Bfiu Lacks Proper Financial Oversight
Stunning loan scam at Uttara Finance raises many questions
The huge loan scam at Uttara Finance and Investment Ltd (UFIL) involving around Tk 6,000 crore has raised question how it all happened when Bangladesh Bank (BB) claims it has a very strong Financial Intelligence (BFIU) regularly performing the financial transaction oversight in banks and non-bank financial institutions.
The loan scam at Uttara Finance and Investment Ltd is the latest case of incredible money laundering in the financial sector by the company directors and officials using the cover of Uttara Group's business subsidiaries.
Concerned BB officials told The Daily Observer on Tuesday that UFIL has replied the central bank show cause in a 120 page letter but in another letter openly apologized for the irregularities. "No explanation is enough," the company Managing Director SM Shamsul Arefin told BB in an open apology.
The official source said BB is scrutinizing the entire matter and considering remedial measures but what is quite stunning is that despite the open confession of the theft, BB is not clear how to handle the theft.
The core issue is how to recover the depositors fund looted by company directors and business partners under the cover of business financing. One could legitimately ask what the BFIU or such other oversight bodies were doing when the offenders were removing the money in phases.
UFIL Managing Director SM Shamsul Arefin in the letter to BB on January 5 said no explanation can justify the irregularities. "We are offering you an apology that such mistakes will not happen in the future," the letter read in reply to an earlier letter from BB on December 1 said demanding an explanation.
Uttara Motors, a giant automobile distribution company of the country dominate the 25 year-old UFIL company. A three-member BB inspection team unearthed the multiple loan irregularities while auditing its loan portfolios covering till 2019.
The loan portfolio statement showed Uttara Group managing director withdrew Tk 335 crore from the company without any board approval concealing information from other directors to meet personal needs such as use of additional floor space without the BB permission.
Total anomalies amounted to about Tk 6,000 crore, according to the inspection report. "No apology is acceptable in this case. The BB is now examining their reply," said Md. Serajul Islam, spokesperson of the central bank.
He said the central bank is still carrying out investigation. Punitive measures will be taken if involvement of any UFIL official or board member in the scam is found.
Meanwhile, share price of Uttara Finance in the stock market plummeted by about 28.2 per cent over the past two years. Its trading closed at Tk 49.7 early this week down 1.78 per cent from the previous trading session.
Meanwhile, default loans at 33 NBFIs soared 15 per cent from the previous quarter to Tk 10,244.7 crore between July and September mainly due to big theft at UFIL despite the loan moratorium offered to all NBFIs. Its loans stood at Tk 3,440.5crore at the end of September.