Crescent Group bank loan scam, influential quarter active to save the culprits

Vijaya Laxmi Tripura

Abdul Aziz and his brother Abdul Kader are not unknown names in Bangladesh, not because of their identity as so-called industrialist of businessmen, instead they are known for owning a controversial film production company named Jaaz Multimedia. According to Janata Bank sources, Crescent Group, a conglomerate of fraudulent companies owned by Aziz and his brothers owe over 3,600 crore Taka as defaulted loan. Although on November 2, 2018, Dhaka’s leading English newspaper The Daily Star quoted Abdul Kader saying, “We will get rid of loans if Janata Bank gets the money by selling off the property”, in reality the total movable and immovable properties and assets of Crescent Group won’t even cost more than two hundred crore Taka, meaning, the lending institution is not going to get the major portion of its investment back from this racket.

In a probe into Janata Bank, the central bank found that Crescent Group skimmed off at least Tk 765 crore in the name of exports from the state-run Janata and the BB from January 2017 year to February 2018. The central bank suspected that the sum was laundered. Even the group could not repatriate the proceeds despite making commitment to the bank of bringing back $500,000, or about Taka 4 crore, every week.

Janata gave Taka 684 crore to Crescent in advance against 653 overdue export bills. As of March 30 2019, Janata’s Imamganj corporate branch disbursed Taka 2,760 crore in loans to Crescent’s five companies, which was 98.4 percent of the branch’s total loans.

Meanwhile, Janata Bank could not hold the auction of the property of Crescent Group as the loan defaulters filled a Writ Petition against the auction a day before the last bid submission day on Wednesday and got a stay order. However, no bidder showed any interest in participating in the bidding as neither Janata officials nor Crescent Group high-ups could give the total market value of the mortgaged property and goods. Even Abdul Kader could not give the market value of the mortgaged property and goods.

Five firms of the group that owe money to the bank are: Crescent Leather Products, Crescent Tanneries, Lexco Ltd, Rupali Composite Leatherwear and Remax Footwear.  Aziz, owner of film production company Jaaz Multimedia, is the chairman of Remax Footwear while Kader is the owner of the four other companies.

Cases filed against Crescent Group owners:

Anti-Corruption Commission in February 2019 filed five cases against 22 people including seven Crescent Group bosses and 15 Janata Bank Ltd officials on charge of embezzling around Taka 1,745 crore from the bank in the name of export business with forged documents.

The accused allegedly embezzled the amount in the name of five sister concerns of Crescent Group.

Of the amount, Crescent Leather Products Ltd embezzled Taka 500 crore, Crescent Tanneries Ltd Taka 68.34 crore, Lexco Ltd Taka 74.38 crore, Rupali Composite Leatherwear Ltd Taka 454 crore and Rimex Footwear Ltd Taka 648 crore.

The accused Crescent Group officials are Crescent Leather Products Ltd chairman MA Kader, its directors Sultana Begum, also Kader’s wife, and Rezia Begum, Rimex Footwear Ltd chairman Abdul Aziz, who is also brother of Kader and owner of Bangla movies production house Jaaz Multimedia, and its director Rimex managing director Litun Jahan Mira and Lexco Ltd director M Harun-Or-Rashid.

The 15 accused Janata Bank officials are former Janata Bank general managers Fakhrul Alam and M Jakir Hossain, deputy general managers Kazi Rais Uddin Ahmed, AKM Asaduzzaman and Muhammad Iqbal, former DGM M Rezaul Karim, assistant general managers M Ataur Rahman Sarkar and SM Shariful Islam, senior principal officials Khairul Amin, Baharul Alam and M Magreb Ali, principal officer Muhammad Ruhul Amin and senior executive officers M Saiduzzaman, M Moniruzzaman and Abdullah Al Mamun.

The Group embezzled the money between 2015 and 2017, said Anti Corruption Commission.

ACC assistant director Gulshan Anowar filed the cases with Chawkbazar police in the capital, said its public relations officer Pranab Kumar Bhattacharjee.

It also found that Hong Kong, Thailand and Dubai-based companies — Sun Paul Leather Craft, Bio Li Da Trading Com, Ltd, Merchant Trade Guarantee Corp, Co Ltd, Bright View General Trading — issued the LCs from West African country Gambia-based bank named Axios Credit Bank Ltd avoiding their own countries though the companies had no business in Gambia, the official said.

Earlier, on January 30, Customs Intelligence and Investigation Directorate of National Board of Revenue filed three cases against 17 people including four business people from leather sector and 13 bankers for allegedly siphoning off Tk 919.56 crore from the country through faking exports.

CIID of NBR lodged the money laundering cases with the same police station indicting the owners of Crescent Leather Products Ltd, Rimex Footwear Ltd and Crescent Tanneries Ltd and officials of Janata Bank.

Customs intelligence also arrested MA Kader on January 30, 2019 from Kakrail area in Dhaka.

A good number of accused are common in the cases of ACC and CIID.
On January 31, the entire loan of Taka 3,572.98 crore given by the Janata Bank to five subsidiaries of Crescent Group became defaulted.

After the development, the scam-hit Janata Bank had Taka 2,868.77 crore more added to its piles of defaulted loans in the past three months mainly due to the failure of two of its clients to repay loans.

