After UFS scam, ICB forms task force to monitor asset managers' activities

The Investment Corporation of Bangladesh (ICB) was caught unawares by the fake investments and doctored bank documents of the asset management company Universal Financials Solutions (UFS), which led to UFS pocketing Tk235 crore from four mutual funds. The ICB was the trustee and custodian of the four mutual funds, earning regular fees for its services.

However, the state-owned investment corporation has learned its lesson from the UFS scam and has now formed a task force to verify the reports of asset management institutions. The ICB has also pledged to take action if any irregularities are found.

Currently, the ICB is the trustee of 61 mutual funds, including the four previously managed by the UFS.

To prevent any incident like the UFS scam in future, the six-member task force will review or re-examine the annual financial reports for the financial year 2021-22 and the half-yearly financial reports for the fiscal 2022-23 filed by the asset management companies.

But, as the ICB failed to fulfil its responsibility as per mutual fund rules in the UFS scandal, the Bangladesh Securities and Exchange Commission (BSEC) has ordered special audit measures for the recovery or replenishment of the embezzled money. The commission has also decided to issue a notice to determine why the officers serving in the trustee and custodian departments will not be taken to task.

Md Abul Hossain, managing director of ICB, told The Business Standard, "A case has been filed against Sayed Hamza Alamgir, managing director of UFS, following the embezzlement of the mutual funds. Efforts to recover the investors' money are ongoing."

He also revealed that the BSEC has already taken other decisions, including measures to recover the misappropriated funds.

"We have come to know that some instructions have also been given to the ICB, but we have not received anything officially yet," he said, adding, "Action will be taken as per instructions after receiving the instructions officially. No one wants investors to suffer. We are trying to recover the money."

What the task force will do

The scope of work of the task force formed by the ICB states that the task force will thoroughly scrutinise securities in the mutual funds' portfolios, including money market and capital market instruments, bank deposits, FDRs and investment documents.

Bank statements will be collected directly from the respective banks and verified to ensure document accuracy.

The task force will investigate the accuracy of investment information in unlisted securities of mutual funds and identify overvalued assets, bad investments and non-existent or non-performing investments.

Additionally, the task force will examine whether the securities held by the custodian in the mutual fund portfolio are correct and review any inaccuracies in the fund's financial statements. Inconsistencies in the financial reports filed by the fund's asset managers will be identified, and appropriate actions will be recommended after analyses of the reports.

To address any inconsistencies that may be found, the task force has been asked to issue letters to the asset managers, conduct special audits, and mention in a separate column if the fund has non-existent, non-performing and non-functioning assets in the fund(s).