Loss of Tk 2.75b for chess board detected; fund manager summoned
FE REPORT |
March 02, 2022 08:29:45
March 02, 2022 08:39:06
The government suffered a financial loss of 2.755 billion taka for funding defaults in 19 projects under the Equity and Entrepreneurship Fund (EEF) between fiscal years 2009-10 and 2014-15, according to a special audit .
Officials say the Office of the Comptroller and Auditor General found the loss was caused by approving loans without “due diligence” and lack of proper follow-up.
Named an Equity and Entrepreneurship Fund when it was launched in 2000-2001, it was renamed an Entrepreneurship Support Fund (ESF) in 2018, and the equity model was changed to a low-lending model. cost to hold contractors accountable to ensure money is recovered in the deal. failure of the project.
The parliamentary standing committee on public accounts has summoned senior officials from relevant ministries, departments and organisations, which sanctioned the loans and had an oversight role, to appear at a committee meeting next week to explain the objections of audit.
The Comptroller and Auditor General (CAG) and some of his subordinates, the Secretary of the Financial Institutions Division, a representative of the Finance Division, the Governor of Bangladesh Bank, the Managing Director of the Commercial Audit Directorate, Managing Directors of Investment Corporation of Bangladesh (ICB), MIDAS Financing Ltd and NCC Bank Ltd were invited to attend the meeting and submit relevant evidence.
The EEF was launched to extend support to two promising sectors – agro-processing and software – the fund was managed by Bangladesh until May 2009.
Subsequently, the operational function of the fund was transferred to the ICB while the central bank remained involved in formulating fund management policies and monitoring EEF’s investment activities.
The special audit revealed that the EEF fund suffered a loss of Tk 917 million as a contractor failed to withdraw the rest of the loan amount two years after disbursement of the first installment. Moreover, the entrepreneur ultimately did not implement the project and did not spend his money properly.
In another project, auditors found that the contractor had stopped buying back the entire volume from the state and had not converted the disbursed funds into a loan. Thus, the recovery of interest-free public money became uncertain, resulting in a loss of 831 million taka.
“The auditors also detected that a project had not been in commercial operation for a long time and the contractor did not buy back the government’s share even after the expiry of the mandate, thus causing a financial loss of 686 million taka,” an official said.
In another incident, it was discovered that an entrepreneur took money from the EEF by submitting false land documents and failed to invest the funds and ’embezzled’ 10.6 million taka. .
Also, the fund officials paid money to a project circumventing the decision of the technical advisory committee and later the project could not be operated commercially resulting in a loss of 21.624 million taka.
During the period 2001-09, under the direction of the central bank, the EEF had disbursed some 5.60 billion taka for 242 projects. On the other hand, the EEF under the management of ICB from 2009 to 2021 disbursed Tk 10.58 billion for 794 projects.
Now, entrepreneurs invest 51% of the total project cost as equity, while the ESF provides 49% of the cost as a loan. ESF loans are only disbursed in instalments after the entrepreneur’s equity has been invested.
ESF charges 2.0% interest on loans, mentions ESF policy.