steeped in scandal. Involving the misappropriation of 45 billion tk. Worse still the government is not bothered about trying the accused persons. Basic Bank chairman Sheikh Abdul Hye Bacchu has quit amid growing allegations that he misappropriated funds by approving shady loans of several thousands crore takas. The default loans of BASIC Bank soared to Tk 2,557 crore last March from Tk 1,417 crore in February. Bangladesh Bank (BB) has appointed an observer to the Basic bank.
 “BB in July signed a memorandum of understanding with BASIC Bank imposing 15 conditions on the state-owned bank to improve its financial state and restore credit discipline. An observer would be appointed to the bank and its top management restructured, if it failed to fulfill the conditions, the MoU(Memorandum of Understanding) stated”.  Bangladesh Bank detected anomalies worth more than Tk 4,500 crore and urged the finance ministry to dissolve the BASIC Bank board of directors, a couple of months ago.  Muhith, while talking to reporters Saturday at the secretariat, acknowledged that Hai, who was appointed chairman in 2009, was rewarded reappointment in 2012.
 “The finance ministry had been dillydallying on taking a firm decision on the loan scam in the BASIC Bank.”  “The ACC filed 56 cases over the loan irregularities of the bank, but the bank's former Chairman Abdul Hye Bachchu was not charged in any of the cases.”  “The Chairman of Anti Corruption Bureau tried to clear himself of responsibility, saying that the matter was being looked into and the persons would be arrested once the charges were made.”
 More than three organization names were come out after investigation of the reporter of Jamuna TV, but we showed only three organizations’ scam scenario in below:  1. M/S SPN Enterprise  2. A. B Trade Link  3. B Alam shipping
 The owner of M/S SPN Enterprise withdrawn 55 crore taka of their loan money on the date of 9th October 2012 by submitting fake Company information as well as residence address.
 The owner of A.B Trade link Mr. ABM Russell also withdrawn 45 crore taka of their loan by submitting fake information as well as the mortgage documents. The Company name does not exist in that place which was mentioned in their documents.
 B Alam shipping line who withdrawn 13 crore taka, but the case was showed somewhat unnatural to us because they applied for the loan on 20 May 2013 within the next 2 days they had withdrawn 10 crore cash, where the Chairman of the board of Basic Bank went to abroad. Without the Chairman permission Bank has no authority to allow withdrawing more than 1 crore.
 The loan receiver had transferred money to the chairman account as well as to panna’s business account of BD Computers. Panna is the younger brother of Chairman of Basic Bank.
Date Loaners Company’s Name Times Amount of Money 10/5/2011 BD Pipes 1 4 Million tk 12 & 16/8/12 Jamuna agro Chemical 2 4 million four hundred thousand tk 25/7/12 Jamuna agro Chemical 10 million tk 10 & 30/4/12 Sonar Bangla Natural 2 17 million five hundred thousand
 In the year of 2012 the Bank Chairman got eleven million taka from nameless company Brothers Enterprise for his Bagerhat abdul hey school which is situated in Bagerhat zilla. Capital Banani Company had taken 30 million taka from SFG shipping company. Capital Banani is considered as Chairman benefited Company. SFG Company had also sent money of 30 million tk to Best Holding Company, this company owner is Panna.
Profit and Loss Account 2010 2011 2012 2013 2014 Interest Income 4337.04 7099 11020.88 14808.95 12,070.32 Interest on deposit and borrowings 3033.56 4911.66 8544.6 -13108 -13,466.23 Net interest income 1303.48 2187.34 2476.27 17010.04 -1,395.91 Commission, exchange and brokerage 642.57 785.34 693.13 737.2 658.52 Other operating income 476.67 189.23 129.09 119.73 125.61 Total operating income 3074.25 3913.55 4857.67 4230.79 1647.33 Salaries, Allowances etc 877.12 993.57 1160.05 1767.83 1,855.36 Depreciation and other non-cash expenses 67.56 79.68 109.4 152.69 181.71 Other operating expenses 236.37 270.01 615.82 349.02 240.96 Total operating expenses 1357.2 1565.03 2247.58 2760.59 2771.71 Profit before provision 1717.05 2348.52 2610.09 1470.2 -1,124.38 Provision for loan & Advances 326.27 404.34 1561.18 1338.52 - Profit before tax 1325.17 1999.99 1075.88 118.49 -1,115.24 Provision for tax 723.27 1038.97 1079.19 732.12 45.34 Net income 660.93 976.11 27.89 -531.53 -1,100.16 Earning per share (Taka) 33.64 41.4 0.95 -18.04 -37.33 Comparative Profit & Loss Account (Million Taka) (In Percent)
 Bank chairman has no legal right to approve those loans which are higher than 1 Corer taka.  Bank purchased a land of 80 crore taka which was dereliction by the Government.  The land price was higher than the market price of 20 crore tk.  The Bank had faced huge loss in the year of 2013 & 14 for the scam.
