A Matter Of Trust

Posted on October 20, 2007 by Mash

Trust Bank Prospectus Cover Sheet

[Cross posted at E-Bangladesh]

Since my post two days ago regarding General Moeen U Ahmed’s tenure as chairman of Trust Bank, General Moeen has responded to the concerns raised by me and others in the Bangladeshi blogosphere by giving a series of interviews to various television, radio and print journalists.

Today General Moeen’s response has been covered by every major Bangladeshi newspaper. General Moeen’s denial and the many interviews he has given surprised me. The blanket coverage in Bangladeshi papers was also surprising. I am sure Bangladeshi readers are confused since this may be the first time they are hearing about the Trust Bank issue since no papers have ever covered it. They must be wondering what General Moeen is responding to.

[display_podcast]

In his interviews, General Moeen denied taking out a loan of approximately 1 crore taka. Instead he said that the loan amount was much less and the Internet reports about his loan were "false" and meant to "malign" him. BDNews24 reports:

General Moeen U Ahmed Saturday brushed aside the allegations of taking Tk 1 crore in loans from a bank and said it was all designed to "malign" him.

The army chief, visiting the US, said: "It’s not true that I borrowed Tk 1 crore from Trust Bank. It’s not true either that I paid back Tk 60 lakh."

The interview was aired on BBC Radio (Bangla).

According to the allegations what BBC said was spread by the internet, Moeen borrowed about Tk 1 crore in loans from Trust Bank in 2005 and repaid more than Tk 60 lakh until the end of 2006.

"It’s totally false. I have borrowed only as much as permitted for an army officer in line with Trust Bank rules. I didn’t borrow even one taka more than permitted."

Moeen said he borrowed only Tk 35 lakh, which includes Tk 25 lakh in house loans.

"It’s all documented. Anyone can see that. Anybody can contact me. I am paying back the loans with the money I get from house rents," he told BBC by phone.

"It (allegation) was all designed to malign me."

The New Nation quotes General Moeen as follows:

General Moeen said, "I have the documents whatever I have said. Anyone can see these documents at any time. So, I took a loan of Tk 99 lakh and repaid Tk 66 lakh in the following year is absolutely a blatant lie.

"It is a propaganda against me which is being carried out intentionally. This propaganda is being carried out against me with an ulterior motive to destroy my image and undermine me before the members of the public. And, this propaganda has been carried out when I have come to the United Nations, and when the expatriates living in the United Kingdom and the United States have been extending warm welcome to me. Perhaps, someone could not tolerate this affection and love of expatriate Bangladeshis toward me and has resorted to making false, fabricated and baseless propaganda against me. But, I have nothing to say against such propaganda and spreading of lies. However, if somebody wants to know about the income and expenditure statement of mine or Trust Bank loan I will welcome him," he said.

The Army Chief said he had always been trying to remain transparent to his conscience. "So, I don’t want to make any comment on such propaganda through Internet. There is no problem if anyone wants to know about my account officially or privately," he said.

However, the prospectus filed on May 17, 2007 by Trust Bank to the Bangladesh Securities and Exchange Commission clearly notes that General Moeen had an outstanding loan amount of Tk. 9,969,215 at the end of 2005 and an outstanding loan amount of Tk. 3,315,323 at the end of 2006. The following chart appears on page 20 of the prospectus [click image to enlarge]:

Loans to directors of Trust Bank (page 20 of Trust Bank prospectus)

According to Trust Bank’s prospectus, the loan amounts to General Moeen specified on page 20 are "per audited accounts for the years ended on 31 Dec 2005 and 2006."