Abdul Aziz smuggled-out millions of dollars to India:

Abdul Aziz, owner of Jaaz Multimedia Limited has smuggled-out millions of dollars through illegal channels and invested the same with Kolkata-based movie production house named Eskay Movies. Aziz also has opened Jaaz Multimedia India Private Limited with its office in Ballyganj, Kolkata, (India).

Beside this, owner of the controversial film production company has smuggled-out crores of Taka to a number of countries and deposited in offshore bank accounts. There even are allegations of Aziz depositing his ill-gotten money into foreign bank accounts using the names of some of the actresses from Dhaka and Kolkata.

Abdul Aziz was supplying film actresses to bank officials:

With the ulterior motive of buying sympathy of the Janata Bank officials, Crescent Group owner and controversial film producer Abdul Aziz was regularly supplying film actresses to the officials of the bank. For this particular reason, bank officials had turned an blind eye on the illegal activities and swindling of bank money by Aziz. In some cases, Abdul Aziz had blackmailed several officials of the bank by secretly filming their private moments with the actresses supplied by Aziz.

Dhaka’s leading newspaper The Daily Star had taken the help of the banking expert with long experience in international trade and finance to decipher the technicalities mentioned in the report.

It showed the company in question, Crescent Group, which has already come under the spotlight in recent months for its alleged banking fraudulence, had exported leather products to some shady companies in Hong Kong. Indications are that these firms were shell companies because they actually don’t exist at their mentioned addresses and many of their directors are Bangladeshi citizens.

The documents also cast doubts as to whether the exports had actually taken place.

The whole scam was done in such a blatant way that even a novice could see the holes in Crescent’s deals. Only Janata did not.

These firms obtained export LCs from an obscure African bank. The authenticity of the LCs has also been questioned by the BB investigators.

The proceeds from the doubtful exports never came to Bangladesh, but Crescent, in collusion with the Janata Bank top officials, took out Taka 684 crore in advance against such exports from January 2017 to February this year, the investigators say.

This is just a part of the story.

It took an even more sinister turn when the investigators found that Crescent had drawn Taka 81 crore in cash incentives from the BB.

To get cash incentives, an exporter has to prove that export proceeds have actually been repatriated to Bangladesh.

But in case of Crescent, the money came not from the destinations of exports but from elsewhere which was shown as export proceeds to get cash incentives.

Crescent claimed to have exported to Hong Kong but its export receipts came from Dubai, often from different remittance companies.

The investigators suspect the “export receipts” were not the result of exports but money sent to Dubai from Bangladesh through legal or illegal means and then brought back again through remittance companies to be shown as export proceeds.

In clear terms, these were fake proceeds that were later used to siphon money from the BB as cash incentive, according to the investigation report.

In every step of the unscrupulous scheme, deep involvement of Janata Bank officials is clearly evident as the bank violated all security protocols in accepting the LCs and giving money to Crescent.

Here is the full saga of the scam:

In any overseas financial transactions, the beneficiary bank is supposed to carefully verify the authenticity of the importers to avoid fraudulence. Banks get reports on the importers from credit rating companies such as Standard & Poor’s.

But in this case, Janata did not bother to acquire such reports.

When the BB investigators asked the state-run bank to get reports, only then it obtained reports on only eight of the 21 importing companies that reveal how shady these companies were and Janata could have avoided fraud if it had just done due diligence.

The scam centering Crescent and Janata was apparently committed through 653 export bills all of which are now overdue or non-repatriated as it is termed in the banking world, meaning not a single payment from the exports were received.

These export orders were placed by 21 Hong Kong-based companies, but only nine of the firms placed 90 percent of the orders. Many of the companies have the same address which the investigators found as unusual and suspicious.

“Although the names of the buyers are different, it was found that their addresses and even office numbers are the same. It is very unusual and suspicious that importers of goods worth hundreds of crores of taka will share the same address,” the BB investigators observed.

They collected credit reports on eight of the firms from international credit agency Dun and Bradstreet, something that Janata itself should have done as part of its due diligence. The credit reports couldn’t provide financial information on any of the firms, seven of which are registered in Hong Kong and one in Bangkok.

Moreover, the BB found that the firms don’t exist at their mentioned addresses.

Two of the firms — Mutual Well Investment Ltd and King Profit Asia Pacific Ltd — not only share the same office address, but their directors and company secretaries are also the same persons.

Two other firms — Sun Paul Leather Craft and Lixiang Trading Ltd — also bear the same address though the nature of their business is different. They are owned by two Bangladeshis — Shahriyar Kabir and Masud Mowla.

The credit rating agency said no registration was found for two firms — Bio Li Da Trading Com Ltd and Lixiang Trading Ltd. But they had a Bangladeshi named Manzur Ahmed as their company secretary.

Another firm, Merchant Trade Guarantee Corp Co Ltd, is a freight forwarding company in Thailand. “It is unusual that a freight forwarding company had imported leather goods worth hundreds of crores of taka,” the investigation report said.

Janata, however, did not think about this point or they were being blackmailed by Abdul Aziz through those secretly filmed videos.

Please read further details in The Daily Star.

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