Exporters Demand Inquiry Into Premier Bank Fraud

Twenty-six export-oriented garment manufacturing companies have jointly demanded a thorough and impartial investigation into allegations of substantial loan fraud involving the Narayanganj branch of Premier Bank PLC. The affected factory owners disclosed the details during a press conference organised at the Economic Reporters Forum (ERF) auditorium. According to the complainants, the financial irregularities and fraudulent activities took place between 2017 and 2023 under the Awami League administration, during the tenure of the bank’s then-chairman, H.B.M. Iqbal.

Mechanism of the Fraud and Operational Damage

Arifur Rahman, the proprietor of Doyas Land Apparels, presented a written statement at the press conference on behalf of the affected entrepreneurs. He alleged that the branch manager and other officials, in collusion with the bank’s head office and the then-chairman, opened fraudulent back-to-back Letters of Credit (LCs) without any knowledge or consent from the clients. These artificially created liabilities were subsequently converted into loans under the names of the unsuspecting customers.

Under standard banking regulations, a company exporting goods worth 10 million Taka is entitled to a maximum back-to-back LC facility of 7.5 million Taka (75 per cent). However, through this fraudulent scheme, back-to-back LCs worth up to 75 million Taka were opened against an export value of 10 million Taka in several instances.

While such LC liabilities are conventionally settled using export proceeds, the perpetrators instead adjusted the liabilities by pretending to purchase US dollars from an entity named ‘Premier Exchange’. This amount was then recorded as outstanding loans against the clients. This malpractice resulted in the creation of fake loans against 43 institutions at the Narayanganj branch, 26 of which are export-oriented ready-made garment factories. These factories previously employed between 28,000 and 30,000 workers but are now facing closure due to the financial strain caused by the fraud.

Financial and Institutional Records of the Fraud

The structural magnitude of the alleged fraud at Premier Bank’s Narayanganj branch, along with the specific financial impact on one affected factory, is detailed in the tables below:

Table 1: Financial Statement of Affected Factory ‘Total Fashion’

Table 2: Overall Institutional and Workforce Data

Regulatory Inaction and Progress of Current Investigations

The affected entrepreneurs expressed profound concern over how such large-scale financial anomalies persisted for years without being detected by Premier Bank’s internal audit department or the regular inspection teams of Bangladesh Bank.

The business owners stated that they had previously sent 22 separate letters to the central bank seeking redress, yet no solution has been provided. Furthermore, despite specific directives from the High Court, the Premier Bank management has failed to furnish detailed account statements showing the exact amount of debt charged against each client. Consequently, the owners have called for an immediate judicial inquiry into the fraud, the cancellation of all fabricated liabilities, and swift government intervention to reactivate the damaged factories.

In response to the crisis, the newly formed Board of Directors of Premier Bank has commissioned the international audit firm Ernst & Young, alongside six local auditing firms, to conduct a comprehensive forensic audit of the bank’s irregularities. As part of this initiative, an independent external audit firm has been appointed to scrutinise the Narayanganj branch. A senior official of the bank confirmed to The Financial Express that the external agency is expected to submit its preliminary report by the end of the current week. Additionally, the bank has established a high-level internal probe committee, whilst Bangladesh Bank has formally requested detailed account statements for the 26 accused garment factories to proceed with its own investigation.