In his various interviews General Moeen went on to describe how he has been repaying the loan. However, my earlier post did not deal with the issue of how General Moeen has been repaying his loan. My post dealt with three issues that appear to run afoul of Bangladesh Bank regulations for banks. These issues are:

  • General Moeen and his brother, Iqbal U Ahmed, are both on the board of directors of Trust Bank. This appears to violate Bangladesh Bank regulations that state "not more than one member of a family will become director of a bank. For this purpose family members shall include spouse, parents, children, brothers and sisters of the director and other persons dependent on him/her."
  • General Moeen points out that his brother was already the Managing Director of the Bank when General Moeen became Chairman of Trust Bank. However, in November 2006, while General Moeen was Chairman, his brother was reappointed Managing Director of Trust Bank. This appears to violate the Bangladesh Bank regulations which state that the above "restriction shall apply to appointment/reappointment of the directors".
  • General Moeen had an outstanding loan amount from Trust Bank well in excess of the Tk. 500 it appears he is allowed to borrow as a member of the board of directors according to Bangladesh Bank regulations. The regulations restrict lending to directors of a bank. The regulations state: "the total amount of the loan facilities extendable to a Director or to his relatives should not exceed 50% of the paid-up value of the shares of that bank held in Director’s own name." General Moeen owns 10 shares of Trust Bank worth Tk. 1000 before the IPO, as specified on page 23 of Trust Bank’s prospectus.

It was refreshing to see General Moeen address the concerns about his tenure as Chairman of Trust Bank. However, his response has raised a discrepancy between the amount of loan he states he took out and the loan amount stated in Trust Bank’s own official filing with the Bangladesh government. General Moeen also did not address the Bangladesh Bank regulations and whether his tenure ran afoul of them. I hope that General Moeen or Trust Bank will clarify the discrepancy between what General Moeen has stated and what is in the Trust Bank prospectus, as well as the issues raised by the Bangladesh Bank regulations.

This is no small matter. Many individuals in Bangladesh have been thrown in jail by General Moeen’s government because what they stated from memory on their "wealth statements" did not match their bank records.

 

Posted in Bangladesh | 10 Comments

Coming To America – Junta Banking Edition

Posted on October 18, 2007 by Mash

[Cross posted at E-Bangladesh]

The head of Bangladesh’s military government, General Moeen U Ahmed, is coming to America. He is accompanied by the Air force chief Air Marshal S M Ziaur Rahman and by the other man instrumental in the January coup, Lt. General Masududdin Chowdhury. Last week Bangladesh’s Navy chief was also visiting the United States. It seems like the entire ruling junta is coming to America.

General Moeen, for his part, will be visiting Harvard University on October 21st. I am told that the General wanted to speak at the Kennedy School of Government (KSG) but wanted to restrict questions. Harvard refused. So, instead, the General will be speaking to a class rather than in a KSG sponsored public event.

On his way to America General Moeen stopped over in London, where he also had a chat with Britain’s Chief of the General Staff. In London, he once again dismissed persistent rumors that he wants to become President of Bangladesh. He also spoke out strongly in defense of the military’s "anti-corruption" drive:

In reply to a question, the army chief said those arrested and jailed were "corrupt". Throwing a challenge, he posed a question: "Can anyone find any honest person among those arrested and jailed?"

Indeed this "anti-corruption" drive has resulted in the jailing of most of Bangladesh’s top political leaders. Some notable convictions of politicians were 13 years imprisonment for incorrectly stating one’s net worth in the so-called "wealth statements" and 5 years imprisonment for having 21 bottles of alcohol in one’s home. In addition, two former Prime ministers, and leaders of the two leading political parties, are being held without bail on corruption charges.

General Moeen’s army has gotten tough on the politicians "in the nation’s forward march." The age of honestocracy is upon Bangladesh.

