The chief in 2011 shaped Bangladesh Infrastructure Finance Fund Dinky (BIFFL), a clear non-bank financial institution, to bolster financing in public-non-public partnership (PPP) initiatives.
On the other hand, the company wasted its funds by investing in Mounted Deposit Receipts (FDRs) with outmoded banks and financial establishments. It also offered loans to some firms unrelated to PPPs which went defaulted causing lack of public money of merely about Tk1,800 crore.
The finance ministry shaped BIFFL, the last be conscious non-bank financial institution in the case of paid-up capital, by allocating Tk1,600 crore. Of this, Tk650 crore used to be invested in fastened deposits with 13 poorly performing banks and NBFIs, which will doubtless be now unable to repay the funds.
The company incurred a lack of merely about Tk300 crore for asserting provision and hobby suspense towards the unhurried investment, in step with BIFFL interior story.
Moreover, loans of Tk500 crore lent to 12 firms including 9 auto brick initiatives agree with turn into defaulted.
It incurred extra loss above Tk300 crore for asserting provision and hobby suspense towards the classified loans, in step with the company commentary as of August 2024.
Furthermore, BIFFL violated finance ministry guidelines for investments. In accordance with a ministry spherical issued in 2015, executive, semi-executive, independent and semi-independent establishments can protect a maximum 20% of funds allocated under Annual Development Programme (ADP) and maximum 25% of their very occupy funds with non-public banks and financial establishments.
The spherical also named handiest 13 NBFIs as eligible to get deposits.
Going towards the guiding precept, BIFFL invested complete deposits with non-public banks and NBFIs in 2015-19 violating the rule of thumb. Moreover, it chosen all outmoded NBFIs beyond the prescribed somewhat truthful 13 NBFIs.
Enter Formanul
All the investments were made all over the length of Formanul Islam, then executive director and CEO of BIFFL who used to be forced to resign in July 2019 on the accusation of making unauthorised FDRs in violation of the ministry spherical.
Formanul took the investment choices on his occupy with out taking approval from the board all over his tenure in a joint signature of Nisarul Kabir Siddiqui, then senior main officer (Treasury) of BIFFL. Later, Nisarul used to be also eradicated on the same accusation.
Later, in 2020, the Anti-Corruption Commission (ACC), filed a case towards Formanul and Nisarul on charges of abuse of energy and breach of belief.
Asked about violating the chief spherical, Formanul acknowledged, “After my forced resignation on 28 July 2019, BIFFL lodged a criticism with the ACC, accusing me of 4 offences – one in all which alive to unauthorised FDRs in breach of the chief spherical.”
The ACC pushed aside all nonetheless the criticism associated to the FDRs, he added.
Formanul claimed that BIFFL is now now not a executive mission or yelp owned entity. “It is a company registered under the Firms Act, 1994, and licensed by Bangladesh Bank as an NBFI. It is a public restricted company speed by its board of directors.”
Therefore, it is now now not discipline to insurance policies acceptable to yelp-owned enterprises, he acknowledged.
He extra acknowledged BIFFL operates with its occupy capital unsuitable and does now now not engage in enforcing annual pattern initiatives. Moreover, it is now now not an independent body; rather, managing deposits and investments is segment of its routine operations, an a lot like other banks and NBFIs.
“If that spherical used to be acceptable to BIFFL, it will most likely perhaps have to were acceptable to other executive-owned banks and NBFIs who made quite lots of investments in those allegedly unsafe banks and NBFIs,” added Formanul.
When contacted, SM Anisuzzaman, the chief director and CEO of the company who joined after Formanul’s resignation, alternatively, acknowledged the spherical must prepare to BIFFL, as it is a entirely executive-owned organisation.
He acknowledged BIFFL’s capital is offered by the finance ministry and it differs from other yelp banks and NBFIs in that it does now now not salvage deposits from the public.
Concerning now now not taking investment approval from the board, Formanul claimed, “There used to be no FDR policy till I purchased acclaim for one in 2018. Till then, the CEO had the authority to create FDRs, and the board-authorized Treasury Manual of 2018 also accepted the CEO to make investments within the money market as well to FDRs.”
In inequity, Hasan Khaled Foisal, director of BIFFL, acknowledged any substantial investment choices must acquire board approval.
