ACC probes $1b laundering, seeks S Alam's Islami Bank loan records

The Anti-Corruption Commission (ACC) has ramped up its probe into the alleged laundering of $1 billion by Mohammed Saiful Alam, chairman of the S Alam Group, and his family members.

As part of the probe, the ACC has sought detailed records of loans sanctioned to Saiful Alam's companies by Islami Bank Bangladesh.

In a letter, a copy of which was seen by The Business Standard, the corruption watchdog on 19 December asked the country's largest private-sector lender to submit the requested documents by 30 December.

Since Saiful Alam assumed control of Islami Bank in January 2017, it has disbursed loans worth thousands of crores against collateral of minimal value, raising serious concerns about safeguarding depositors' funds.

Take, for instance, S Alam Super Edible Oil Ltd, which received loans amounting to Tk3,166 crore. The loan amount has since swelled to Tk3,528 crore, while the collateral pledged – land and machinery – was valued at a mere Tk104 crore, according to Islami Bank documents.

Another case involves Sonali Traders, a subsidiary of S Alam Vegetable Limited, which secured Tk4,890 crore in loans – exceeding the sanctioned limit by over Tk1,000 crore – against collateral worth just Tk314 crore.

Similar patterns of inadequate collateral are evident in loans granted to other S Alam Group entities, including S Alam Power Generation, S Alam Steels Limited, Unitex LP Gas, Unitex Steel Mills, Unitex Composite Mills, and S Alam Trading Private Co Ltd.

The ACC has also extended its inquiry beyond S Alam Group to include other borrowers, such as Zaman Syndicate. This Islami Bank client, from the bank's Pabna branch, received loans totalling nearly Tk1,000 crore, which have ballooned to Tk1,154 crore – backed by collateral valued at a scant Tk27 crore.

Similarly, Islami Bank gave Shob Meher Spinning Mills Ltd a loan of nearly Tk200 crore against Tk14 crore collateral.

Regarding the investigation into the S Alam Group, Akhtar Hossain, director general (prevention) of the ACC, told TBS, "The country's major companies with information about loan irregularities are under investigation. Legal action will be taken only after the complete investigation reports are received."

Iftekharuzzaman, executive director of Transparency International Bangladesh and head of the ACC Reform Commission, told TBS that S Alam had taken control of several banks with the help of the Directorate General of Forces Intelligence (DGFI).

"They looted money from these banks' vaults and laundered it abroad. This does not happen in any civilized, democratic country. It was made possible by the lack of accountability during the Awami League government's tenure," he said.

"As S Alam has laundered the money, they are more responsible. However, they had help from others in this act. Those responsible must be brought to justice. If accountability is ensured, money laundering will stop in the future," he emphasised.

On 5 September, Islami Bank Chairman Md Obayed Ullah Al Masud, after a meeting with Bangladesh Bank Governor Ahsan H Mansur, told reporters that S Alam Group alone had taken more than half of the total loans from the private sector lender.

At that time, Islami Bank had disbursed around Tk1.75 lakh crore in loans.

An ACC official involved in the investigation told TBS that initially, information about loans to eight companies was requested. However, 44 companies across 14 Islami Bank branches were found to have loan-related issues in sanctioning and disbursing loans. Information on the remaining companies will be sought step by step.

With the help of some DGFI officials, S Alam Group took control of Islami Bank by purchasing shares through shell companies. Top bank officials, including the managing director and CEO, were forced to resign, allowing S Alam to gain control.

From then until 5 August 2024 political changeover amid a mass uprising, the group had controlled Islami Bank. Later in the month, the Bangladesh Bank dissolved the Islami Bank's board, ending S Alam's control.

After a report on S Alam's money laundering was published on 4 August 2023, the ACC launched an investigation on 13 August. However, the Appellate Division of the Supreme Court temporarily halted the investigation.

The ACC resumed its work in November following a High Court order. On 20 November, a three-member team led by ACC Deputy Director Md Abu Sayeed was reconstituted for the investigation.

As part of the probe, the court ordered the freezing of 125 bank accounts in the names of S Alam Group boss Saiful Alam and his family members based on an ACC application on 19 December.

The investigation revealed that Tk22.65 crore was deposited in these accounts at First Security Islami Bank.

Earlier, on 7 October, the court banned 13 individuals, including Saiful Alam, his wife, children, and brother, from leaving the country.