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SALEEM ALTAF & SUDEB KRISHNA SUR CHOUDHURI | DHAKA

BEXIMCO Group vice chairman Salman F Rahman has been Private Industry and Investment Advisor to Prime Minister Sheikh Hasina — but why ?

The premier appointed him as her adviser for private sector industries and investment under rule 3B(i) of the Rules of Business, 1996, says a government circular.

■ Salman F Rahman

The post is non–salaried but Rahman enjoys the status of a cabinet minister.  In reality, he is the most powerful man in the Hasina administration, capable to getting efficient ministers, central bank governors, officials even in the military shot down at will. Salman F Rahman is the lawmaker for Dhaka–1. He was made Awami League private sector development advisor first in 2009.

He is the founder of the Beximco Group and is a former president of the Federation of the Bangladesh Chamber of Commerce and Industry (FBCCI).

Recently, taking advantage of India–China border clashes, Rahman worked from behind the scenes to set up a red carpet welcome for the new Pakistan High Commissioner in Dhaka’s Foreign office in great secrecy — so much so that no press statement was issued by a normally hyperactive MOFA and no Bangladesh media outlet covered the story.

Rahman worked from behind the scenes to set up a red–carpet welcome for the new Pakistan High Commissioner in Dhaka’s Foreign office in great secrecy — so much so that no press statement was issued by a normally hyperactive MOFA and no Bangladesh media outlet covered the story

A stray piece by Turkish news agency Andalou Agency blew the lid on the secret bonhomie which comes as a surprise because it is the Sheikh Hasina’s government which has heavily cracked down on the ISI and even refused to accept credentials of Pakistani diplomats on charges that they were espionage agent.

Times have changed and with Rahman the undisputed king of the Bangladesh PMO, the Pakistanis can surely expect forgiveness even without tendering an apology for the 1971 genocide.

That is Pakistan’s Man Friday in a country that was carved out of Jinnah’s Dreamland after a bitter eight month civil war which led to 3 million Bengali deaths and quarter of a million Bengali women raped and molested.

Is it not surprising that the Awami League, the greatest beneficiary of the anti–war crimes movement of the Ghatak Dalal Nirmul Committee, would, as the spearhead of the liberation war, turn its back on the 1971 legacy , when it comes to government policy and befriend Pakistan and China, the perpetrator and the supporter of the 1971 genocide.

■ Shahriar Kabir of Ghatak Dalal Nirmul Committee | Archive

It has really come full circle and nothing exemplifies this better than the rise and rise of Salman F Rahman despite all the huge controversies that he and his family is directly implicated with.

According to an article in New York Times, Beximco said that it owed US$800 million to Bangladeshi banks. An American embassy cable released by WikiLeaks described Salman F Rahman as “allegedly one of Bangladesh’s biggest loan defaulters”. The cable makes for interesting reading — because it provides Rahman’s extensive political links across the Awami League–BNP–Jamaat divide. “He has his eggs in all basket,” says a top business analyst but unwilling to be named for fear of physical retaliation.

He was arrested for fraud by the military–backed interim government in 2008. Since 2009, the Bangladesh Bank has allowed Beximco to restructure its loan repayments. The group has alleged that the previous Bangladesh Nationalist Party government tried to target it for Salman F Rahman‘s links’s with the Awami League. But that is a white lie. Rahman’s brother–in–law Morshed Khan, a former BNP minister, has looked after Beximco‘s and Salman’s interests rather well — so when Khan got embroiled in a recent case filed by Anti–Corruption Case, he was whisked away to London in a private jet hired by the Rahman family, violating all Corona time regulations.

American embassy cable released by WikiLeaks described Salman F Rahman as “allegedly one of Bangladesh’s biggest loan defaulters”. The cable makes for interesting reading — because it provides Rahman’s extensive political links across the Awami League–BNP–Jamaat divide. “He has his eggs in all basket”

STOCK MANIPULATION

Beximco has faced accusations of being one of the 60 primary parties involved in the 2011 Bangladesh share market scam. According to the High Court’s judgment, no direct evidence had been found against any of the individuals or organisations accused in the case. But the judges who delivered the judgements under threats and inducement have all been found in possession of huge assets well beyond their known sources of income within a few years after their retirement.

