Saad Musa Group’s colossal monetary fraud shakes Bangladesh banking sector

Saad Musa Group, an industrial conglomerate primarily based within the port metropolis of Chittagong, Bangladesh, has gained notoriety lately resulting from its involvement in a large-scale monetary scandal. Below the management of Muhammad Mohsin, the group has managed to safe loans amounting to Tk 5,668 crore (roughly $670 million) from varied banks by presenting fraudulent documentation of uncooked materials purchases for exports. Over the previous decade, all of those loans have defaulted, leading to extreme monetary misery for twenty-four banks and monetary establishments within the nation.

Muhammad Mohsin, typically described as a grasp manipulator, has a historical past of evading repercussions from monetary scandals much like these involving Crescent, Hallmark, and Bismillah teams. He has earned the doubtful title of the “new king” of voluntary defaulters in Bangladesh. His monetary maneuvers have left a path of devastation, notably impacting the Nationwide Financial institution Restricted (NBL), which has been considerably defrauded by the Saad Musa Group.

NBL’s Agrabad department alone holds defaulted loans of BDT 11.78 billion from 4 Saad Musa Group corporations. Among the many fraudulent actions, Mohsin established a paper firm named ‘Radium Composite Textile Mill,’ appointing his cousin Moin Uddin Ahmed Chowdhury because the Managing Director. This firm secured BDT 7.55 billion from NBL. Moreover, accounts beneath the identify of ESM Company, opened by Radium Composites and Saad Musa Group worker Mohammed Shawkat Ali, had been extensively used to promote faux payments throughout varied banks. Moreover, Mohsin withdrew BDT 1.88 billion in authorities incentive loans, supposed to mitigate the influence of the COVID-19 pandemic, with out investing it again into his enterprise.

The investigation revealed that Mohsin obtained most of those loans between 2012 and 2021. Regardless of buying substantial funds purportedly for export-related uncooked supplies, precise exports amounted to solely BDT 1.92 billion, carried out solely by Al-Arafah Islami Financial institution. At present, all factories for which these loans had been organized are non-operational.

In 2021, the Bangladesh Monetary Intelligence Unit (BFIU) submitted a report back to the Anti-Corruption Fee (ACC) highlighting the group’s quite a few irregularities and recommending authorized motion. Though the BFIU directed banks to get better their loans, Mohsin continued to siphon off funds, shutting down his companies when beneath scrutiny. By mid-2022, he tried to safe further loans by falsely claiming to have important loans from banks in China, Belgium, and Germany, however these claims had been quickly debunked, resulting in lawsuits within the credit score courtroom.

Muhammad Mohsin, initially a resident of Anwara in Chittagong, began his enterprise profession in 1982, transitioning from supplying items to native outlets to opening a grocery retailer in 1986, and finally getting into the garment business. In 1994, he co-founded the Saad Musa Group along with his father and uncle. Mohsin can also be an entrepreneurial director of South Bengal Agriculture and Commerce Financial institution, operational since 2013, whereas his spouse, Shamima Nargis, previously served as a director of Meridian Finance and Funding till her resignation in February.

On April 23, 2021, the Finance Courtroom of Chittagong banned Mohsin and his spouse from leaving the nation resulting from a case involving BDT 30.00 billion. Quite a few arrest warrants have additionally been issued towards him in different bank-related instances.

Regardless of these allegations, Mohsin claims he’s a sufferer of vendetta, asserting his financial institution loans whole BDT 35.00 billion towards his belongings price BDT 90.00 billion. He denies having any benami (undeclared) loans or belongings. When confronted with BFIU’s investigation into mortgage fraud by faux accepted payments, he admitted to some fund diversion however maintained that every one cash was invested again into his enterprise.

Just lately, Bangladesh Financial institution issued tips on figuring out and taking motion towards voluntary defaulters. Officers from the Central Financial institution have indicated that Mohsin’s actions align with these tips, categorizing him as a willful defaulter.

Saad Musa Industrial Park, situated close to Barkal Highway earlier than getting into Anwara Upazila Sadar, stands as a testomony to the group’s fraudulent actions. On March 31, a safety guard, concealing his id, found that every one factories throughout the industrial park had been locked, and a rusting five-story metal construction constructing bore the signboard “Proposed Saad Musa Financial Zone.” Locals recounted that the group employed 1,700 staff in 5 factories, however manufacturing halted years in the past, with factories absolutely closing in November 2020 and worker wages remaining unpaid.