 Basic bank had paid 45 lac 31 thousand taka to the lawyer of Barrister Kamrujamman for operating their legal suit at the very beginning of that case which was unusual for other lawyer because normally lawyer gets at best 4 to 5 lac taka in total.  In a board meeting number of 316, 317, 318 and 319 were approved a higher loan. For instance the bank was approved 117 crore taka in a board meeting no. of 317 without acceptance of other board members.
 Government will have to take legal action against the board chairman as well as other suspected board members.  Anti Corruption Bureau has to be more efficient against all these corruptions.  Government will have to take an action to recover of that money from those who were involved in these scams.
 At the end we can say that the Bank would be survived but the more important thing is to recover the lost money. The Government should take legal stand against those suspicious directors, Chairman and loaner. Find out those loaners who submitted fake information to the bank and took millions of taka. If government takes proper action against all these scams then these type of scams will not happen again and again.
 Newspaper – The Daily Star ◦ Web address: http://archive.thedailystar.net/beta2/tag/basic-bank/  Newspaper – New age bd ◦ Web address: http://newagebd.net/28233/scandal-hit- basic-chairman-quits/  Newspaper – The Independent bd ◦ Web address: http://www.theindependentbd.com/printversion/details /33441  Basic Bank Limited ◦ Official web address: http://www.basicbanklimited.com/financial_reports.php

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The basic bank scam

  • 2.  establishes as a banking company under the companies Act 1913 launched its operation in 1989.  It was incorporated under the Act on the 2nd of August, 1988. The Bank started its operation from the 21st of January, 1989.  Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares.
  • 3.  The BCCI, the Government of Bangladesh took over 100 percent ownership of BASIC on 4th June 1992.  Thus there is state-owned. However, the Bank is not nationalized; it operates like a private bank as before.
  • 4. No. Directors Name Designation Year 1. Mr. Sheikh Abdul Hye Bacchu Chairman 2009 -13 2. Mr. Fakhrul Islam Director 2009 -13 3. Mr. Shubhashish Bose Director 2009 -13 4. Mr. Shyam Sunder Sikder Director 2009 -13 5. Ms. Neelufar Ahmed Director 2009 -13 6. Ms. Quamrun Haher Ahmed Director 2009 -13 7. Mr. Akm Rezaur Rahman Director 2009 -13 8. Mr. Md. Anwarul Islam, FCMA Director 2009 -13 9. Mr. AKM Kamrul Islam, FCA Director 2009 -13 10 Mr. Anis Ahamad Director 2009 -13 11 Mr. Kazi Faqurul Islam Managing Director 2009 -13
  • 5. No. Directors Name Designation Year 1. Mr. Alauddin A. Majid Chairman Present 2. Mr. Kazi Shfiqul Azam Director Present 3. Begum Parag Director Present 4. Mr. Hasan Mahmood, FCA Director Present 5. Begum Raihana Aneesa Yusuf Ali Director Present 6 Mr. Md. Mamun Al Rashid Director Present 7. Mr. Khondoker Md. Iqbal Managing Director Present
  • 6.  Basic Bank as a state sector bank was doing satisfactorily well. Within a couple of years the bank is steeped in scandal. Involving the misappropriation of 45 billion tk. Worse still the government is not bothered about trying the accused persons. Basic Bank chairman Sheikh Abdul Hye Bacchu has quit amid growing allegations that he misappropriated funds by approving shady loans of several thousands crore takas. The default loans of BASIC Bank soared to Tk 2,557 crore last March from Tk 1,417 crore in February. Bangladesh Bank (BB) has appointed an observer to the Basic bank.
  • 7.  “BB in July signed a memorandum of understanding with BASIC Bank imposing 15 conditions on the state-owned bank to improve its financial state and restore credit discipline. An observer would be appointed to the bank and its top management restructured, if it failed to fulfill the conditions, the MoU(Memorandum of Understanding) stated”.  Bangladesh Bank detected anomalies worth more than Tk 4,500 crore and urged the finance ministry to dissolve the BASIC Bank board of directors, a couple of months ago.  Muhith, while talking to reporters Saturday at the secretariat, acknowledged that Hai, who was appointed chairman in 2009, was rewarded reappointment in 2012.
  • 8.  “The finance ministry had been dillydallying on taking a firm decision on the loan scam in the BASIC Bank.”  “The ACC filed 56 cases over the loan irregularities of the bank, but the bank's former Chairman Abdul Hye Bachchu was not charged in any of the cases.”  “The Chairman of Anti Corruption Bureau tried to clear himself of responsibility, saying that the matter was being looked into and the persons would be arrested once the charges were made.”