On February 4, 2016 $101 million dollars of Bangladesh’s foreign exchange reserves were stolen from its account at the Federal Reserve in New York. The entire blame was laid on the Bangladesh Bank governor Atiur Rahman, overlooking the fact that such routine FedReserve–BB forex movement is supervised not by a Governor but by junior officials.

■ Advisor Salman F Rahman with US Acting Assistant Secretary of Commerce and Director General of the US and Foreign Commercial Service, Ian Steff | UNB

The real reason was different — Rahman has instituted and tried to develop a Financial Intelligence Unit which investigated two scourges of Bangladesh economy — bank bad debt and money laundering. On both count, Salman F Rahman and his business conglomerate topped the list. And that seems to be his one real qualification to claim the position of an advisor in Bangladesh PMO, an absolute disgrace when one considers that the fastest rising economies of Asia has been shephered by a brilliant Finance Minister AMA Muhith and  a more brilliant Bangladesh bank governor Atiur Rahman who has been awarded the best central banker several times.

“One set of brilliant men made money for Bangladesh, the poor working class of the nation trusted the leadership and parked their hard earned money in the national banking system and a small group of thugs robbed the country and parked all their money in safe tax havens abroad,” said  Indian economist Indraneel Bhowmik, who follows the Bangladesh economy closely. Joseph Alluchin who wrote biggest expose on Bangladesh bank frauds has expressed similar views.

Rahman has instituted and tried to develop a Financial Intelligence Unit which investigated two scourges of Bangladesh economy — bank bad debt and money laundering. On both count, Salman Rahman and his business conglomerate topped the list. And that seems to be his one real qualification to claim the position of an advisor in Bangladesh PMO

It’s hardly the first–time tens of millions of dollars have vanished from Bangladesh’s banks. The high–flying cyberscam at the Federal Reserve pales in comparison with the routine plunder of Bangladesh’s financial system, including by some of its purported guardians.

The country’s six state–owned commercial banks (SOCBs) control around one–quarter of all bank assets in the country but have on outsize influence on the economy thanks to their connections to the government. For example, SOCBs have “extremely high” rates of nonperforming loans, according to the IMF, and the average for the entire banking industry is “very high” about 11 percent, compared with about 4 percent in advanced economies.

Part of the explanation for this is poor governance by the banks’ boards, but the main culprit is the country’s culture of patronage.

■ Advisor Salman F Rahman

One of the most notorious of Bangladesh’s banking scandals involves the country’s largest SOCB, Sonali Bank. Between 2010 and 2012, one branch of Sonali Bank alone illegally gave out $344 million in loans, including nearly $344 million to Hallmark Group, a textile business, according to the Dhaka media. Tanvir Mahmud, Hallmark’s managing director, connived with a branch manager to issue fraudulent letters of credit to fictitious companies.

In reality, he is the most powerful man in the Hasina administration, capable to getting efficient ministers, central bank governors, officials even in the military shot down at will

Even after the scam was uncovered, Sonali Bank continued to operate with an extremely high nonperforming loan ratio reportedly more than 37 percent in the fall of 2014. And the bank, along with Bangladesh’s other five SOCBs, are regularly recapitalised by the government — to the tune of about $640 million for fiscal year 2014 and, it is expected, more than $700 million for fiscal year 2015.

These banks’ irresponsible lending practices — and the state’s irresponsible efforts to systematically bail them out — are partly the result of collusion between business and political elites.

Fahmida Khatun, the research director at the Center for Policy Dialogue, in Dhaka, was a board member of the SOCB Janata Bank in 2008–11, after being appointed by the military caretaker government that ran the country in 2007–8. In an interview in Dhaka in 2014 she told that since Bangladesh’s return to civilian rule after the 2008 election, loan portfolios have typically been assessed not according to their business potential, but with an eye toward “the influence or the connections of the person” asking for credit.

