The Bangladesh Bank finally decided to act upon the findings unearthed recently by a chartered accountant firm into irregularities and allegations of embezzlement against SM Shamsul Arefin, managing director and chief executive officer (CEO) of Uttara Finance.
He was also accused of falsifying the non-bank financial institution (NBFI)'s annual financial report and information provided to the Credit Information Bureau (CIB).
The central bank also ordered the NBFI to take legal actions against him, who claimed that the funds were taken for his son's treatment, and that he had returned some of it from time to time.
Rahman Rahman Huq, a chartered accountant firm, recently carried out a special audit into the irregularities committed by Arefin, which were later proved.
Earlier, Bangladesh Bank had directed Uttara Finance to revise its 2019 financial report.
However, in that year dividends have been distributed to investors based on the same year's financial report.
According to sources, Uttara Finance has not yet been able to correct its 2019 financial report.
Moreover, the company failed to prepare annual financial reports for 2020 and 2021 as well.
Primary accusations
According to the probe report, irregularities in the disbursement of loans and collection of deposits involving Tk 5,100 crore were committed by the board and management of Uttara Finance and Investment Limited, the probe found.
Arefin was found to be involved in siphoning off funds and eroding the interest of depositors and other stakeholders of the financial institution, the report also said.
He took Tk24.22 crore from the company without approval from the board.
The amount was not even stated in the NBFI's financial statement and he does not have any loan account with the lender.
At that time, Arefin had told the audit team that he had taken the funds for his son's treatment and returned a good amount from time to time.
Dhaka Tribune tried to reach him several times for his comment, but to no avail as of filing this report.
On the other hand, Md Serajul Islam, central bank spokesperson and executive director, said that the removal order had been in effect since June 23.
By confirming a letter was sent to him on Thursday, Islam said that it will be effective from the day the letter was sent.
Regarding the matter, the executive director also informed that: “Earlier, Bangladesh Bank raised questions about various financial irregularities of the NBFI. Even the Uttara Finance report sent to the central bank was evidently 'incorrect'.”
“Then the central bank asked for an explanation from Shamsul Arefin, the company's managing director. But the information and explanation given by him did not match reality. Dissatisfied with his response, it forced Bangladesh Bank to make such a decision.”
The central bank also ordered the NBFI to take legal actions against Arefin for the irregularities found by the audit firm.
Uttara Finance Company Secretary Zakir Hossain told the media: “The 2019 audit is over. Some amendments are being made as per the instructions of the Bangladesh Bank. Once the amendment is approved, the next audit report for 2020 and 2021 will be prepared.”
“Now we are waiting for further instructions,” he added.