Fake imports from shell firms new scam style

It is a new way of syphoning off money from the bank. The process is simple: you set up a project, take loans, and then you set up shell companies that are supposed to supply the equipment for the project.

So all the LCs are opened in the name of the shell companies and the mother company falsely certifies that it has received the imported goods. The bank of the importer then makes the payment to the shell company without checking whether the goods had arrived.

Otherwise, a simple and sure way of transferring money. And this is exactly what the Bangladesh Bank has unearthed in case of three companies when it investigated three companies taken as a sample of what is happening in the shady organisations.

The companies are Simi Knit Textile, Get Knit Textile and Suprov Spining and all of them actually belong to the scam-hit AnonTex Group. They together swindled Tk 850 crore from the bank.

Since all the stories are copycats of each other, in our report we have given the details of only one company, Simi Knit Textile.

Simi's story

In January 2011, the Janata Bank approved a Tk 95 crore loan to the newly formed Simi Knit Textile to build its maiden facility. 

The company floated a tender to import machineries and three indentors jointly bagged the deal. The bank disbursed Tk 72 crore for this purpose. 

The project was supposed to end by August 2011, according to a loan disbursement condition.

The bank disbursed the full loan within 45 days of approval. But neither Simi Textiles completed its project nor did the indentors supply any machinery.

After eight years, an investigation by the Bangladesh Bank found that the owner of Simi Textiles and the three indentors is the same person- Md Younus Badal.

According to the investigation, Badal is the chairman and managing director of AnonTex Group that swindled Tk 5,768 crore from the Janata Bank by taking various loans for 22 companies—many of which were created to bag the loans. 

The probe also found involvement of the high officials of Janata Bank Corporate Branch in the loan approval process and recommended their removal from the bank as per the banking law.

The central bank sent the report to Anti-Corruption Commission (ACC) for taking necessary legal actions in this regard. 

Meanwhile, Bangladesh Financial Intelligence Unit (BFIU) launched another investigation on AnonTex Group and found similar irregularities. The report also made its way to the anti-graft watchdog's office in December last year. 

The BFIU findings said that AnonTex started opening accounts with Janata Bank Corporate Branch by submitting project proposals since 2007. 

In the next seven years, the company had obtained loans against 15 projects, of which nine remained incomplete.  

The report also revealed that as of September 2019, Anontex Group owned 22 companies, of which all were loan defaulters. 

While investigating the Simi Textile scam case in September last year, the central bank found that Badal created three indenting companies named Wysuc Overseas, Universal Technological Services and Uni Asia Association. 

One was registered under his own name, while two others were under the name of his wife Jamila Akter Shima and business partner Md Kabir Hossen, one of the director of Anontex Group. 

As per law, an indenting company represents a foreign company, product or person and draws commission on any transaction taking place in the home country.

But the three companies formed by Badal did not represent any foreign supplier. They do not have any registration or agreement with any principal company, probe found. 

They submitted fake documents to the bank to secure the loans. The documents showed the country of origin of the imported machineries as Germany and the USA.

The Business Standard's repeated attempts to reach Md Yunus Badal for his comments on the matter went futile as he remained inaccessible. 

This correspondent visited AnonTex corporate office in Uttara on January 16 to find nobody except the receptionist Mukhlesur Rahman, sitting idle in the front desk. 

Badal was notified through a text message that a reporter from The Business Standard came to meet him, but he did not respond. 

Before visiting the corporate office, on January 9 this correspondent contacted Mostofa Sarwar, a director of the group over phone for a comment. Sarwar requested this reporter to visit the corporate office to talk over the issue. 

However, when this correspondent tried to contact him upon reaching the office, Sarwar seemed to have changed his mind and did not pick any calls. 

In a recent conversation regarding the AnonTex group scam, Managing Director of Janata Bank Abdus Salam Azad said he believes that the indentors are fake and did not submit all necessary documents. 

Why Bangladesh Bank investigated AnonTex

Until 2014, the group was in the good books of Janata Bank when Bangladesh Bank conducted a routine investigation and found no irregularities in its loan process. Instead, the investigation team praised AnonTex Group's business units as having a "world class standard".

In 2015, AnonTex availed the loan restructure package regularising loan of Tk1,095 crore. 

But it failed to continue the revised instalments, deepening further into the default zone. This caused the large borrower to come under radar of the central bank. 

Subsequently, Bangladesh Bank reviewed the meeting minutes of Janata Bank and found irregularities in loan approval processes and violations in single borrower exposure limit.  

Later in January 2018, Bangladesh Bank conducted a primary investigation to find out those responsible for the irregularities. 

The primary probe found that the loans granted to AnonTex accounted for more than 25 percent of the bank's capital base, which violates a single borrower's exposure limit as set in Bank Company Act 1991.

The investigation report also found involvement of the bank's board of directors and top management in the scam.

