Swindler’s list: How a man enlisted his own bank, shell firms to rob money
The scheme he laid out is simple, crude and yet outrageous to swindle his own bank and general investors.
The model works like this: You have to have a company listed with the stock market and a bank. Now, you set up a shell company and take loans from your own bank. Then you transfer the money to the publicly-listed company and declare a hefty dividend.
This way you take out the bank money in the form of a dividend.
Now, you set up another shell company and take another loan. With this money you adjust the loan of the previous shell company. And then you keep on setting up fake companies and keep shifting the loan burden from one company to another.
You have to keep a few people from the regulators blind from your misdoings. For example, the central bank, the auditors, and so on.
Once you have made money, you fly to the USA.
This brazen scheme was dug out recently by the Bangladesh Bank investigators. And guess who the man is. Again, it is SM Amzad Hossain, former chairman and current board director of South-Bangla Agriculture and Commerce (SBAC) Bank.
This swindler, who fled the country, took out a loan amounting to Tk3 crore from the SBAC Bank in the name of a shell company Ador Enterprise in 2016.
But he used Tk2 crore of the loan in paying a cash dividend to the investors of his company named Khulna Printing & Packaging Limited (KPPL), listed on the Dhaka Stock Exchange (DSE) – a losing concern of Lockpur Group owned by Amzad.
KPPL announced a 10% cash dividend in 2015, which was disbursed in 2016.
Later, the loan was adjusted through another loan by forming another shell company named Rahi Mahi Corporation. Despite receiving no payment, the bank did not mark the loan account as a defaulter, rather extended the loan ceiling from time to time.
Moreover, info on those loans were not reported to the CIB (Credit Information Bureau).
This is how the bank money was skimmed off in the form of loans by setting up one after another fake company.
The entire bank, including board members who greenlighted the loans, worked hand in glove with him to plunder bank money. The loan proposals were supposed to go through scrutiny on multiple tiers, but that did not happen as loans were approved without verifying the existence of the companies and without collateral.
All bank directors who approved those loans still sit in the bank board and the bank employees who helped the swindler skim off the money are being rewarded with promotions.
How swindling took place
On 16 February 2016, Johirul Islam, owner of Ador Enterprise, opened a bank account with Motijheel branch of the SBAC Bank and on the same day he submitted a loan application for Tk3.5 crore to it. The branch did a hurried inspection of the applicant's office the same day and sent the loan proposal to the head office.
The executive committee of the board approved a loan of Tk3 crore the next day on 17 February. The loan was secured by 25 lakh shares of Sonar Bangla Insurance, whose market value was Tk3.62 crore at that time. The shares given as collateral were owned by Captain Moazzam Hossain, the then board director of SBAC Bank and his son Ehsan E Moazzam.
The central bank's investigation team found that Johirul Islam is the employee of Moazzam Hossain. Ador Enterprise's office had not been investigated before the loan proposal was sent to the head office; rather the respective bank branch employee went to the office of E-Securities, a company owned by Moazzam, carrying an account opening form to Johirul on the investigation day.
On the day of loan approval, Tk2 crore was deposited in the account of Khulna Printing & Packaging Limited (KPPL) and Tk1 crore in the account of Fareast Social Foundation.
Amzad is the chairman of Fareast Social Foundation and his wife Begum Sufia Amjad, Moazzam and his wife Farjana Moazzam are directors. Begum Sufia Amjad is currently board director of SBAC Bank.
The amount transferred to Ador Enterprise's account proved that the ultimate beneficiaries of the loan were Amzad and Moazzam.
Amzad influenced both the money market and the stock market by disbursing dividends by taking out loans in the name of fake companies, said the inquiry report.
During the investigation, the respective branch officials informed the inquiry committee in writing that Amzad and Moazzam created another fake company named Rahi-Mahi Corporation. Later they took a loan in the name of this new company to adjust the previous loan.
Initially, Tk3 crore was approved in the name of Rahi-Mahi corporation in June 2017 against Sonar Bangla shares, which was given as collateral. The same collateral was given for Ador Enterprise.
Later, the loan ceiling of Rahi-Mahi Corporation was enhanced to Tk12 crore in November 2018. Though there was no payment against that loan, the board approved the extended ceiling instead of marking it as default.
Another loan of Tk6.40 crore was given by Bijaynagar branch against Al-Amin Corporation owned by Masudur Rahman without any approval in 2019. The loan was disbursed at the verbal instruction of the then managing director Golam Faruque. Then, credit division officials informed the investigation team in writing about it.
Later, the loan was withdrawn by an employee of Lockpur Group and deposited in the bank account of different companies of the same business group, which proved that Amzad is the ultimate beneficiary of the loan.
The loan was taken out in the name of Al-Amin Corporation, but money was withdrawn without informing the company owner.
On 5 August, 2019, Tk1.35 crore was withdrawn from Al-Amin Corporation's account at the bank's principal branch by an employee of Lockpur Group with the help of branch manager Nurul Azim. That transaction happened after banking hours and the real account holder was unaware of it. Nurul is still manager of the principal branch of the bank.
Some other officials, who were also named in the investigation report as associates of such misappropriation of bank money, have still remained employed at the bank and got promoted too.
How entire board, management worked hand in glove
Two directors plundered money from the bank by opening accounts one after another in the name of fake companies, but all other directors did not resist and instead approved those loans at the board meetings.
For instance, Ador Enterprise's loan was approved at the meeting of the executive committee of the board when Abdul Kadir Molla was the chairman of the committee. He became chairman of the bank after Amzad resigned last year. The other six members of that executive committee are also current board members.
Besides, the board approved Rahi-Mahi Corporation's loan when Amzad was the chairman.
Al-Amin Corporation, against which a loan of Tk6.40 crore was disbursed without approval from the bank in 2019, is owned by Amzad.
The money was given on the verbal instruction of then managing director Golam Faruque and other senior officers carried out his instruction. Later, senior officials admitted to the inquiry committee in writing that that loan amount was disbursed as per the directive of the top executive.
Chairman's version
When asked if he could deny the responsibility of approving a loan against a fake company named Ador Enterprise, Kadir Molla said when the loan was approved it was fully collateralised.
However, the central bank investigation found that the collateral was given by Moazzam and his son, but the loan was approved in the name of another borrower.
In this matter, Molla said "as far as I can remember, at that time there was no bank regulation."
"We do not deny our responsibility, but usually we give a loan to a borrower if the loan is fully collateralised," he added.
"Usually, when giving a loan we see if there is adequate collateral. Whether the borrower is fake or genuine is a secondary matter. The loan of Ador Enterprise was adjusted by another loan taken in the name of another fake company. The board came to know about the fake borrowers when loans were not recovered."
When asked why loan irregularities of 2016 were revealed in 2021, he said the branch manager who helped them plunder the money did not supply documents to the central bank. That is why the loan had not been reported to the CIB for four years.
