Banking: Junta edition

October 18, 2007
By
  • General Moeen U Ahmed refused by the Kennedy School of Government.
  • Bangladesh Bank regulations breach: Brother appointed MD of Trust Bank.
  • Taka 99,69,215 loan raises serious questions.
  • Photo: General Moeen Uddin Ahmed.

    [Mashuqur Rahman, USA.]

    The head of Bangladesh’s military government, General Moeen U Ahmed, is coming to America. He is accompanied by the Air force chief Air Marshal S M Ziaur Rahman and by the other man instrumental in the January coup, Lieutenant General Masududdin Chowdhury. Last week Bangladesh’s Navy chief was also visiting the United States. It seems like the entire ruling junta is coming to America.

    General Moeen, for his part, will be visiting Harvard University on October 21. I am told that the General wanted to speak at the Kennedy School of Government (KSG) but wanted to restrict questions. Harvard refused. So, instead, the General will be speaking to a class rather than in a KSG sponsored public event.

    On his way to America General Moeen stopped over in London, where he also had a chat with Britain’s Chief of the General Staff. In London, he once again dismissed persistent rumors that he wants to become President of Bangladesh. He also spoke out strongly in defense of the military’s “anti-corruption” drive:

    In reply to a question, the army chief said those arrested and jailed were “corrupt.” Throwing a challenge, he posed a question: “Can anyone find any honest person among those arrested and jailed?”

    Indeed this “anti-corruption” drive has resulted in the jailing of most of Bangladesh’s top political leaders. Some notable convictions of politicians were 13 years imprisonment for incorrectly stating one’s net worth in the so-called “wealth statements” and 5 years imprisonment for having 21 bottles of alcohol in one’s home. In addition, two former prime ministers, and leaders of the two leading political parties, are being held without bail on corruption charges.

    General Moeen’s army has gotten tough on the politicians “in the nation’s forward march.” The age of honestocracy is upon Bangladesh.

    So it comes as a surprise to learn that General Moeen and his brother Iqbal U Ahmed are Chairman of the board of directors and Managing Director, respectively, of the same bank in Bangladesh — The Trust Bank Ltd. The Trust Bank recently IPOed and its stock skyrocketed on its first day of trading on the Dhaka Stock Exchange, setting a new record for volume traded in a single day. Before the IPO, the owner of Trust Bank was the Army Welfare Trust. As such, the army chief, General Moeen, was appointed the Chairman of the board of directors. However, having two members of the same family on the same board of directors apparently violates the Bangladesh Bank regulations governing the constitution of the board of directors of a bank:

    1. Constitution of the Board of Directors:-

    a) The board of directors of the bank-companies shall be constituted of maximum 13 (thirteen) directors. However, the directors of the banks, where the number of directors is more than this number, shall be allowed to complete their present tenure of office.

    b) This restriction shall apply to appointment/reappointment of the directors against retirement or filling casual vacancy subject to section 15 Ka Ka of the Bank Companies Act, 1991. Not more than one member of a family will become director of a bank. For this purpose family members shall include spouse, parents, children, brothers and sisters of the director and other persons dependent on him/her.

    [Emphasis added.]

    One of the responsibilities of the Chairman and the board of directors is to appoint the Managing Director of the bank. Having family members on the same board of directors can lead to conflict of interest and nepotism. In November 2006 General Moeen was the Chairman of the board of directors when his brother was reappointed Managing Director of Trust Bank.

    [Iqbal U Ahmed.]

    Not only are General Moeen and his brother, Iqbal, on Trust Bank’s board of directors, they are also borrowers of large sums of money from the bank. According to a prospectus filed by Trust Bank before its IPO, General Moeen had a loan with an outstanding balance of Taka 9,969,215 at the end of 2005. By the end of 2006, the outstanding amount had been reduced to Taka 3,315,323. In one year, the general [a salaried public servant] apparently paid back Taka 6,653,892.

    His brother, the Managing Director, had an outstanding loan balance of Taka 1,775,242 at the end of June 2006. At the end of 2005 General Moeen’s loan amount was by far the largest loan given to any director or senior executive of Trust Bank.

