Tk6,798cr Beximco-linked investments in capital market flagged, share manipulation suspected

Investments were funded through loans taken under false names from IFIC Bank and others

Highlights:

• Loans issued under false names suspected to inflate share prices
• BSEC forms four-member probe panel to investigate
• Salman F Rahman chaired IFIC Bank during loan approvals
• Eight Beximco-linked firms, including Apollo Trading and Tradenext, named
• DSE fines nine Beximco-linked entities Tk428 crore
• Frozen accounts leave many Beximco-linked firms unable to sell shares

The Bangladesh Financial Intelligence Unit (BFIU) has uncovered investments worth Tk6,797.78 crore in the capital market by eight companies and 34 individuals linked to the Beximco Group, allegedly financed through irregular bank loans.

According to BFIU findings, the funds were channelled into the market via loans obtained – often under false names or through non-existent firms – from IFIC Bank and several other lenders. Investigators suspect the money was used to artificially inflate share prices.

The BFIU shared the findings with the Bangladesh Securities and Exchange Commission (BSEC) and the latter has formed a four-member inquiry committee to investigate the matter, citing the need to protect investors and maintain market discipline.

According to a BSEC order, “It appears that while Salman F Rahman was the Chairman of the Board of Directors of IFIC Bank, a loan amount was created in the name of anonymous or non-existent institutions in various banks including IFIC.”

The funds were deposited in accounts operated in the name of the eight institutions related to his interests and it was later invested in the stock market, it said.

BSEC spokesperson Abul Kalam told The Business Standard, “The BFIU shared detailed information about Beximco-linked entities’ investments with the commission. Based on these findings, the commission formed an inquiry committee for a thorough investigation.”

Sources said the loans were sanctioned during the tenure of Salman F Rahman, Beximco Group’s vice-chairman and former adviser on private industry and investment to the ousted prime minister Sheikh Hasina, when he chaired IFIC Bank.

The eight companies identified are Absolute Construction and Engineering, Apollo Trading, Beximco Holdings, Jupiter Business, New Dhaka Industries, Crescent, Tradenext International, and Central Land and Building.

IFIC Bank records show Salman F Rahman served as chairman from 2010 until the Awami League government’s fall in August 2024, after which the central bank dissolved the IFIC board and appointed new directors.

Following his arrest in multiple cases, Salman remains in custody. Earlier, the Bangladesh Securities and Exchange Commission (BSEC) declared him and his son Shayan F Rahman persona non grata in the capital market, after uncovering irregularities in Beximco’s Tk3,000 crore Green Sukuk and Tk1,000 crore Amaar Bond issues.

When contacted, several Beximco officials declined to comment on the BFIU findings or the BSEC’s new probe. One official, requesting anonymity, said, “Salman F Rahman personally oversaw all capital market investments, including loan sourcing and investment destinations. He alone knew the full picture.”

He added that the freezing of several Beximco-linked investment accounts had left “many firms unable to sell shares despite capital shortages”.

Beximco Limited’s Managing Director Osman Kaiser Chowdhury did not respond to repeated calls and WhatsApp messages seeking comments. During a visit to Beximco’s BEL Tower office in Dhanmondi, officials said the MD was abroad and declined to speak further.

The BSEC committee comprises Additional Director Mohammad Ziaur Rahman, Deputy Director Maudud Momen, and Assistant Directors Mizanur Rahman and Amit Adhikari. They have been given 60 days to submit their findings.

The BSEC letter alleged that Beximco embezzled around Tk3,000 crore from investors in its Green Sukuk and IFIC Amaar Bond (Sripur Township) through misuse of the capital market, trustee institutions, and banking channels involving companies linked to Salman F Rahman.

Board seats gained through share purchases

Three Beximco Group firms – Beximco Limited, Beximco Pharmaceuticals, and Shinepukur Ceramics – are listed on the capital market. Together, they raised Tk4,000 crore through zero-coupon bonds and sukuk issues and were later allowed to raise another Tk1,000 crore through a separate bond. However, after the Awami League government’s fall, the bond issue was only half-subscribed, attracting Tk500 crore.

Beyond its listed entities, Beximco also acquired shares in other companies to secure board positions. Regulatory sources said the group gained influence on the boards of Fareast Islami Life Insurance and the Bangladesh Shipping Corporation (BSC) through its linked firms.

In 2022, Tradenext International and Jupiter Business purchased 9.91% and 9.9% stakes, respectively, in Fareast Islami Life Insurance, jointly holding 19.81% and nominating four directors to its board. That same year, Beximco Limited acquired a 5.25% stake in BSC and nominated one director.

After the government’s fall, Beximco withdrew its nominated directors from both boards. However, the group has reportedly been unable to sell its shares, as the BO accounts of its associated individuals remain frozen.

Beximco in share manipulation

The commission has imposed substantial fines on Beximco-linked individuals and firms after finding evidence that they artificially inflated share prices of listed companies through group-associated entities.

A Dhaka Stock Exchange probe revealed that nine Beximco-linked firms and individuals had artificially inflated shares of Beximco Limited, leading to collective fines totalling Tk428 crore.

Among these, Apollo Trading, Jupiter Business, Crescent, and Tradenext International were penalised Tk114 crore for their role in the manipulation.

According to BSEC’s enforcement report, Jupiter Business was fined Tk22.5 crore, Apollo Trading Tk15.01 crore, Tradenext International Tk4.01 crore, and Crescent Tk73 crore.

A BSEC official, speaking on condition of anonymity, told TBS, “Although the commission imposed fines, Beximco-linked firms filed review petitions. When these were rejected, they sought court stays, delaying the recovery of the penalties.”