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Understanding the Hallmark-Sonali Bank Loan Scandal
By Daniel Sabet and Ahmed S. Ishtiaque
January 2013

Monthly Current Events Analysis Series
Purpose of the report
This month’s Current Events News Analysis takes up an issue that has been well documented and discussed in a variety of news sources: the Hallmark-Sonali Bank loan scandal. As with other hot topics, important information is scattered across a variety of different articles and sources. This report seeks to provide readers with “all that they really need to know” about the scandal. The analysis tries to provide clear, simple answer to the following questions:




What happened?
How did it happen?
Why wasn’t the malpractice prevented or discovered sooner?




What has been the fall out?
What is next?

What happened?
In May 2012, a report from the Bangladesh Bank revealed that the Ruposhi Bangla Hotel Branch of the state-owned Sonali Bank, Bangladesh’s largest commercial bank, illegally distributed Tk 36.48 billion (US$460 million) in loans between 2010 and 2012. The largest share, of Tk 26.86 billion
(US$340 million), went to the now infamous Hallmark Group. While the focus has understandably been on Hallmark, other companies also participated in the fraud, including:




T and Brothers, Tk 6.10 billlion
Paragon Group, Tk 1.47 billion
Nakshi Knit, Tk 660 million




DN Sports, Tk 330 million
Khanjahan Ali, Tk 50 million

This is considered to be the country’s largest banking scandal. It dwarfs previous fraud cases, such as a Tk 6.2 billion Letter of Credit fraud in Chittagong in 2007, a Tk 5.96 billion fraudulent withdrawal from Oriental Bank in 2006, and a Tk 3 billion forgery scandal in 2002.
How did it happen?
It is alleged that the scandal resulted from collusion between officials of Hallmark and Sonali Bank, in particular between Tanvir

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