So it comes as a surprise to learn that General Moeen and his brother Iqbal U Ahmed are Chairman of the board of directors and Managing Director, respectively, of the same bank in Bangladesh – The Trust Bank. Ltd. The Trust Bank recently IPOed and its stock skyrocketed on its first day of trading on the Dhaka Stock Exchange, setting a new record for volume traded in a single day. Before the IPO, the owner of Trust Bank was the Army Welfare Trust. As such, the army chief, General Moeen, was appointed the Chairman of the board of directors. However, having two members of the same family on the same board of directors apparently violates the Bangladesh Bank regulations governing the constitution of the board of directors of a bank:

1. Constitution of the Board of Directors:-

a) The board of directors of the bank-companies shall be constituted of maximum 13 (thirteen) directors. However, the directors of the banks, where the number of directors is more than this number, shall be allowed to complete their present tenure of office.

b) This restriction shall apply to appointment/reappointment of the directors against retirement or filling casual vacancy subject to section 15 Ka Ka of the Bank Companies Act, 1991. –Not more than one member of a family will become director of a bank. For this purpose family members shall include spouse, parents, children, brothers and sisters of the director and other persons dependent on him/her. [Emphasis added]

One of the responsibilities of the Chairman and the board of directors is to appoint the Managing Director of the bank. Having family members on the same board of directors can lead to conflict of interest and nepotism. In November 2006 General Moeen was the Chairman of the board of directors when his brother was reappointed Managing Director of Trust Bank.

Not only are General Moeen and his brother, Iqbal, on Trust Bank’s board of directors, they are also borrowers of large sums of money from the bank. According to a prospectus filed by Trust Bank before its IPO, General Moeen had a loan with an outstanding balance of Tk. 9,969,215 at the end of 2005. By the end of 2006, the outstanding amount had been reduced to Tk. 3,315,323. His brother, the Managing Director, had an outstanding loan balance of Tk. 1,775,242 at the end of June 2006. At the end of 2005 General Moeen’s loan amount was by far the largest loan given to any director or senior executive of Trust Bank.

Bangladesh Bank regulations restrict lending to directors of banks. The regulations state:

1. Any loan facility or guarantee or security provided to a Director of a bank or to his relatives must be sanctioned by the Board of Directors of the bank and approved in the general meeting and has to be specifically mentioned in the Balance sheet of the bank. However the total amount of the loan facilities extendable to a Director or to his relatives should not exceed 50% of the paid-up value of the shares of that bank held in Director’s own name. [Emphasis added by me.]

The ownership of Trust Bank, before the IPO, consisted of 7,000,000 shares, with 6,999,920 shares held by Army Welfare Trust. Of the remaining shares, General Moeen owned 10 shares. His brother, Iqbal, owned no shares. Each share was valued at Tk. 100. Therefore General Moeen owned Tk. 1000 worth of shares. According to Bangladesh Bank regulations he was entitled, with the approval of the board of directors, to get a loan for an amount up to Tk. 500. In other words, at the end of 2005 General Moeen had a loan Tk. 9,968,715 in excess of the amount allowed by the law.

The reason the Bangladesh Bank regulations are in place is to guard against abuse of power by directors of private banks – that is to say, to prevent corruption.

It appears, from looking at the available public information on Trust Bank and its loans to its directors, that the loan to General Moeen exceeds that which is allowable by the law. In an environment where the Bangladesh military has been jailing politicians for failing to accurately recount from memory their net worth, it is extremely important that the man in charge of the military clear up any confusion arising from his tenure as the Chairman of Trust Bank.

 

Posted in Bangladesh, Foreign Policy | 11 Comments

The Stupidest Thing Ever Uttered By An American President

Posted on October 17, 2007 by Mash

See if you can spot the stupidity:

Q But you definitively believe Iran wants to build a nuclear weapon?

THE PRESIDENT: I think so long — until they suspend and/or make it clear that they — that their statements aren’t real, yeah, I believe they want to have the capacity, the knowledge, in order to make a nuclear weapon. And I know it’s in the world’s interest to prevent them from doing so. I believe that the Iranian — if Iran had a nuclear weapon, it would be a dangerous threat to world peace.

