Union Bank branch manager uses multiple schemes to embezzle Tk8cr: Internal probe

Infograph: TBS

Highlights:

• Internal investigation uncovers Tk8cr heist
• Manager employs illicit methods over several years
• The scam came to light in January
• Some dishonest customers may have involved in it 
• Authorities suspend manager and issues show-cause notice
• Affected customers trying to retrieve deposits for months
• Bank says money won't be reimbursed until full probe ends

An internal investigation has uncovered a major financial fraud at Union Bank's Hatkhola branch, where manager Zakir Hossain is accused of systematically syphoning off over Tk8 crore from customer accounts over several years.

The fraudulent methods included creating loans against savings and fixed deposit accounts without customers' consent, duplicating accounts, and transferring funds between accounts.

The scam came to light in January when a customer attempted to withdraw his deposited funds, revealing the manager's fraudulent activities. Union Bank's immediate internal inquiry subsequently confirmed the branch manager's involvement in the widespread fraud affecting numerous customers.

This prompted the bank authorities to suspend him. The bank also served him a show-cause, asking why legal action should not be taken against him for the financial irregularities.

Affected customers await reimbursement

Despite evidence of fraud, the bank has yet to reimburse the affected customers. At least 20 customers have been visiting the bank's branch and head office for months in an attempt to retrieve their deposits.

The bank authorities have been providing assurances that the funds would be recovered from Zakir and then returned to the customers, without establishing any concrete mechanism for repayment.

Probe findings

The investigation report, seen by TBS, states that Zakir served two terms as manager of the Hatkhola branch: from 25 January 2016 to 8 December 2020, and again from 7 February 2021 to 30 January 2025. The report suggests that he engaged in illicit activities during both periods.

The investigation revealed that Zakir transferred and withdrew money through various accounts by creating fake investments or loans. He also duplicated Mudharabah Term Deposit Receipt (MTDR) blocks and created loans against them to withdraw funds. 

Additionally, he reconciled loans of some customers by manipulating transactions in others' savings accounts and transferring funds from customers' savings accounts to other accounts for withdrawal. As of 17 February, the investigation found that Zakir had syphoned off Tk8,06,88,000 from various customer accounts at the Hatkhola branch.

When contacted on 16 June, Union Bank Managing Director Humayun Kabir told TBS over phone, "The branch manager and some dishonest customers jointly carried out these irregularities and are now trying to shift the blame onto the bank." 

He added, "An investigation is currently underway. The authorities will make a decision once the full investigation is complete. Zakir has been temporarily suspended and is being pressured to return the money."

Accused branch manager Zakir told TBS, "I don't want to comment on this matter. The audit department is working on it. The audit department will speak on this."

A customer's account

One affected customer, Mizanur Rahman, had deposited Tk60 lakh in two accounts under Mudharabah Term Deposit Receipt, an Islamic banking product based on the Mudharabah principle for depositing funds for a fixed term, at Union Bank's Hatkhola branch.

Mizanur told TBS, "I had a loan against my first MTDR, which I had already settled. There was no loan against my second MTDR. But last January, I went to the bank manager to withdraw the money from the second MTDR. The manager advised me to deposit the original copy of the MTDR and return it in two to three days. I left the original MTDR copy with the manager accordingly.

"When I later contacted the branch, I was informed that a loan of Tk60 lakh had been taken against my MTDR. I was told that the bank would not honour my MTDR unless the loan was repaid. But I never took a loan from the bank against that MTDR. Afterwards, in February, I learned that this manager had withdrawn money from many customer accounts by creating fake loans and through other methods."

He added, "Since then, despite repeated attempts to contact the bank's branch, head office, and various other levels, I have not received my money back."

Mizanur, who owns a shoe manufacturing factory in Dhaka's Savar and produces shoes for various local brands, informed TBS that due to a lack of capital, he is unable to deliver many orders on time.

Union Bank is among several financial institutions that have faced capital shortages following last year's political changes. The bank has been struggling to repay large customer deposits for several months.

Recently, Bangladesh Bank Governor Ahsan H Mansur said that five Islamic banks, including Union Bank, would be merged into a single entity soon.