    Bangladesh Bank regulations restrict lending to directors of banks. The regulations state:

    Any loan facility or guarantee or security provided to a Director of a bank or to his relatives must be sanctioned by the Board of Directors of the bank and approved in the general meeting and has to be specifically mentioned in the Balance sheet of the bank. However the total amount of the loan facilities extendable to a Director or to his relatives should not exceed 50% of the paid-up value of the shares of that bank held in Director’s own name.

    [Emphasis added.]

    The ownership of Trust Bank, before the IPO, consisted of 7,000,000 shares, with 6,999,920 shares held by Army Welfare Trust. Of the remaining shares, General Moeen owned 10 shares. His brother, Iqbal, owned no shares. Each share was valued at Taka 100. Therefore General Moeen owned Taka 1000 worth of shares. According to Bangladesh Bank regulations he was entitled, with the approval of the board of directors, to get a loan for an amount up to Taka 500. In other words, at the end of 2005 General Moeen had a loan Taka 9,968,715 in excess of the amount allowed by the law.

    The reason the Bangladesh Bank regulations are in place is to guard against abuse of power by directors of private banks — that is to say, to prevent corruption.

    It appears, from looking at the available public information on Trust Bank and its loans to its directors, that the loan to General Moeen exceeds that which is allowable by the law. In an environment where the Bangladesh military has been jailing politicians for failing to accurately recount from memory [while serving time behind bars without access to legal and accounting resources] their net worth, the man in charge of the military owes an explanation to the public about his tenure as the Chairman of Trust Bank.


    Mashuqur Rahman [http://www.docstrangelove.com] is one of the highest read Bangladeshi-American bloggers. Critically acclaimed for his incisive analysis on Bangladesh, US foreign policy and dedicated advocacy of human rights.

    [Read posts by Mashuqur Rahman]

    33 Responses to Banking: Junta edition

    1. Salam Dhaka
      October 18, 2007 at 4:05 pm

      Unfortunately our sushil samaj newspapers and our so called civil society is quiet on this. The IPO was oversubscribed, so many people jumped on this gravy train — SEC should make public, who made all the money on this deal.

    2. October 18, 2007 at 5:02 pm

      You can read the story here in Bengali.

      http://www.sachalayatan.com/sushanta/9506

    3. Strawberry
      October 18, 2007 at 5:22 pm

      Don’t know how reliable the source is but I just heard that the chief took General Masud Uddin “with” him in case Masud decides to counter-attack and takes the reign of the country when he’s out of the country…

    4. Nirbashito
      October 18, 2007 at 7:05 pm

      Yet another stroke of a genius… Thank you, Mash! Looks like the BD army is copying the Pakistani army blueprint to the dot, so in a matter of years, you’ll be glad to have any business opposition left open for the rest of the population (i.e. civilians not doing business directly with/for the Army).

      As for General Masud, wasn’t he the guy who paid his “tributes” to Islamabad (or was it the ISI?) right after 1/11? I think he is in the US to pick up some more state-of-the-art surveillance systems for eavesdropping/intercepting emails. Maybe they’ll also get a White House briefing on how much torture at the DGFI Blackhole is permissible until the US State Dept will be “forced” to make a public announcement “condemning” such HR violations.

    5. Someone
      October 18, 2007 at 11:04 pm

      Thanks for writing about corrupted Moeen U in this blog. I already wrote about this in a comment in E-Bangladesh. Though this information is not new, it deserves discussion again and again.

    6. October 19, 2007 at 4:37 am

      So much of the fight against corruption and so much of our (the educated elites) mind boggling support of him!

      Second Lieutenant Moeen joins the armed forces in 1975. Same year Mr. XY joins the civil service of Bangladesh, suppose, Bangladesh postal department.

      By 2007, after all 30 years of hard work, smart effective service to the republic, Second Lieutenant Moeen is a 4 star general and lives in a palatial many acres compounded home with staffs, orderlies and fresh milk yielding cows. He probably is very rich by this time, thanks to the tens of million Taka land in DOHS and another multi million Taka multi story flat on that same land plot. He also is the chairman of a Bank while his brother is the MD of the same bank.

      On the other hand, after all 30 years of hard work, smart effective service to the republic, Mr XY has also reached the pinnacle of his career. He is now the Post Master General of Bangladesh. In sharp contrast to the other general, he lives in a multi story government flat (Postal Colony) cross the street from ever noisy and crowded new market’s south gate. He is retiring soon and due to the meagre compensation he got from the government all his life, he even does not know where he will be staying once he has to hand over this 3 room government flat after his retirement.