Meanwhile, following the toppling of Sheikh Hasina’s executive, Formanul, who served at BIFFL for over four years since 2015, filed a prison case in September towards several high-profile participants, including feeble finance secretary Abdur Rouf Talukder and Hasina’s non-public industry and investment adviser Salman F Rahman. Additionally named within the case are feeble NBR chairman and BIFFL board member Abu Hena Rahmatul Muneem, along with 9 others.
In the case paperwork, Formanul claims he faced harassment and threats after refusing to approve loans for Salman. He alleges that Rouf compelled him for the loans in 2019, and after he declined, he used to be eradicated from his yelp.
The case has now reached court, with the Police Bureau of Investigation ordered to analyze the allegations.
How Formanul diverted deposit to outmoded banks, NBFIs
BIFFL had fastened deposits of Tk1,986 with 13 banks in 2014, of which 80% were with yelp banks. On the other hand, those FDRs were spread to 30 banks and NBFIs in 2015 soon after Formanul joined as the chief director and CEO, in step with TBS’ findings from annual story prognosis.
In 2017, complete deposits were diverted to 51 non-public banks and NBFIs, withdrawing from yelp banks violating the finance ministry’s regulations. Of the 51 banks and NBFIs, 13 were poorly performing and now Tk650 crore are stuck with them.
Abdur Rouf Talukder, who changed into chairman of BIFFL in 2018 whereas serving as finance secretary, raised concerns in 2019 after discovering the unhappy investments in outmoded NBFIs.
In conversations with top officials at BIFFL, The Enterprise Celebrated has realized that Rouf sought to elevate motion towards Formanul, finally pressuring him to resign.
An interior audit performed after the resignation of Formanul came across that deposits were invested in a joint signature of Nisarul Kabir Siddiqui, then senior main officer (Treasury) of BIFFL. Later, Nisarul used to be also eradicated.
When BIFFL unique management moved to get better deposits from the outmoded organisations, they came to know that those deposits were given in substitute of rate, acknowledged SM Anisuzzaman.
He acknowledged classified loans surged to above 15% from lower than 2% after Formanul resigned as all investments made all over his tenure changed into defaulted.
He also acknowledged loans of Tk500 crore given to 12 firms given by Formanul were defaulted causing extra lack of Tk800 crore including suspense hobby and provision maintained.
The central bank has also confirmed the authenticity of the claims regarding rate transactions associated to fastened deposit investments in BIFFL. In a letter to BIFFL dated 16 April 2023, the Bangladesh Bank acknowledged it realized from credible sources that some yelp-owned banks and NBFIs were investing in fastened deposits with out conducting truthful financial analyses or verifying the security of yelp funds.
In some cases, these investments were being influenced by participants, in step with the central bank.
In gentle of this, the central bank suggested BIFFL to habits thorough analyses of industrial health sooner than making fastened deposit investments in any NBFIs. It also urged the formation of a separate investment committee to supervise such choices.
When requested about the investments, Formanul explained, “FDRs were made within the latter segment of 2015 and 2016, some in 2017, all over a length when the country’s market used to be extremely over-liquid and banks were returning our FDRs. The company’s profitability used to be declining very a lot; due to the this truth, we allocated a miniature fragment of our FDR investments to NBFIs seeking elevated yields.”
How S Alam and PK Halder benefited from BIFFL’s fastened deposits
A first-rate fragment of Tk200 crore used to be invested in four inclined NBFIs all over Formanul’s tenure which will doubtless be linked to Saiful Alam Masud, chairman of the controversial enterprise neighborhood S Alam and his companion loan scammer PK Halder.
As an illustration, BIFFL invested Tk56 crore as fastened deposit in Folk’s Leasing and Financial Companies in 2017 when outmoded financial health of the company used to be already published by the Bangladesh Bank.
The central bank eradicated five directors of Folk’s Leasing in 2015 for their alleged involvement within the embezzlement of Tk358 crore and financial health of the NBFI used to be worsening since then.
In 2015, PK Halder’s company Anan Chemical took adjust of Folk’s Leasing.
BIFFL also invested Tk138 crore in one other three NBFIs in 2017 which will doubtless be linked with Halder and S Alam.
