CAIRO: IMF approval of Egypt’s request for nearly $5 billion in aid would come as a vital boon to its reeling economy but President Mohamed Morsi must at the same time enact tough reforms, analysts say.

An economic slump following the February 2011 ouster of Hosni Mubarak aggravated the main problems inherited from his regime: budget-draining subsidies, extreme social inequality, corruption and poor energy infrastructure.

A chief concern is the decline in central bank reserves which have plunged from $36 billion at the start of January 2011 to $14.4 billion, threatening Egypt’s ability to import basic goods such as wheat and refined oil products.

The budget deficit is projected to increase by 12.5 percent over the fiscal year from July 2012 to July 2013, to about $22.5 billion, official figures show.

Tourism, one of the main sources of revenue and a job provider for 10 percent of the population, has made a modest recovery but security concerns still keep the bulk of visitors at bay.

“Much-needed” support from international lenders “could weaken if the Egyptian authorities are unable to effectively address ongoing economic, fiscal and external challenges,” Standard and Poor’s warned on Thursday.

News: Daily Sun/Bangladesh/27-Aug-12

The immediate past acting managing director of the Grameen Bank yesterday refuted the claims that the microcredit lender has never paid dividends to its shareholders.

Dividends were paid to all the shareholders, said Nurjahan Begum who had taken over the charge of acting managing director of the Grameen Bank after Dr Muhammad Yunus stepped down from the bank in May last year.

The bank gave 100 percent dividend in 2006 and 20 percent in 2007 and 30 percent in 2008, 2009 and 2010, she said in a statement.

Nurjahan, who also retired last year, had been with the bank for 35 years since its inception.

Her comments came a day after Law Minister Shafique Ahmed said Grameen Bank founder and Nobel laureate Prof Yunus did not pay dividends to its shareholders.

Of the 84 lakh borrowers of the bank, 55 lakh borrowers have so far bought shares of the bank, Nurjahan said.

The borrowers bought shares of Tk 55 crore to become owners of 97 percent shares of the Grameen Bank, whereas the government owns the rest 3 percent as it bought shares worth Tk 1.80 crore.

The Grameen Bank has so far paid Tk 2.52 crore to the government as dividends and Tk 63 lakh each to Sonali Bank and Bangladesh Krishi Bank.

Nurjahan said the Grameen Bank could not pay dividend until 1996 as it did not earn enough profit to do so.

She said dividend could not be given between 1997 and 2005 to meet the government's conditions.

To obtain income tax waiver, all profits were deposited in the rehabilitation fund as per government condition. As a result, the board did not give any dividend.

News: Daily Star/Bangladesh/27-Aug-12

Janata Bank has finally withdrawn the chief executive officer of its UAE operations on charges of fraud worth nearly $1.3 million.

Shafiqul Islam, the Bank's CEO in the United Arab Emirates, has been withdrawn and asked to report to the Bank's head office in Dhaka on September 1, a senior official said yesterday.

“Ismail Hossain has been appointed as the new CEO to look after the Bank's UAE operations,” said SM Aminur Rahman, managing director of the bank.

The removal and new appointment came at a time when a three-member team headed by a senior official of the Bangladesh Bank is in the UAE to further investigate the fraud related to opening of an LC (letter of credit) in 2010.

State-owned Janata Bank is one of the largest banks in Bangladesh with a network of 860 branches. It has four overseas branches, all in the UAE. The branches are located in Abu Dhabi, Al-Ain, Sharjah and Dubai.

Janata Bank appointed a CEO and branch managers to look after the branches in the UAE.

During a bi-annual inspection in 2011, the central bank detected gross irregularities in the operations of Janata Bank's Dubai branch.

The investigation found that the Bank's Dubai branch opened an unapproved LC worth around $1.30 million (Tk10.54 crore) for M/S Steven Frost LLC, which the bank could not recover.

Later, the central bank wrote to Janata Bank to take action against Shafiqul Islam along with Abdul Momen, manager of Dubai branch, and Mohammad Shahbuddin, an officer at the same branch.

But the Bank failed to take action against any of the officials charged with the irregularities. The finance ministry also asked Janata to punish the officials.

“We cannot take action keeping the CEO there,” said Rahman. “There was a possibility of damage to our business reputation,” he said.

