Vol. 5 Num 591 Thu. January 26, 2006  

Irregularities in EEF
Govt orders impact study

Implementation, Monitoring and Evaluation Division (IMED) has been assigned to conduct an impact assessment study on the Equity Entrepreneurship Fund (EEF) following allegations of financial irregularities.

The IMED under planning ministry was given the task early this month to look into allegations of corruption, nepotism and political interference in the allocation process of EEF under the central bank.

"Fresh projects under the EEF depends on the IMED report scheduled to be submitted by March," an official of the central bank said.

The board of directors of the fund will only consider fresh projects if the IMED report finds the fund is making positive impact on economy, the official explained.

The official said the government also may bring changes in the operational policy of the fund to bring transparency and accountability.

Meanwhile, the central bank has appointed seven audit firms instead of the Department of Banking Inspection (DBI) to inspect the irregularities in allocation of EEF.

The audit firms will conduct inspection of the projects under EEF and fund will be released as per reports of the audit firms.

Earlier, central bank officials under EEF unit used to conduct the inspection of EEF. But the duty was shifted to DBI following allegations of irregularities against the BB officials.

Following the allegations, approval of new projects under EEF remains suspended since June 8, 2005.

The government created the fund in 1999 by allocating Tk 100 crore to give collateral and interest free loans to innovative projects.

The BB has so far disbursed Tk 303.65 crore for 324 projects under EEF. While around Tk 928 crore has been sanctioned.

In the 2005-06 fiscal year, the government allocated Tk 150 crore.

Under the existing provisions, the central bank will provide entrepreneurs with 49 percent fund of the total cost of the project.

The central bank earlier relaxed some conditions relating to the sanctioning of the fund in line with trade body recommendations to help entrepreneurs establish their industrial units.

When asked, a high official of the BB said officials are not involved in any malpractice. But some entrepreneurs lobby brokers, who have no relations with the EEF management.