Of the quantity Tk71 crore used to be invested in World Leasing and Financial Companies, Tk52 crore in FAS Finance, and Tk16 crore in Reliance Finance which used to be renamed Aviva Finance owned by S Alam.
All those NBFIs are now unable to pay encourage money to BIFFL.
PK Halder took adjust of the four firms – World Leasing and Financial Companies, Folk’s Leasing and Financial Companies, FAS Finance, and Reliance Finance – by seeking their shares from the stock market all over 2015-16.
With handiest 10 years of banking experience, Halder used to be promoted to the publish of the managing director of S Alam’s Reliance Finance in 2009 which used to be the open of his loan scandal. In July 2015, he joined as the MD of S Alam’s one other bank NRB Global which used to be renamed Global Islami bank later.
In precisely a decade, Halder, who used to be arrested in India, faded the four firms to elevate Tk11,000 crore.
As a substitute of investing in executive bonds and bills, Formanul invested deposits in those unsafe financial establishments aligning with the scamster putting BIFFL in loss.
On the other hand, Formanul claimed that “those banks and NBFIs were now now not unsafe at that time. It is possible you’ll perhaps moreover merely please check their credit ranking, CRR standing, ticket of shares etc of that time.”
He also acknowledged, “Making FDRs in NBFIs is now now not illegal or an offence. No longer monitoring their activities nicely is a shortcoming of the Bangladesh Bank. Depositors ought to now now not be punished for the failings on the segment of the central bank and alleged corruption of NBFIs house owners.
“Furthermore, in 2018, we at BIFFL, were under mighty stress from the central bank to create FDRs with NBFIs because banks within the discount of-off their credit lines. The bank’s high-americaincluding the governor assured us that after the 2018 election, the market will turn into long-established, which failed to work.”
Tk110cr loan proposal for Beximco
Formanul filed a prison case now now not too lengthy ago towards several high-profile figures, including Salman F Rahman the establish he claimed that Salman secured Tk100 crore for his RMG conception from BIFFL with out any collateral, no topic within the origin inquiring for Tk40 crore.
This could perhaps now now not agree with took yelp with out the involvement of Rouf Talukder, the then management, and the board of directors, Formanul Islam concluded, including that an investigation is needed.
On the other hand, TBS came across that Formanul initiated the loan proposal of Tk110 crore towards RMG plant of Beximco in 2017. The letter signed by Formanul on 9 May possibly perhaps 2017 reveals that he sought no objection from Sustainable and Renewable Energy Development Authority (SREDA) for financing the mission.
He used to be the mission director of Energy Effectivity and Conservation Promotion Financing (EECPF)-BIFFL which is funded by Japan. Any finance under the mission requires no objection from SREDA.
When requested about the converse, Formanul acknowledged he couldn’t undergo in thoughts sending any ask to SREDA for NOC engaging an quantity of Tk110 crore.
“Previously I recall, there used to be a ask for Tk40 crore from Jica tender loan. Sending a ask to SREDA for NOC is a precondition to open mission appraisal, which is suitable for all such proposals. After receiving SREDA’s NOC we faded to habits due diligence on the mission. You’re going to seek that despite the indisputable truth that SREDA issued NOC, we did now not take into story financing of the mission due to the their detrimental CIB stories.”
Formanul’s lending to some firms does now now not scuttle with the mandate of the formation of BIFFL to facilitate PPP initiatives.
As an illustration, no topic being a specialised financial institution, BIFFL invested Tk25 crore in industrial paper towards a trading company Computer Source within the 365 days 2016 with out any collateral which changed into to default later. The unique management after Formanul’s resignation has written off the loans within the 365 days 2022 as it remained execrable continuously, in step with BIFFL annual story of 2023.
Formanul also lent Tk250 crore to 9 auto brick initiatives all over his tenure which also goes towards the company’s mandate. All loans changed into to default after Formanul resigned.
On the other hand, describing the mandate, BIFFL’s annual story for 2013 acknowledged that the predominant plot of the company is to offer predominantly lengthy-time-frame financing for PPP initiatives by issuance of bonds and debt instruments and equity offerings. BIFFL envisages attracting non-public investments from local and foreign merchants and to make investments in firms that are enforcing infrastructure initiatives in Bangladesh.