$101 million dollars of Bangladesh’s foreign exchange reserves were stolen from its account at the Federal Reserve in New York. The entire blame was laid on the Bangladesh Bank governor Atiur Rahman, overlooking the fact that such routine FedReserve–BB forex movement is supervised not by a Governor but by junior officials

The New York Times went to the bottom of the huge bank frauds when it confronted Salman F Rahman, one of Bangladesh’s wealthiest individuals and a co–founder of Beximco, a major business group that specialises in exports of pharmaceuticals and garments. A 2007 cable from the United States ambassador in Dhaka subsequently disclosed by WikiLeaks called Mr. Rahman “allegedly one of Bangladesh’s biggest bank loan defaulters.” He was imprisoned for fraud in 2007–8, under the caretaker government.

In an interview in his Dhaka office early last year, Mr. Rahman told NYT he owed about $800 million to state–owned banks. He blamed the previous government, led by the Bangladesh Nationalist Party — a staunch rival of the Awami League, which is in power today — for not servicing his debts. By the time he was speaking to NYT, though, Mr. Rahman had become an adviser to Sheikh Hasina, the prime minister of Bangladesh and the president of the Awami League. And the Bangladesh Bank was now “restructuring” his debts.

Mr. Rahman is no exception. Some $565 million in assets are said to have been looted from the state–owned BASIC Bank between 2009 and 2012, yet the scam’s suspected mastermind, a former chairman of the bank, wasn’t troubled by the anticorruption commission investigating the fraud, reportedly thanks to his political connections. Banking in Bangladesh is beholden to the politicians.

■ Salman F Rahman with PM Hasina | Archive

This is largely because state institutions are underfunded and weak. Technocrats, auditors, courts — all those traditional safeguards don’t have enough authority or muscle in Bangladesh to keep the politicians in check.

This, in turn, is due to the fact that Bangladesh has one of the smallest tax–to–GDP ratios in the world, at less than 10 percent. Lack of infrastructure prevents the collection of income taxes. There are myriad taxes on corporations, but it’s easy enough to bribe one’s way out of paying them. Partly as a result, imports are subject to exorbitant fees — which only gives importers an incentive to finagle a way to avoid them.

Then there’s capital flight. If you loot state resources in a country like Bangladesh, you don’t want to risk losing it to someone else’s scams or to seizure by the government. And so, you take the money abroad, far from the prying eyes of local tax collectors, preferably to a low–tax, low–transparency jurisdiction.

About $9.7 billion worth of illicit capital left Bangladesh in 2013 alone, up from $3.3 billion in 2004, according to the NGO Global Financial Integrity. That’s the equivalent of more than 6 percent of GDP that year, and more than 3.5 times what Bangladesh received in foreign development aid.

That money should have been taxed in Bangladesh. If it had been taxed, there would probably have been less bank fraud, and less illicit money to be stashed abroad.

A 2007 cable from the United States ambassador in Dhaka subsequently disclosed by WikiLeaks called Mr. Rahman “allegedly one of Bangladesh’s biggest bank loan defaulters.” He was imprisoned for fraud in 2007–8, under the caretaker government

This is one reason offshore tax havens must be made to operate more transparently. Bangladesh, for its part, must stem the outflow of illicit capital and rethink its taxation system in order to collect more on income and earnings.

Such changes would mean major reform, of course — of the tax authorities, of the legal system, of the Bangladesh Bank — and the elites who benefit from the current situation have little incentive to undertake it. But Bangladesh needs a proper state bureaucracy if it is to curb its venal politicians.

The 2010–11 Bangladesh share market scam was a period of instability stock market from 2009 to 2011; the turmoil was in the two Bangladeshi stock exchanges, DSE and CSE. The market went up 62% in 2009, and 83% in 2010, but then went down 10% in January 2011, and a further 30% in February 2011. The crash is deemed to be a scam and exacerbated due to government failure.

■ The Dhaka Westin property is partly owned by Beximco | Wikiwand

After news of the order was picked up by the media, the plaintiffs in the case, Bangladesh Securities and Exchange Commission (SEC) said it would appeal against the decision.

