ANALYSIS

Published:  03:52 AM, 11 September 2018 Last Update: 03:56 AM, 11 September 2018

Fund heist at BB: Who is responsible?

Fund heist at BB: Who  is responsible?

"Thus I entered, and thus I go!" The famous line from the poem of Robert Browning portrays the ironic departure of the patriot who once was greeted by millions but later denounced by the same group of people at the end of his term in office. 

The same seemed true for the former Bangladesh Bank governor, Dr. Atiur Rahman - once the best governor of Asia and the Pacific who had to endure a humiliating exit when the fund heist of $101 million from the central bank stunned the entire nation with shocks and surprise in March 2016. 

Atiur Rahman, who succeeded in accumulating a record high level of foreign currency reserves for the nation, was blamed for not providing enough security of the funds stored at the Federal Reserve Bank of New York (Fed NY). At the finance minister's insistence, Atiur had to resign and come back to academia from where he began his foray into developmental central banking some seven years ago. 

The governor of the poor turned really poor when no one was there to stand beside him.  Rather, the finance ministry saw the departure of the rebellious governor, who was often too hard to manage, as a new dawn of fiscal authority's control over the central bank like a feudal lord rules his subjects. 

Without any thoughtful search that usually looks for economics scholars to run the central bank, the ministry instantly appointed a tested 'good boy' who was blindly compliant with the finance minister while serving as finance secretary some three years ago. 

The newly appointed governor first vowed to bring things back in order as if everything had been in a disorderly state. The retired bureaucrat claimed to be a strong administrator who would rather focus on recovering the stolen money by applying the 'expertise' he acquired as a top notch bureaucrat. 

Meanwhile, 20 million dollars were recovered from Sri Lanka while Atiur was at the helm, leaving the remaining 81 million dollars in the dark - the money that was transmitted to the Philippines from Fed NY. 

The ministry hastily formed a probe committee headed by Dr. Farashuddin, another ex-governor of BB during 1998-2001, and directed it to deliver the report in the shortest possible time.

In retrospect, it is clear that the intention of the ministry was to malign the central bank officials and indirectly to smear Dr. Atiur's regime which, as the ministry intended to prove, had indulged in massive corruption. Farashuddin sang the song the ministry desired to listen to. 

Finding the dereliction of duty by BB officers seemed to have remained Farashuddin's preconceived notion without fathoming the depth and width of this international cyber crime. Usually, the government forms probe committees in the wake of any unholy incidents and eventually the reports never see the light of day. 

We the public are used to this style of practice. But this time the finance minister initially sounded quite enthusiastic about publishing the report in a non-bureaucratic manner. He promised to make it available online. However, it was stopped on the excuse of the safer continuity of the case then evolving in the Philippines. 

The Farashuddin report in fact was parochial and couldn't widen its periphery except for imposing wholescale blame on a number of BB officers. That's all. The recent report in the New York Times (NYT), titled "The Billion-Dollar Bank Job" on May 3, has made the Farashuddin report entirely pointless. 

The third most circulated newspaper in the world investigated every corner possible and took years to write a single report on the fund heist at BB. 

The newspaper described how an international syndicate of cyber criminals initially attempted to steal $951 million from Bangladesh's foreign reserves stored in the custody of Fed NY, but eventually succeeded in taking out only $101 million. 

The hackers might have committed this act sitting in some Asian countries or most probably from North Korea where some of the stolen money ultimately reached, as the NYT presumes. The hackers stole money from countries like India and Uruguay, but Bangladesh's case was severe. 

While the NYT cited ex-governor Atiur more than once, it didn't have a single word regarding the Farashuddin report of pointing the finger at BB officials, suggesting how shallow it was.

 In addition, the Farashuddin report lost its validity as a legally admissible document because its committee was not formed the way it should have been as per legal requirements. The finance minister's haste in immediately pinning the blame on Atiur and the central bank management blocked all logical procedures.  

In March 2016 just before leaving the central bank, governor Atiur left a written instruction to file a case in the US to recover the money from the Philippine central bank. While the ministry showed unusual promptness in forming a probe committee, it remained surprisingly tardy and timid in filing the case.  

Some countries got justice by doing so immediately after their fund hemorrhage and they got their money back. The finance minister said that the government was going to file a case, but the words didn't see any action. 

This time it took a heavy toll on the nation. And the current central bank governor has had nothing to say of late, though he held out the assurance of recovering all of the stolen money in his initial days. Of course, the BB governor has turned 'speechless' but obedient to the MOF in all respects in recent months, with default loans are piling up. 

Then who is responsible for the fund heist? Actually there were no immoral motives of the BB officers. But the ministry-directed report caused a lot of harassment of officers and institutional infamy for the central bank with no clear purpose. 

While hackers are constantly trying to steal others' money through breaking the pass codes, Bangladesh Bank was an unfortunate victim. More ironic was the fate of Atiur, who revolutionized the IT side of the central bank, earning the accolade of the most digitized public institution of the country. 

But he succumbed to an IT related disaster engineered by notorious global hackers, as the FBI has divulged in a report of late. The long weekend was another scope for the thieves to take the money out of the central bank circuits.

The time has come to find out those responsible for failing to recover the stolen money in a timely, intelligent manner. And the time has come to hold to account those responsible for pressuring Atiur Rahman into resigning abruptly. 

That unfortunately infamous departure didn't give Dr. Atiur a single chance to defend his position. The finance minister should feel sorry not only for forcing Atiur - a globally recognized leader of financial inclusion for Bangladesh - to resign, but also for presiding over the damage caused to the banking sector in the wake of Atiur's departure. Huge disservice has been done to the nation.


The writer is professor of economics at State University of
 New York at Cortland. 
Email: birupakshapaul@gmail.com

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