The Bangladesh Bank has been burdened with excessive gold in it vault as a large volume of golden metal was deposited there following their seizure while smuggling into the country.
In contrary, the central bank failed to dispose off huge deposits of this precious metal, as part of its regular job, which the experts opine has caused increased threat to this reserve.
The central bank could not hold auction of the seized gold during last 10 years and as a consequence the volume of gold stored in the bank has raised manifold.
The central bank that held its last auction of gold in July 2008 had 963 kilograms of gold in its volt. According to the Bank, at present there is 4 to 5 tonnes of gold in permanent and temporary sector.
Elaborating the root causes for high trend of smuggle of gold in the country, they said, despite annual demand for about 40 tonnes of gold a year and the reality that there is no gold mine in the country, traders do not import any gold, rather meet the demand for this precious metal from smuggled gold. Gold traders are even reluctant to buy gold from Bangladesh Bank reserves through auction.
An official of the central bank said, during auctions they purposefully offer lower price than the actual price of gold, creating less or no demand during the auction. “When the actual price of gold was Tk 40,000 per bhori, they offered Tk 3,000 less in 2008. For this, auction is not held for last nine and a half years,” he mentioned.
The central bank has been repeatedly urged for regularly auctioning its seized gold to ensure supply of the precious metal on the market.
In this regard, former Bangladesh Bank spokesperson M Mahfuzur Rahman said: “Traders make profit from smuggled gold. Maybe that is why they offered very low prices for the gold deposited to Bangladesh Bank during the auction.”
Referring to BB’s last gold auction he said, “During the auction in 2008, the traders said there is no demand for gold in the country.”
He also said: “Gold business is transparent all over the world but not in Bangladesh. It happens only in Bangladesh that prices of gold rise after mixing impure substances with it.”
Contacted over the BB official’s allegation that gold traders offer fewer prices at auction, Bangladesh Jewelers Association’s president Gangancharan Malak categorically denied the allegation.
He rather claimed the opposite, saying: “The gold traders purchase gold citing competitive prices. At present, there is huge demand of gold in the local market. If the Bangladesh Bank auctions its seized gold, we will show huge response.”
On May 18, 2017, the Customs Intelligence and Investigation Directorate sent a letter to the central bank, asking it to regularly auction gold seized in drives, as a move alternate to import of the precious metal, to increase supply to the local market.
Customs Intelligence and Investigation Directorate (CIID) which prepared a report based on inspection at the vault during January-April 2017 found irregularities in gold deposits. They submitted the report in January 2018 and accordingly sent a letter to the Bangladesh Bank requesting it to take necessary action.
The report unearthed, the warehouse official of the customs Harunur Rashid handed over a gold disc and a ring weighing 3.3 kg to the central bank authorities on August 23, 2015.
The Bangladesh Bank authorities, after examination of the gold by a goldsmith, certified it as 19.2-carat genuine gold before putting it into its vault. That means the metal contained 80 per cent pure gold.
When the team of investigators reexamined the gold disc in January this year, it was found that the metal contained only 46.66 per cent gold and it was graded as 11.2-carat gold, said the report. The ring had 15.12 per cent gold which is graded as 3.63-carat gold.
“The disc and ring contain no gold at all. These are made with alloy of other metals,” read the report. The government has lost Tk 11.8 million as a result of this adulteration alone.
Earlier on Tuesday, Bangladesh Bank at a press briefing denied the allegation. “There is no irregularity found in the gold,” said central bank executive director Rabiul Hassan, and general manager Awlad Hossain Chowdhury.