No solution for the poor

Observations on fraud

The company slogan was "Shopner Shomadhan", which translates as "Dreams Realised". Now, First Solution goes by the tag line the "Bengali Farepak".

Thousands of people living in the UK transferred at least £1.7m to their families in Bangladesh and it "went missing". The largest single payment to disappear was sent by a businessman, Dullah Miah. He lives in Stoke-on-Trent and used First Solution to transfer £70,000 to build a house for his family. It never arrived. Most of the sums are smaller. The real tragedy is that money earned by some of the hardest-working people in the country, destined for some of the poorest people in the world, vanished.

Mohammed Abdul Awal works as a chef in one of Brick Lane's curry houses in the East End of London. He arrived in the UK just 18 months ago and managed to save £500. This was to be sent to Bangladesh to pay for his sister's wedding in June. First Solution, with a branch next door to the restaurant, was recommended by a friend. The company had 41 branches and more than a hundred agents nationwide.

The transfer fee was cheaper and the money got to its destination quicker than with bigger operators like Western Union. Not this time. Mohammed's sister is still waiting.

The company has been run into the ground. The three directors - Fazal Mahmood, Gulam Robbani Rumi and Shah Hadi - butchered the golden goose. And First Solution was a Golden Goose. Its turnover grew from £4m in 2004 to £87m in the last tax year.

Part of the reason for its success was that, after the 11 September 2001 attacks, western governments tried to clamp down on money being transferred informally across borders. So, for example, the Department for International Development gave the Central Bank of Bangladesh a £7.5m grant in 2005 to help encourage more formal, "safer" ways of transferring money. As a result, more "professional" operations such as First Solution cashed in. I asked one branch manager in east London how much money would be handed over his counter to be transferred on any given day. "On a bad day, £30,000," he said.

Last year, First Solution took on 30 extra agents to handle demand. They advertised extensively on Channel S, one of the biggest UK-based Bengali TV channels, and the money flooded in. Then it all started to unwind. They didn't have the infrastructure to cope with the expansion. They couldn't keep adequate tabs on the new agents. Some of them decided to sit on the money for a while to see if they could benefit from the exchange rate. Some of them didn't hand over the money at all. Rumours started to circulate that something was seriously wrong with the company and then, during a phone-in show on Bengali TV, a caller declared that First Solution was going bankrupt.

Panic ensued. The next day crowds of people gathered outside branches demanding their money back. Branches started to close. A week later, Fazal Mahmood was interviewed by BBC London at a safe house because death threats had been delivered to his home. He broke down and explained that the company was going into liquidation. He insisted that none of the directors had done anything illegal and that they would refund as many people as they could.

George Galloway MP set up a creditors' group and raised the matter in parliament. The following week, police and detectives from the Insolvency Service announced that they were investigating what had happened.

A charitable fund run by the Sir William Beveridge Foundation, similar to the one started after the collapse of Farepak, has been set up (helpline: 0845 602 2548).

This article first appeared in the 13 August 2007 issue of the New Statesman, Road fix