One of Bangladesh’s most powerful business families has launched an international arbitration case against the government, alleging that Dhaka’s asset recovery drive has caused massive financial losses to their conglomerate.

Mohammed Saiful Alam, founder and chair of the S Alam Group, along with his family, filed the claim with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington on Monday, according to documents reviewed by the Financial Times.

The family argues that they are victims of a “targeted campaign of arbitrary asset freezing, confiscation, and value destruction” by the interim government of Professor Muhammad Yunus, which came to power after the August 2024 uprising that toppled former Prime Minister Sheikh Hasina.

A clash over billions

The case marks a new front in the Yunus government’s aggressive push to repatriate billions of dollars allegedly siphoned abroad during Hasina’s 15-year tenure.

A government white paper, released in December, claimed that around $234 billion had been diverted from Bangladesh’s economy during that period.

Among those targeted in the recovery effort is the S Alam Group, one of the country’s largest industrial conglomerates with businesses spanning banking, energy, food, construction, and garments.

Ahsan H Mansur, the central bank governor who leads the asset recovery initiative, accused the S Alam family of moving about $12 billion out of Bangladesh’s banking system.

“Where is the money?” Mansur asked, alleging that the group used loans and inflated import invoices through six banks under its control.

S Alam Group has strongly denied the allegations, calling them “baseless” and “politically motivated.”

Legal battle goes global

The arbitration claim, prepared by Quinn Emanuel Urquhart & Sullivan, alleges that the government has frozen the family’s bank accounts, seized assets, and conducted “spurious investigations” into their businesses – while also orchestrating a hostile media campaign.

According to the filing, these actions have caused “very substantial damages, estimated in the hundreds of millions of dollars.”

However, the exact amount of compensation sought was not disclosed.

The family’s lawyers had warned the Yunus administration last December that they would seek international arbitration if no resolution was reached within six months.

Citizenship and legal grounds

The arbitration is being pursued under the 2004 Bilateral Investment Treaty (BIT) between Bangladesh and Singapore, where the Alam family is now based.

Legal documents show that family members renounced their Bangladeshi citizenship in 2020 and became Singaporean citizens between 2021 and 2023 – making them eligible to claim protection under the treaty’s foreign investor provisions.

The S Alam family argues that, as Singaporean nationals, they are entitled to protections guaranteed by Bangladesh’s 1980 Foreign Private Investment Act, which promises fair treatment to foreign investors.

Government’s position

Governor Mansur confirmed to the Financial Times that the authorities would respond “through the proper channel” once the arbitration documents reach Dhaka.

The office of Chief Adviser Muhammad Yunus has not yet issued a statement on the matter.

Mansur, a former IMF official, earlier accused S Alam and his associates of orchestrating bank takeovers with the assistance of military intelligence, using them to extract money through fictitious loans and import transactions.

“We have uncovered extensive evidence of resource diversion,” he said. “These banks now have negative net worth, and the government is being forced to bail them out.”

The S Alam Group maintains that the government has not produced any credible evidence to support its allegations.

Economic and political stakes

The dispute underscores the fragile relationship between business elites and the post-Hasina interim administration, which has pledged to restore transparency and recover looted wealth.

However, analysts warn that the S Alam arbitration could complicate Dhaka’s international image just as it seeks foreign investment and donor confidence to stabilise its struggling economy.

If ICSID accepts jurisdiction, the case could become one of the largest international investment disputes involving Bangladesh – with potential implications for the country’s banking sector, investor sentiment, and global reputation.