Let’s all join hands to loot

Ghatpar area, adjacent to the Meghna River in Araihazar upazila of Narayanganj. This is where Nuru Dairy Farm once stood. After changing hands three times, the establishment is now closed. Its owner, Nuruzzaman, currently lives in Dubai. The Bangladesh Bank Entrepreneur Fund had provided Tk 3 crore for the establishment. In return, 8 bighas and 11 percent of land had been mortgaged. But an on site inspection found that the entire plot was under water from the Meghna River.

Locals allege that the money from the Equity and Entrepreneurship Fund, was released using fake documents and by exerting the influence of former Narayanganj MP Shamim Osman, former Law Minister Anisul Huq, former governor Fazle Kabir and former deputy governor S K Sur. Pressure was also allegedly exerted on relevant officials of Bangladesh Bank and the Investment Corporation of Bangladesh, or ICB. There are also allegations that another Tk 5 crore was taken in two installments by keeping the same land as collateral and merely changing the owner’s name. However, ICB is now struggling to find a way to recover the money.

A fund to create entrepreneurs, most of the money not recovered

The Equity and Entrepreneurship Fund, was established with the aim of increasing food production and creating self employment in the country. Its objective was to help ambitious young people and entrepreneurs establish businesses. The special fund was intended to provide financing for production oriented projects.

According to Bangladesh Bank data, approximately Tk 1,639 crore was disbursed to 1,048 projects from the entrepreneur creation fund between 2001 and 2018. After that, approximately Tk 47 crore was disbursed over the following eight years from the ESF, which was renamed from the previous fund in 2018. The data shows that even after 25 years since 2001, Tk 1,436 crore remains outstanding. In other words, a large portion of the money from the fund created with the dream of producing entrepreneurs has still not been recovered.

Several EEF projects have been successful. Only a handful of projects went into production. Some entrepreneurs repaid the money and obtained ownership of their projects. However, the opposite picture is more common. An investigation found information about projects where money was allegedly obtained by showing fake documents, other people’s land, government owned land, rivers or waqf property as collateral.

Transparency International Bangladesh, Executive Director Dr. Iftekharuzzaman said, “There was a lack of transparency in fund management from the very beginning. There was political favoritism and a lack of oversight.” In his view, “Funds were disbursed based on party and political considerations because there was no effective implementation of specific policies. Monitoring and oversight were weak in this fund operated through Bangladesh Bank.” He also said that the wastage of public resources in this way is a major cause for concern.

In his words, “Those involved in irregularities in the fund should be brought to justice regardless of their identities.”

Tk 5 crore in three installments, bribes paid 21 times: Mukul Ahmed is a businessman from the Taltala area of Khilgaon in the capital. His company is Sonani Traders Limited. He received assistance from the EEF for business expansion by mortgaging agricultural land near Dhaka. Tk 5 crore was disbursed from the fund in three installments. Mukul Ahmed alleges that he had to pay bribes to nine people 21 times to get the money released. He claims that this cost him Tk 92,500.

It is alleged that under the influence of a powerful deputy governor of Bangladesh Bank, no installment of the money had to be repaid until 2021. The business was subsequently affected by the impact of the coronavirus pandemic. The pressure of installments on loans from other banks also increased. At one point, the project collapsed. As the money could not be recovered, ICB filed a case. The entrepreneur is reportedly on the run out of fear of the case. Meanwhile, ICB is trying to recover the money from the mortgaged land.

Tk 3.5 crore obtained using fake documents: The alleged network factory could not be found at Green Village, Holding 23, in the Parag area of Tongi. The owner of the establishment is Rafiqul Islam. He is alleged to have submitted fake documents when taking money from the fund.

Those concerned are now struggling even to identify him. A local man named Nurul Islam said he knows Rafiqul Islam. According to him, Rafiqul received money from the fund in 2016 with the assistance of S K Sur. Nurul Islam also claimed that when Rafiqul came to the area during the coronavirus pandemic in 2021, he himself said that he had paid Tk 1 crore in bribes.

