Kuliarchar Sea Foods, a Cox's Bazar-based fish exporter, withdrew about Tk 19 crore in cash incentives from Mercantile Bank last year, violating government rules.
Exporters cannot collect the incentive, meant to encourage exports, until the entire export earnings are credited by the importer to the exporter's bank, according to a Bangladesh Bank circular issued in December 2001.
But some exporters with help of their local banks continue to breach the rules, a BB investigation has found.
In the last two years, five companies, including Kuliarchar, misappropriated Tk 40 crore in such incentives from Mercantile. Three other companies took away Tk 3.35 crore from Jamuna Bank, the BB report said.
The central bank carried out the probe between May and November last year.
The Daily Star has been able to contact five of the eight companies in question. All of them denied any wrongdoing.
But top officials of both the banks involved admitted violating rules. They said they would try to adjust the amount from future export earnings of these firms and make sure this did not happen again.
Twenty-seven export sectors receive cash incentive between 2 percent and 20 percent under a government policy to boost export and encourage exporters to explore new markets.
The sectors enjoying cash subsidy include garment industry, frozen food and fish industry, leather products, finished leather, agro-based products and agro-processing industry.
In fiscal year 2016-17, the government gave Tk 4,395 crore in such incentives. It was Tk 3,500 crore and Tk 4,000 crore in the two previous fiscal years.
There is no data on how much of the cash incentive is withdrawn breaching rules every year, but BB officials said it could be between 10 and 15 percent of the total sum.
Under the rules, the exporters' banks pay the cash incentive to their clients. Later, the BB reimburses the banks on behalf of the government.
In case of the eight companies, the BB has already reimbursed Mercantile and Jamuna, a BB source told The Daily Star last night.
The BB investigation found that a number of export bills of Kuliarchar Sea Foods were unpaid when it collected the incentive, which is against the rules.
As the proceeds did not come even nine months after the export, Mercantile wrote to the BB in November, seeking two years' extension for the export earnings to come.
The application was subsequently rejected, but Mercantile paid the incentive to Kuliarchar anyway, the BB report said.
Teamex Jute Mills, a jute spinner, pocketed nearly Tk 10 crore in a similar way from Mercantile.
The bank also disbursed nearly Tk 41 lakh to Utah Knitting and Dyeing Company and Tk 24.60 lakh to Creative Woolwear, although each of them had overdue export bills.
In another instance, Mercantile disbursed Tk 10.44 crore to Ratul Fabrics and Ratul Knitwear, two companies of Ratul Group, violating central bank rules.
The two companies produced textile items by procuring chemicals from another local factory not owned by Ratul Group, the BB report said.
The bank should have deducted the cost of the procured items while calculating the incentive, it added.
Jamuna Bank disbursed Tk 2.68 crore to Tajbed Trading and Tk 64.74 lakh to Raj-Kamal Everest Corporation although the two companies brought their export earnings through exchange houses.
“Only inward remittance can be sent through exchange houses. Exporters must bring their money through the banking channel,” said the BB report, describing the transactions as suspicious and money laundering.
IFS (Pvt) Ltd, another client of Jamuna Bank, illegally received Tk 2.59 lakh by exporting textile products to Poland. Exporters cannot collect incentives against exports to a number of countries, including Poland.
Musa Meah, chairman of Kuliarchar, termed the central bank's allegation as “bogus”.
“I have been enjoying cash incentives for long. I collected the money in line with the rules,” he told The Daily Star over the phone last week.
Contacted, Mozammel Hoque, managing director of Teamex Jute Mills, first cited network problem and hung up the phone. Later, he did not pick up the call despite repeated attempts.
Ratul Group Managing Director Nazrul Islam could not be reached for comment. A man who identified himself as Mamun and an employee of the Group received the call instead.
He insisted they broke no rules.
Mosharraf Hossain, general manager of the Utah Knitting, and Mostafa Kamal, managing director of Raj-Kamal Everest, made similar claims.
“I have applied to Jamuna Bank and the central bank to review the allegation,” Mostafa said.
On January 7, the BB asked the Mercantile Bank authorities to take punitive action against the officials involved in the irregularities by the first week of February.
The bank sought time till February 28 (tomorrow).
Mati Ul Hasan, additional managing director of the bank, said they already realised some export proceeds against which cash incentive was given.
“We will respond to the central bank letter by February 28. Also, we have taken steps so that such wrongdoings do not recur,” he said, adding that they committed an “unintentional mistake”.
Jamuna Bank managing Director Shafiqul Alam said his bank had already frozen export earnings of one of the three companies to recover the incentive.
The BB has asked Mercantile and Jamuna to deposit the fund in the government account.