Beximco Group, a prominent conglomerate in Bangladesh, and its associates have come under scrutiny for allegedly pressuring several banks into investing in its Tk 3,000 crore Sukuk bond. The project faced reluctance from banks due to concerns over its viability, but former adviser to the ousted prime minister Sheikh Hasina, Salman F Rahman, who is also the vice-president of Beximco Group, reportedly used his influence to push the investments.
Several senior bank officials claimed they were pressurized into investing large sums in the bond despite reservations about the project’s risks. Mutual Trust Bank managing director and CEO Syed Mahbubur Rahman revealed that they faced significant pressure but managed to avoid investing, citing concerns about the lack of underlying assets and the high risk of not recovering their principal.
On July 8, 2021, the Bangladesh Securities and Exchange Commission approved Beximco’s plan to issue Tk 3,000 crore in Shariah-compliant Sukuk. The plan aimed to raise half the funds through private placement, Tk 750 crore from existing shareholders, and Tk 750 crore through an IPO. However, the IPO fell short, raising only about Tk 450 crore, leading to a shift in funding allocation as approved by the BSEC.
With the IPO underperforming, the private placement portion increased to Tk 2,427 crore. The stock market regulator extended the subscription period multiple times to ensure the Sukuk’s success, eventually securing most of the funds from banks and institutional investors. On September 27, 2021, the Bangladesh Bank authorized banks to invest the entire Tk 200 crore of their special stock funds in Sukuk, including Beximco’s bond, to ensure full subscription.
However, this intervention diverted funds away from stocks, undermining the central bank’s original intention for the stock market support package. Additionally, Salman’s newly formed real estate company, Sreepur Township Ltd (STL), issued a Tk 1,000 crore bond called ‘IFIC Amar Bond’, marketed through bank branches in a misleading manner to attract general investors.
There were allegations that it campaigned as if IFIC Bank was the issuer of the bond. Despite STL having no prior experience in real estate development, over 7,000 individuals invested in the bond, attracted by promises of a 12% annual return. Salman F Rahman and his son Ahmed Shayan Fazlur Rahman are shareholders in both STL and IFIC Bank, with IFIC acting as a guarantor for the bond, an unusual move under debt securities rules for zero-coupon bond issuers.
The controversy surrounding Beximco Group and its associates’ alleged pressure on banks to invest in the Sukuk bond raises concerns about transparency, corporate governance, and ethical practices in the financial sector. It highlights the need for regulatory oversight and accountability to protect investors and maintain the integrity of the market.
