Following the much publicised bank heist, Bangladesh Bank Governor Dr. Atiur Rahman recently offered his resignation to the PM. The intriguing question is why did he take more than a month and why did the PM accepted his resignation.

One conjecture, merely a theoretical one and not an allegation by any means, could be that Dr. Atiur Rahman was trying to cover up the governance failure. But given his impeccable record of personal honesty and professional integrity, it is unbecoming that he would orchestrate an illegal cover up to protect or enhance personal gains. In case he acquiesced to protect persons of high status, his political sentiments prevailed over ethics, and his resignation is merely a political sacrifice, not an exemplary leadership gesture.

Albeit unintended, the PM’s acceptance of Dr. Atiur Rahman’s resignation, just months before his normal termination, may on the surface appear consistent with this political scheme. The new Governor Fazle Kabir clearly has an impressive resume of his own, but it is not clear why the PM thought that he is more capable than the former governor in navigating the central bank through this crisis. Certainly any new governor has a learning curve to ride and rapports, internal and external, to establish, all of which require some time. If time is of essence in investigation and remedial efforts, then continuity through the now fired deputy governors, if not Dr. Atiur Rahman himself, would have made more sense.

Also, if Dr. Atiur Rahman were to protect individuals, they are likely to be intimately connected to the current regime. The mysterious abduction of IT professional Zoha and now the Law Enforcement finding him “loitering” in the airport area, the Home Ministry’s deafening inaction to rescue him and absence of denial of Zoha’s custody are apt to strengthen such suspicions. If this conspiracy theory were true, the accomplices, when arraigned, are expected to reveal the links to the allegedly protected individuals. But it seems absurd that any influential loyalist of the current regime would engage in such a high risk fraud that could literally annihilate the political capital of the party if discovered. It is also inconceivable that the Honorable, patriotic and politically savvy PM would let a transgression of such gravity pass with impunity. More importantly, so far there is no tangible evidence whatsoever of a cover up.

A more honourable view of Dr. Atiur Rahman’s arguably delayed resignation is that he was trying his best to simultaneously re-establish internal security of the payments system to prevent another breach, coordinate and collaborate with the foreign central banks and institutions to retrieve the stolen funds, engage globally acclaimed cybersecurity firm to diagnose the exact technical nature and pathways of the hacking, inform select law enforcement organs of Bangladesh to initiate suitable investigation etc. All such efforts had to be pursued while maintaining all regular central banking operations including international fund transfers on normal course.

One can imagine the intercontinental banking panic and chaos that could have emerged with a premature dissemination of the news of the international fund transfer architecture being compromised, involving not just one central bank (Bangladesh Bank) and two banks (in The Philippines and Sri Lanka), but also large Wall Street banks like Deutsche Bank, the world’s most revered institution (Federal Reserve Bank of New York) with trillions of dollars in deposits from 200 plus countries, and the most trusted and widely used interbank global messaging service (SWIFT). As consequences, one could not rule out all out bank runs (frantic withdrawal of cash), trade and investment counterparties canceling pending payments, guarantees like letters of credit halted and dishonored, wage remittance dropping sharply albeit temporarily etc., that would have paralysed not just banking but also trade and general economic activity. Additionally, it could have set off volatile swings in currency and securities markets. It is thus an accepted best practice in the banking world, first and foremost, to act swiftly to learn the nature and the points of system (technical and financial) failures, and then use immediately available measures to arrest the damage. Such investigative and stabilising efforts need to be pursued with maximum feasible discretion and least possible publicity due to the highly sensitive, fast, furious and fluid nature of banking. Not being sure what transpired but aware of the potential severity, clients tend to head for the exit first and ask questions later. In other words, controlled dissemination of the bad news until the situation is deemed under control is in fact in the best interest of all concerned and is instrumental in minimising systemic risk.

In such unusual contexts, the usual protocol of information sharing is worth sacrificing if that is unlikely to be immediately helpful and worse could jeopardise the controlled dissemination of information. Given the distinguished and dedicated public service history of the Finance Minister, the nation could thus have used a bit more of his forbearance and support. But his public disapproval of Dr. Atiur Rahman’s leadership is unlikely to have forced his resignation and its acceptance by the PM. Surely the discreet approach adopted by the former governor worked exceedingly well; the points and the technical nature of breach have been preliminarily identified, the banking and financial markets hardly registered any disruption or instability once the story broke from the Philippines media, and Bangladesh Bank would end up losing $81 million at most, a negligible fraction of its reserves. Thus, Dr. Atiur Rahman’s resignation and the PM’s acceptance of his resignation become all the more perplexing.

It is possible that Dr. Atiur Rahman all the while wanted to resign after making sufficient enough remedial progress. But what did convince the PM to accept his immediate resignation? Except for selective outrage within her own political alliance and in the media, one is hard pressed for any objective explanation. The bewilderment only ratchets up noting that numerous governance failures during her regime, prior or ongoing, that are truly of utmost importance and consequence to the country failed to elicit any such outcome, voluntary resignation or involuntary termination. To the contrary, repeated and blatant denial seems to be the modus operandi, the Election Commission’s claim of fair and peaceful local elections being the most ridiculous.

One reasonable explanation, albeit a subjective hypothesis, may run like this. Dr. Atiur Rahman concluded that the public feud and the media storm about the delay in informing the Minister of Finance was distracting the focus away from the principal task of proper and speedy investigation of the heist and restoration of security of the central bank’s funds transfer architecture. Accordingly, Dr. Atiur Rahman convinced the PM that it is in the best interest of the nation for him to resign immediately and the PM reluctantly obliged upon his insistence.

To conclude, yes there was a governance failure of potentially high severity under his leadership, but is it principally due to his supervisory incompetence or the political pressure to fast digitalise the banking system or both? In either case, where does the leadership responsibility start or end?

How severe and consequential (for the nation) do the governance failures have to be for an immediate and non-electoral change in leadership?

In the developed democracies, the answers have largely evolved as unwritten norms but with ever increasing respect, acceptance and practice. Dr. Atiur Rahman’s resignation is hopefully the first important brick laid for building this in Bangladesh.

Mo Chaudhury, McGill University, Montreal, Canada.