Kleptocracy: How former taxman Matiur Rahman profited from pre-IPO shares

In a scandal that has shocked Bangladesh, former Nationwide Board of Income (NBR) official Md Matiur Rahman is on the heart of allegations involving insider buying and selling and vital monetary misconduct. An investigation by The Each day Star has uncovered that Matiur, alongside along with his relations, amassed tens of tens of millions of Bangladeshi takas by way of strategic investments in pre-public shares of assorted corporations. This text delves into the main points of the investigation, exposing the intricate internet of inventory market actions and household connections that facilitated these unlawful features.

Md Matiur Rahman, a high-ranking official within the NBR, has been embroiled in controversy for a while. His wealth got here underneath scrutiny after a high-profile incident involving an costly sacrificial goat, which was flaunted on social media by Mushfiqur Rahman Ifat, allegedly his son from a second marriage. The goat, price BDT 1.2 million, highlighted the extravagant way of life of Matiur’s household and prompted a deeper investigation into their monetary actions.

Matiur, who joined the federal government service in 1994 and was transferred to customs in 1998, held numerous vital positions throughout the NBR, together with the presidency of the Customs, Excise, and VAT Appellate Tribunal. Regardless of his comparatively modest official wage of Tk 78,000 monthly, Matiur and his household have collected a rare stage of wealth by way of investments within the inventory market, particularly by way of placement shares.

Placement shares, or pre-public shares, are supplied privately to pick out traders earlier than an organization goes public. This type of share buying and selling is usually reserved for traders who’ve a previous affiliation with the corporate, permitting them to buy shares at a lower cost earlier than the Preliminary Public Providing (IPO). Whereas this apply might be authentic, it turns into problematic when the investor has entry to insider info or holds a regulatory place that would affect the market.

In Matiur’s case, his place throughout the NBR offered him with entry to confidential details about corporations’ monetary well being and upcoming IPOs. This benefit allowed him and his relations to buy placement shares at considerably decrease costs, which they may then promote for substantial income as soon as the businesses went public.

Dhaka’s main English newspaper The Each day Star in its investigation revealed that Matiur and his household held a staggering 98,041,492 shares throughout at the least 15 publicly listed corporations. The shareholders included his quick relations, corresponding to his first spouse Laila Kaniz Fortunate, his second spouse Shammi Akter Shibli, his kids from each marriages, and numerous prolonged relations.

A good portion of those shares have been acquired between 2013 and 2018, throughout which Matiur held key positions throughout the NBR. Nonetheless, the investigation traced a few of these shares again to as early as 2002. The sheer quantity of shares held by his relations, together with their strategic investments, suggests a well-coordinated effort to take advantage of their insider standing.

The investigation additionally uncovered that 36.5 % of the shares have been purchased within the names of 5 corporations owned wholly or partially by Matiur and his household. These corporations, with a mixed paid-up capital of BDT 68.2 million, have been arrange or acquired throughout the years when Matiur was in energy. The businesses embrace World Footwear, World Max, SK Trims, Anik Trims, and Synergy Buying and selling.

The sample of share acquisition by these family-owned entities mirrors that of the person relations, usually occurring on the identical days or inside shut proximity. For instance, on Might 2, 2010, World Footwear purchased placement shares from ML Dyeing Ltd on the identical day that Matiur and his quick relations bought shares within the firm. This coordinated buying sample additional illustrates the insider buying and selling practices at play.

The cumulative buy worth of the shares held by Matiur and his household is estimated to be over BDT 1 billion, assuming they have been purchased at a face worth of Tk 10 per share. The present market worth of those shares in publicly listed corporations is roughly BDT 1.75 billion. Nonetheless, it stays unclear in the event that they nonetheless maintain all these shares or have invested in further corporations not but recognized by The Each day Star.

Authorities service guidelines strictly prohibit officers from partaking in speculative buying and selling or making investments that would affect their official duties. Furthermore, public officers are barred from investing in shares the place they’ve insider info. Matiur’s actions, as revealed by the investigation, clearly violate these guidelines. His acceptance of placement shares, consultancy roles for IPOs, and discounted share purchases are all indicative of insider buying and selling and misuse of his official place.

Regardless of the clear violations, repeated makes an attempt by The Each day Star to contact Matiur and his relations for feedback have been unsuccessful. Telephones have been discovered switched off, and messages went unanswered, indicating a reluctance to handle the allegations publicly.

Former Bangladesh Securities Trade Fee (BSEC) chairman Faruq Ahmed Siddiqi has voiced robust opinions on the matter, questioning why no motion was taken in opposition to Matiur and his household for such blatant violations. He emphasised that placement shares are sometimes given as favors, and the truth that so many corporations favored Matiur factors to critical misconduct.

Siddiqi additional highlighted that offering consultancy companies and receiving shares in alternate is a transparent battle of curiosity and a breach of presidency service guidelines. He referred to as for strict motion in opposition to Matiur and his household to uphold the integrity of public service and the capital market.

The scandal surrounding Md Matiur Rahman and his household’s insider buying and selling actions has delivered to gentle the vulnerabilities in Bangladesh’s regulatory framework. It underscores the necessity for stricter enforcement of guidelines and larger transparency within the monetary dealings of public officers. Because the investigation continues, it stays to be seen what authorized and regulatory actions will likely be taken to handle this egregious misuse of energy and privilege.

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