All losses belong to the state, profits only to Orion
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Photo: Collected
Dhaka: Since 2010, corruption and irregularities have been ongoing in all areas, from the construction of the Hanif Flyover to its management. The contracting company Orion Infrastructure of the Orion Group has embezzled several thousand crore taka through corruption surrounding the country's largest flyover.
Obaidul Karim, the owner of the Orion Group, has taken about Tk. 2.5 thousand crore as loans and investments from a total of 6 banks, including 4 state-owned banks, by showing that project. In that case, the state-owned banks are now facing extreme losses. In the last 14 years, not only construction work or bank loans, but there have been cases of embezzlement of state money in the collection of flyover tolls. Orion Infrastructure collects Tk. 350 crore from tolls every year, but only Tk. 176 crore has been shown on paper. Accordingly, the state has been deprived of Tk. 100 to Tk. 150 crore revenue from the Hanif Flyover every year. Similarly, money is being embezzled even now. That is, all the losses are from the state due to Orion's aggression. Similarly, all the profits through unlimited misdeeds are only for Orion. This information has been revealed in the latest investigation report of Bangladesh Bank and multiple sources of Dhaka South City Corporation.
An investigation report by Bangladesh Bank on bank loans states that in 2010, for the first time in Bangladesh, the construction of the longest 11.7-kilometer flyover in Bangladesh called 'Mayor Hanif Flyover' was undertaken entirely through PPP. For the first time, state-run commercial banks also made long-term investments. The contractor (Orion Infrastructure) has already rescheduled the loan twice and has exceeded the target repayment period of three years citing increased costs and low income.
The investing banks said that so far no cost estimates of the contractors or any monitoring of the income from the flyover have been done. Since 2010, a total of six banks and financial institutions have invested Tk. 2,250 crore in that flyover. These are the state-owned Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank. Apart from this, the Investment Corporation of Bangladesh (ICB) and the private Social Islamic Bank also invested. Of these, four state-owned banks have lent most of the total amount, i.e. Tk. 2,150 crore. The loan amount was disbursed in three tranches since 2010. The condition was that the contractor company would pay the first tranche dividend from 2013. But Orion's Obaidul Karim did not pay any dividend against the bank's investment. The banks did not receive any dividend against the investment in 2016 either.
The investigation report also said that Orion Group owner Obaidul Karim took a total of Tk. 500 crore from Agrani Bank in favor of the flyover construction project. Out of this, Tk. 200 crore was a loan and the rest was given as an investment by the bank. The term of this investment agreement expired long ago. However, the bank did not classify this loan until December 2014. However, it was later classified as a bad loan.
As of December 2014, Agrani Bank's total debt to Orion Infrastructure was Tk. 704.73 crore, which is 32.84 percent of the bank's total paid-up capital, which was very risky. Because it exceeded the single borrower exposure limit of 15 percent of the paid-up capital. In addition, the loan was given to another director of Orion Infrastructure, which owns two companies of Agrani Bank that had defaulted on their loans. Bangladesh Bank advised the bank management to strengthen efforts to recover loans and investments from Mayor Hanif Flyover. Even after this, the banks did not classify the investment and the contractor company (Orion Infrastructure) did not pay dividends within the specified period. But the influential contractor company later rescheduled the loan twice. Once in January 2015 and the other in January 2016. According to the second reschedule, the contractor company (Orion Infrastructure) is supposed to pay interest and regular dividends from 2017. Even after this, Orion's Obaidul Karim did not pay any interest or dividend.
According to the investigation report, Agrani and Sonali Bank invested Tk. 500 crore each, Rupali Bank Tk. 550 crore and Janata Bank Tk. 600 crore in the flyover. The banks invested money in the flyover against fully convertible preference shares at a dividend rate of 10 percent, fully repayable preference shares at a dividend rate of 15 percent and against the proposed public issue at a dividend rate of 16 percent. The project contractor, Orion Infrastructure Limited, requested the banks to reduce the dividend rate fixed against the investment as well as extend the principal payment period.
In view of the contractor's application, the banks also revised the dividend rate and repayment period plan with the approval of Bangladesh Bank. The new dividend rate has been reset to 10 percent against convertible preference shares, recoverable preference shares and 12 percent against project financing. According to the new plan, the accumulated dividends from 2014 to January 2019 will be paid by December this year.
Meanwhile, Orion Mayor Hanif collects at least Tk. 350 crore from the toll of the flyover every year, but on paper it is shown as Tk. 105 to Tk. 176 crore. In this case, despite collecting tolls from motorcycles, CNG-powered auto-rickshaws and some private cars, the account has not been paid. Several officials of the South City Corporation have said that this account is always being hidden from the City Corporation Bank and investors.
