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Tuesday, February 27, 2024

Bangladesh Bank should blame itself

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The $81-million cyber heist that rocked Bangladesh and the Philippine banking system in February this year will not come to a siginificant conclusion if Bangladesh Bank does not resume its internal investigation.

The central bank of Bangladesh, in a way, is the biggest stumbling block to the recovery of the stolen funds. Recent developments suggest an inferior internal system led to a breakdown in the security of the funds held and managed by Bangladesh Bank.

Bangladesh Ambassador to the Philippines Maj. Gen. John Gomes can continue pestering local authorities over the return of the money that used to form part of Bangladesh Bank’s foreign reserves, but he and his nation will not be able to unlock the mystery in the absence of a thorough investigation.

A very reliable source said the brother of a high Bangladesh Bank official was the one in custody of the code to the bank computers when it was hacked. The revealing information partly led to the resignation of the bank governor.

“Then BB aborted its internal investigation. So it has no report to share with the world, its people and to the Philippine government that has been more than generous in helping BB. The least BB can do is give us a report. We washed our dirty linen in the global public. They owe us that report,” one banker said.

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The theft succeeded clearly because BB was negligent. Had the bank installed enough firewalls and used quality instead of $5 switches, the heist would not have occurred.

RCBC external legal counsel Thea Daep agrees. “They stopped their investigation and then their ambassador here, John Gomes, started claiming it was an outside job. But their finance minister said it was an inside job,” she said earlier in a statement.

She also questioned BB’s decision not to investigate and renew the contract of a US-based investigating company.

“Why don’t they want to know the truth? Before they ask for help from the Philippine government, it is incumbent upon them to submit a full report to the Philippine government, detailing what happened in Bangladesh,” she said.

The inside job accusation of Bangladesh’s own finance minister by far is the most credible explanation to the cyber robbery.

“How can the theft happen if six different BB officials had to place their palm prints on a plate in proper sequence before any order to move funds could happen? We are talking here of people, not computer codes,” the first source said.

Bank of Bangladesh may think itself as the vicitim of the grand theft but surpisingly, it did not sue the New York Federal Reserve where the money was transferred from.

Rogue employee

“The answer is because they (NY Fed) had nothing do with the theft. In the same way, Rizal commercial Banking Corp. had nothing to do with the theft. Its issue was with a rogue employee who allegedly was a participant in the laundering of the BB funds. It was all BB’s fault and negligence,” said the source. “And yet, Ambassador Gomes has the temerity to go around and say RCBC should pay. Looking at it, RCBC was a victim of BB’s negligence.”

A Bangladeshi expert earlier pointed out the weaknesses of BB after the heist. The expert suddenly disappeared and was found days later in a daze and apparently mentally challenged.

“Around March, the finance minister of Bangladesh told media he was sure it was an inside job, and the Bank of Bangladesh Governor and two deputies resigned shortly thereafter. To us, these are clear indications of guilt and negligence,” Daep adds.

The Philippine banking heist was not the first for Bangladesh. A Dhaka-based journalist wrote in the New York Times on April 11, 2016 that the cyber scam at the Federal Reserve “pales in comparison with the routine plunder of Bangladesh’s financial system, including by some of its purported guardians.”

“Part of the explanation for this is poor governance by the banks’ boards, but the main culprit is the country’s culture of patronage,” wrote Joseph Allchin.

“Some $565 million in asssets are said to have been looted from the state-owned BASIC Bank between 2009 and 2012, yet the scam’s suspected mastermind, a former chairman of the bank, wasn’t troubled by the anticorruption commission investigating the fraud, reportedly thanks to his political connections. Banking in Bangladesh is beholden to the politicians,” he said.

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