BB has decided to show $81-million fund stolen

Bangladesh Bank has decided to show $81-million fund stolen from its foreign exchange reserve as ‘protested bill’ in its balance sheet for the fiscal year 2015-16 to avoid keeping provision against the fund although the two audit firms appointed by the central bank has raised objection against the move.
The central bank, however, will have to review its decision if the audit firms remain stick to their position.

A BB official told New Age on Tuesday that the audit firms gave opinions that there was no scope for avoiding provision against the fund in line with International Financial Reporting Standard (IFRS).

The money was stolen from the Bangladesh central bank’s account with the Federal Reserve Bank of New York on February 5. The fund was transferred to Philippines’ Rizal Commercial Banking Corp and then laundered into casinos in the Southeast Asian country.

In the unprecedented reserve theft, another $20 million BB fund was transferred to Sri Lanka where the fund was blocked by its central bank for suspected money laundering. The BB later recovered the fund.

The BB appointed two audit firms — Rahman Rahman Huq, a member firm of KPMG International, and A Qasem & Co, a member firm of Ernst & Young Global Ltd — to conduct the BB’s audit for FY16.

The central bank and the audit firms will have to reach a mutual understanding on the matter within the next few days as the board of directors of the BB will approve the balance sheet at a meeting on August 28.

The BB will have to explain in details provision or protested bill it will keep against the stolen reserve in its annual report of FY16.

The BB board asked its (central bank) account and budgeting department on June 23 to examine whether the BB would keep provision against the heist fund or create a protested bill to show the fund as other assets in the balance sheet from FY16, the BB official said.

The BB has examined both the options, he said.

He said the central bank would face difficult situation if it keeps provision against the heist fund right now.

The BB will have to keep around Tk 632 crore in provision against the heist
fund if it picks the option, he said.

The central bank will have to face net loss in FY16 if it maintains provision against the fund, so the BB is now trying to manage the two audit firms, the BB official said.

The BB has recently sought suggestions from the International Monetary Fund on the issue (how to manage the heist money in its balance sheet).

The IMF in a letter said that the central bank would have to keep provision against the theft money in line with financial norms.

It, however, said that the BB would be able to keep the provision from the next fiscal year as the recovery process of the theft money was now going on.
The BB has taken decision to avoid keeping provision considering the IMF suggestions, the official said.

In the protested bill, the central bank will have to clarify why it shows the theft fund as other assets in its balance sheet, the BB official said.
Besides, the central bank has informed the audit firms that the recovery process of the heist fund is now going on, he said.

The BB has already recovered $67,000 from the Philippines to its accounts, he said.
The central bank has submitted some documents to the audit firms on its recovery process of the heist fund, the official said.

More documents will be given to the audit firms in this regard so that the audit firms will take decision in favour of the BB, he said.
BB executive director and spokesperson Subhankar Saha told New Age on Tuesday that the central bank would prepare its balance sheet following the IFRS.
The central bank will take its move in this regard (showing the heist fund in its balance sheet) in line with the IFRS, he said.

According to the BB data, the operating profit of the central bank decreased to Tk 1,039 crore in FY15 from Tk 2,038 crore in FY14.