Kamal’s remarks on salvaging notorious Hallmark irks economists, bankers, lawyers

The finance minister AHM Mustafa Kamal’s remarks on offering special rescheduling facility for the notorious Hallmark Group drew huge criticism from renowned economists, bankers, and lawyers in the country.

Kamal on Wednesday said steps were being taken to facilitate Hallmark by offering special rescheduling facility at 2% down payment, and a 10-year repayment facility.

Once it is done, the Hallmark group would enjoy rescheduling, and fresh loans facility to re-launch its commercial operation, Kamal told reporters.

Hallmark Group managing director Tanveer Mahmud, and its chairman Jesmin Islam had swindled Tk 2, 964.81 crore from state-run Sonali bank’s Sheraton branch between 2009, and 2012 through fraudulent documents.

In 2014, the government had to inject Tk 3,140 crore to the scam-hit Sonali Bank to keep it afloat.

“You have to believe that Hall-Mark will pay back the money. They will start a business again,” he told reporters on the day after a meeting of the cabinet committee on economic affairs.

On the same day, he held another meeting with top officials at Sonali Bank , banking division of the finance ministry, and representatives of the Hallmark Group to discuss the issue.

“Hallmark still has the capability to run their business.  We cannot create new businesspeople in the country, rather we will have to patronize the existing ones,” Kamal added.

“I want that they will pay back the bank loan, and live their life smoothly,” Kamal said further.

Hallmark’s loan scam was the biggest fraudulence in the banking history of Bangladesh. Till date, the bank has been able to recover only Tk 456.61 crore from the errant company.

Hallmark’s Tanveer, and Jesmin are facing 11 cases, filed by ACC with regard to the loan scam.

Noted company lawyer Tanjib-ul-Alam said, Hallmark’s loan scam was a criminal offense, and its owners might face conviction.

“So, how would they be back in business?” he wondered.

He said, Hallmark was not entitled to receive any facility under the recent circular of Bangladesh bank that offers special rescheduling provisions for loan defaulters with genuine causes, not for the willful defaulters, and bank looters.

He noted “India’s Sahara group’s chief Subrata faced legal charges on the ground of non-payment of Rupees 1,500 crore bank loans.”

Criticizing the finance minister’s speech on Hallmark, Executive Director of Policy Research Institute, Ahsan H. Mansur said, “What kind of rationale is it that we treat a criminal like an entrepreneur after such a big fraudulent event? In the eyes of law, they are criminals.”

He again said: They (Hallmark people) have committed criminal offences. They should be treated like a criminal, not like investors.”

Mansur said “Providing Hallmark the rescheduling facility will create  bad precedence, and encourage many to swindle bank money in the name of loan through resorting to forged documents.”

Former Bangladesh bank deputy governor Khondkar Ibrahim Khaled viewed that it was illegal to offer special facility to someone who had committed criminal offenses.

“It is not the right approach to offer anyone such a facility. What the Hallmark people did was a crime.” Khaled, also a former managing director of Sonali Bank told Dhaka Tribune.

Former Bangladesh Bank governor Dr Salehuddin Ahmed said the government’s behavior to loan defaulters was taking a serious turn day by day, raising complications for banks’ future financial operations.

He said the government was doing such things day by day, giving wrong message to financial sector’s stakeholders.

“It is taking a complicated turn.”

“In all, it is giving a wrong message to borrowers. Others will do the same.”

He said the government could do many things in its capacity.

“But it is not at all justified to offer loan rescheduling facility to Hallmark since it committed the history’s biggest fraudulence in obtaining loans. It is not acceptable at all.”

Salehuddin mentioned three reasons why Hallmark should not be offered any special fiscal or banking facility.

“The reasons are: firstly, Hallmark took away the money from the banking system by the act of fraudulence.”

“Secondly, this type of facility would give wrong message to all loan defaulters. Borrowers would think that non-repayment of bank’s money is no more an offense. The government is there to assist them.”

“Thirdly, it is an under trial matter, and the legal process needs to be ended before considering anything for Hallmark.”

About the Finance Minister’s comment on facilitating the Hallmark people to bring them back into business, Salehuddin said it was impossible to believe that Hallmark’s same people would not commit further financial crimes.

Earlier, finance minister AHM Mustafa Kamal held a meeting with Bangladesh Bank (BB) Governor Fazle Kabir at his secretariat office on September 4 to discuss the issue. Secretary to financial institution division under the finance ministry Ashadul Islam, Sonali bank’s managing director Ataur Rahman Prodhan, and Hallmark representatives were present at the meeting.

Hallmark’s managing director Tanveer Mahmud applied to AHM Mustafa Kamal, immediately after he was sworn in as finance minister, (on January 15, 2019) seeking a chance for him, and his wife Jesmin Islam (Hallmark Group’s chairman) to re-launching commercial operation of their company.

In the application, Tanveer said his company would make the 2% down payment for loans from its fund worth Tk 100 crore held at different bank accounts, which currently remained frozen, for the rescheduling.

He said, if they were allowed a bailout, they would start commercial operation of their factories, and repay the bank loans gradually. It submitted a plan, saying they would pay Tk 12 crore in the first year, Tk 24 crore in the second year, and Tk 100 crore from third year to Sonali bank.

Within three weeks after receiving the Hallmark’s application, the financial institution division wrote to the Sonali bank asking for details about Hallmark’s loan status. Sonali bank replied in March, according to financial institution division sources.

In its reply, Sonali bank opined that a high-level multi-stakeholders meeting might be arranged between ACC (Anti Corruption Commission), Bangladesh Bank, finance ministry, law ministry, and Sonali bank to discuss the issue.

Transparency International’s executive director Dr Iftekharuzzaman said “Initiative of reinstatement of Hallmark instead of giving punishment is meant for offering an asylum. How the government can do it?”

He said the market was in the grip of corrupts.

“It is restricting creation of new entrepreneurs. It is not a good idea that creating new businesspeople is not possible. Old businesses will get all assistance despite being under trial with criminal records.”

It is learnt,  the market price of Hallmark Group’s assets, currently under Sonali bank’s management, will not be more than Tk 472 crore. Sonali bank had published advertisements four times for selling Hallmark’s assets but there were no buyers available.

Hall-Mark started its journey in 2006 by buying just 36 decimals of land from Janata Housing at Hemayetpur. It set up its first factory, Hall-Mark Fashion, on the plot in 2007, the year it started banking with the Sonali branch.

In 2008, the Group set up Boby Fashion, Wall-Mart Fashion, Hall-Mark Style, Boby Denim, and Hall-Mark Design Wear with loans from the state owned bank.

A number of Sonali Bank officials, including its deputy managing directors, were suspended for their alleged involvement in the scam, and are now facing court cases. Hall-Mark Group’s Chairman Jasmine Islam, and its Managing Director Tanvir Mahmud, have been in prison for the last seven years for the well publicized fraud.