How S Alam Group took advantage of Islami Bank to take out Tk45,000cr loan

Infographic: TBS

Saiful Alam Masud, chairman of the controversial S Alam Group, has honed a unique style of minting money. His strategy often involves forming new companies or acquiring struggling ones, then securing loans worth hundreds of crores of taka in the names of these paper-based entities.

Masud, by which he is more popular, operates with the confidence that no bank will dare to question him, as many are under his control. To carry out this job he has strategically placed his men at top posts. In many cases, these companies are registered under the names of his relatives or other individuals.

One such example involves the staggering sum of around Tk45,000 crore that he withdrew from Islami Bank Bangladesh. A notable case is Silver Food Industries Limited, a struggling flour mill that Masud acquired for Tk18 crore in mid-2022. On 6 April 2023, Islami Bank's Anderkilla branch approved a loan of Tk850 crore for this mill, which has now ballooned to over Tk1,000 crore.

Silver Food is officially registered at 347 Jilani Tower in Khatunganj, Chattogram. However, after a three-day investigation, no sign of the company could be found at this address.

An old signboard bearing the name Silver Food was located on a building adjacent to Hamidullah Miah Mosque. The fourth-floor office there was found to be covered in cobwebs – a worker at a nearby raw materials shop said the office is rarely open.

The loan approval document lists Mamunur Rashid from Patiya municipality, Chattogram, as the chairman, and Mehedi Hasan from Sabujbagh, Dhaka, as the managing director. It was secured with two plots of land and project machinery valued at Tk109 crore.

Chairman Mamunur Rashid said, "The loan is in my name, but I don't handle these matters. A powerful industrial group used my name to get this loan."

Islami Bank's Senior Vice President and Head of the Anderkilla branch, Mohammad Borhan Uddin, declined to comment.

Economist Prof Moinul Islam told TBS, "No other group in the world has taken control of seven banks, including the country's largest Islamic bank, like S Alam has.

"The fact that loans worth thousands of crores of taka are going to non-existent or barely-known companies shows serious problems within the bank. Around Tk40,000-45,000 crore has already been syphoned off under various names. It's urgent that this money is recovered."

Thousands of crore loans for closed factory, non-existent company, tin shop

An investigation by TBS found that since the S Alam Group took over Islami Bank in 2017, Tk34,200 crore in loans have been disbursed from seven branches in Chattogram.

In April 2022, Mohammad Forkan and Kutub Uddin from Patiya upazila bought a flour mill from KR Foods in Mogpukor, Sitakunda, Chattogram, for Tk27 crore and renamed it Ideal Flour Mills Ltd.

They secured a Tk900 crore loan from Islami Bank's Chawkbazar branch, disbursed over 23 days between September and October 2022, with the debt now exceeding Tk1,100 crore.

After the ownership change, KR Foods briefly managed the factory, which has been closed for over a year, and Ideal Flour Mills has never operated under the new owners.

Despite the loan being intended for importing raw materials, there are no import-export records for the company. Locals are surprised that such a large loan was granted to individuals with no business background, as Kutub previously worked as a land broker, and Forkan was unemployed.

The loan was secured with factory land and machinery valued at Tk132 crore, even though the company's registered capital was only Tk10 lakh in 2022.

In 2021, Islami Bank's Chaktai branch approved a Tk600 crore loan to Inherent Trading and Impex Limited, which grew to Tk1,630 crore by March 2022, despite no repayments.

The loan, secured by land in Dhaka and Chattogram valued at Tk592 crore, has been regularly renewed, though branch officials claim the land value was inflated.

Inherent Trading, formerly Sunmoon Traders, was renamed in 2020, with Ziaul Kabir Chowdhury as chairman and Ansarul Alam Chowdhury as managing director. A TBS reporter found no trace of the company at its listed address, and locals were unaware of its existence.

Managing Director Ansarul, reportedly holding Tk3,000 crore in loans from multiple banks, is a cousin of Masud. Despite receiving over Tk1,000 crore in loans, Ansar's recent bank account application showed a monthly income of only Tk2 lakh. No business activities were linked to Chairman Ziaul Kabir.