      Its so easy to lecture about corruption and we are so fool in hushing each other in listening to the Godly words of the General!

    7. Salam Dhaka
      October 19, 2007 at 4:35 pm

      Where else in this universe of ours can you find a sitting army chief who just promoted himself, be the chairman of a publicly traded bank that too by violating all banking rules? I wonder what the Anam’s and Hossain’s have to say about this. I wonder if now Yunus would now claim that all “generals in BD are corrupt.”

    8. October 19, 2007 at 5:22 pm

      Salam Dhaka, of course it is worth noting that Moeen also promoted himself to a full general. Now of course he is speaking very much like a politician, and not like a military man. He’s kind of a renaissance man — a general, a politician, and a business tycoon. Laws are for little people and don’t matter when you have taken on the job of singlehandedly “rescuing” a nation of 150 million people.

    9. Kaiser Kabir
      October 20, 2007 at 5:15 am

      Someone should definitely get General Moeen’s point of view on these allegations when he speaks on October 21.

    10. Nirbashito
      October 20, 2007 at 6:15 am

      I see the last line in my comment was deleted: was it considered irrelevant? I have seen this Corporal Shihab defend the army’s role in Bangladesh in this blog: and so I’m now really eager to hear his reactions on his beloved general’s latest feats. BTW, the shameless general has been heard moaning in NYC that we compare his army with the Pakistani one (see the Inquilab of October 20). There’s this saying in Bangla about a fox’s laments about a dead chicken… can anyone provide an appropriate translation/analogy in English? Thanks again for the fact-digging blogs!

    11. Imran
      October 20, 2007 at 5:27 pm

      Mash:

      ATN Bangla just showed its interview with Gen. Moeen at JFK airport.

      In response to allegations made against him regarding bank loans, his version follows:

      1. He got his bank loans within the governing banking rules and regulations .

      2. He denied taking 60 lakh in loans.

      3. He denied defaulting on loans.

      4. He claims that he is paying off his loan on monthly installments. The payoff money comes from the rental income from the house.

      5. He further reiterated his desire that everybody, including the CTG and the military should be transparent and should stay away from corruption. He said that this government is here to rout corruption and should not involve itself in such.

      Congratulations. The good news is that your piece has been noticed by MOeen and company. Whether he is telling the truth or not will be proved, I believe, not today but at a later time when the guns are locked up in the barracks. Till that moment of freedom, we wait.

    12. Salam Dhaka
      October 20, 2007 at 6:05 pm

      UNB reports:

      Govt mulling appointing ‘assistants’ to advisers: Moeen
      UNB, Dhaka

      Army Chief General Moeen U Ahmed, now visiting USA, has cleared his position about drawing loan from bank, saying that he took the loan according to bank rules and has been repaying it every month.

      “I have taken that amount of loan as permitted under bank rules and I have been repaying it every month,” he told private TV channel ATN Bangla at JFK Airport in New York on Friday.

      The army chief said question of taking a loan of Tk 1 crore does not arise. “I have not even taken a loan of Tk 60 lakh.”

      Replying to another question, General Moeen said he repays the loan from the money he gets from house rent every month. All these are documented, he added.

      The army chief said since the prime task of the present government is to free the country from corruption, anyone from army, caretaker government and government officials should not get tangled in it. “Everyone should remain accountable.”

      About appointment of consultants, he said the council of advisers of caretaker government is usually appointed for 90 days. But since this government is to remain in power for two years, it is difficult for 11 advisers to run the administration as each advisor is in charge of four ministries.

      Gen Moeen said the government is examining the possibility of appointing “assistants” to the advisers by maintaining the constitution.

      Earlier, the army chief had a meeting with Congressman and Co-Chair of Bangladesh Caucus in US Congress Joseph Crowley.

    13. Niloy
      October 20, 2007 at 11:18 pm

      I am student at Boston University. Having heard that General Moeen is coming to Harvard, I went to Kennedy School of Government, Harvard to find out regarding General Moeen’s lecture ceremony and have been advised to look into their monthly event schedule, which I posted below. Each event of KSG has it’s own link but surprisingly — General Moeen’s name or the event was no where to be listed:..

