Bangladesh central banker accuses tycoons of ‘robbing banks’ of $17bn with spy agency help

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Bangladesh’s new central bank chief has accused tycoons linked to the toppled regime of Sheikh Hasina of working with members of the country’s powerful military intelligence agency to siphon $17bn out of the banking sector during her rule.

In an interview with the Financial Times, Ahsan Mansur — who was appointed Bangladesh Bank governor after Sheikh Hasina fled the country in June — said the Directorate General of Forces Intelligence had helped force takeovers of leading banks.

Mansur said an estimated Tk2tn ($16.7bn) had been spirited out of Bangladesh after the bank takeovers, using methods such as loans made to their new shareholders and inflated import invoices.

“This is the biggest, highest robbing of banks by any international standards,” he said. “It didn’t happen on that scale anywhere, and it was state-sponsored and it couldn’t have happened without intelligence people putting guns [to former bank CEOs’] heads.” 

The governor said Mohammed Saiful Alam, founder and chair of industrial conglomerate S Alam, and his associates had “siphoned off” at least $10bn “as a minimum” from the banking system after taking control of banks with the help of the DGFI. “Every day they were granting loans to themselves,” he said.

In a statement issued by law firm Quinn Emanuel Urquhart & Sullivan on behalf of Saiful Alam, the S Alam Group said there was “no truth” to Mansur’s allegations.

“The co-ordinated campaign of the interim government against the S Alam Group and several other leading businesses in Bangladesh has failed to respect even basic principles of due process,” it said.

“It has already undermined investor confidence and contributed to the deterioration of law and order,” the statement said. “Given the Group’s record and contributions, we find the accusations by the governor . . . surprising and unjustified.”

The Inter Services Public Relations Directorate, which handles media inquiries for Bangladesh’s armed forces, did not respond to a request for comment and the DGFI could not be reached for comment.

Sheikh Hasina was in power for a total of two decades in Bangladesh, a country of 170mn people and the world’s second-largest garments exporter, but her rule was marred by allegations of vote rigging, the jailing and torture of opponents, and widespread corruption. The former prime minister fled to India in August, and her current whereabouts are unknown.

The interim government headed by Nobel laureate Muhammad Yunus that took power after her flight has repeatedly vowed to recover funds it claims were misappropriated by members of the regime and their associates.

Mansur, a former IMF official who told the FT last month that he had sought the help of the UK to probe the overseas wealth of allies of Sheikh Hasina, said board members of leading banks had been targeted under her rule.

The board members were “hijacked from their houses” by intelligence officials, taken to other locations such as hotels, and told “at gunpoint” to sell all their shares in the banks to “to Mr S Alam” and to resign their directorships. “At one bank after another they did it,” he said. 

One former bank CEO told the FT he had been forced to resign the position as part of a forcible takeover. Mohammad Abdul Mannan, formerly CEO of Islami Bank Bangladesh, one of the country’s largest lenders, said he came under pressure from “people associated with the then-government” from 2013.

This included pressure to recruit board members suggested by the prime minister’s office and a search by “people related to government agencies” of a hotel room used by one of the bank’s foreign directors.

Mannan said that in January 2017 he was diverted on his way to a board meeting and taken to see a senior defence official, then kept for a full working day to force him to resign.

“They prepared bank letters on fake stationery,” said Mannan, who was appointed chair of First Security Islami Bank by the central bank in September. “I had to sign a resignation letter.” 

S Alam diversified into banking over the past decade. The group’s website says it has “significant investment” in seven banks, including Islami Bank Bangladesh and First Security Islami Bank.

Mansur said Bangladesh aimed to recover stolen funds after completing an audit of about a dozen mostly bankrupt banks taken over during Hasina’s time in government. “We want to use that audit as evidence in the court of law internationally and domestically,” the governor said. 

Bangladesh’s interim government moved to block sales of shares in the banks after the Sheikh Hasina regime collapsed. Mansur said authorities now planned to sell stakes in the banks to “good quality national or international strategic investors” in order to recapitalise them. The central bank also planned to set up an asset management firm to manage or dispose of the banks’ distressed assets.

He said Bangladesh would also seek to recover money taken out of the country by hiring international law firms to try to attach assets held by the banks’ shareholders in Dubai, Singapore, the UK or elsewhere.