Ex-directors of People's Leasing move to repay loans amid pressure

Five directors of People's Leasing and Financial Services, who were removed from the board last year for taking loans of about Tk 400 crore from the company breaching rules, have now moved to pay back the loans to avoid arrests.

According to Bangladesh Bank rules, directors of banks and financial institutions or their family members cannot take loans from their own companies.

Panic gripped the directors, especially after the Anti-Corruption Commission arrested Khabir Uddin Miah, one of the five directors, a few days ago.

Pranab Kumar Bhattacharya, a spokesman of ACC, confirmed that two persons, including Miah, have been arrested on the basis of a case filed by the anti-corruption watchdog.

“Some of these directors have contacted us to settle their loans. One has already offered to pay back Tk 100 crore and we have sent the proposal to the central bank for its approval,” said Sami Huda, acting managing director of the financial institution.

Bangladesh Bank detected the irregularities in September 2014 and suggested the company remove the directors and file cases against them to recover the funds misappropriated between 2002 and 2014.

Though the accused were removed from the board, no cases were filed. Then chairman M Moazzam Hossain claimed he was not removed, he resigned himself.

The scams have put People's Leasing and Financial Services in a tight spot as it is struggling to maintain loan-loss provision and capital adequacy ratio, which the BB mentioned in its recently-released financial stability report.

The company is not getting adequate deposits even by offering higher returns -- close to 10 percent, which is above the average market rate.

Huda, however, said filing cases will not help them get back the money quickly. “We sent them legal notices two months ago,” he said.

According to the BB report, the former chairman and several other directors of the non-bank embezzled the funds using family members and people and representatives of companies in which they have interests.

Three of the directors are blamed for insider lending worth Tk 123 crore. They are: Arafin Shamsul Alamin, Humaira Alamin and Nargis Alamin. They took the loans for the companies, where they have ownership or interests.

Miah, another accused, had bought shares from the stockmarket in the name of his family members by taking loans worth more than Tk 60 crore from People's Leasing.  Later, as the prices of those shares declined sharply, Miah incurred huge losses.

Motiur Rahman, the other accused, took about Tk 50 crore loans for companies, where he has ownership or interests.

Hossain, the former chairman, took nearly Tk 124 crore for buying a piece of land for the company on Green Road in the city, according to the BB report and company officials. But People's Leasing is yet to get the land.

According to company officials, Hossain was one of the owners of the land. Paramount Properties, a real estate firm, where he was a director, also owns the land.

Hossain refuted the allegations. “I did not take loans from People's Leasing. Some directors took the money in their own names and fictitious names,” he told The Daily Star.

“I was acting as an attorney to help my company get back the money,” he said.

Hossain also claimed he had requested the BB to allow People's Leasing to register the land in its name. But the central bank did not give the permission, he said.

An official of the financial institutions department of the BB said: “We have done our job by detecting the irregularities. Now the issue is with the ACC and Bangladesh Financial Intelligence Unit.”