Reverse the economic park, a once-thriving restaurant named ‘Allahhar Daan,’ primarily serving Saad Musa Group’s officers and workers, closed in 2022 as a result of manufacturing facility’s decline. The restaurant proprietor now sells previous furnishings from ships.

Muhammad Mohsin’s land acquisitions, notably round 2012, sparked curiosity and suspicion amongst locals. Initially, they assumed the belongings had been bought with authentic enterprise funds, solely to later notice that the acquisitions had been made utilizing financial institution loans.

NBL’s entanglement with the Saad Musa Group started in 2011 with a BDT 1.20 billion composite mortgage, which finally escalated to BDT 9.59 billion beneath the financial institution’s former administration. By 2016, NBL had authorised BDT 4.15 billion in working capital loans for Saad Musa Hometex and Clothes. Nevertheless, important quantities had been misappropriated to settle unrelated money owed, corresponding to transferring BDT 1.05 billion to Mahim Actual Property, owned by the late MP Aslamul Haque, to clear his Maisha Property’s debt.

Additional investigations by Bangladesh Financial institution in 2017 revealed irregularities within the sale of land belonging to the Nationwide Financial institution Basis, indicating potential private features for some financial institution homeowners. The BFIU’s 2021 report back to the ACC documented misuse of presidency incentive loans and different monetary malpractices, recommending authorized actions towards these concerned.

Muhammad Mohsin denied allegations of transferring funds to settle Aslamul Haque’s money owed, citing enterprise relationships as a substitute. Nevertheless, his responses had been evasive when probed additional on particular transactions.

In 2018, regardless of Saad Musa Group’s default standing with NBL, Mohsin managed to safe a BDT 4.10 billion mortgage for his cousin’s firm, Radium Composite Textile Mill. This mortgage, together with a number of others, was fraudulently manipulated utilizing faux native LCs, leading to substantial misappropriation of funds.

Premier Financial institution and Exim Financial institution have additionally fallen sufferer to the Saad Musa Group’s fraudulent schemes, with Premier Financial institution defaulting on BDT 4.64 billion and Exim Financial institution on BDT 4.98 billion. These loans had been obtained by misleading means, together with creating faux accepted payments and misusing funds supposed for capital gear and spare components imports.

Prime Financial institution, too, suffered from fraudulent loans, with BDT 1.22 billion defaulted. In 2012, Prime Financial institution disbursed BDT 800 million for setting up a manufacturing facility constructing for Saima-Samirah Textile Mill with out verifying the development progress, leading to misappropriation of funds for different functions.

The listing of banks and monetary establishments impacted by the Saad Musa Group extends additional, together with Commonplace Financial institution, Agrani Financial institution, Pubali Financial institution, Mutual Belief Financial institution, Southeast Financial institution, NCC Financial institution, and NRB Business Financial institution, amongst others, with defaulted loans amounting to a whole bunch of crores.

Regardless of these intensive monetary irregularities, Muhammad Mohsin continues to say he can rectify the scenario if supported by the federal government, citing his operational factories and equipment as potential belongings for restoration.

Investigations additionally uncovered that Mohsin bought an industrial plot in California, USA, in 2012 utilizing laundered cash. Though the plot was bought secretly in 2014, a cash laundering case filed by the Nationwide Board of Income (NBR) towards Mohsin is ongoing.

An official from Bangladesh Financial institution described Mohsin as “very crafty,” noting suspicions of his makes an attempt to deliver again laundered cash within the guise of international loans. Regardless of suggestions from the BFIU, the ACC has but to take decisive motion towards Mohsin.

Bangladesh Monetary Intelligence Unit’s 2021 report back to the Anti-Corruption Fee (ACC) detailed particular situations of mortgage fraud and beneficial authorized motion, but ACC’s investigation recommended dropping costs towards Mohsin, citing his potential to create employment alternatives by future investments.

Saad Musa Group scandal underscores the pervasive points of economic fraud and corruption inside Bangladesh’s banking sector, highlighting the necessity for stringent oversight and accountability to guard public and depositor pursuits.

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