Additionally, Islami Bank's Chaktai branch granted Tk170 crore in Covid-19 stimulus funds to Inherent Trading, despite the company being seemingly non-existent.

M/S Murad Enterprise, based in Chattogram, secured a Tk1,054 crore loan from Islami Bank's Chaktai branch in December 2021, with no repayments made and the loan renewed annually.

The loan, taken by proprietor Golam Sarwar Chowdhury (alias Murad) from Patiya, was approved for trading, using Tk270 crore in fixed deposit receipts as collateral.

Despite the large loan, the company's shop is a small, mostly empty 300 sq ft space with no records of imports in the NBR database, and the Business Identification Number used for the loan is fake.

Locals note that the company's trade-in corrugated iron sheets do not require such a large loan, and it lacks heavy industries or factories.

The loan approval was reportedly directed by Miftah Uddin, the then-head of the bank's Corporate Investment and International Services Wings.

Tk29,417cr loan from four branches

According to Bangladesh Bank, the S Alam Group has secured a record loan of Tk23,295 crore from Islami Bank's Khatunganj branch.

Major allocations include Tk10,083 crore to S Alam Refined Sugar Mill and S Alam Steels Mill, Tk3,968 crore to S Alam Super Edible Oil Ltd, and Tk3,694 crore to S Alam Vegetable Oil Ltd.

Other recipients include S Alam Cold Rolled Steels Ltd (Tk1,356 crore), Adil Corporation (Tk1,789 crore), Sadia Traders (Tk984 crore), and Century Food Products (Tk1,421 crore).

There are allegations that the S Alam Group began taking loans from this branch before officially acquiring ownership of Islami Bank, with the help of branch officials. Key figures involved in these loans include Masud and his relatives.

In addition to the Khatunganj branch, the group secured Tk2,922 crore in loans from Islami Bank's Jubilee Road branch, including Tk1,084 crore for United Super Trade and Tk1,538 crore for Karnaphuli Flour Mills.

They also received Tk2,000 crore from the OR Nizam Road branch for Unitex Composite Spinning and Unitex LPG, and Tk1,200 crore from the Pahartali branch for Unitex Steel.

The group has also borrowed at least Tk10,000 crore from other branches, including VIP Road, Nawabpur, and Gulshan-1 branches.

A deputy managing director of Islami Bank said, "S Alam took at least Tk40,000 crore from various branches, including Dhaka, Chattogram, and Rajshahi. These loans were given on orders from S Alam Group officials, ignoring all regulations."

The official added, "Bank officials had no chance or courage to check the collateral for these loans. Despite no repayments, the loans were renewed year after year."

Bank appointments, irregularities

Since the S Alam Group took control of Islami Bank in 2017, they have appointed relatives and close associates to key positions within the bank, leading to substantial loan approvals. Before 2017, the group's loans from the Khatunganj branch totalled Tk2,500 crore.

Notable appointments include Deputy Managing Director (DMD) Akij Uddin, who started as a cashier at First Security Bank and is now the second-highest-ranking official at Islami Bank. Another DMD, Miftah Uddin, also received an unusually rapid promotion compared to his peers.

Additional Managing Director Kaiser Ali and DMD Mohammad Shabbir, involved with the Khatunganj branch, are accused of similar irregular promotions. The branches disbursing large loans have benefited from these promotions and perks.

Bangladesh Bank spokesperson Mezbaul Haque said that the central bank will investigate the irregularities in loan disbursements at Islami Bank and other banks and take legal action.

Attempts to contact Islami Bank's Managing Director Monirul Mowla, as well as S Alam Group's Chairman Masud, Executive Director Subrata Kumar Bhowmick, and General Manager Md Akhtar Hasan, for comments were unsuccessful.

When asked about the loans taken under different names and in violation of regulations, S Alam Group's Chief Land Officer Mostain Billah Adil said, "I am busy right now and cannot talk. I will call you later."