Beximco Group Vice Chairman Salman F Rahman, his son, Ahmed Shayan F Rahman, and former Chairman of the Bangladesh Securities and Exchange Commission (BSEC), Professor Shibli Rubayat Ul Islam, have been banned from the capital market for life. BSEC took this action against them for deceiving investors through the “IFIC Amar Bond” and for abuse of power in extending the subscription deadline of the Beximco Green Sukuk issue. Salman and his son were also fined. These decisions were made at the BSEC’s 965th commission meeting, chaired by current Chairman Khondoker Rashed Maqsood.
Following the meeting, BSEC stated that the “IFIC Guaranteed Sreepur Township Zero Coupon Bond” with a face value of BDT 15 billion and an issue size of BDT 10 billion was approved during the 871st commission meeting on June 4, 2023. Its consent letter was issued on July 12 that year. The issuer was Sreepur Township Limited, a private limited company registered on March 2, 2023. Barely a month later, on April 11, it applied to issue the bond. The company had an authorized capital of BDT 5 billion and paid-up capital of BDT 3.35 billion, of which BDT 2.48 billion in cash was withdrawn within four days for land purchase or development purposes, raising questions within the commission.
Moreover, IFIC Bank PLC served as the bond’s guarantor, with IFIC Investment Limited as adviser and arranger, Sandhani Life Insurance Limited as trustee, Emerging Credit Rating Limited (ECRL) as credit rating agency, and MJ Abedin and Co. Chartered Accountants as auditor. The bond was not issued by IFIC Bank but by real estate company Sreepur Township Limited (STL), which raised the funds. However, advertisements used the name ‘IFIC Amar Bond’, misleading investors into believing IFIC Bank issued it. IFIC Bank was merely the guarantor. This deception attracted investors. BSEC’s Enquiry and Investigation Committee probed into this issue and submitted its report to the commission.
Considering all aspects, BSEC fined Salman F Rahman, then-Chairman of IFIC Bank, BDT 1 billion, and Ahmed Shayan F Rahman, then-Vice Chairman, BDT 500 million, while declaring both “persona non grata” in the capital market for life. Simultaneously, former BSEC Chairman Professor Shibli Rubayat Ul Islam was also declared persona non grata, and former commissioner Dr. Shaikh Shamsuddin Ahmed was banned for five years.
Additionally, Imran Ahmed, then-CEO of IFIC Investments Limited, was banned from all capital market-related activities for five years. BSEC decided to take enforcement action against former IFIC Bank Managing Director Shah Alam Sarwar and issue warnings to the bank. Warnings were also issued to then-nominated Directors A R M Nazmus Sakib, Golam Mostofa, Zafar Iqbal, Kamrun Nahar, and then-independent director Sudhangshu Shekhar Biswas. Emerging Credit Rating Limited (ECRL) was fined BDT 1 million. BSEC further decided to take action against all others involved in bond-related irregularities and rule violations.
Bangladesh Export Import Company Limited’s (Beximco) BDT 30 billion five-year “Beximco Secured Convertible or Redeemable Asset-Backed Green Sukuk” was approved during BSEC’s 779th meeting on June 23, 2021. The sukuk involved BDT 22.5 billion through private placement (BDT 7.5 billion from existing shareholders and BDT 15 billion from other investors) and BDT 7.5 billion through initial public offering (IPO). Funds were meant for expanding Beximco Limited’s textile unit and renewable energy projects at subsidiaries Teesta Solar Limited (200 MW) and Korotoa Solar Limited (30 MW). Each Sukuk unit had a face value of BDT 100, with a minimum subscription of BDT 5,000.
Beximco acted as the originator of this Sukuk, Beximco Green Sukuk al-Istisna’a acted as the issuer or trust/SPV, Investment Corporation of Bangladesh (ICB) acted as the trustee, City Bank Capital Resources Limited and Agrani Equity and Investment Limited acted as the issue managers, MJ Abedin and Co. Chartered Accountants acted as the auditors, and ECRL acted as the credit rating provider.
BSEC granted Beximco Limited exemptions from specific sukuk regulations. However, the commission approved the sukuk application on June 23, 2021—before the exemption gazette was published. The consent letter was issued on July 8 that year. Later, the public subscription deadline was improperly extended from August 23 to September 30, 2021. BSEC’s Enquiry and Investigation Committee probed into this issue and submitted its report to the commission.
