The central bank authorities have denied the findings of the report, saying its vault is protected by a six-layer security system
An inspection report by the Customs Intelligence and Investigation Directorate (CIID) has revealed irregularities regarding gold stored in the vault of the Bangladesh Bank, which could cause a huge loss to the government.
The central bank, however, has vehemently rejected the report, saying its findings were faulty because it is impossible to penetrate the vault's security system.
The irregularities came to light in a news report published yesterday by a national Bangla daily - the Prothom Alo, which said around 3.3kg of apparent gold coins and rings had been found to be made of mixed metals, while gold bars that were measured to be 22 and 24 carats during deposit turned out to be 18 carat later.
The CIID found the shocking discrepancies when they examined 963kg of randomly selected gold bars and other objects stored in the Bangladesh Bank vault from January to April in 2017, the news report said.
According to the CIID report, submitted to the central bank this year via the National Board of Revenue (NBR), the gold coins and rings that were deposited to the central bank in 2015 were tested and found to be made of 80% pure gold at that time.
But when the CIID inspection team tested the same rings and coins two years later, they found 46.66% gold in them.
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Sources in the banking sector as well as banking experts believe the original gold items were pilfered out of the vault and replaced with low quality duplicates.
These irregularities could cost the government more than Tk3 crore, according to the CIID report.
Leading economists have asked the Bangladesh Bank to launch a fully-fledged investigation into the matter.
“It is impossible to make changes in the quality or measurement of a gold item once it is deposited in the [Bangladesh Bank] vault, unless someone with access to the vault physically changes the item,” former Bangladesh Bank deputy governor Khandaker Ibrahim Khaled told the Dhaka Tribune yesterday.
This is not the first time that the central bank has found itself at the centre of a scam.
In February 2016, unidentified hackers stole around $81 million from the Bangladesh Bank’s account in the Federal Reserve Bank of New York using fraudulent orders on the SWIFT payment system, sending the money to accounts in Philippines-based Rizal Commercial Banking Corporation (RCBC). As of February 2018, around $15 million have been recovered.
The Bangladesh Bank has outright rejected the CIID report, saying whatever discrepancy there might be was due to “clerical error.”
During an emergency press conference yesterday, the central bank officials said the error had been made by the goldsmith who tested the gold items in question at the time of deposit.
Awlad Hossain Chowdhury, who is in charge of the vault, said the only error made by the central bank was language-based – mainly confusion of English-Bangla translation during documentation.
He further said the information mismatch regarding gold carats was because they had been measured by two different machines, and “each machine reads differently.”
“The customs intelligence's machine may have measured the bars as 22 carat, but our machine found them to be 18 carat,” he told the press conference.
Dismissing the Prothom Alo report, Bangladesh Bank Executive Director SM Rabiul Hassan said there was no scope of changing or altering the gold preserved in the central bank’s vault. “The [CIID] report is absolutely baseless,” he added.
The central bank official further claimed that the report was arbitrarily prepared by the CIID and it had no relation with the Bangladesh Bank, reported UNB.
“There is a six-layer security system in place to protect the Bangladesh Bank vault. Even the governor and the deputy governor needs security permits to access the place,” he added.
Speaking to the Dhaka Tribune, CIID Director General Shahidul Islam said his agency did not have a machine of its own that could make the error.
Rejecting Bangladesh Bank's claim that the CIID report was faulty, the CIID chief said the gold items had been tested, weighed and documented using machines owned by the central bank, in the presence of a bank official.
“Their representative was in front of us. Even the inspection done by the customs intelligence was done in front of the bank representatives. There is no way we can be blamed,” he told the Dhaka Tribune.
Sources said all illegal gold confiscated by different government agencies are deposited to the central bank vault.
In each case, the concerned authority contacts the central bank and then takes the gold to the vault on a day agreed upon beforehand. The central bank officials in charge of the vault then run tests on the products to measure the weight and the purity.
If it is bullion that meets international standards, it is added to country's foreign currency reserve. If it is a piece of jewellery, the bank sells it through open tenders and deposits the money to the national exchequer.
Leading economists and banking experts have called upon the central bank to launch an in-depth investigation into the matter, regardless of the authenticity of the CIID report.
“The gold is deposited in the presence of Bangladesh Bank officials, who have to sign a form when they receive the items. Whenever the vault's custodian is changed, all the gold items are re-measured and re-verified,” he told the Dhaka Tribune.
There is no way that the items can be changed, unless a bank insider does it, he added.
“If the Bangladesh Bank officials thought there was error in CIID's measurements of the gold items, why did they not raise any objection before,” he further asked.
“These are huge allegations. The bank authorities must find out those responsible for this, reveal them to the public, and take legal action against them,” he said.
Prof Mustafizur Rahman, distinguished fellow at independent think tank Centre for Policy Dialogue (CPD), said the CIID report was “very alarming.”
“The central bank should run an in-depth investigation to find out whether the allegations are true. If they are, the authorities should find out why and how it happened and who are responsible,” he said.
After the cyberheist of 2016, incidents like this will affect people's confidence in the central bank, said the CPD fellow.
He also requested the central bank to ensure necessary security for the vault so incidents like this are not repeated in future.
AB Mirza Azizul Islam, former finance adviser to the 2007-08 caretaker government, said the incident came to light after a government agency looked into it.
“The next step should be to find out who has access to the vault, who was responsible for the irregularities and take strict action against them,” said the leading economist.