One of the most notorious of Bangladesh’s banking scandals involves the country’s largest SOCB, Sonali Bank. Between 2010 and 2012, one branch of Sonali Bank alone illegally gave out $454 million in loans, including nearly $344 million to Hallmark Group, a textile business

Beximco Group companies Beximco Pharmaceuticals and Shinepukur Holdings, Beximco Pharma Chairman Sohel Rahman, Vice Chairman Salman F Rahman and the late managing director DH Khan are accused in the cases.

Salman is currently Awami League President Sheikh Hasina’s Private Sector Development Adviser.

Capital market regulators SEC started a case against 15 organisations and 36 individuals for artificially inflating the stock market in 1996 after taking bribes from investors.

The cases were transferred to a special tribunal for stock market after its formation from the chief metropolitan magistrate court.

But the accused persons and companies had moved the High Court, seeking cancellation of the cases in the meantime. The High Court later issued a rule asking why the cases should not be dismissed. It also stayed proceedings of the cases.

A significant delay followed and the cases were quashed after final hearings in March 2015.

“We have waited so long, knowing the cases had no merit,” Salman F Rahman told Media . “The High Court’s verdict proves it. They have said what we have always said.”

Bangladesh Bank secret reports suggest that the windfall profits made by the Rahman family and their conglomerates have almost wholly been siphoned off to safe tax havens and then ploughed back into economies of Saudi Arabia and Karachi, where the Rahmans own substantial real estate

According to the judgment, no direct evidence had been found against any of the individuals or organisations accused in the two cases. Not only are the allegations against the accused unclear, they have not been defined, the High Court observed.

The Bangladesh Bank secret reports suggest that the windfall profits made by the Rahman family and their conglomerates have almost wholly been siphoned off to safe tax havens and then ploughed back into economies of Saudi Arabia and Karachi, where the Rahmans own substantial real estate. That Salman F Rahman‘s wife is Pakistani helps. The estimated siphoning off is in the vicinity of Taka 50000 crores, mostly made from windfall insider trading and stock market manipulation.

And since Bangladesh banking sector owes him $800 million (four years ago), is that not enough to make this man the darkest figure in Bangladesh’s history, someone as bad as those who led the 1975 coup or the military dictators who turned back on an aspiring vibrant nation what Lawrence Lifschultz described as the  “Bangladesh unfinished revolution.”

That the stock market hugely affected soldiers and officers of Bangladesh who had invested substantially in the markets their hard earned  UN peace keeping money only find that vanishing. Complicit in that crime were officers like Lt Gen CH Sarwardy, whom “unknown hands” are trying to protect from hard interrogation over a Major Power led Regime Change Plot, in which a “senior pro–Pakistan PM adviser’s name is implicated.”

Bangladesh banking sector owes him $800 million (four years ago), is that not enough to make this man the darkest figure in Bangladesh’s history, someone as bad as those who led the 1975 coup or the military dictators who turned back on an aspiring vibrant nation what Lawrence Lifschultz described as the “Bangladesh unfinished revolution.”

“I am shocked how the Awami League could risk so much disaffection in the army a year after the bloody BDR riots just for the sake of this one man who supported the cause of United Pakistan during his 1970–71 Karachi University days,” said a freedom fighter and bureaucrat. Obviously he wasn’t willing to be named for possible retaliation.

Rahman has framed and discredited legendary AL veteran Suranjit Sengupta for lashing out against him for his involvement in the 2010 stock market crash, got BB Governor Atiur Rahman removed, cut short the political career of promising ministers like Taranna Halim and AMA Muhith (who is quite old though) and even shot down smaller promising figures like digital Bangladesh planner Naimu Zaman Mukta.

In the rundown to the great Bangabandhu anniversary celebrations and the country’s Golden jubilee celebrations lurks the stink of mafia politics, prompting some to say this is no more the Awami League of Bangabandhu or his daughter Hasina but Awami League–Dorbesh ■

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