  • 9.  More than three organization names were come out after investigation of the reporter of Jamuna TV, but we showed only three organizations’ scam scenario in below:  1. M/S SPN Enterprise  2. A. B Trade Link  3. B Alam shipping
  • 10.  The owner of M/S SPN Enterprise withdrawn 55 crore taka of their loan money on the date of 9th October 2012 by submitting fake Company information as well as residence address.
  • 11.  The owner of A.B Trade link Mr. ABM Russell also withdrawn 45 crore taka of their loan by submitting fake information as well as the mortgage documents. The Company name does not exist in that place which was mentioned in their documents.
  • 12.  B Alam shipping line who withdrawn 13 crore taka, but the case was showed somewhat unnatural to us because they applied for the loan on 20 May 2013 within the next 2 days they had withdrawn 10 crore cash, where the Chairman of the board of Basic Bank went to abroad. Without the Chairman permission Bank has no authority to allow withdrawing more than 1 crore.
  • 13.  The loan receiver had transferred money to the chairman account as well as to panna’s business account of BD Computers. Panna is the younger brother of Chairman of Basic Bank.
  • 14. Date Loaners Company’s Name Times Amount of Money 10/5/2011 BD Pipes 1 4 Million tk 12 & 16/8/12 Jamuna agro Chemical 2 4 million four hundred thousand tk 25/7/12 Jamuna agro Chemical 10 million tk 10 & 30/4/12 Sonar Bangla Natural 2 17 million five hundred thousand
  • 15.  In the year of 2012 the Bank Chairman got eleven million taka from nameless company Brothers Enterprise for his Bagerhat abdul hey school which is situated in Bagerhat zilla. Capital Banani Company had taken 30 million taka from SFG shipping company. Capital Banani is considered as Chairman benefited Company. SFG Company had also sent money of 30 million tk to Best Holding Company, this company owner is Panna.
  • 16. Profit and Loss Account 2010 2011 2012 2013 2014 Interest Income 4337.04 7099 11020.88 14808.95 12,070.32 Interest on deposit and borrowings 3033.56 4911.66 8544.6 -13108 -13,466.23 Net interest income 1303.48 2187.34 2476.27 17010.04 -1,395.91 Commission, exchange and brokerage 642.57 785.34 693.13 737.2 658.52 Other operating income 476.67 189.23 129.09 119.73 125.61 Total operating income 3074.25 3913.55 4857.67 4230.79 1647.33 Salaries, Allowances etc 877.12 993.57 1160.05 1767.83 1,855.36 Depreciation and other non-cash expenses 67.56 79.68 109.4 152.69 181.71 Other operating expenses 236.37 270.01 615.82 349.02 240.96 Total operating expenses 1357.2 1565.03 2247.58 2760.59 2771.71 Profit before provision 1717.05 2348.52 2610.09 1470.2 -1,124.38 Provision for loan & Advances 326.27 404.34 1561.18 1338.52 - Profit before tax 1325.17 1999.99 1075.88 118.49 -1,115.24 Provision for tax 723.27 1038.97 1079.19 732.12 45.34 Net income 660.93 976.11 27.89 -531.53 -1,100.16 Earning per share (Taka) 33.64 41.4 0.95 -18.04 -37.33 Comparative Profit & Loss Account (Million Taka) (In Percent)
  • 17.  Bank chairman has no legal right to approve those loans which are higher than 1 Corer taka.  Bank purchased a land of 80 crore taka which was dereliction by the Government.  The land price was higher than the market price of 20 crore tk.  The Bank had faced huge loss in the year of 2013 & 14 for the scam.
  • 18.  Basic bank had paid 45 lac 31 thousand taka to the lawyer of Barrister Kamrujamman for operating their legal suit at the very beginning of that case which was unusual for other lawyer because normally lawyer gets at best 4 to 5 lac taka in total.  In a board meeting number of 316, 317, 318 and 319 were approved a higher loan. For instance the bank was approved 117 crore taka in a board meeting no. of 317 without acceptance of other board members.
  • 19.  Government will have to take legal action against the board chairman as well as other suspected board members.  Anti Corruption Bureau has to be more efficient against all these corruptions.  Government will have to take an action to recover of that money from those who were involved in these scams.
  • 20.  At the end we can say that the Bank would be survived but the more important thing is to recover the lost money. The Government should take legal stand against those suspicious directors, Chairman and loaner. Find out those loaners who submitted fake information to the bank and took millions of taka. If government takes proper action against all these scams then these type of scams will not happen again and again.
  • 21.  Newspaper – The Daily Star ◦ Web address: http://archive.thedailystar.net/beta2/tag/basic-bank/  Newspaper – New age bd ◦ Web address: http://newagebd.net/28233/scandal-hit- basic-chairman-quits/  Newspaper – The Independent bd ◦ Web address: http://www.theindependentbd.com/printversion/details /33441  Basic Bank Limited ◦ Official web address: http://www.basicbanklimited.com/financial_reports.php