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MK Alamgir-Nafeez Sarafat raise allegations of graft against each other

  • Published at 06:45 pm March 9th, 2021
Chowdhury Nafeez Sarafat and Mohiuddun Khan Alamgir

The two sent letters to government agencies against one another

A volley of finger-pointing has begun between Mohiuddin Khan Alamgir, former home minister and chairman of Farmer Bank, which was renamed Padma Bank in 2019, and the lender’s current chairman, Chowdhury Nafeez Sarafat: both allege that the other has misappropriated the troubled bank’s money.

It all started on Sunday, when Alamgir, who is also the sponsor-shareholder of Padma Bank, urged the Bangladesh Bank governor to investigate an investment of Tk 100 crore by the lender in an alternative investment fund managed by Strategic Equity Management, which is allegedly owned by Sarafat.

The fund was approved at a board meeting in which Alamgir was not present. The amount was released on November 1, 2015 and was never paid back in terms of dividend or return on investment, Alamgir said in the letter, which Dhaka Tribune has a copy of. 

The investment was sanctioned in violation of the law that prohibited Sarafat from receiving any investment from Padma Bank as he was a director of the bank.

The amount appears to have been unlawfully sanctioned and invested or channelled, which is a gross misuse or misappropriation of the bank’s fund, the letter said.

Therefore, Alamgir urged the central bank to investigate the matter and identify the unlawful users of the bank’s fund and arrange for its return to shareholders.

Meanwhile, on the same day, Padma Bank sent a letter to the Anti-Corruption Commission and the Bangladesh Securities and Exchange Commission alleging corruption and misuse of power by Alamgir.

Alamgir and former audit committee chairman Mahbubul Haque Chisty embezzled Tk 8.33 crore through sanctioning loans to clients to buy City Medical College & Hospital, said the letter signed by Md. Ehsan Khasru, managing director and chief executive officer of Padma Bank.

Dhaka Tribune has a copy of the letter.

Alamgir and Chisty also took bribes from clients for sanctioning loans and were financially benefited, the letter read.

“The loan irregularities and misuse of power for personal benefit were reported in an inspection report of the Bangladesh Bank.”

Subsequently, the bank sought the assistance of Alamgir regarding the recovery of default loans amounting to Tk 845.45 crore that was sanctioned in favour of 19 clients in his tenure, the letter added.

But to no avail, according to Khasru.


“Nafeez and his associates are responsible for the bank’s adverse situation,” Alamgir told Dhaka Tribune on Tuesday.

He went on to categorically deny allegations of misuse of power. 

The bank had some problems in his tenure, but it has been going through serious problems after Sarafat took charge.

Alamgir and Chisty had resigned from the board of then-Farmers Bank in November 2017 on the central bank's orders after allegations of graft against the two became deafening and depositors, including government agencies, began to pull out money.

In January 2018, Sarafat was appointed the bank's chairman. But the bank's fortune remained the same.

Established in 2013, the bank became a hotbed of financial irregularities within three years of operation. More than Tk 3,500 crore has been siphoned out of the bank in that time, enabled by Alamgir and Chisty, according to the BB.

In 2019, the bank was renamed Padma Bank to give it an image makeover but its troubled past continues to hound its present. 

For instance, at the end of 2020, its capital shortfall of Tk 309.99 crore was amongst the ten largest in the banking sector. Its default loan ratio is about 60 per cent, whereas the industry average is 7.7 per cent as of last year. Its loan-deposit ratio is 99.4 per cent, when the regulatory ceiling is 87 per cent.

“The central bank should appoint an administrator to save the bank and the depositors’ money,” Alamgir said.

He went on to state that the BB should not have allowed the state-run banks to buy stakes in Padma Bank to rescue it; rather, they should have provided loans to resolve the temporary liquidity problems in the bank.

In 2018, the state-owned financial institutions Investment Corporation of Bangladesh, Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank bought 60 per cent stakes in the bank for Tk 715 crore, with the view to giving it another lease of life.

But Sarafat also denies the charges levelled against him.

“The bank was empty when I became the chairman,” he told Dhaka Tribune on Sunday.

The government engineered the ownership of the five state institutions to regain the customers' confidence, he said.

Sarafat went on to disown any connection with Strategic Equity Investment.

However, in the last five years, Padma Bank regularly got more than Tk 12 crore from the investment of Tk 100 crore, he told Dhaka Tribune.

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