Bangladesh Bank: Deputy governor among others involved in embezzlement

(From L-R) Former deputy governor SK Sur Chowdhury, former BFIU chief Masud Biswas and former executive director Shah Alam

During the tenure of the ousted Awami League government, the banking sector reportedly suffered its most significant losses, according to the White Paper Committee on the economic situation. The responsibility for protecting and supervising the sector fell to the central bank, Bangladesh Bank. 

Over the past 15 years, three central bank governors have been accused of complicity in irregularities and accumulating illegal wealth. During this period, many deputy governors (DGs), members of the Bangladesh Financial Intelligence Unit (BFIU), and other top officials were also alleged to have been beneficiaries or enablers of these irregularities.

The Anti-Corruption Commission (ACC) arrested former deputy governor Sitanshu Kumar (SK) Sur Chowdhury on Tuesday, with the court subsequently ordering his imprisonment. This followed an ACC case filed against him for failing to respond to a notice requiring him to declare his assets.

Earlier this month, the ACC also filed a case against former BFIU chief Masud Biswas on charges of amassing wealth beyond known sources of income.

The agency is also investigating Shah Alam, an executive director accused of orchestrating irregularities in the financial institution sector. Sources suggest that a case against him may be filed soon.

Commenting on the situation, former chief economist of Bangladesh Bank, Mustafa K. Mujeri, told Prothom Alo, “A click was formed in the past, sponsored by the then government, which included top officials of Bangladesh Bank. Cases are being filed against them, and they are being sent to jail. However, all those involved in the irregularities must face justice. If not, the trial will remain incomplete, and others may be encouraged to follow the same path.”

Who has what role?

SK Sur Chowdhury, who was sent to jail Tuesday, was appointed as Deputy Governor by the then Awami League government in January 2012. His tenure was extended until January 2018. 

During this period, he oversaw the banking and financial institutions. Under his supervision, four financial institutions were handed over to the controversial Prashant Kumar (PK) Halder, which subsequently became embroiled in embezzlement scandals. 

Additionally, he, along with the then Governor Fazle Kabir, approved the takeover of Islami Bank and Social Islami Bank Limited (SIBL) by the S Alam Group. The regulatory body failed to investigate the origins of the funds or the entities involved in the takeovers.

In 2018, Sur Chowdhury was appointed as an advisor for banking sector reform, while his associate, Executive Director Shah Alam, was given charge of supervising the financial institutions sector. The ACC is currently investigating allegations of Sur Chowdhury's accumulation of illicit wealth.

In November 2021, Md. Masud Biswas was appointed Chief Officer of the Bangladesh Financial Intelligence Unit (BFIU) with the rank of DG. Despite extensions to his term, he was forced to resign after the fall of the Awami League government. 

During his tenure, the BFIU, responsible for preventing money laundering, failed to take significant action. Instead, Biswas is accused of extending his term with the support of money launderers and amassing illegal wealth.

Similarly, Abu Farah Md. Naser, appointed as DG in 2021, is accused of destabilising the banking sector by relaxing loan policies, reportedly aligning himself with private sector interests.

He was later appointed as a banking policy adviser after completing his term.

DGs Kazi Saidur Rahman and Khurshid Alam are also accused of exploiting the banking sector, allegedly contributing to chaos in the dollar market. 

After the fall of the Awami League government, these three DGs, along with Governor Abdur Rouf Talukder, vacated their positions.

Additionally, several DGs and executive directors, who served during the Awami League’s tenure, reportedly joined influential groups like Beximco, Bashundhara, and S Alam Group after their service.

Regarding actions against officials involved in irregularities, Bangladesh Bank assistant spokesperson Mohammad Shahriar Siddiqui told Prothom Alo, “Those who committed irregularities did so at a personal level, often by abusing their positions. No initiative has been taken yet to investigate whether other beneficiaries within Bangladesh Bank may exist.”

How was the sector

Irregularities in the banking sector began after the Awami League formed the government in 2009. When the party returned to power in 2014, pro-Awami League businessmen started exploiting the banking sector with impunity.

During this period, Islami Bank, Social Islami Bank, and Commerce Bank were taken over by the S Alam Group. The family of former land minister Saifuzzaman Chowdhury gained control of United Commercial Bank. By 2018, after the Awami League secured a third consecutive term, systemic embezzlement within the banking sector began with formal approval.

Amid a liquidity crisis in several banks, the central bank overprinted money to bail them out, which was subsequently looted under the guise of loans. High-ranking officials, including the governor and deputy governors, reportedly played active roles during this time.

In 2011, the Hall-Mark fraud case exposed weaknesses in the central bank’s supervisory mechanisms. While the government replaced the board of Sonali Bank on the central bank’s recommendation, fraud continued unabated in Basic Bank, with the central bank failing to act decisively due to political pressure.

In 2012, the government initiated the approval of new banks. However, a list of recipients was dictated from the highest level of the government, resulting in licenses being granted to nine Awami League leaders.

In 2015, loan restructuring facilities were introduced after a request from Salman F. Rahman, the private development adviser to the Awami League president. These policy concessions further disrupted the banking sector.

Between 2016 and 2018, several banks were taken over, with central bank officials, including the governor and deputy governors, working late hours to expedite approvals. When these banks were eventually plundered, the central bank remained largely silent. Reports of irregularities in the media were often met with protests from the regulatory body, which effectively shielded those involved.

In response to critical media coverage, journalists were barred from entering the central bank’s premises in March 2024, a restriction that was lifted only after the Awami League’s fall from power.

Reforming the banking sector has now become one of the primary tasks of the interim government. The White Paper Committee on the economic situation has likened the banking sector to a “black hole”.

Shah Md. Ahsan Habib, Director of the Bangladesh Institute of Bank Management (BIBM), emphasised to Prothom Alo, “If there is any irregularity, those involved must be brought under the law. Without accountability, discipline will not return to the banking sector, and reform initiatives are destined to fail.”

* The report, originally published in the print and online edition of Prothom Alo, has been rewritten for the English edition by Farjana Liakat