Irregularities, bad governance mar Southeast Bank

19 July 2021

Special Correspondent  :
Bangladesh Bank (BB) has found a number of irregularities, governance, internal control and compliance lapses in Southeast Bank while conducting an inspection on the private sector lender.
A BB team carried out the inspection on the head office of the bank recently also found delinquency in credit disbursement and interest waiver on current loan. They also identified inaccuracy on its books of account regarding investment, loans and advances and assets.
Besides, the directors were divided over running the bank, as there has been a feud among them. Even the directors are frequently escaping from board meetings.   
Alamgir Kabir has been serving as the chairman of the bank for the last 17 years, which also causes discontent among the board members.
All these issues were spotted in the BB's report on the bank. Sources said the chairman and managing director are now
operating the bank at their whims cashing the difference of the directors. As a result, the bank faces operational inefficiency and business losses.    
On the other hand, the founding directors, who have put their sweat to build the bank from scratch, keep them sidelines in the decision making process as feud spilled over within the bank's top management.
When the situation is prevailing inside the bank, a section of director has already been involved in a hectic lobbying over setting their 'own man' as next chairman. Besides, a powerful quarter is also buying shares from the block market to become director as well as grab the bank.    According to rules, director will have to hold a minimum of 2 per cent shares of a company individually. "There has been a feud over the control of the bank with some directors taking side with chairman and some with the managing director. As a result, a duel administration has been created in the bank casing uneasiness among the officials," said a BB official on condition of anonymity.    
He added the bank was suffering from governance issues, weak compliance and inaccurately accounted assets, liability, and risky credit decision.
According to the BB report, the bank's net profit, return on assets (ROA), and return on equity (ROE) are in declining trend. Besides, in the books of accounts, the loan classification was not maintainted properly.
Providing examples of irregularities, BB in its inspection report cited that the bank's Rangpur branch was supposed to deposit Tk 15 lakh pay order into the designated account. But the branch officials were greedy to swindle the money without depositing it to the client's account.
The bank management is yet to take any action against the concerned officials though the incident tarnishes image of the bank as well hinders interest of the client. Meanwhile, the bank management converted 17 forced loan of Partex Paper Mills into term loan. Later, the loan has been rescheduled.
Besides, the bank provided Tk 2.60 crore loan to Amber Cotton, a sister concern of Partex Group, for buying luxuries cars. The loan was disbursed to unproductive sector defying the BB's guideline to provide loans in productive sector of the economy.
In another example of irregularity, the bank's Gulshan Branch provided personal credit card bill of Generation Next Fashion Limited's chairman Touhidul Islam Chaudhury from Export Retention Quota (ERQ) account. Similarly, the credit card bill of Rajiv Sethi, managing director of the same company, also paid from the  (ERQ) account.
The Snowtex Outerwear Limited, a concern of Snowtex Group, took back-to-back LC and EDF facilities from the bank showing amendment of agreements with buyers and importers. But the bank failed to give satisfactory expiations over how the deals were signed. Furthermore, BB inspection team did not find signatures of nominated buyer's representative and exporter in the documents of the deal.
Southeast Bank Limited takes the insurance coverage of its permanent assets, fire and cars from the Asia Insurance Limited violating bidding rules. It bypassed the tender process to take the insurance facility as several director of the bank are also holding the similar post in the Asia Insurance. Even the Managing Director of the bank becomes director of the insurance company by purchasing its share. So, the bank provided the job to the insurance company ignoring the rules, according to the BB report.
The BB officials also found irregularities in the disbursement of stimulus fund at the bank. The irregularity was fund while giving the worker's salary for May of Generation Next Fashion Limited.
A worker having mobile phone number 0171425--92 was provided Tk 7,916 salary for the month of April. But in May, Tk 34,676 was paid through the mobile number and it was Tk 26,760 more than the actual salary of the worker.
Besides, the management did not update the personal dossier of its 46 officers who had been appointed in the bank during January-June of 2020. In addition to, there was no record of objection certificates (NOCs) in the personal file of the experienced officers who joined the bank from other organizations.        
BB in its report also expressed dismay over 'unsatisfactory' attendance in board meeting by some of the directors. "Nonattendance of directors in board meeting is not conducive to operate a commercial bank," mentioned the BB report, citing example that director Md. Akikur Rahman attended only in nine meetings out of 29.     

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