The Bangladesh Bank (BB-central bank) has launched an investigation into allegations that US$7.5 million has been smuggled out of the country via letters of credit (L/Cs) opened at several banks.

In the light of these allegations the authorities have apparently ordered banks not to open L/Cs for 346 export-import firms in Rangpur, Bogra, Naogaon, Jaypurhat and Nilphamari.

No imports

The L/Cs used in the currency smuggling operations purported to be for the import of essential commodities from India, but investigators have found hundreds of instances where no bills of entry to prove receipt of the imported goods have been submitted against L/Cs opened.

Customs officials say the smuggling began in 1995 and ended in 2006, with the majority of cases thought to have taken place after 2000.

Bogra investigations

Three teams are now reportedly tasked with undertaking investigations in Bogra.

Their preliminary investigation of around 1,000 allegations has apparently unearthed nearly four hundred cases where bills of entry against opened L/Cs were not submitted.

More discrepancies

According to media reports, bills of entry have not yet been submitted against 27 L/Cs worth nearly US$1.9 million opened between 2001-06 with Marcantile Bank in Naogaon.

Bills of entry have also not been found for around US$1.2 million worth of L/Cs for imports of rice, lentils and other commodities by a Naogaon trading company called Rituraj Enterprise.

In Bogra, bills of entry against 54 L/Cs worth US$1.7 million opened with City Bank Bogra branch between 2005-06 have not been found while a bill of entry against an L/C for around US$900,000 opened by Sarkar Flour and Rice Mill has not been found either.

Further actions

Central bank sources are reported to have said that investigations would be conducted initially in the banks that opened suspect L/Cs.

If gross anomalies are uncovered at those banks, further investigations could be conducted at all 41 banks authorised to open L/Cs in the areas under suspicion.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.