In a shocking revelation, a central bank investigation has uncovered a massive fraud committed by ‘Nagad,’ the mobile banking service of the Bangladesh Postal Department. According to the findings, Nagad engaged in an unprecedented digital money-printing scheme with the backing of the state, resulting in the embezzlement of nearly Tk 650 crore in counterfeit e-money. Furthermore, an additional Tk 2,356 crore has been siphoned off through various fraudulent activities, leading to significant financial deficits that have been blamed on the Postal Department itself. This is the first time in the country’s history that such a large-scale fraud involving the illegal creation of money has been uncovered. The central bank’s investigation has raised serious concerns, particularly the involvement of high-ranking individuals and the potential for money laundering under the guise of foreign shares. The Fraudulent Scheme and Unauthorized E-Money Printing: The investigation reveals that Nagad, through an agreement with Third Wave Technology, was allowed to issue e-money equivalent to the amount deposited in its bank account. However, Nagad issued an additional Tk 645 crore in e-money beyond the amount held in its account. In another illegal maneuver, Nagad opened accounts for 41 distributors responsible for disbursing government allowances. These distributors, however, failed to distribute the funds as intended, and the allowance money was instead embezzled.
More concerning, Nagad withdrew Tk 1,711 crore from these unauthorized accounts, primarily targeting beneficiaries who failed to collect their allowances within three days. This fraudulent activity, carried out through unauthorized distributors, has led to the embezzlement of a staggering Tk 2,356 crore. The investigation is ongoing, and experts believe the total sum of embezzled funds may rise further as the full scope of the fraud is unveiled.
State Involvement and Alleged Political Backing: The investigation also highlights the involvement of high-level political figures and former central bank governors in facilitating this fraud. Nagad’s operations, which were initially launched without the necessary approval from the central bank, allegedly received direct encouragement and support from ousted Prime Minister Sheikh Hasina and her son, Sajeeb Wazed Joy. Sources claim that Joy, an IT advisor, played a key role in the establishment and expansion of Nagad, benefiting directly from its operations.
Former Central Bank Governors, Fazle Kabir and Abdur Rouf Talukder, have been accused of quietly supporting Nagad’s illicit activities, allowing the platform to operate without the necessary regulatory oversight. Nagad was promoted as a government-backed institution under the Postal Department, despite not being formally recognized as part of the department. This exploitation of the government’s name allowed the company to carry out its fraudulent activities under the guise of a public institution.
Regulatory Failures and Legal Ramifications: Nagad’s failure to obtain a permanent license from the central bank has raised further questions about the regulatory failures surrounding its operations. Initially launched without the central bank’s permission, Nagad only obtained a temporary license and later a digital banking license after amendments were made to the Postal Department Act. However, throughout this process, Nagad failed to meet the eligibility criteria, which were allegedly overlooked due to political interference.
The central bank has already filed a case against Nagad for its illegal digital money printing activities. This marks the first time the central bank has taken such action against an institution for the unauthorized printing of money. In addition, the Anti-Corruption Commission (ACC) has filed a separate case against Nagad for the embezzlement of Tk 2,356 crore. Both investigations are ongoing, and further actions may be taken depending on the findings.
The Impact on the Postal Department and Public Trust: The financial deficits resulting from Nagad’s fraud have placed the Postal Department in a difficult position, as it is being held accountable for the embezzlement and mismanagement of public funds. This has raised concerns about the integrity of the government’s institutions and the potential for widespread corruption within the public sector.
As the investigation continues, the scope of Nagad’s illegal activities is expected to widen. Experts have expressed concerns that this fraud may be part of a larger scheme involving money laundering, where the state’s financial systems are being exploited to channel illicit funds.
The unfolding scandal has already led to widespread calls for accountability and reforms in Bangladesh’s financial and banking systems. With several high-profile figures implicated, it remains to be seen how the government will address these serious allegations and restore public confidence in its institutions.
The discovery of Nagad’s fraudulent operations, facilitated by political interference and regulatory failures, marks a dark chapter in Bangladesh’s financial history. As investigations continue, the embezzled funds, amounting to billions of taka, highlight the potential risks of unchecked digital financial platforms operating without proper oversight. The central bank’s actions, along with the involvement of the Anti-Corruption Commission, are expected to set the stage for a protracted legal battle as the full scale of the fraud is revealed.
The Rise and fall of Nagad: In a deeply concerning development, the mobile financial service provider Nagad, initially launched by the Bangladesh Post Office, has come under intense scrutiny following an investigation that has revealed widespread irregularities and corruption. The rise of Nagad, promoted as a government-backed initiative, has been clouded by allegations of illegal activities, financial mismanagement, and political influence, particularly from figures associated with the Awami League government.
