Uttara Finance officials yet to face the music for Tk 5,100cr scam

Uttara Finance Ltd is yet to take any major steps against the officials allegedly involved in the Tk 5,100 crore scam unearthed by the Bangladesh Bank although four months have passed since the central bank directed it to bring the culprits to the book.

The BB appointed KPMG in 2020 to audit the non-bank financial institution. The audit led to the finding of irregularities committed by a board member and some officials of Uttara Finance.

It prompted the BB to remove Uttara Finance Managing Director SM Shamsul Arefin in June last year and dissolve the board in December. But no other officials who were allegedly involved in the scam have had faced any action yet.

Md Mezbaul Haque, the spokesperson of the BB, told The Daily Star that the central bank had ordered Uttara Finance to take action against the officials who were responsible for the scam.

"A new board has been appointed and the board is taking steps too."

Contacted, Mohammad Mohibur Rahaman, company secretary of Uttara Finance, said the NBFI is now digging deeper to see who were involved in the irregularities and to what extent so that steps could be taken properly.

"All of the officials who were involved will face punishment in proportionate to their involvement."

The irregularities at the NBFI were perpetrated during the disbursement of loans and mobilisation of deposits. It concealed the actual amount of term deposits mobilised from clients.

Term deposits totalled Tk 1,877 crore as of December 2019, according to the financial statements. But a probe report of the BB found that the actual amount was Tk 2,603 crore.

The undisclosed amount of the term deposits to the tune of Tk 726 crore was diverted to other sectors as a part of its effort to help scamsters plunder the money, it said.

The lender also employed the same tactic in the calculation of loans disbursed.

For instance, the total amount of loans provided by the NBFI was Tk 1,877 crore till December 2019 as per its balance sheet. But the BB found the actual amount to be Tk 3,802 crore.

The company is yet to publish its financial reports for 2020 and 2021. The quarterly report was published up to the third quarter of 2020.

Its net profit dropped 81 per cent year-on-year to Tk 21 crore in the January to September period of 2020. It was Tk 109 crore during the identical nine-month period in the previous year.

Among the top officials allegedly involved with the embezzlement, Uttara Finance's Deputy Managing Director Zakir Hossain's name came up several times in the probe report along with Shamsul Arefin's name.

The KPMG report said Uttara Finance invested in the shares of JMI Hospital, Beka Garments and Rangpur Distilleries where the NBFI made extra payments of Tk 2.29 crore.

"This may be an indication that money laundering has taken place," the auditor said, adding that Hossain, Arefin and some other officials were involved in the case.

Contacted, Hossain told The Daily Star: "Which scam are you talking about? I was not involved in any scam. I only signed some vouchers."

"I am not involved in any scam, so Uttara Finance has not taken action against me yet."

"The new board has had to take some time initially to understand the situation at Uttara Finance," Mohammad Maksudur Rahman, chairman of the new board of Uttara Finance, told The Daily Star, when asked about the delay.

He said 24 top officials have been identified for the scam.

"Three officials have already resigned. We are going to send suspension letters to nine officials on Sunday and five others will be suspended by the middle of May."

"The rest of the officials, including Hossain, will be suspended by June. None of the top officials responsible for the irregularities will be spared," Rahman said.

The new board has already changed its law firm and appointed Attorneys, a legal and management consultancy firm, to get proper guidance so that it can take action against the people responsible for the scam.

"A few officials were involved in the irregularities are now helping us recover the embezzled funds. So, they have not been punished yet," Rahman said, without disclosing their names.

"Who would have run the company had we removed them instantly?" he said. "We have appointed officials in some posts."

The new board has recouped funds to the tune of Tk 500 crore and is hopeful of getting back 95 per cent of the total funds embezzled.

"The new board is trying to ensure that deposits funds are safe," said Rahman.

The chairman said the central bank has not approved the financial reports of Uttara Finance for 2019.

As a result, the NBFI is facing troubles. This is because until the financial reports for the year get the regulatory nod, the reports for 2020, 2021 and 2022 could not be prepared.

"We are not being able to hold annual general meetings. The stock has remained in the "Z" category in the stock market."

If a company fails to provide at least a 10 per cent dividend or hold AGM, its stock is downgraded to the "Z" category.

Uttara Finance shares closed at Tk 33.80 on the Dhaka Stock Exchange yesterday.