Bangladesh tycoon says Singapore citizenship is a shield against central bank ‘intimidation’

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One of Bangladesh’s biggest businessmen has claimed an international investment pact and his status as a Singaporean citizen offer protection against a “campaign of intimidation” being waged by the country’s central banker against his conglomerate.

In a letter sent by lawyers on their behalf, Mohammed Saiful Alam, founder and chair of industrial conglomerate S Alam, and members of his family warned central bank governor Ahsan Mansur that they could seek to launch international arbitration proceedings against Bangladesh.

The letter from law firm Quinn Emanuel Urquhart & Sullivan follows Mansur’s allegations in an interview with the Financial Times that Saiful Alam and associates “siphoned off” at least Tk1.2tn ($10bn) from Bangladeshi banks under the regime of ousted former prime minister Sheikh Hasina.

The letter, a copy of which was seen by the FT, accused Mansur of making “inflammatory and unsubstantiated public comments” amounting to a “campaign of intimidation against a business group” that it said employs about 200,000 people directly and indirectly in Bangladesh.

The letter and Saiful Alam’s threat to pursue international arbitration mark his most serious pushback yet against Bangladesh’s interim government, led by Nobel Peace Prize laureate Muhammad Yunus, which took power after a student-led protest movement toppled Sheikh Hasina.

Mansur, a former IMF official who was appointed Bangladesh Bank governor in August, told the FT last month that Saiful Alam and his associates had siphoned money out of the banking system after taking over leading banks with the help of members of a powerful military intelligence agency.

Mansur alleged Saiful Alam, his associates and other groups used methods such as loans to the banks’ new shareholders and inflated import invoices to carry out the “biggest, highest robbing of banks by any international standards”.

The group is one of several business groups that Yunus’s government is targeting in its push to reclaim money it says was taken out of the banking system.

S Alam group, which has interests in sectors including food, construction, garments, and banking, rejected Mansur’s allegations last month, saying in a statement through Quinn Emanuel that there was “no truth” to them. 

The letter to Mansur — sent on behalf of Saiful Alam, his wife Farzana Parveen and his sons Ashraful Alam and Asadul Alam Mahir, who it said collectively owned and controlled a “major part” of S Alam group — described the allegations as “deliberately false and defamatory”.

“Your statements only further the aims of an apparent campaign designed to destroy the S Alam Group, and therefore also the Investors’ Investments,” it said. “Notably, you appear to be leading, if not orchestrating, that campaign.”

The letter said all four investors were Singaporean citizens. A spokesperson for Quinn Emanuel did not respond to a request for comment on when Alam’s family had acquired Singaporean citizenship and whether they remained Bangladeshi nationals. The government of Singapore did not respond to a request for comment.

Bangladesh and Singapore have a bilateral investment protection treaty dating from 2004.

The letter said Mansur’s statements as central bank governor were “attributable to the State of Bangladesh” under the pact. It said that as Singaporean citizens, the investors also enjoyed “the rights and protections” granted by a 1980 Bangladeshi law on foreign private investment.

The investors’ letter said they would “take all necessary measures to protect their rights, including but not limited to” requesting arbitration by the International Centre for Settlement of Investment Disputes.

Mansur told the FT that the claims he made in the interview were “fully substantiated” when asked for a response to the letter. “They are still being documented because the range of corrupt activities are widespread across many banks and over many years,” he added. “The full documentation will take some time.”

The threat of arbitration is the latest of a slew of challenges facing Yunus’s interim government, which is contending with political unrest, cancellations of orders in the country’s crucial garment sector and hostility in India to what many in New Delhi see as a US-backed regime change. 

The letter said the investors would prefer to avoid costly and protracted litigation and remained committed to resolving any differences “amicably and in accordance with law”.

But it warned the central bank governor that if he continued to “encroach on their rights” making “false statements” they and S Alam group would “have no choice but to take legal action” against him individually for the “damage you have inflicted”.

Additional reporting by Owen Walker in Singapore