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LETTERS TO THE EDITOR

Bangladesh Bank no victim in $81-M theft

/ 12:00 AM December 17, 2016

This is in response to the Inquirer’s Dec. 3 editorial titled, “Clear enough” which echoes the call of Bangladesh Bank for RCBC to pay Bangladesh Bank its stolen deposits with the New York Federal Reserve Bank.

As you are aware,  there had been reports that the theft of the $81 million of Bangladesh Bank’s deposits with the New York Federal Reserve Bank succeeded because of help from within Bangladesh Bank. Just recently, a Bangladeshi investigator categorically said Bangladesh Bank insiders deliberately exposed its computer system to allow the cybertheft.

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So if Bangladesh Bank was negligent, why would RCBC be made to pay for Bangladesh Bank’s loss?

The editorial skipped a critical part of our earlier statement that would have thrown off the Inquirer’s line of reasoning as it would Bangladesh Bank’s—that Bangladesh Bank aborted its own investigation when it appeared, based on reports, that Bangladesh Bank’s own people may have been involved in the heist.

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Clearly, without this involvement of Bangladesh Bank’s  personnel, the New York  Federal Reserve Bank would not have released the $81 million; SWIFT would not have authenticated the message; and the three global correspondent banks would not have remitted the funds to RCBC. RCBC only received the funds in good faith after the funds cleared the sophisticated security wall of global banking organizations.

With the latest reports from Dhaka of an inside job, Bangladesh Bank  now has to convince the public that it was not negligent. It also must explain why it aborted its own investigation and did not renew the contract of an American outfit that first indicated the possibility of an inside job, and why a Bangladeshi IT expert who said the same adverse findings went missing, based on  reports, only to be found days later allegedly already out of his wits and, therefore, no longer a credible expert witness.

And there was this requirement to have six palm prints of six different people placed in sequence on a plate.

The Inquirer editorial also stated that RCBC “allowed the money to be withdrawn despite receiving stop orders from the Bangladesh Bank….”  Please be advised that only the Court of Appeals has this authority to freeze accounts under Philippine law. Had RCBC followed Bangladesh Bank, RCBC would have then become liable—to our regulators, depositors, and shareholders.

Further, the message requests from Bangladesh Bank were not in accordance with correct SWIFT formats so that urgency and red flags were not raised. Equally worse, the requests came days after the theft.  As set forth above,  the fund transfers involved were verified and cleared by the Federal Bank of New York and three correspondent banks which handled Bangladesh Bank’s accounts. Thus, RCBC, in good faith, relied on the regularity of the transactions which had already undergone proper verification procedures.

Clearly, Bangladesh Bank cannot play the victim since the proximate cause of Bangladesh Bank’s loss was its own lack of diligence in safeguarding the funds entrusted to it. GEORGE DELA CUESTA, deputy chief legal counsel, RCBC

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TAGS: Bangladesh Bank, Clear enough, cybertheft, editorial, New York Federal Reserve Bank, RCBC
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