“We’ve received the complaint filed by former home minister Muhiuddin Khan Alamgir on the Padma Bank. We are working on the matter. We will seek the Padma Bank’s statement,” SEC Chairman Shibli Rubayat-Ul-Islam said at a dialogue organised by the Economic Reporters Forum in Dhaka on Saturday.

Alamgir, the founding chairman of the bank, has alleged that his successor Sarafat invested Tk 1 billion of the bank in a fund in a “breach of rules”.

“We will talk to the asset management company as well. We will check everything to determine which information is correct. Everything will happen according to the law of the land. There is no reason for deviation on our side,” said SEC chief Islam, responding to a query from a reporter.

Dogged by loan scam and irregularities, the ownership and management of The Farmers Bank changed in 2018 before it was rechristened Padma Bank the following year apparently to restore its image.

The government approved the Farmers Bank, owned by Alamgir, an Awami League Presidium member, in 2013. He resigned as chairman following pressure over loan scams and irregularities in 2017.

Sarafat took over as chairman of the bank in early 2018 before the bank was renamed at the beginning of 2019.

The chairman of RACE Asset Management Ltd also heads the board of trustees of the Canadian University of Bangladesh.

The board of directors of the now-defunct Farmers Bank sanctioned an investment of Tk 1 billion in the Alternative Investment Fund of Bangladesh, the first of its kind in the country, on Nov 1, 2015 “in the absence” of Alamgir, then the chairman of the institution, Alamgir said in his letter to the regulator on Mar 7.

Alamgir says he only came to know about the investment after receiving a copy of a board memo recently.

“As is understood, Mr Nafeez Sarafat as Chairman/MD, the Alternative Investment of Bangladesh at the time received the investment amount in violation of the law that prohibited him to receive any investment from the Farmers Bank/the Padma Bank Ltd as he was the director of the bank,” he said in the letter.

Section 27 (2) of the Bank Company Act states that a bank cannot give loans to a firm of which a director of the bank is a partner or director.

The Act also states that such investment can be made only when the majority of the bank’s directors approve it. It prohibits the director, whose firm is receiving the fund, from giving his or her decision on such investment.

“The amount thus appears to have been unlawfully sanctioned and invested or channelized constituting gross misuse or misappropriation of the bank’s capital or fund,” he said.

According to the SEC website, Strategic Equity Management Ltd is the manager of the Alternative Investment Fund of Bangladesh while Premier Bank is the fund’s trustee.

The mew management of the Padma Bank hit back at Alamgir quickly in a letter sent to the SEC, the same day Alamgir sent his to the central bank governor. The bank accuses the former chairman of “abuse of power” and blamed him for “irregularities”.

Its Managing Director Ehsan Khasru said in the letter that Alamgir and Mahbubul Haque Chishti alias Babul Chishti, then chairman of the bank’s audit committee, “embezzled the bank’s money through loan fraud and misused funds by putting depositors’ money at risk.”

Alamgir also “interfered in the bank’s job directly to sanction loans”, Khasru alleged.

The bank sought the former chairman’s “assistance” to get back Tk 8.45 billion of defaulted loans from 19 customers, according to the letter.

More than Tk 83.33 million was transferred from the accounts of the bank’s customers “to City Medical and Hospital, owned by Alamgir”, the letter said.

Alamgir denies the allegation. He says he has no stakes in the medical college and hospital.

Sarafat and Khasru could not be reached for comment.