Following the findings, the central bank instructed Janata Bank not to give further loans to AnonTex; take necessary steps to recover the loans and frame the exit plan from AnonTex.

On the other hand, AnonTex chief met then Finance Minister AMA Muhith, to seek further loans.

On August 20, 2018, Muhith sat down with Badal and Janata Bank. After a discussion, he praised AnonTex Group in front of the press and said, "I have visited AnonTex Group and it is a first-class unit. The units are there."

But Bangladesh Bank maintained its strict stance and on December 2, 2018, asked Janata Bank to take necessary steps to reduce the loans down to single borrower exposure limit, alleging all 22 companies are owned by AnonTex.

On February 19 last year, AnonTex Group filed a case with the High Court claiming that it did not own the 22 companies. 

The group challenged the findings of the central bank and stated that it owns only four companies: Suprov Composit Knit, Galaxy Sweaters, Lamisa Spinning and Simran Composite. 

Subsequently, on March 26 last year, High Court stayed the central bank's decision by a month.

Six months later, in September last year, Bangladesh Bank picked three companies among the 22 and launched a special investigation. They found heavy inter dependency, internal transactions and massive irregularities – proving an interconnection of AnonTex and the three companies. 

Investigation found the three companies used the same method for committing the graft: a project proposal was submitted to the bank to get a loan. Then they withdrew money through three fake indentors in the name of purchasing machinery to set up the project infrastructure. 

In reality there was no supply or project implementation.

Following the probe report, the high court dismissed the case and upheld the central bank's decision.

The investigation found that not only 22, but the group also owns Jara Grain and Fast Treck Anontex, two more companies, which have transactions with the bank. 

Investigators believe that a functional audit will reveal more about the companies belonging to AnonTex, which took loans from the bank.

Three fake indentors   

Wysuc Overseas:

The Wysuc Overseas held bank accounts with Prime Bank and United Commercial Bank. The Prime Bank account was registered under the name of Younus Badal, while Kabir Hossen was shown as the owner of Wysuc Overseas while opening the account with UCB. 

Kabir Hossen is the managing director of Get Knit, an affiliate of AnonTex group.

The bank statement of Wysuc Overseas shows that it had transferred crores of taka from its accounts to different companies owned by AnonTex group.

Huge amounts of money was transferred from Janata Bank to the account held by Wysuc Overseas. The company's transaction between July 2010 and October 2016 stood at Tk1,097 crore.  

A Google search brings up a Korean company with the same name, which supplies machineries to the Bangladesh market. The president of the company is one Kyung Hun Lee. 

It is suspicious to have two companies with similar names in two countries owned by different proprietorship, the report said.

The official address in indent letter of Wysuc was Auchpara, Squib road, Nishatnagar, Tongi, Gazipur, Bangladesh, which is also the factory address of AnonTex group. The email address of Wysuc was [email protected] which proves that the indentor company is a proprietor company of AnonTex group.

Moreover, in the commercial invoice of Wysuc, same signature was used in the seal of two different companies Wysuc and Simi Knit.

Uni Asia Associates:

Similar to Wysuc, Jamila Akter Shima was shown as the owner of the company and an account was registered by her name with Prime Bank. Another account was registered with UCBL, identifying Kobir as the owner of Uni Asia Associates. 

A review of the papers of Uni Asia and Wysuc shows identical signature in official business. Janata Bank authenticated the identical signatures of both companies having dissimilar ownership at different banks.

The payment description of Uni Asia reads "100% Payment in favour of M/s. Wysuc Overseas…," which proves that the indents were prepared through forgery to obtain money from the bank.

Universal Technological Services

Yunus Badal introduced himself as the proprietor of the company at both Prime Bank and UCBL. After reviewing four indents, the investigation team found that the payment description reads "100% Payment in favour of M/s. Wysuc Overseas…," which proves that documents were forged.

Transaction History that proves common interest

On May 3, 2011, Simi Knit applied to Janata Bank for a loan for purchasing local machineries. The bank released total Tk6 crore at a time for purchasing machineries. The money was transferred to supplier Wysuc's account, a company owned by AnonTex group.

Despite not having production or business activities, Tk59 crore was deposited to Simi Knit's account from Jacard Knit, Suprov Spining, Suprov Millange, Alvi Knit, FK Knit, Suprov Composit, Simran Composit and Galaxi Sweater between May 2011 and December 2017.

Such transaction indicates there is inter-relation among the companies. Younus Badal is the direct owner of Suprov Composit, Simran and Galaxi Sweater.

In another instance, on 29 November 2011, Tk5 crore was transferred to Simi Knit's account from Suprove Composit for a day to inflate the account to get loan.

According to bank's rule, at least 5 percent of project loan will have to be deposited with the client's account. To comply with this rule, money was transferred to Simi Knit's account. 

Younus Badal is directly involved with Suprov Composit and the inter transaction confirmed the common interest of two companies Suprov and Simi Knit, the investigation report said.