The High Court on Thursday ordered Bangladesh Bank to submit within 15 days its investigation report into allegations that former Eastern Bank (EBL) Chairman Md Showkat Ali Chowdhury controlled more than 20 per cent of the bank’s shares, exceeding the legal ownership limit.
A bench comprising Justice Mohammad Showkat Ali Chowdhury and Justice Abdur Rahman also issued a rule asking why the authorities’ failure to act against the former chairman should not be declared unlawful.
The court directed the Bangladesh Bank governor to dispose of an application seeking action against Chowdhury within 30 days.
Under Section 14A(1) of the Bank Company Act 1991, an individual, family or institution cannot hold more than 10 per cent of a bank’s shares.
According to the writ petition, Chowdhury and his family directly controlled 9.99 per cent of EBL and another 11.12 per cent through proxy entities, bringing their combined holding to 21.11 per cent, equivalent to approximately 33.67 crore shares.
A Bangladesh Bank investigation separately identified 20.48 per cent of the bank’s shares as being under their control, the petition stated.
The petition alleges that Chowdhury used Naimul Haque, an employee of his family-owned SN Corporation, Haque’s wife Salma Shirin and his sister-in-law Anika Tahjib as proxy shareholders.
Two entities, Arusha & Co (Pvt) Ltd and Anika Shares & Securities, allegedly held 9.98 per cent and 1.14 per cent of EBL shares, respectively. The petition also cited links between Arusha’s former shareholders and Chowdhury’s family.
Arusha & Co., established with paid-up capital of just Tk1 lakh, accumulated more than 13.54 crore EBL shares worth approximately Tk330.50 crore through bonus issues without making fresh purchases since 2009, according to the petition.
The company also received Tk243.23 crore in cash dividends.
The petitioner alleged that Chowdhury, while serving as EBL chairman and director, approved dividends from which he subsequently benefited. Of the proceeds, Tk9.90 crore was allegedly transferred to his personal bank account and Tk27.25 crore to SN Corporation under purported advance payments for land purchases.
The petition further alleged that attempts were being made to sell the disputed shares to avoid possible confiscation.
The writ was filed by Dhaka Bar Association member and EBL minority shareholder Kamrul Islam, seeking protection of depositors’ and investors’ interests.
Advocates Mohammad Ali, Ishrat Hasan and Biplob Kumar Das represented the petitioner.
The petition cited central bank governance rules providing for a minimum three-year ban from financial institutions for directors and associated family members implicated in serious financial irregularities.
