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£1 million lost in money-transfer crash

Hasan Suroor

Hundreds of Bangladeshi immigrants, mostly low-paid workers, have lost their precious savings as a high-profile company used by them to transfer money back home has collapsed leaving behind unpaid remittances of nearly £1.7 million affecting some 2,000 families.

The First Solution Money Transfer Limited, which operated out of the predominantly Bangladeshi East London, suddenly went bust last month, and stopped trading on June 28 blaming the collapse on lack of “necessary management procedures” and “exchange rate fluctuations.”

Customers, who went to the company’s offices in Whitechapel to inquire about their remittances, were greeted with the notice: “Please note that this company has ceased trading.” All inquiries were directed to a firm of insolvency practitioners. The company, which is in the process of liquidation and is being investigated by the police, denied any wrongdoing and said it was “committed” to ensuring that all its customers were satisfied.

In a statement, the company’s three directors — Fazal Mahmood, Gulam Robbani Rumi, and Shah M. Hadi — accused local Bangla TV networks and the constituency MP, George Galloway, of “distorting” the truth and creating “panic” by spreading “rumours” that they (the directors) had “fled” the country with £9 million belonging to 10,000 customers. They said they were fully cooperating with the police and looked forward to a “favourable outcome.”

A spokesman for the insolvency firm Panos Eliades, Franklin & Co, which is handling the liquidation process, told The Hindu that a “survival plan” was being worked out to make sure that those affected by the company& #8217;s collapse did not lose their money. But he admitted there was a big “if.”

“We should know by the end of this week. If the plan works these people will not lose their money,” he said acknowledging, however, that if the company eventually went into liquidation then they might as well say goodbye to their savings. The plan was being put together by “three or four of the company’s rich agents,” he said.

Those, who have followed First Solution’s fortunes, claim it was an accident waiting to happen. The company, they say, became a victim of its own success: a success which, they allege, was achieved by employing “sharp” trade practices to seduce customers. These included unrealistically higher exchange rates and lower commission. While this helped it to expand dramatically, it also led to a situation where, as its directors admitted, they lost “control” over critical procedures.

“As a result of the rapid growth of the company’s business, the necessary management procedures were not in place to effectively manage and control all the transactions being processed through our agents,” they said.

Its growth was indeed rapid. Starting off as a modest operation, with a turnover of around £4 million in 2004, First Solution became one of Britain’s biggest money transfer businesses within two years showing a turnover of £87 million in 2006-2007. One close observer said: “There is only one word to describe their approach: greed. They were only interested in making money.”

When the issue was raised in the Commons, Labour MP Paul Farrelly said: “If it looks like a fraud, sounds like a fraud and quacks like a fraud, it is a fraud.” Mr. Galloway, the Respect Party MP from the area, claimed that the company knew about the problems for sometime but didn’t do anything about it.

Victims are seething with anger. Dullah Miah, a waiter, was a typical First Solution customer. He wanted to send £70,000 to Bangladesh for building a house and was looking for cheap money transfer arrangements. After shopping around, he discovered that First Solution offered the most competitive exchange rates and charged much less commission than others. He was also impressed by the attention they paid him. “One of the directors started calling me again and again. Each time he offered better rates and less commission,” he said. Finally, he plumped for it. And now he is “heartbroken.”

Mr. Miah, who had raised the money by remortgaging his house in Britain, said: “I wanted to build a house in Bangladesh and now it is all gone… They took my money on June 21 and closed down their business on June 28.”

Another victim, Abdul Haq, said he was shocked when he learnt that the money he had sent to his poor relatives in Bangladesh never reached them. One restaurant employee said he sent £500 for his sister’s marriage but it was not delivered. A woman worker said she had lost her six months’ savings. “I trusted these people,” she said.

Bank transfers being more expensive, expatriate communities rely heavily on money-transfer companies such as First Solution. In recent years, the money-transfer business has become a multi-billion pound industry but remains lightly regulated. There are now calls for it to be subjected to a more rigorous regime. But, equally, there is need for bank transfers to be made cheaper. So long as bank fees remain as prohibitive as they now are, people from low-income groups will continue to turn to cheaper alternatives that might then turn out to be dodgy too.

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