MD sent to force leave
Staff Correspondent: Hostility among the board members of NRB Bank has outburst as chairman took over the whole charges, even day to day affairs. The bank is running without Managing Director as its MD Mehmood Husain sent to force leave before one and half month ago.
The trouble-hit NRB Bank is now on the losing spree of public confidence due to internal conflict and declining trend of business for the ongoing virus pandemic.
The fourth generation private bank has already been in the red zone with huge amount of bad loans mounting and ‘questionable’ activities of the chairman have deteriorated the corporate governance and pushed the bank’s financial health into grave risk, a group of sponsor directors said in a complaint to the central bank.
Mohammed Mahtabur Rahman who has been the chairman of the bank since 2016 allegedly seized all power of management and executive committee of the bank sending its managing director into forced leave on August 3 this year.
“The chairman has intentionally created some false allegations against the Managing Director, Mehmood Husain, and sent him on a forced leave for three months,” reads the complaint signed by seven sponsor directors.
The board chairman has taken over loan sanctioning and all other managerial power, making the management dysfunctional.
“Ever since the tenure of the present Chairman, Mahtabur Rahman, supported by a few other members of the board has been carrying out activities which are highly questionable and irregular both in legal and moral terms and this is seriously affecting the bank’s goodwill, its customers and its shareholders,” says the August 17 complaint addressed to the Bangladesh bank governor.
The Executive Committee and risk management committee of the bank which plays the most vital role in business decisions of a bank has remained inactive since February as the power of the committee was seized.
M Badiuzzaman, director of the bank is also the chairman of the executive committee.
In the recent note of dissent to the Bangladesh Bank, the seven NRB Bank directors also alleged that the chairman is trying to tighten his family’s grip on the bank by buying shares in the name of his family members and that he is involved with various irregularities, such as mishandling CSR fund, and personal use of company properties and staff members.
The seven directors also made complaints against a few other directors.
Mehmood Husain was not holding call while trying to contact yesterday about the latest situation of the bank. But the sources of the bank told Daily Industry that the chairman and some other directors were trying to amass a significant amount of loans and assets including recruitment of fresher in the bank by taking bribe. Managing Director was not agreed upon the illegal recruitment and loan sanctioning matters. As a result, the board members have made false allegation against the Managing Director, the bank sources added. The bank officials demanded that Bangladesh Bank should look into the matter very urgently.
“Every purchase issue or loan processing or other managerial activity needed to be placed before the board, delaying the daily operational activities. As a result, loan disbursement even under the stimulus packages has been hampered,” the sources said.
When contacted, Abu Farah Md Naser, executive director of the Bangladesh Bank, confirmed that they received the note of dissent sent by the seven directors of NRB Bank.
“It appears that the directors of the bank are in conflict. The Bangladesh Bank is looking into it,” he added.
When asked if a bank can send its managing director on forced leave for three months, he said the decision goes against Bangladesh Bank rules in technical terms since a bank can’t run without a managing director for three months.
Mohammed Mahtabur Rahman could not be reached for comment on this issue.
The 7 directors in their letter to the Bangladesh Bank alleged, it appears that the bank has become a family business of Mahtabur Rahman.
They said Mahtabur, also the chairman and managing director of Al Haramain Perfumes Group of Companies, uses the head office of NRB Bank as the office of his perfume company to operate business in the country, as Al Haramain does not have any separate office in Dhaka.
Besides, he uses the vehicles of the bank for his personal as well as family use, the directors alleged. Mahtabur allegedly used the bank’s vehicles for his personal use.
The directors also raised allegations of mishandling the bank’s corporate social responsibility fund of Tk 2 crore this year.
The allegation says although it is obligatory to invite tenders for any expense worth Tk 1 crore or more by a bank, Mahtabur Rahman in collusion with his brother Oliur Rahman have spent the CSR fund in the name of distributing food among the poor, they wrote, adding that he has not submitted any account regarding this expenditure to the board.
In their note of dissent to the central bank, the seven NRB Bank directors put forward three recommendations to the central bank. The recommendations are – restructuring the bank’s board, conducting a detailed investigation into the bank, and appointing an observer to the bank.
Mahtabur Rahman has been holding the chairmanship of the bank since 2016, creating tension among other directors of the bank. He has imposed family rule on the board of directors and the managing authorities of the bank, the seven directors said in their letter.
He has allegedly been purchasing shares of other directors since he took over the chairman post. Other directors have been leaving their directorship in the bank for the last several years. Mahtabur Rahman bought shares from 11 directors of the bank during last 4 years.
As the Bangladesh Bank’s rules allow a director to hold a maximum of 10% stake, Mahtab has allegedly bought shares of the bank in the name of his family members. Currently, he along with seven other members of his family holds 20% stake in the bank, according to sources at the bank.
The bank incurred a loss of Tk 12.5 core last year, although it had made a profit of Tk 58 crore in the previous year. The bank has to make huge provision against its bad loans. More provision is also required, the bank sources added.