Proposed law to curb loan scams gathers dust

A proposal for a new law to thwart loan disbursement on personal or special consideration to members or officials of the management boards of banks and non-banking financial institutions, involving personal or group interest, is gathering dust for months.

Seven months ago, the Bangladesh Law Commission submitted a draft of the law to the Anti-Corruption Commission (ACC) upon its request. The ACC subsequently sent copies of the draft to the Cabinet Division.

Styled “Conflict of Interest Prevention and Management Act”, the proposed law has a provision for a maxim of three years’ jail term as well as a fine of Tk10 lakh, if the initiation of any loan disbursement process or loan recommendation is found to have served the interest of someone or any group.

Law Minister Anisul Huq told The Business Standard, “I have heard it is now lying with the Cabinet Division. After the Cabinet Division takes the next step, it will come to the Legislative Division of the Law Ministry. Then the drafting section of the division will work on it.”

Asked about the draft of the proposed law, Cabinet Secretary Shafiul Alam confirmed that they received it. He suggested contacting the additional secretary for law of the Cabinet Division for updates.

When contacted, Sahan Ara Banu, the additional secretary, said they have sent the draft to the Legislative and Drafting Division of the Law Ministry seeking their opinions on it. On receiving their opinions, the Cabinet Division will move to finalise the draft of the law.”

While talking on the relevance of the proposed law, ABM Khairul Haque, chairman of the Law Commission and former chief justice, told The Business Standard, “Allegations of irregularities and corruption concerning loan disbursement in banks and non-banking financial institutions, involving personal interest and personal favour, often come up in the media.”

Khairul Haque said scams involving large amounts of money have been occurring in a number of banks over a considerable period of time; many of the main perpetrators, involved in these incidents, have not been accused in these cases. The former chief justice believes that it is urgent to bring these culprits under law.

“In our country, misdeeds involving conflict of interest have increased lately. According to media reports, such incidents are happening more while formulating contracts in the infrastructure development sector, involving construction of roads, bridges, culverts and government buildings. In this context, we recommended formulation of the law,” he said.

In the draft, “conflict of interest” has been defined as something that influences decisions made by an employee, official or consultant of the assigned government or private authority or office for personal gain.

In 2006, Canada passed a law titled “Conflict of Interest, Canada” to prevent conflict of interest. The USA widened the scope of its conflict of interest law in 2004, considering the crime as serious. India has also been working on formulating a similar law.

The proposed law has a provision for establishing a commission for examining and reviewing laws and other measures to prevent clash of interest involving government policies, decisions, and any government project. It will submit an annual report to the government in this regard.

The commission will also send recommendations to the government for remedial action against any conflict of interest at policy level, programme, public-private partnership, and decision-making and implementation phases that took place before the formation of the commission.

Muhammad Dilwar Bakht, ACC secretary, told The Business Standard that the formulation of the law is urgent. After the law is passed, legal action can be taken against any bank or financial institution for its involvement in nepotism or conflict of interest.