Between 2003 and 19 June 2006, the then-Oriental Bank, now known as ICB Islamic Bank, became the scene of the first major bank loot in Bangladesh.
Under the guise of fictitious accounts and corporate entities, the bank's funds were siphoned off by Orion Group ChairmanObaidul Karim.
He was assisted by his brothers, Ebadul Karim and Rezaul Karim, his son Salman Karim, and his son-in-law Mehedi Hasan.
Of them, all but Ebadul Karim were directors of the bank, enabling them to carry out their elaborate scheme to embezzle customers' funds from various branches.
The secretive plundering, however, did not remain concealed for long.
Following complaints, an investigation by the Bangladesh Bank uncovered the full extent of the looting, leading to legal action.
Although Obaidul Karim and his associates were sentenced in three separate cases, none have served their sentences over the past 16 years, highlighting the unfortunate reality that, despite legal proceedings, justice was never enforced in this unprecedented bank looting.
At the time, Dr Salehuddin Ahmed, who is now the finance adviser in the interim government, was the governor of Bangladesh Bank.
When pressured by the highest levels of government to save Obaidul Karim and allow the ailing bank to raise capital through a bond issue on the stock market, Dr Salehuddin refused. Firm in his statutory duty to protect depositors' interests, he seized the shares held by Obaidul Karim and his fellow directors.
Subsequently, under Bangladesh Bank’s supervision, the bank was put up for auction, with Malaysia's ICB Islamic Bank Group emerging as the highest bidder.
They assumed control of the bank, which was rebranded as ICB Islamic Bank.
However, despite some depositors receiving their money back, many are still waiting, and the rebranded bank has yet to recover fully from its dire straits.
Obaidul Karim and his family members coerced bank officials through threats and intimidation to loot Tk2,329 crore in depositors' funds from the once-prominent and financially stable Oriental Bank (formerly Al-Baraka Bank).
They used methods such as Inter-Branch Debit Advice (IBDA) and Inter-Branch Credit Advice (IBCA) along with fake savings, investment accounts, and import letters of credit to withdraw the funds from various branches.
The principal branches, Karwan Bazar, Nawabpur, and Mirpur Road branches were particularly affected, with Tk488.5 crore misappropriated through fake trade companies.
Additionally, their family-controlled companies accrued Tk191.7 crore in unadjusted IBCA credits against 469 IBDA debits, totalling Tk757 crore embezzled by Obaidul Karim and his accomplices.
He executed this theft through 54 fake companies and 10 anonymous bank accounts, while also diverting $180,000 abroad by falsifying import documentation.
A special investigation conducted by Bangladesh Bank across 30 branches unearthed these irregularities.
To verify the allegations of looting, then-Governor Dr Salehuddin Ahmed ordered a priority investigation into Oriental Bank, which was submitted on 19 June 2006.
The report implicated Obaidul Karim, his associates, and bank officials, recommending criminal and civil action against them.
However, fearing the consequences, Obaidul Karim appealed to the highest echelons of government, with then-prime minister Begum Khaleda Zia summoning Dr Salehuddin.
Despite the political pressure, Dr Salehuddin stood firm, leading the investigation towards legal proceedings.
In the wake of these revelations, the government's change in 2007 led to the filing of a case by Kazi Manzur Hossain, the then-senior assistant vice president (SAVP) and head of human resources at Oriental Bank, against 25 individuals.
Additional cases were lodged for embezzlement, money laundering, and illegal asset acquisition, resulting in 48 years of cumulative sentences for Obaidul Karim.
However, through various legal stratagems, including the disappearance of case files and trial delays, he has evaded imprisonment for the past 16 years.
The Anti-Corruption Commission (ACC) has recently initiated a renewed effort to prosecute these cases, reviewing the dubious acquittals of former Oriental Bank defendants.
From 2003 to 2006, the bank's managing director was CM Koyes Sami, brother of former caretaker government advisor CM Shafi Sami, who is now the president of the Jalalabad Association in Dhaka.
Bangladesh Bank’s investigation also held him accountable for the misappropriation. In a recent interview, he reflected on his tenure, stating, "Incidents of embezzlement were occurring branch by branch. As these reports began reaching me, I urged the directors and branch officials to refrain from such activities. However, by then, some officials had already become complicit in the theft, while others were coerced into illegal fund transfers."
Sami further revealed that he sought intervention from Bangladesh Bank, which was known to then-governor Dr Salehuddin Ahmed. He added, "When the political landscape changed after the 1/11 event, I had to appear before a special agency. I openly admitted my responsibility in the embezzlement of depositors’ funds, but I had not gained any personal benefit from it. If anything had been found against me, action would have been taken, but nothing was discovered, and I was released."
When questioned why he did not resign after discovering that directors had been misappropriating funds for three years, he responded, "I had previously served as MD of several banks and had a team of experienced bankers at Oriental Bank. We could not all leave the bank together. We made a collective effort to turn the bank around, but ultimately, we failed."
In an interview with a national daily on 6 August 2023, Dr Salehuddin Ahmed remarked that the bank's owners had absconded with all the funds, unbeknownst to the then-chairman, leaving the board in the dark as they withdrew money with the aid of certain bankers.
A brief history of Oriental Bank
The financial institution began operations in 1987 as Al-Baraka Bank but by 1994 had become a "troubled bank."
To salvage it, Bangladesh Bank appointed an observer, yet no improvement followed, leading Orion Group’s Obaidul Karim and Bengal Group’s founder Abul Khair Litu to acquire the majority of its shares in 2004, rebranding it as Oriental Bank.
In 2006, a Bangladesh Bank investigation revealed that Obaidul Karim and Abul Khair Litu had violated section 14(a)(1) of the Banking Companies Act 1991 by holding 86.34% of the bank's shares, with Karim’s family and their four companies controlling 69.87%.
Four foreign entities also held shares, which were later seized by the central bank, including 8.67% or 45,000 shares held by Founder International Investment Limited.
The central bank’s findings of widespread embezzlement led to the dissolution of Oriental Bank’s board in June 2006.
Masum Ahmed Chowdhury was the bank’s chairman at the time.
From 2006 to 2007, a total of 34 cases were filed by the bank's management and the ACC, alleging the embezzlement of an estimated Tk 34 crore from Oriental Bank.