      Last Week: http://ksgnotes1.harvard.edu/ksginfo/enews.nsf/KSGToday?Openform&Date=10/13/2007

      This week: http://ksgnotes1.harvard.edu/ksginfo/enews.nsf/KSGToday?Openform&Date=10/20/2007

      Failing to find it under KSG calendar, I went to ASH Institute, where General Moeen is supposed to lecture. The calendar for month of October, 2007 of ASH Institute of Kennedy School is totally empty. Ash Institute has no event whatsoever listed for the entire month of October, 2007.

      Link.

      Being failed to find anything anywhere, I contacted to KSG Ash Institute personally and talked with Andrea Roll, responsible for ASH institute communication & program at the following contact details. Andrea Roll from Ash institute replied in negative. Roll mentioned they haven’t heard of “Bangladesh army chief” coming to Harvard let alone at Ash institute.


      Ash Institute for Democratic Governance and Innovation
      John F. Kennedy School of Government
      Harvard University
      79 John F. Kennedy Street
      Cambridge, MA 02138
      Tel: 617-495-0557
      Fax: 617-496-4602
      E-Mail: innovations@harvard.edu

      I am little bit confused and just wondering — is this event a kind of top secret which KSG doesn’t want to disclose or it’s a total hoax or as already reported at few websites that Kennedy school refused General Moeen already (General Moeen might attend one class in KSG as observer or at most in a panel discussion.)

      Very Astounding indeed! Still I do hope and pray that my findings are wrong and General Moeen will come to Kennedy School as a honorary guest to give his lecture. But, if not, then it would a real shame for all of us, for Bangladesh army, for Bangladesh in deed.

    14. Saif
      October 21, 2007 at 3:49 am

      I don’t think Mr. Moeen (General) has that much intellectual hight or dignity that can be compared to Maulana Bhasani, Gandhi or Aung San Suu Kyi. So how could he be invited by Harvard? Well, if he got it then why not :P

    15. Corporal Shihab
      October 21, 2007 at 4:50 am

      #10

      Sorry sir for being away on duty. Our general has clarified his position on his loan from Trust Bank and his brother being the MD of the bank. Self explanatory. Please come out with any other spear.

      #Mr. Saif

      Please keep on thinking till you elevate yourself to an intellectual hight and compare General Moeen with Maulana Bhasani, Gandhi or Aung San Suu Kyi.

    16. Amias Demha
      October 21, 2007 at 6:00 am

      Dear Imran: It is true our great General has denied taking 60 lakh in loans. Because the amount is 99 lakh. We should honour his truthful ness and transparency, should not we?

    17. Corporal Shihab
      October 21, 2007 at 9:10 am

      Mr. Rumi #6

      While talking about General Moeen and Mr. XY (The PMG) possibly you forgot to mention about their friend Mr. ABC who quit study and join politics, earned millions of money through corruption, bought houses in UK/USA and now residing inside Kashimpur jail. You did not say about their another friend now just an Imam of a mosque in greater Sylhet.

      While I do left-right in cantonment, one of my classmates purchased house in Uttara being in the police service, another is the country manger of a leading international courier service, another is settled in Dubai who was literally a maastan in DU. I also heard about Zahid doing good in Intel. One of my friends is just a school teacher in Sirajgonj and another is shopkeeper in Pabna.

      Isn’t it the reality of Life ? But I agree that we are really so fool to listen General Moeen and talk about him. Like it or not he is in the middle of our discussion.

    18. Nirbashito
      October 21, 2007 at 6:15 pm

      Corporal Shihab: Why don’t you take out the original spears causing serious bleeding as we speak, before asking me to “bring them on”? General Moeen’s responses do not, I repeat, DO NOT stand up to scrutiny. You have already seen Mash’s follow-up titled “In Denial,” I see! (and you can respond to my further queries in this regard there). Thanks.

    19. Sudhir Mitra
      October 21, 2007 at 6:49 pm

      Big problem awaits Moeen. The official prospectus of the Trustee Bank posted at the Securities and Exchange Commission official website http://www.secbd.org clearly states on page 29 that Moeen had an outstanding loan of 99 lakh taka at the end of 2005 and only 33 lakh taka at the end of 2006. So his story of taking only 35 lakh taka including 10 lakh from the pension fund is a lie.

