Controversial S Alam Group has acquired a staggering Tk聽2.25 lakh crore from 10 banks and a non-bank financial institution, pushing the country鈥檚 banking sector and economy into a severe crisis.
About 44 per cent or Tk聽97,486 crore of the loans was taken using shell companies and anonymously while Tk 92,676 crore was taken in the business group鈥檚 name and Tk聽34,866 crore indirectly, according to the Bangladesh Financial Intelligence Unit data submitted to the Anti-Corruption Commission.
At a press conference on August 28, 2024, Bangladesh Bank governor Ahsan H Mansur termed the S Alam scandal 鈥榯he largest bank heist in world history鈥�, accusing the business group of using state mechanisms to acquire over Tk 2 lakh crore ($16.6 billion).
The Bangladesh Financial Intelligence Unit has found preliminary evidence that a significant portion of these funds has been laundered.
A joint investigation team led by the ACC has already been formed to probe the S Alam Group鈥檚 alleged money laundering. Criminal Investigation Department of the Bangladesh Police and the National Board of Revenue are also in the team.
Such a massive withdrawal of funds most of which was allegedly laundered has sent exchange rates soaring, with the dollar selling at now at Tk聽122, foreign exchange reserves dwindling to $20 billion and commodity prices skyrocketing.
S Alam Group chairman Saiful Alam Masud was a close associate of deposed prime minister Sheikh Hasina who fled to India amid a student-led mass uprising on August 5, 2024.
Saiful and his family acquired Singaporean citizenship in 2021, renouncing Bangladeshi nationality in 2020.
S Alam withdrew from Islami Bank Bangladesh Tk聽1.05 lakh crore, First Security Islami Bank Tk聽45,636 crore, Social Islami Bank Tk 12,876 crore, Union Bank Tk 23,526 crore, Global Islami Bank Tk 13,250 crore, Bangladesh Commerce Bank Tk 995 crore, Al-Arafah Islami Bank Tk 377 crore, National Bank Tk聽2,346 crore, Exim Bank Tk聽6,346 crore and state-run Janata Bank Tk聽12,332 crore and from NBFI Aviva Finance Tk聽1,858 crore.
The loans from Islami Bank, constituting 70 per cent of the business group鈥檚 total loans, were secured against collateral worth less than Tk 6,000 crore.
The loans have already begun to be classified as defaulted as the business group was not repaying the instalments. The group defaulted on Tk 11,734 crore with Janata Bank and Union Bank as of September 2024.
The amount of the business group鈥檚 total loans will continue rising as loan interests will be added to the total loans due to non-payments.
Due to such massive fund withdrawals and irregularities, these institutions except Al-Arafah Islami Bank have found them in a serious crisis and failed to pay back depositors鈥� money. Islami Bank is now trying to turn around after the disaster.
The business group had controlled the banks except Janata Bank and Exim Bank before the fall of the Awami League-led government.
BB officials said that S Alam鈥檚 loan spree had escalated after the 2018 national elections, leveraging political connections and bypassing banking regulations.
The past Awami League regime allegedly had facilitated S Alam鈥檚 control of multiple banks under state patronage.
S Alam Group chairman Saiful Alam Masud has now initiated a legal effort as a Singaporean citizen to recover losses he claims were caused by the interim government freezing his assets and harming his investments, The Financial Times reported on December 24.
Saiful and his family currently reside abroad and they could not be contacted for comment regarding the fund withdrawal and money laundering allegations. The group鈥檚 executive director, Subrata Kumar Bhowmik, could not be reached over phone.
Moinul Islam, a former economics professor at the Chittagong University, told 抖阴精品 that the loans in question were political in nature and those were approved with the consent of the ousted prime minister, Sheikh Hasina.
鈥業t is inconceivable that a single business group could control seven banks and withdraw such a massive amount of loans without her knowledge,鈥� he said, adding that this level of corruption under government patronage was unprecedented globally.
He noted that sales of the business group鈥檚 all collateral and assets would recover only a fraction of the loans.
Moinul urged the government to accept the fact that the bulk of the loans could not be recovered and to frame economic policies to address the banking crisis, keeping this reality in mind.
He also emphasised the need for identifying the ultimate beneficiaries of these loans, even if they include members of the Sheikh Hasina鈥檚 family.
Mustafa K Mujeri, former chief economist of the Bangladesh Bank, told 抖阴精品 that a single business group securing such a massive amount of loans against minimal collateral was a blatant irregularity, amounting to looting from banks.
He held the former board members, management officials of the banks, and the Bangladesh Bank as the regulator, accountable for these large-scale scams.
Identifying and prosecuting those who were responsible are essential to prevent corruption in future, he said.
Mujeri suggested that the banks first negotiate with the business group to recover the loans. If negotiations fail, legal actions, including selling the group鈥檚 other properties, should follow, he said.
He also recommended that the government and banks pursue international arbitration to recover the business group鈥檚 overseas assets.
Bangladesh Bank executive director Husne Ara Shikha, also the spokesperson for the central bank, told 抖阴精品 that the banks, which were previously under S Alam鈥檚 control, were now free from the business group鈥檚 influence.
Investigations into his loan irregularities and alleged money laundering are ongoing, she added.
The Bangladesh Bank data showed that the amount of non-performing loans in the country鈥� banking sector shot up by more than Tk 1 lakh crore to Tk聽2,84,977 crore in September 2024 from Tk 1,82,295 crore at the end of March.
About 17 per cent of total bank loans of Tk聽16.82 lakh crore was classified as non-performing, the highest in South Asia.