Govt moves to probe graft allegations over ADB-funded project

The interim government has taken steps to investigate alleged irregularities in the Capital Market Development Programme (CMDP), implemented by the Bangladesh Securities and Exchange Commission (BSEC), officials said.

As part of the move, the Financial Institutions Division (FID) has formed a 3-member committee, headed by its joint secretary, to scrutinise the procurement and implementation processes of the project, funded by the Asian Development Bank (ADB), they said.

The committee will also examine whether there was any fund embezzlement in the project execution process.

Although the project fund has been spent, it is alleged that the BSEC has not installed the 'surveillance' software, which was supposed to provide real-time data to the Commission from its stakeholders, to monitor the market and manage it properly.

Besides, some other irregularities, including classified data leakage, have allegedly taken place in the Tk 280 million CMDP-III project that started in 2018 and ended in 2024, sources said.

The FID-formed committee has been asked to submit a report within 15 working days.

A representative from the Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning and a deputy secretary of the FID are the other members of the committee.

A Project Completion Report has been submitted to the ministry, but the surveillance and dedicated software, RIS, has yet to be handed over and activated, insiders said.

Meanwhile, the Anti-Corruption Commission (ACC) conducted raids on the BSEC last March to investigate allegations of illegal connections with the software linked to the BSEC's 'surveillance' system, information leaks, fund embezzlement, and irregularities in project implementation.

According to the ACC, the surveillance system had 'dedicated' connections with the directors' room, outside the surveillance room, during the period from 2012 to 2024. However, these no longer exist.

There is a perception that these connections containing confidential information may have had an impact on the capital market.

The Manila-based lender came forward with its technical and financial support to streamline the market following the 1996 capital market scam in Bangladesh.

As per the TA project, the Regulatory System Design for BSEC, Training Workshops Handout, BSEC Risk-Based Regulatory Model: Elements of a Risk-Based Supervision Framework and RBS - A Supervision Index, and Risk Assessment Questionnaire, Supervision and Regulation of Intermediaries (SRI): Inspection Procedures Manual and Guidelines are key components of the programme.

The physical separation of dealership from brokerage operations was made necessary during the 1996 scam, as the broker-dealers were responsible for preying on the unsuspecting public by booking transactions for their own accounts when those were favourable to them (acting as dealers) and booking transactions for client accounts when prices went adverse (acting as brokers).

Since the transactions were done manually, it was relatively easy for brokers to cover their tracks, and there was no way to prove their actions.

However, the trading system has since been automated and a central depository established-separation is no longer required, as the automated system provides a clear audit trail.

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