It is learned that Rafiqul took approximately Tk 3.5 crore in two installments. Later, he went into hiding following disputes with officials of ICB and Bangladesh Bank.

Allegations of obtaining money by showing government land and someone else’s farm: Monir Hossain Sohag, a resident of Sirajdikhan upazila headquarters in Munshiganj, is also accused of obtaining money by showing a fake project. According to those concerned, a fake signboard was placed in front of government owned land and someone else’s cattle farm and it was presented as his own project. There are also allegations that no permission was obtained from the owner of the farm.

It is alleged that an organized group within ICB assisted in the matter. The group allegedly claimed fake travel allowances and daily allowances without even inspecting the project on site. In exchange for the release of Tk 5 crore, Tk 2.20 crore was allegedly taken in bribes in installments. However, Monir Hossain Sohag denied these allegations.

Irregularities also found in CAG report: The Comptroller and Auditor General’s, or CAG’s, report has also revealed irregularities in the distribution and management of funds under the program. A report for 2019 to 2020 said many entrepreneurs who had received money could no longer be found. Some were deliberately avoiding contact. There was also no income and expenditure information for many projects. Many entrepreneurs did not respond even after receiving repeated notices.

The CAG report further said that money had been released in favor of clients without implementing the initial work of the projects. It also found instances of money being disbursed through land registration in the company’s name and fake documents. The feasibility of many projects had not been assessed. Even the actual price and quality of imported machinery had not been determined. The CAG also found evidence of money being provided against fake documents without verifying the actual ownership and value of the land.

From EEF to ESF: Since 2001, money had been provided to entrepreneurs’ projects as equity, meaning a specified amount of capital. Entrepreneurs receiving assistance from the fund were required to pay for 49 percent of the shares held by the central bank. The remaining 51 percent of the shares belonged to the entrepreneurs themselves. Entrepreneurs had the opportunity to obtain full ownership of the project after repaying Bangladesh Bank’s money. However, various complications arose in recovering the money. In particular, since equity shares were not loans, there were also complications in taking legal action to recover the money.

In 2018, the EEF was renamed the Equity Support Fund, or ESF. Under the ESF, loans were provided at an interest rate of 4 percent instead of equity financing. A grace period of four years was maintained. After that, the loan was to be repaid in installments every six months over eight years. According to Bangladesh Bank data, approximately Tk 47 crore was disbursed from the ESF over eight years from 2018. Against this, only Tk 2 crore has been recovered.

Fund under ICB, tension over its management: A senior ICB official, speaking on condition of anonymity, said ICB has been overseeing the entire fund since 2009. Bangladesh Bank provides the policy framework and funding for the fund. However, despite ICB’s long experience, a particular group wants to take away its operational authority and operate the fund through 27 banks.

According to him, a huge amount of money has been disbursed from the combined EEF and ESF funds. However, many people did not repay the money within the stipulated time because of legal loopholes and limitations on the scope for filing cases. The legal framework was later changed. The opportunity to file cases was created. However, some projects, including crocodile farming and crab production and farming, failed to achieve the desired results because of shortcomings in government policies. Similarly, new types of projects such as meat production in greenhouses are also facing obstacles.

ICB’s statement, efforts underway to recover money: Investment Corporation of Bangladesh Chairman Professor Abu Ahmed said, “As a government institution, ICB is working with utmost sincerity. If there is a problem with any loan, an attempt is made to resolve it by discussing it at the board.” However, he said recovery had been weak because of some serious problems in the past. Despite this, the ICB chairman said maximum efforts are continuing.

Bangladesh Bank’s statement: Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said, “There are allegations of various irregularities in investments in projects established with the aim of increasing food production and creating employment in the country. However, some projects have been successful. The entrepreneurs behind these projects are now contributing to the national economy.”

In his view, “Although there was misappropriation of money, recovery has now increased. However, the main problem is that many people obtained funds by using fake names and fake collateral.”