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Hallmark's return to the headline

How the government should proceed with recovering the money the company embezzled
ITS been a while since the Hallmark Group has been mentioned in the news. Except for when it has been used as an example of severe corruption and criminality, to illustrate the grave
consequences that arise when certain principles and rules are ignored. This makes its return to making the headline all the more relevant—and surprising at the same time, considering why its back. According to newspaper reports, Finance Minister AHM Mustafa Kamal, after a meeting of the cabinet committee on economic affairs and another with members of Sonali Bank and representatives of the Hallmark Group, hinted at the possibility of the government granting the disgraced group certain concessions that may allow it to return to doing business. He said, "You have to believe that Hallmark will pay back the money. They will start business again." When asked what type of new arrangement will be made available, however, he replied, "You all would know in due time when the measures would be taken," thereby leaving the door open for speculation—and the issues of whether the money the group embezzled would actually be recovered and how, unconfirmed.
Among the questions that his statements raise, is how the fate of those members of the group who had been found guilty of criminal behaviour, would be affected by any future decision—if they are to be affected at all. In that regard, it is important to remember that this is not just an ordinary case of loan default. But involved serious acts of criminality and fraud.
To refresh our memories, the forgery of the Hallmark Group in the Ruposhi Bangla Branch of Sonali Bank had occurred for two years—from 2010 to May 2012—before being first detected in three branches by a GM of the bank in January 2012. After finding proof of massive irregularities in lending by
the state-owned bank’s Ruposhi Bangla Branch, the Bangladesh Bank had asked the Anti-Corruption Commission (ACC) to investigate the matter. The probe by the central bank had found that "Sonali Bank high-ups, including a deputy managing director, a general manager and the branch manager, were directly involved in the scam" (Hallmark loan scam under ACC probe, August 14, 2012, The Daily Star).
The ACC found Sonali Bank's Ruposhi Bangla Branch gave Hallmark Tk 1.568.49 crore in funded loan (money given in cash) between October 11 and May 22. And on October 7, 2013, the anti-graft body pressed charges against 25 people in 11 cases for swindling over Tk 2,600 crore out of Sonali Bank, including "Hallmark Chairman Jasmine Islam, Managing
Director Tanvir Mahmud, Tusher Ahmed, the then managing director of Sonali Bank, Humayun Kabir, and a union parishad chairman in Savar who issued fake trade license to the controversial business group" (Loan scam: HC clears way for trail of Hall Mark GM, March 16, 2016, The Daily Star).
In order to recover the money, Sonali Bank tried 60 times to sell the mortgaged assets of Hallmark Group in five years, but failed. Its attempts were thwarted on occasions by defaulters filing writ petitions with the High Court to stop the auction
process. But mainly the bank did not succeed as there were problems with much of the paperwork of these assets—such as land deeds. And people were unwilling to purchase the mortgaged assets, fearing it may invite trouble for them in future.
This brings us back to the question of recovering the stolen money.
At the end of the day, it is true that all attempts should be made to recover the money that Hallmark, with the help of some Sonali Bank officials, stole from the state-owned bank. As ultimately, this money had been taken out of taxpayers' pockets.
However, the way it was siphoned out was through sheer fraudulence. And those who were responsible for this, had committed some very serious crimes.
Which is why, in the interest of justice, pardoning them for their crimes in any way should be completely off the table.
But so is recovering the money through auctioning off the assets of Hallmark, it seems, given how things currently stand. But does that mean that there are no other alternatives? Not at all! Sonali Bank had already previously approached the government with two alternative proposals. One was to turn the land of the Hallmark Group in Gazipur into an economic zone; and to sell the plots to industrialists to
recover the fund.
And the other was to set up a company with an initial capital of Tk 500 crore, which would be owned by the state-run Investment Corporation of Bangladesh (ICB), Sonali, Janata, Agrani and Rupali, with each contributing Tk 100 crore. The proposed company would purchase the properties of defaulted borrowers put up on auction by banks at the market price. Now granted that the Hallmark case is not a case of a "typical defaulter"; however, this option could still help bring down the overall amount of default loan in the banking sector.
And in the specific case of Hallmark, what the government could do is establish a special committee or platform that could solve the various issues related to the company's assets, restart the operations of its businesses and then look to reprivatise them. If it can successfully do that, then potential clients might be more willing to buy the assets—or businesses—of Hallmark, making the recovery of the money it stole easier or, at least more likely, compared to what it is right now.
What the government should categorically not do, is seek to reinstate those who have been found guilty of committing crimes, back into positions of power or influence or to lighten the punishments they have been given, for those crimes. As not only would that give rise to the problem of moral hazard, but it would also deal a grave blow to justice itself. And that should be totally out of the question.
Although not exactly the same, there are many cases that are similar to that of Hallmark's that are plaguing our banking sector. And the government should understand that if an example is set, where those who have been openly found to have committed serious frauds, that have resulted in the embezzlement of hundreds of crores of taka from the public exchequer, are forgiven, then others would be emboldened to do the same. Instead of enabling such a scenario and facilitating an environment of impunity, the government should set an example by letting justice continue to run its due course in this case
Eresh Omar Jamal Is a member of the editorial team at The Daily Star.
His Twitter handle is: @EreshOmarJamal.