“Now the CEO is withdrawn and we will go for action against him,” said the Janata Bank boss.

News: Daily Star/Bangladesh/27-Aug-12

Finance Minister Abul Maal Abdul Muhith has said the government is in the final
stages of reaching an agreement with the World Bank to get the global lending agency
back on board to fund the Padma bridge project. He also expressed the hope to be successful
in such efforts within a week. Speaking with bdnews24.com on Saturday at his
Minto Road residence in the capital, Muhith said: "All obstacles to reach the agreement
are being cleared. I hope the matter will be resolved within one week."

The Washington-based lender cancelled its promised loan of $1.2 billion for the country's
biggest-ever infrastructure project in June alleging corruption. Although the government
later decided to bridge Padma river with its own resources, the Finance
Minister has also been trying to bring back the global lender to fund the infrastructure
project.

The global lender had spelt out a number of conditions for the government to fulfil
after raising the allegations and suspended the fund for the project in September last
year after Canadian authorities launched an investigation into SNC-Lavalin, a firm
short-listed as a consultant for the project. The World Bank cancelled the loan on June
30 claiming that the government did not follow their recommendations.

After the deal was scrapped, Information Communications and Technology Minister
Syed Abul Hossain, who was the Communication Minister when the allegations were
raised, resigned and former Bridges Secretary Mosharraf Hossain was sent on leave.
Meanwhile, several newspapers reported on Saturday that Integrity Advisor of the
Padma bridge project and adviser to the Prime Minister Moshiur Rahman was also
excusing himself from the project.

Muhith, however, said: "We will invite tenders in November if the World Bank returns
to the project, and the bridge construction work will begin by April next year." The
Asian Development Bank (ADB) and the Japan International Cooperation Agency
(JICA) extended their agreement to fund the project until Aug 31 even after the World
Bank cancelled its funding. Bangladesh needs to come to an understanding with the
global lender before that.

Muhith said the government did not want to delay any more in inviting tenders once
both parties reached an agreement. "We have also received positive response from
them (World Bank) in this regard." Asked whether a letter would be sent to World
Bank to review its decision, he said, "I already have the draft letter. It will be sent after
we get a positive response from the other side."

On August 22, he had said, "We will issue the letter when we are sure that our proposal
will not be turned down." According to the minister, the World Bank's IndiaBangladesh-
Nepal's Executive Director MN Prasad (former Indian Chief Secretary) had
taken up the case of Bangladesh with the World Bank. He also said Bangladesh's
Alternative Director to World Bank Mohammad Tareque was also joining the dialogue.

Of the proposed $2.9-billion project, the World Bank had agreed to provide $1.2 billion
while ADB pledged $610 million. The Jeddah-based Islamic Development Bank is also
expected to provide $140 million and JICA said it would contribute $400 million to the
project. Before the Eid holidays, Muhith had commented that the allegation the World
Bank had raised was tarnishing Bangladesh's image in the international arena. "We
have to recover it (the image).

News: The Financial Express

WASHINGTON: US prosecutors are looking into whether British bank HSBC was involved in laundering money for Mexican drug cartels and moving cash for Saudi Arabian banks with ties to terrorists, The New York Times reported yesterday.

Citing unnamed federal authorities with direct knowledge of the investigations, the newspaper said the investigators were also probing whether HSBC circumvented US law by transferring money through its American subsidiary for sanctioned nations, including Iran, Sudan and North Korea.

Last month, HSBC announced that its Mexico unit had paid a fine totalling 379 million Mexican pesos ($27.5 million) to Mexico’s banking regulators for breaching anti-money laundering controls.

Earlier, HSBC apologized and a senior executive resigned after US lawmakers accused Europe’s biggest bank of giving Iran, terrorists and drug dealers access to America’s financial system.

In a 330-page report, the US Senate found the lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

The report said HSBC’s Mexican affiliate “transported $7.0 billion in physical US dollars to HBUS from 2007 to 2008 ... raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States.”

According to The Times, eager to resolve the investigation, HSBC reached out to federal prosecutors in July in hopes of securing a settlement by September.

But officials said a settlement in the next couple of weeks was highly unlikely, the paper pointed out.

News: Daily Sun/Bangladesh/26-Aug-12