The central bank investigation report revealed that Falu and his associates illegally purchased the shares in the name of a Malaysia based company violating both the Foreign Exchange Regulation Act and the Money Laundering Prevention Act.

Sources in the central bank said they are considering forfeiture of the shares illegally purchased by Falu and others.

According to the Bank Company Act, any individual, company or members of a family cannot hold over 10 percent shares of a company. But Falu and his associates, AB Bank and AB Bank Foundation, and Beximco Group still hold more than 10 percent shares of IFIC bank each, the investigation report said.

The government owns 34.54 percent shares of IFIC bank, while Falu and his associates own 13.71 percent, Beximco group owns 12.74 percent, AB bank owns 18.31percent and family members of Aga Yusuf and of the directors of Islam Group own 3.56 and 2.21 percent respectively of the remaining 65.46 percent shares.

Dhaka Shanghai Ceramics Ltd, Build Trade Engineering Ltd, Diaper Ltd, and Bel Construction SDN BHD own 4.98 percent of the shares owned by Falu and his associates, while the rest are owned by the directors of these companies and their family members.

Falu, Arafat Rahman Koko, son of former prime minister Khaleda Zia, Enaytur Rahman, and Lutfar Rahman are the owners of these four companies.

Besides, the investigation found that Falu and his associates purchased 1.22 percent shares of the bank in the name of Bel Construction SDN BHD, a Malaysia based company. Falu, who became the chairman of the bank after striking a deal in October 2006, holds only 0.62 percent shares in his own name.

When Bel Construction SDN BHD was listed in Malaysia, two Bangladeshi citizens -- Osman Kaiser Chowdhury, and engineer Ashraful Alam -- were the owners of the company. But when this company purchased shares of IFIC bank in October 2006, Mosaddak Ali Falu, Enayetur Rahman, and Ekramul Haque were the signatories on behalf of Bel Construction.

The central bank's investigation team however did not find any document proving Falu's ownership of the company.

The report raised the question, how Mosaddak Ali Falu and Enayetur Rahman became directors of Bel Construction while they were active directors of IFIC bank too. The investigation team however did not find any provision in the bank's documents against holding such dual positions.

The BB report explained that Bel Construction is a company listed in Malaysia by Bangladeshi private entrepreneurs. But when the company purchased IFIC shares, it did not take any permission from any government authority.

According to the Foreign Exchange Regulation Act, if a foreign investment company wants to buy shares of a locally listed company, its investment should come to the country through non-resident investors account. And then the investment should be converted into local currency to buy shares of the locally listed company.

But the BB investigation team did not find any documentation of such a transaction in the bank's records. The BB investigation team assumed that the foreign company purchased the IFIC shares through collecting money locally, a practice which is illegal. The report said the bank did not even treat Bel Construction as a foreign investor.

Interestingly, the transactions of Bel Construction were conducted by Brotherhood Securities, a company owned by Falu. The report said it is quite mysterious how a Bangladeshi citizen became a director of a company listed in Malaysia and how he remitted the necessary capital to that country.

According to IFIC bank's share transaction form No-117, the witness of the transactions made by these four companies and by the family members of their owners, was Mazharul Islam. And interestingly, the same person was also the one who actually received the share documents from the bank on behalf of the four companies and the family members of their directors.

Moreover, in the transaction documents Islam mentioned different addresses as a witness and also at the time of receiving the share documents. The addresses used by him are: Latif Securities, DSE building, 9/F Motijhil, Dhaka; and Dhaka Shanghai Ceramics Ltd, BSE Bhaban, level-4, Kazi Nazrul Islam Avenue, Dhaka.

Lutfar Rahman, vice-president of IFIC bank is interestingly the managing director of Latif Securities too, and also one of the directors of Shanghai Ceramics.

Besides, the business addresses of Latif Securities and of Diaper Ltd, companies owned by Falu, Enayetur Rahman, and Arafat Rahman are the same. Similarly Build Trade Engineering, and Bel Construction also use addresses which are identical.

The investigation report said such transactions are totally in violation of the Foreign Exchange Regulation Act and also the Money Laundering Prevention Act.

The report remarked it is very interesting that Beximco Group, family members of the directors of Islam Group, and family members of Aga Yusuf still own IFIC bank shares, despite their earlier claim that they had sold all their shares.

According to the BB report Beximco Group along with members of Islam and Yusuf families hold 18.52 percent shares of the bank.