Social Islami Bank goes to court to clear terror financing charges
A Bangladeshi Islamic bank went to court to take three Jeddah-based terror-link suspected entities off its shareholders' list in an attempt to avoid international business restrictions.
Social Islami Bank Ltd, known as SIBL, has filed a lawsuit with the Fifth Joint District Judge's Court in Dhaka on Monday, said Ahsanul Karim, a lawyer for the Bank.
The case was filed against two non-government organisations -- International Islamic Relief Organisation (IIRO) and Islamic Charitable Society (ICS) -- and one Saudi individual named Shahir Abdulraouf Batterjee, the scion of a wealthy Saudi family. There are allegations against them that they have terrorist financing links.
“The Bank (SIBL) has filed the case seeking the court's direction on how to take them off its shareholders' list,” Karim told The Daily Star.
He said the SIBL has also sought the court's directive on the fate of the three entities' investments in the bank.
The IIRO and ICS came under the spotlight last month in the media after disclosure of a probe report by the US Senate Permanent Subcommittee on Investigations, on HSBC's lax governance to control money laundering.
The report detected that two Bangladeshi private banks -- Islami Bank and SIBL -- have foreign shareholders who are allegedly involved in terrorist financing.
According to SIBL data, both the IIRO and ICS became the bank's shareholders at the time of its inception in 1995.
Though the IIRO owned 8 percent shares of the Bank's Tk 20 crore paid-up capital in 1995, it is not a promoter. The IIRO, which is allegedly linked with Al-Qaeda founder Osama bin Laden's brother-in-law, now owns only 1.61 percent shares, equivalent to Tk 10.29 crore of the Tk 639.4 crore paid-up capital of the bank.
The ICS now owns only 0.14 percent shares of the bank, equivalent to Tk 89 lakh. Batterjee also has an insignificant number of shares, Bank officials said.
“Their names on our shareholders' list will hamper our international business. We want to get rid of them,” said Muhammad Ali, managing director of the Bank.
"After all the bank has to do business as it deals with Tk 8,000 crore (nearly $1 billion) deposits," he said.
Ali said the IIRO, ICS and the Saudi national have been implicated in terrorist financing by the US government and included on the list of those prohibited to do business in the US.
These organisations also face sanctions from the US Treasury Office of Foreign Asset Control (OFAC) and the United Nations.
“None of these three shareholders has transacted any amount from their accounts till date,” Ali said.
AMM Farhad, deputy managing director of the Bank, said they have communicated several times with these shareholders, including IIRO's Dhaka office, after the central bank asked the bank in 2006 not to transact with these terror-suspect organisations and person. But the Bank did not get any response from them.
“We had no way but to seek the court's intervention to remove them,” said Farhad. “We have taken the move for public interest,” he added.
Bangladesh Bank, the country's central bank, in 2006 took actions against Islami Bank and SIBL for their involvement in money laundering. The central bank in 2006 banned IIRO and ICS and prohibited transactions with them.
“We stopped depositing dividends to IIRO and ICS's accounts since the ban. But we credited dividends after the BB withdrew the restriction in 2010,” said the deputy managing director.
SIBL again froze these organisations' share accounts after their names came in the US Senate probe committee, said Farhad.
Ali said the three became the shareholders of the Bank when MA Mannan, one of the founders of the bank, was in Saudi Arabia on his job in the Organisation of Islamic Conference (OIC) and collected money from there for setting up the Bank.
Ali said, at that time Hamid Algabid, the then OIC secretary general (1989-1996) and a Nigerian politician, also bought some shares of the Bank that now values at Tk 7-Tk 8 lakh.
The Daily Star/Bangladesh/ 1st Aug 2012