The Launch of Nagad: A Government-Sponsored Service: Nagad was initially introduced in 2010 as a postal cash service by the Bangladesh Post Office. However, the service’s true transformation occurred in 2017 when the Post Office signed an agreement with Third Wave Technology to launch mobile financial services. This partnership paved the way for Nagad’s formal launch in 2019 under a new law, with former Prime Minister Sheikh Hasina herself inaugurating the service. Despite its promotion as a government service, Nagad was not actually owned by the Postal Department, but operated by Third Wave Technology.
At the time of its inception, Nagad’s operations were backed by several influential figures within the Awami League government. Notably, Sajeeb Wazed Joy, the son of the former Prime Minister, played a pivotal behind-the-scenes role in the company’s establishment. The service was seen as an extension of government welfare efforts, especially after the disbursement of government allowances began through the platform.
However, behind the public face of the service lay a different reality. Several prominent figures, including then-Awami League MPs Nahim Razzak and Raji Mohammad Fakhrul, became shareholders of Third Wave Technology. Additionally, Rezwana Noor, the wife of former Prime Minister’s Deputy Press Secretary Ashraful Alam Khokon, initially held a stake in Nagad before relinquishing ownership.
Central Bank’s Resistance and Legal Irregularities: Despite the growing influence and political backing, Nagad faced legal hurdles in its early years. In August 2018, an application for permission to operate a mobile banking service was submitted to Bangladesh Bank. The central bank rejected the application, citing failure to meet regulatory conditions. However, this did not stop the Postal Department from pushing forward with its plans. In March 2019, following a change in the Postal Department’s laws, Nagad was launched as a mobile banking service, bypassing the necessary approval from the central bank.
The central bank’s refusal to approve Nagad was based on clear regulations: no financial institution can launch banking services in Bangladesh without the approval of the central bank. Yet, despite these legal concerns, Nagad’s operations continued to expand, benefiting from its association with the government. The company was granted a temporary license by the central bank on March 15, 2020, but it failed to meet all required conditions.
The Role of Political Influence and Awami League Leaders: Nagad’s expansion was not without controversy. As the service grew, allegations of irregularities and corruption emerged. The company came under severe criticism for bypassing regulatory approval, and questions were raised about its governance. The irregularities were allegedly facilitated by Awami League MPs and influential party leaders, with support from the government. The central bank, under Governors Fazle Kabir and Abdur Rouf Talukder, is accused of turning a blind eye to these issues, failing to take action against the growing concerns.
Sources indicate that Sajeeb Wazed Joy himself directly intervened, speaking to then-Central Bank Governor Fazle Kabir to ensure that Nagad was granted the temporary license in 2020. This intervention has raised suspicions about the role of political influence in facilitating the company’s irregular operations, with some accusing the government of allowing Nagad to operate with impunity.
Despite being aware of the irregularities, both the former Prime Minister and the Postal Department remained silent. Observers claim that Sheikh Hasina chose not to intervene due to her son’s involvement in the venture, while the Postal Department’s leadership, aware of the situation, chose not to take any action.
The Unraveling: Central Bank Steps In: In August 2021, as investigations into Nagad’s activities deepened, the central bank took the rare step of appointing administrators to manage the company. The move came after mounting pressure and ongoing allegations of financial misconduct. As the administrators took charge, several key officials involved in the irregularities were dismissed, and the scale of the fraud began to come to light.
The investigation revealed a series of financial malpractices, including the misappropriation of government funds meant for distribution through the platform. The central bank’s investigation into these irregularities is ongoing, with some sources claiming that the total scale of the financial misconduct could reach billions of taka.
Nagad’s Future: Questions of Accountability and Transparency: As Nagad faces increasing scrutiny, questions about its future remain unanswered. The company’s operations, once seen as a success story for digital banking in Bangladesh, are now at the center of a political and financial scandal that threatens to undermine the credibility of government-backed initiatives.
The investigation into Nagad’s irregularities raises serious concerns about the role of political influence in financial services, as well as the regulatory failures that allowed such a large-scale fraud to occur. While the central bank and other authorities continue their investigations, the public and political fallout from the scandal is likely to have far-reaching consequences for the future of digital banking in Bangladesh.
In the coming months, further legal and regulatory actions may be taken against those responsible for the mismanagement of public funds and the illegal operations of Nagad. The case serves as a cautionary tale of how government-backed financial services can be exploited for personal and political gain, and how critical it is for regulatory bodies to enforce transparency and accountability in the financial sector.
