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Towel exporter fires up another banking scam in Bangladesh
Publication Date : 22-02-2013
Bismillah Towels Group (BTG), a towel manufacturer and exporter in Bangladesh, has fooled the government and pocketed nearly 210 million Bangladeshi taka (US$2.6 million) of taxpayers' money in the name of incentives, revealed a Bangladesh Bank (BB) inspection.
The group overpriced its exports to enjoy 10 per cent cash incentives from the government.
To get the benefit, Managing Director and owner of the group, Khaja Soleman Anowar Chowdhury, had opened two companies - Banglus Middle East in Dubai and Banglus Singapore, and shown his export destinations there at a much higher price.
Although he exported the goods directly to Banglus Middle East and Banglus Singapore, Soleman told The Daily Star recently that these two companies were Bismillah's strategic partners that marketed towels in the Middle East on the group's behalf.
"They [Banglus Middle East and Banglus Singapore] are not our buyers. They contact with buyers," he said.
However, business information report by D&B, a global rating agency, showed that Soleman is a shareholder and chief executive of the companies.
After the Hall-Mark Group scam in May last year, BTG's swindling was a hot topic for discussion in the banking sector.
The inspection by the central bank has found that the three companies of BTG allegedly swindled around 11 billion taka from five banks between 2010 and 2012. The group pocketed the money by showing false exports, taking advantage of inland bill purchase - as did the controversial Hall-Mark Group - and overpricing exports to get cash incentives.
BTG committed the irregularities through its three concerns - Bismillah Towels, Hindul Wali Textile and Alppa Composite Towels.
The central bank report says BTG took 170 million taka as incentives from the Prime Bank's Motijheel branch by showing false documents and 37.9 million taka from the state-owned Janata Bank's Moghbazar branch.
When the BB inspection team found that the group had taken the incentive benefit against forged documents, it ordered Prime Bank to recover the money. But soon after the order, BTG filed a writ petition with the High Court that stayed the BB order.
To check on the irregularities, Southeast Bank stopped business with BTG in early 2012, whereas Prime Bank continues business with the controversial group.
Despite repeated phone calls and texts, Managing director of Prime Bank Ehsan Khasru and MD of Janata Bank SM Aminur Rahman did not respond to this correspondent.
Bangladesh is an emerging exporter in terry towel items. But industry players have set up a few companies, like BTG, which are damaging the prospects of the sector. Bangladesh generally exports basic towel that costs between US$5.10 to $5.70 per kilogram, but BTG showed its export prices between US$9.50 to $12.50 per kilogram.
Documents show BTG in February last year claimed that it had exported 214,828 kilograms of towels and the price of the export stood at over US$2.3 million, which according to usual rates should have been US$1.07 million at best.
BTG started its operations with Hindul Wali Textile in 1988 and now it owns nearly a dozen companies, ranging from towels to spinning, composite and logistics.
According to the group's managing director, BTG exported goods worth 7 billion taka in 2011 and of nearly 10 billioon taka in 2012.