The High Court (HC) has announced a ten-member board of directors, led by company and international law expert Barrister Kamal-Ul Alam, to restructure the People's Leasing and Financial Services Ltd (PLFSL) – that made the headlines due to its former director PK Halder's financial scam.
The court in its full verdict on People's Leasing restructuration also directed the central bank to pursue the government to inject money in the ailing PLFSL as the first option.
Instructing the formation of several committees and recruitment of necessary manpower to overhaul the institution, the court told the board that individuals with links to PK Halder or his associates involved in money laundering must not be appointed to those positions.
Naming the new board and mentioning the instructions, the court published the full written order on Monday night as the HC bench of Justice Mohammad Khurshid Alam Sarkar gave the brief verdict to restructure the PLFSL on 28 June.
To save the ailing financial institution, the HC also set some specific tasks for the board, the Bangladesh Bank (BB), the Bangladesh Securities and Exchange Commission (BSEC) and the Anti-Corruption Commission (ACC).
The board has former Secretary Anwarul Islam Sikder, retired Senior District and Sessions Judge Hasan Shaheed Ferdous, former Managing Director of Pubali Bank Abdul Halim Chowdhury, Brig Gen (retired) Kazi Taufiqul Islam, Noor-E-Khoda Abdul Mobin, Mowla Mohammad, depositors' representative Dr Nashid Kamal, North South University teacher Dr Nurul Kabir, former Managing Director of Ansar VDP Unnayan Bank Mohammad Jalaluddin.
Instructing the central bank to cooperate with the new board, the court said Bangladesh Bank Deputy General Manager Asaduzzaman has been removed from the PLFSL liquidator post. However, he will be assisting the board.
Contacted, Barrister Kamal-Ul Alam, the chairman of the new board, said, "With the cooperation of all concerned, it is still possible to bring the institution back to its position and return the money to the investors."
The company law expert said the PLFSL once was a reputed non-bank financial institution that went for liquidation owing to several reasons. "The main reason is the irregularities of the top brass, especially the loan scam of PK Halder who was the director of the PLFSL."
Barrister Kamal-Ul Alam said actions would be taken against those responsible for the ailing state of the institution.
After completing the court instructed appointments, he said the main task of the board would be taking appropriate measures to recover the default loans.
The HC in its order told the board chairman to hold a board meeting immediately, and to take steps to appoint the company secretary.
The court told the board members to verify the report prepared by the ACNABIN Chartered Accountants following the HC order in 2019 to wind up the company. The HC asked the board members to appoint another audit firm KPMG if the report does not reflect on the court instructions.
The board is also directed to make its own findings and observations about the role of the former People's Leasing top brass, and loan sanctions to defaulting borrowers.
Central bank asked to try pumping money in PLFSL
As the first option, the HC asked the central bank governor to pursue the finance ministry to pump in money in the PLFSL as a stimulus package.
If the central bank governor fails to get a positive response from the government, then the Bangladesh Bank would take the decisions regarding operation and viability of the company, including restructuring or merging it with other financial institutions.
The HC also directed the Bangladesh Securities and Exchange Commission (BSEC) chairman to display the news of revival of the PLFSL on the BSEC webpage. He has also been directed to regularly guide the new board aiming at making the PLFSL commercially operational.
But if the Bangladesh Bank decides to restructure or merge the People's Leasing, the BSEC has been asked to assist the restructuring or merging bids.
The Anti-Corruption Commission (ACC) chairman has been directed to deal with the criminal cases. The ACC chairman has been asked to extend all-out cooperation to the court-appointed board.
Borrowers get loan rescheduling facility
The court asked all the People's Leasing borrowers to contact the PLFSL head office for loan rescheduling with a down-payment within 30 days.
The HC said, "If they fail to start making payments, they shall be under an obligation to appear before the court in person in order to explain their position."
Starting the journey in 1997, the PLFSL faced a liquidation bid launched by the government in 2019 as it failed to return the money of the depositors. Subsequently, the HC appointed a liquidator to the People's Leasing following an appeal by the central bank.
The operations of People's Leasing were thrown into disarray after Proshanta Kumar Halder alias PK Halder, former managing director of NRB Global Bank and Reliance Finance Ltd, fled abroad after embezzling Tk3,500 crore in loans from several financial institutions, including People's Leasing.
Apart from PK Halder, 280 individuals and organisations owe the PLFSL a total of Tk1,655 crore.
On 20 June, depositors of the non-bank financial institution moved to the HC seeking restructuring of the company amid the liquidation bid. Then the court came up with the restructure order, and set 22 August for the next hearing.
The new board chairman, Barrister Kamal-Ul Alam, said they would update the court on the next hearing.