But this — we got a leader in Iran who has announced that he wants to destroy Israel. So I’ve told people that if you’re interested in avoiding World War III, it seems like you ought to be interested in preventing them from have the knowledge necessary to make a nuclear weapon. I take the threat of Iran with a nuclear weapon very seriously. And we’ll continue to work with all nations about the seriousness of this threat. Plus we’ll continue working the financial measures that we’re in the process of doing. In other words, I think — the whole strategy is, is that at some point in time, leaders or responsible folks inside of Iran may get tired of isolation and say, this isn’t worth it. And to me, it’s worth the effort to keep the pressure on this government.

And secondly, it’s important for the Iranian people to know we harbor no resentment to them. We’re disappointed in the Iranian government’s actions, as should they be. Inflation is way too high; isolation is causing economic pain. This is a country that has got a much better future, people have got a much better — should have better hope inside Iran than this current government is providing them.

So it’s — look, it’s a complex issue, no question about it. But my intent is to continue to rally the world to send a focused signal to the Iranian government that we will continue to work to isolate you, in the hopes that at some point in time, somebody else shows up and says it’s not worth the isolation.

Yes, ma’am.

I am so looking forward to the 2008 election.

 

Posted in Foreign Policy, Iran | 3 Comments

Eid Mubarak

Posted on October 13, 2007 by Mash

Eid Mubarak

Today is Eid ul-Fitr. It marks the end of the month of Ramadan and is a day of celebration, forgiveness, peace and unity.

On the occasion of Eid ul-Fitr, my family and I wish all of you peace, serenity, and joy. Eid Mubarak.

 

Posted in Islam, Personal | 6 Comments

Waiting For Albert Gore, Jr.

Posted on October 11, 2007 by Mash

Al Gore

In a few hours from now former Vice President Al Gore will most likely be the winner of the 2007 Nobel Peace Prize. If he wins, and I think he will, he should go for the trifecta.

The White House awaits. Buhdydharma at Daily Kos has a message for Mr. Gore: "Please?"

Good luck Mr. Vice President and, after you win, consider Buhdydharma’s request.

Update: Al Gore wins the 2007 Nobel Peace Prize.

The Nobel Peace Prize press release:

The Norwegian Nobel Committee has decided that the Nobel Peace Prize for 2007 is to be shared, in two equal parts, between the Intergovernmental Panel on Climate Change (IPCC) and Albert Arnold (Al) Gore Jr. for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change.

Indications of changes in the earth’s future climate must be treated with the utmost seriousness, and with the precautionary principle uppermost in our minds. Extensive climate changes may alter and threaten the living conditions of much of mankind. They may induce large-scale migration and lead to greater competition for the earth’s resources. Such changes will place particularly heavy burdens on the world’s most vulnerable countries. There may be increased danger of violent conflicts and wars, within and between states.

Through the scientific reports it has issued over the past two decades, the IPCC has created an ever-broader informed consensus about the connection between human activities and global warming. Thousands of scientists and officials from over one hundred countries have collaborated to achieve greater certainty as to the scale of the warming. Whereas in the 1980s global warming seemed to be merely an interesting hypothesis, the 1990s produced firmer evidence in its support. In the last few years, the connections have become even clearer and the consequences still more apparent.

Al Gore has for a long time been one of the world’s leading environmentalist politicians. He became aware at an early stage of the climatic challenges the world is facing. His strong commitment, reflected in political activity, lectures, films and books, has strengthened the struggle against climate change. He is probably the single individual who has done most to create greater worldwide understanding of the measures that need to be adopted.

By awarding the Nobel Peace Prize for 2007 to the IPCC and Al Gore, the Norwegian Nobel Committee is seeking to contribute to a sharper focus on the processes and decisions that appear to be necessary to protect the world’s future climate, and thereby to reduce the threat to the security of mankind. Action is necessary now, before climate change moves beyond man’s control.

 

Posted in Human Rights, Personal, Politics | 8 Comments