State-owned Janata Bank indulged in 31 counts of "serious financial irregularities" from 2015 to 2020 involving Tk 13,110.8 crore, which is 22.85 percent of the lender's liabilities, found a recent audit.

The infamous AnonTex Group, which faces allegations of forgery and money laundering, accounts for 44.3 percent of the sum, found the audit by the Comptroller and Auditor General of Bangladesh conducted over a two-and-a-half-month period.

The audit found serious weaknesses in the bank's internal control system and gross non-compliance with rules and regulations, according to the audit report, which was submitted to parliament last week.

The irregularities include non-compliance with the terms for loan sanctioning and collection, circulars from the Bangladesh Bank's Banking Regulation and Policy Department (BRPD), the Bank Company Act 1991 and the lender's own credit risk management and loan sanctioning policies.

Neither did it adhere to the guidelines for Foreign Exchange Transactions nor to the terms agreed for performance improvement in the memorandum of understanding (MOU) signed with the BB.

The bank lent huge amounts without adequate collateral, increased the large loan amounts beyond the permissible limit and waived interest by violating rules.

"The audit report reflects the need for the authorities to focus on strengthening the internal control system of the audited branches, complying with the prevailing rules and regulations in collection and expenditure of government funds," it said.

It called on the bank management to ensure the same types of irregularities are not repeated and its recommendations are implemented.

Foremost amongst the irregularities is the rescheduling of AnonTex Group's loans amounting to Tk 5,243.6 crore by violating the terms of the MoU the bank had struck with the central bank as well the BRPD circular by the bank's Janata Bhaban corporate branch in Motijheel.

For rescheduling the amount, the bank took just a 1 percent down payment from AnonTex instead of the minimum 2 percent.

"It was not right to reschedule loans that have become classified due to forgery and money laundering," said the audit report.

The branch also extended generous letter of credit (LC) facilities to six subsidiaries of AnonTex Group from 2015 to 2020 despite the client's failure to clear their previous dues. Not just that, it even honoured AnonTex's LCs by creating demand loans. Those loans have defaulted too. And yet, its six subsidiaries got further LC benefits.

The amount outstanding is Tk 558.9 crore.

In its response, the bank said that it cleared AnonTex's LCs with its own funds to preserve the bank's reputation among banks abroad. AnonTex did not receive any new LC facility after February 2018, the bank said.

Then its Sadharan Bima Bhaban corporate branch in Chattogram extended credit beyond the permissible amount to S Alam Refined Sugar Industries, a subsidiary of the controversial S Alam Group, without the head office's approval, which violates rules. The outstanding amount is Tk 1,248.3 crore.

The audit also unearthed irregularities involving Tk 1,070.7 crore by the branch pertaining to another S Alam subsidiary. The branch adjusted the liabilities of Global Trading Limited with amounts from its sister concerns S Alam Cold Roll Steels and S Alam Vegetable Oil Mills Ltd, in a breach of central bank rules. It also provided credit to Global Trading beyond the permissible limit.

The Kemal Attaturk branch extended back-to-back LC facilities against fake export bills. The exports never happened, so demand loans were created. Those loans had defaulted and the bank rescheduled the loans, which stood at Tk 267.5 crore, without taking any collateral.

The bank's Motijheel branch extended fresh LCs to BR Spinning Mills from January 2015 to June 2020 despite the company's failure to export goods multiple times. The amounts were never cleared, leaving Janata owing Tk 806.4 crore from the textile manufacturer.

The bank also owes Tk 168.2 crore from Doreen Garments, thanks to its local office extending huge amounts of back-to-back LCs against exports that were never shipped.

The local office also extended a range of credit to Al-Madina Tannery without proper due diligence. The amounts had defaulted but the branch showed them as regular without taking the compromise amount, which violates the BPRD circular. Janata now owes Tk 102.1 crore from the tannery.

The bank has dues of Tk 111.6 crore, thanks to its Khulna corporate branch extending loans beyond the limit five times in seven years, rescheduling those and extending the moratorium facility multiple times.

The branch also rescheduled loans of three concerns of Lockpur Group without taking adequate collateral, which violates BB rules. The amount outstanding is Tk 120.4 crore.