    20. Tahsin Hyder
      October 21, 2007 at 9:35 pm

      Hi rey.. keu to ar Bangladesh e halal thaklo nah… amra chara. lol.

    21. Third Eye
      October 22, 2007 at 3:58 am

      Check the prospectus of Trust Bank (it may be linked from this site). It did NOT include his brother as a member of board. Bangladesh bank regulations are for board of directors, not managing director. Keep your research about his loan and good luck.

    22. Kalam
      October 22, 2007 at 11:08 am

      1. NBR must publicize how much rent General Moeen gets from his house and how much tax does he pay for it?

      2. General Moeen claims his brother was one of the finest banker in Bangladesh. In fact, he was only a senior executive vice president (No 4 man) in AB Bank prior to this appointment. He was discharged from AB bank on foreign currency scam along with 5 others without a release certificate. Gen Moeen,then GOC Chittagong, tried to force the Bank authorities to take his corrupt brother back or provide a release certificate. Bank politely refused. The chairman and his family are paying the price heavily now.

      3. General Moeen reportedly went to Hawa Bhaban, Giasuddin al mamun , Hafiz Ibrahim, and many others to look for Iqbal’s job. Even the most corrupt people refused to help this corrupt banker. Finally Moeen struck a deal with the the army chief Hasan Mashud Chowdhury, that if he was made next army chief then Moeen would make him a caretaker adviser and finally would give him a minister status appointment. So can General Hasan Mashud put General Moeen behind bars for his proven crime and blatant lie? The nation is waiting to see.

      4. How could he pay from his house rent before the house was built?

      5. You can’t build even a two storied building using 35 lakh taka. Send a civil work estimator to the built house, you can then imagine how much money was required to build it.

    23. Sudhir Mitra
      October 23, 2007 at 12:48 pm

      “I hope Mr. President will show some guts now and save the nation from total disaster.”

      This must be a joke. Not this president. He tried to save the nation by making himself the chief adviser [to himself]. That began the trouble. If we had a proper board of advisers to begin with, there would have been no need for this “back,” which is now more visible than the front.

    24. Iconus Clustus
      October 28, 2007 at 8:57 am

      Really — as I look at it, corruption is the “buzzword” for today’s political discussion. Since army and CTG has put so many so-called corrupt politicians behind bars, now it is incumbent upon us to prove that Mr. Ahmed (Moeen U that is…) himself is a corrupt person… sort of tit for tat — returning his own weapon right back at him.

      While it might be a good come-back, it might be derailing us from being able to see through the activities of this government. Dhor pakor has not been my cup of tea to begin with. I am always of the opinion that we as a nation are no more corrupt than any other nation in the world. There is nothing inherently wrong in our blood, as some of us frustrated ones think. It is just the system and how it got manipulated by the ruling class over the years with active participation of big brothers, generals, politicians (deshi and bideshi), businessmen, and the like. And when the system gets poilticized and swindled, then it is simply a matter of chaos, an excellent condition for a couple of different things… a popular revolution or a coup.

      The latter is usually the case with third world countries like ours and that is exactly what has happened. Technocrats and religionists are jumping on the bandwagon and doing their best to bring about a technocratic revolution as well… we have examples from South Korea (Mr. Park), from Malaysia (Mahatir), from Pakistan (Gen. Musharraf), from Burma, from many many other countries.

      However, this is not to suggest that people shouldn’t be investigating into the General’s account… but as I said, he is and will slip out of it unscathed, until and unless we nab him on more serous charges… for instance, selective political purging, selective arrests (businessmen v. politicians), appointing army personnel as top of most of the big industries, harboring and backing the religionists, and of course further politicization of army itself!

    25. Imtiyaz Husain
      November 8, 2007 at 6:55 am

      The allegations are without substance for following reasons:

      1. CAS is a director/chairman because of his official position thus many of the rules do not apply to official directors viz to equity directors.

      2. CAS and all directors are non executive directors while the MD is an executive director.

      3. Same principle has been applied in many other institutions. For instance the bar on stock brokers to become directors of PLC does not apply to ICB staff who are in fact working for investment/brokerage entities.

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