Consequently, for their involvement in this incident, former BSEC chairman Professor Shibli Rubayat Ul Islam was declared “persona non grata” for life, and former commissioner Dr. Shaikh Shamsuddin Ahmed was banned for five years.
BSEC Director and Spokesperson Md Abul Kalam told Bonik Barta, “Based on the BSEC’s Enquiry and Investigation committee’s report, those involved in violating the securities law in the IFIC Guaranteed Sreepur Township Zero Coupon Bond and Beximco Sukuk-related issues have been banned from the capital market, along with financial fines and punitive measures. There are more parties and individuals involved in these two issues. Action will be taken after investigating their involvement.”
Explaining “persona non grata,” he said, “Such individuals cannot enter BSEC, stock exchanges, or related institutions or hold positions there. Whether barred persons can serve on listed company boards, remain shareholders, or invest and trade will be detailed in BSEC orders after legal review. They may also be barred from writing columns in newspapers or participating in media talk shows regarding the capital market. He noted securities laws don’t explicitly define “persona non grata,” but the committee recommended it.
Salman F Rahman has long faced allegations of involvement in the 1996 and 2010 stock market crashes. The 2010 crash was investigated by a committee led by Khondkar Ibrahim Khaled, whose report raised serious concerns regarding Salman F Rahman’s activities, including issuing warrants and preference shares, and using placements to amass wealth. GMG Airlines shares worth BDT 600 million were sold for BDT 3 billion via placement. The investigation committee also expressed doubts about the accuracy of the information given in the GMG Airlines IPO information sheet. The committee questioned the IPO prospectus of GMG Airlines, suspecting manipulation of assets, income, expenses, and profits to inflate share prices.
In August 2009, Bextex Limited issued shares worth over BDT 6.35 billion to repay loans for six companies from the same group. The companies that received shares in exchange for the loans are New England Equity Limited, Beximco Limited, Shinepukur Ceramics, Bangladesh Online Limited, New Dhaka Industries Limited, and Beximco Holdings Limited. Of these, New England Equity was owned by Shahabub Alam, a close adviser to Salman. And the rest were owned by the Beximco group. The director, former president, and representatives of broker-dealers of the Chittagong Stock Exchange told the investigation committee led by Khondkar Ibrahim Khaled that Sahabub Alam, a former member of BSEC, was a consultant and lobbyist for the preference share issue and private placement system. The committee found accounting discrepancies in Bextex’s loan-to-share conversion documents. As such, the committee recommended that high-level government officials should be cautious about Salman F Rahman in capital market transactions and management. However, these recommendations were not followed during the later Awami League government. Instead, after the controversial 2018 elections, Salman F. Rahman was appointed as the private industry and investment advisor to the then-Prime Minister Sheikh Hasina. Since then, he has allegedly become more reckless by using state influence. He looted billions of taka from banks and the capital market.
Salman F Rahman was arrested on August 13 last year following the AL government’s fall, while Shibli Rubayat Ul Islam was sent to jail on February 4 this year. Ahmed Shayan F Rahman, abroad currently, remains unresponsive to contact attempts.
Former BSEC chairman Faruq Ahmad Siddiqi told Bonik Barta, “The impact of the decision made after investigating the two bonds is not limited to the capital market alone. The board of IFIC Bank is involved here. Why did the bank guarantee such a bond? Did anyone force them to take this decision? Or whether those who bought these bonds were forced to buy them? Moreover, the Bangladesh Bank has also approved the IFIC guaranteed bond. It is also necessary to know on what basis the Bangladesh Bank approved it. The issues that the BSEC investigation committee investigated in this case regarding the two bonds are only a part. There are many more issues involved here. As a result, the committee formed by the BSEC is not able to look into these issues. In my opinion, in this case, it was necessary to form a high-level committee jointly with Bangladesh Bank and BSEC to investigate.”
He further said, “In any punishment, legal language should be used, not political language like declaring ‘persona non grata’. When BSEC, Bangladesh Bank, or any other government agency uses a language, it should come within the definition of the law. You need to define what ‘persona non grata’ means in the eyes of the law. The issue of ‘persona non grata’ must be defined somewhere in the securities law. If it is not there, then you cannot use any language as you wish.”