The successors (children and grandchildren) of three big Chattogram-based loan defaulters have set up their own separate companies to run businesses, but banks are wary of giving them loans as they do not want to get burnt twice.
The companies – SA Group, Balaka Group and Elias Brothers – altogether owe around Tk6,000 crore to more than half a dozen banks. They had been taken to the court to realise their debts, but these cases have been pending for close to a decade.
In the meantime, their successors have set up their own companies utilising the properties of their ancestors. They are using their fathers' and grandfathers' offices and warehouses which has led bankers to believe that these new organisations are actually fronts for their earlier entities set up afresh to get new bank loans. Therefore, bankers are being extra cautious in dealing with these companies.
The newcomers in business claim, legally, they are separate organisations who should not be held responsible for their predecessors' liabilities.
However, the banks are sceptical about their stands and say laws should be there to bar defaulters' successors from using the same premises for conducting business while refusing to take over the burden of their ancestors' loans.
SA Group running business in the name of Muskan
SA Group Chairman Shahabuddin Alam, one of the country's top loan defaulters, has defaulted on around Tk4,000 crore of 18 banks and financial institutions.
Over 100 cases were filed against Shahabuddin for loan recovery. He was arrested in a case on 17 October in 2018. Later after serving his time, he was released on bail and launched Muskan Group with his sons, staying under the radar. Sajjad Arefin, son of Shahabuddin, has been shown as the group's owner.
Bankers in Chattogram say SA Group is one of the companies that has put the country's banking sector at risk. He has set up the new company as a tactic to get a new bank loan by shielding himself from the earlier liabilities.
The group has already applied to various banks for new loans. But the bankers have ignored these applications, they added.
Rafiq Newaz, former manager at Uttara Bank's Agrabad branch, currently zonal head in Cumilla, said, "SA Group had sought a fresh loan in the name of Muskan. We rejected the loan proposal that showed Shahabuddin's son as the owner of Muskan. We do not want to take any new risks."
Muskan Group has also applied for loans to several other banks but they are not responding to those applications either.
Terming Shahabuddin a deliberate defaulter, AKM Siaful Islam Chowdhury, executive vice-president and Chattogram regional head at Bank Asia, said he was unwilling to pay back loans. Lending to Muskan is as risky as it is to SA Group.
Mia Md Barkat Ullah, senior vice-president and head of Agrabad Corporate branch of Islami Bank said, "The value of SA Group's collateral to the bank is much lower than its defaulted loan. That is why we had to go for legal action to recover the loan. The company has applied for loan rescheduling and we have forwarded that application to our head office."
If a defaulter company starts business under a new name, the bank cannot legally do anything against it, he added.
SA Group's loans at banks, financial institutions
The highest defaulted loan of SA Group is Tk600 crore with Islami Bank, followed by Tk481 crore with First Security Islami Bank, Tk338 crore with Bank Asia and Tk288 crore with Pubali Bank.
Besides, the group owes Tk247 crore to Dhaka Bank, Tk221 crore to National Bank and Tk200 crore to Janata Bank.
The other lenders to the conglomerate are Rupali Bank, Agrani Bank, Social Islami Bank, Krishi Bank, Mutual Trust Bank, Uttara Bank, Prime Leasing, Commerce Bank, Midas Finance and Al-Arafah Islami Bank. They have not yet got any repayment of their loans to the company.
The Business Standard approached Shahabuddin Alam for comment on default loans and setting up Muskan Group in the name of his son. Despite several attempts, the newspaper could not get any statement in this regard.
Balaka becomes Dream Group
Nur-un-Nabi owes more than Tk800 crore to the banks.
Bankers said he set up Dream Group in the name of his son, Safat Bin Nabi, to avoid the liabilities.
The group was set up with loans taken out against Balaka Group and its subsidiaries. In bank documents, the address of Balaka Group is mentioned as Nib House, Agrabad, they added.
The place now holds a sign of Dream Group which has multiple business wings, including garments and knitting.
Nur-un-Nabi is not repaying loans but running his business by setting up a new company in the name of his son, said Mohammad Belal, senior assistant vice-president of Bangladesh Commerce Bank Limited and also head of the Agrabad branch.
The banks tried to recover loans from Balaka Group by selling its mortgaged land but failed.
"Balaka Group mortgaged 200 decimals of land against a loan of Tk200 crore. As the group failed to repay the loan, we put the land up for auction. But the land could not be sold for non-cooperation of the borrower and not getting a fair price. A loan case was filed against the company owner to recover the loan amount," Mohammad Belal also said.
Md Kamal Uddin, Chattogram regional head of First Security Islami Bank, said the group availed several rescheduling facilities, but it did not repay the bank loan.
The banks also filed several lawsuits with Chattogram Money Loan Court against Balaka in a bid to realise the loans.
Nur-un-Nabi started his business in different sectors such as knitting, garment accessories and travel in the 90s.
Balaka's loans at banks
Balaka took out Tk400 crore in loan from First Security Islami Bank and defaulted on the entire amount.
The group also owes Tk151 crore to Mutual Trust Bank, Tk128 crore to Bangladesh Commerce Bank, Tk17 crore to Southeast Bank and Tk16 crore to Premier Bank.
While contacted, Nur-un-Nabi said, "I could not repay the banks due to business losses and is now trying to pay them back gradually."
He claimed loans taken against Balaka were not invested in setting up Dream Group. His son owns the newly set up business.
Elias Brothers renamed as MEB Industrial Complex
Chattogram-based Elias Brothers is another group on the list of top loan defaulters.
The group that once led the country's consumer goods business defaulted on a loan of Tk1,000 crore from 15 banks.
Unwise investments and family conflicts caused the group to decline that had begun its journey during the British era.
The third generation of the Elias Brothers owners has now changed the group's name to MEB Industrial Complex led by Mohammed Shouib, a grandson of the Elias Brothers owner, Mohammed Elias.
Shouib is unwilling to take the liability for the bank loans taken by his predecessors.
Elias Brothers defaulted on Tk280 crore of Agrani Bank and Tk270 crore of National Bank. The business entity also owes Tk73 crore to Eastern Bank, Tk62 crore to AB Bank, Tk63 crore to Islami Bank and Tk55 crore each to Mercantile Bank and City Bank.
The group also defaulted on loans taken from Bank Asia, ONE Bank, Standard Bank, Shahjalal Islami Bank, Pubali Bank and Exim Bank.
MEB is currently operating its business in several sectors, including bitumen imports. Its businesses of bottled water, edible oil and consumer goods remain closed at present.
Bankers in Chattogram said most defaulted loans were in the name of Shamsul Alam, Nurul Absar and others who are the second generation of the Elias Brothers.
The present generation has also benefited from these loans, and they are also the heirs of the property built with the loan money. MEB is enjoying all the movable and immovable property of the Elias Brothers, including its office, warehouse, factory, land etc.
The banks questioned: Why will they not take the liability when they are utilising the property and goodwill earned by the Elias Brothers with the bank loans?
Jasim Uddin, senior vice-president and zonal head of Mercantile Bank in Chattogram, said the issue of non-payment of the bank loan is just a ploy to default on it.
The effort to recover loans from Elias Brothers through selling the mortgaged properties also failed.
ASM Helal Uddin, senior vice-president and Khatunganj branch manager of National Bank, said, "The mortgaged properties were put up for auction but no suitable bidder was found. Moreover, the value of the mortgaged properties is much lower than the loan amount. So, we filed a case against the company owners."
MEB Chief Shouib said, "I did not take the loan from the banks. My father and uncles had taken it. Why should I take the liability of their debt?"