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Download PDF The Bangladesh Bank (BB) yesterday rejected an appeal of the dissolved board of directors of the Oriental Bank seeking withdrawal of the action taken on charge of failure to properly operate the bank.
The central bank also decided to review its monitoring system of all banks to unearth how the recent scam at the Oriental Bank happened despite close watch for years.
The BB board of directors at a meeting also rejected an appeal of CM Koyes Sami, ousted managing director of the Oriental Bank, who also requested to relieve him of the same charge.
Rezaul Karim, a director of the Oriental Bank, made the other appeal to the central bank on behalf of the Oriental board of directors.
The BB dissolved the Oriental Bank board of directors and its managing director in June this year due to worst financial situation in the bank. The central bank also appointed one of its executive directors at the Oriental Bank as an administrator and launched investigation into allegation of misappropriation of huge money by the owners enjoying management’s support.
The BB board members were informed at yesterday’s meeting about the findings of the investigation on financial irregularities in Oriental Bank, sources said.
A central bank director told The Daily Star they questioned the BB’s supervision of commercial banks when some unscrupulous people at the Oriental siphoned off huge money despite the ’so-called’ strong monitoring.In response to the board members’ queries, the BB authorities told the meeting they would form a committee to review the existing monitoring system, he said.
“Steps will be taken on the basis of the review committee’s recommendations,” a high official of the central bank said.
The Oriental board in its appeal said they took the charge in November 2004 and did not interfere in the day-to-day affairs in operating the bank. On the other hand, CM Koyes Sami claimed the bank’s performance improved under his management.
However, BB officials told the board members the magnitude of corruption in case of the Oriental Bank has beat all of those in the past.
The investigation found involvement of the Oriental Bank’s owners and management in misappropriating Tk 596 crore when they siphoned off the money showing false vouchers.
The entire sum of Tk 596 crore was drawn between 2003 and 2006, mostly during 2005-2006, until the central bank took over Oriental Bank, sources said. Tk 488 crore was drained out from the bank’s five branches by simply issuing vouchers, they added.
Records of these branches — Karwan Bazar, Mirpur, Nababpur, Principal Office and Bangshal — show that the sum was sent to the bank’s head office under two “adjustable block accounts” and about 60 percent of the sum was taken from the Bangshal branch.
Another Tk 108 crore was obtained against 26 different accounts held by unsuspecting accountholders when they did not have any clue that their names and accounts were being used for draining out the sum.
The bank officials informed the board members about the situation of the Oriental Bank before the central bank’s interference. They said the Oriental had failed to repay deposits of about Tk 200 crore due to liquidity crisis even on maturity.
Though the bank follows Islamic Shariah law it took loan from the call money market of more than Tk 200 crore.
As per the BB report, total accumulated loss of the bank was Tk 435 crore until 2005 and of the amount, Tk 58 crore loss was recorded in 2005. Prior to the central bank’s intervention, the bank was facing a monthly loss of about Tk 10 crore.
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