There are numerous precedents for appointing receivers in industrial establishments in the country in the aftermath of various events. However, unfortunately, in almost every case, the outcome has been unfavorable. Many once-established industrial groups have turned into moribund enterprises after the appointment of receivers.
It has been observed that after the appointment of receivers or administrators, the lack of continuity in innovation and marketing has led to the collapse of businesses that the founders had painstakingly built. This has further exacerbated the uncertainty surrounding debt recovery and the settlement of dues.
Recently, rumors of receiver appointments in 10 major industrial groups across the country have created an uncomfortable situation for both the owners and employees of various establishments.
Reports indicate that in the 53 years since independence, Bangladesh has achieved remarkable success in its economy. The country now ranks among the leaders, surpassing its competitors in various economic and social indicators.
The exceptional contribution of entrepreneurs and large industries has been central to this success. Business leaders have played a crucial role not only in driving economic growth but also in advancing the country’s socio-economic development.
However, instances of harassment and mistreatment of businesspeople in the wake of certain incidents have caused considerable harm to the country’s industrial sector and overall economy.
Business leaders have stated that action should be taken if any businessman is proven to be involved in corruption or criminal activities.
However, while holding individuals accountable, it is crucial to ensure that businesses, employment, and the economy are not adversely affected. For the greater good of the country and its economy, it is essential to sustain businesses. Otherwise, the repercussions will be felt by all.
Economists argue that while private sector companies in the relevant industries are making profits, most factories under corporation control are struggling to do so.
In fact, even when factories remain closed, several corporations continue to incur losses year after year.As a result, the government is forced to bear the burden of substantial annual losses.
To keep these institutions afloat, subsidies are being provided using public tax money. Given the current economic situation, however, there is little capacity to sustain this burden.
Institutions where administrators or receivers have been appointed
The former Director General of the Anti-Corruption Commission (ACC) and former District Judge, Maidul Islam, explained that the court appoints receivers to prevent the destruction of ill-gotten assets and to ensure that, following the final judgment, these assets can be easily confiscated in favor of the state.
He told KalerKantho that receivers will submit the income and expenditure accounts of the concerned assets to the court. If the assets are damaged for any reason, the receiver will be held responsible.
Furthermore, if the accused is acquitted in the final verdict, their assets must be returned to them.
Therefore, everyone involved in the maintenance and management of seized assets must act with greater responsibility.
Beximco: The High Court had directed Bangladesh Bank to appoint a receiver for managing all the assets of Beximco Group, a leading industrial conglomerate, for a period of six months.
However, following Beximco Group's appeal against the High Court's order, the appointment of a receiver for Beximco Pharmaceuticals Limited was suspended.
Nonetheless, the order for appointing receivers in the group's other companies will remain in effect.
Salman F Rahman, former Prime Minister Sheikh Hasina's advisor on private industry and investment, is the Vice Chairman of Beximco Group. Following the fall of the Awami League government after the student uprising, he is now imprisoned.
It has been reported that recently, due to the inability to pay wages, labor unrest spread across several factories of Beximco Group, leading to incidents of vandalism.
Nagad: Bangladesh Bank has appointed an administrator for the postal department's mobile banking service, Nagad.
On August 21, 15 days after the fall of the Awami League government on August 5, Muhommad Badiuzzaman Dider, a director at Bangladesh Bank's Chattogram office, was appointed as the administrator for Nagad.
However, following the appointment of the administrator, it has been reported that Nagad's transactions have decreased compared to before, and the decision-making process within the organization has become stagnant.
Premier Leasing: In 2020, Bangladesh Bank appointed an administrator for the non-bank financial institution Premier Leasing and Finance after it failed to return depositors' funds.
In similar cases, customers of several financial institutions that were unable to repay their deposits have sought the liquidation of these institutions by petitioning the higher courts over time.
Hallmark Group: In 2011, Hallmark and four other companies embezzled over 3,500 crore taka from Sonali Bank's Ruposhi Bangla (Sheraton Hotel) branch under the guise of loans, sparking a major controversy at the time.
The legal proceedings for this case are still ongoing, and Sonali Bank has yet to recover the funds.
Both parties have been adversely affected by this incident: the bank has not recovered the full amount, while Hallmark's business has been ruined.
In 2022, the then Managing Director (MD) of Sonali Bank, Md Ataur Rahman Prodhan, stated, "The assets of Hallmark that exist have been brought under the bank's control through a court ruling. We are considering how to resolve this matter."
Shamim Al Mamun, the General Manager of Hallmark Group, stated, "The situation here is well known. The vast Hallmark industrial park, covering nearly 137 acres and housing 43 factories with around 40,000 workers, no longer exists. Everything has been sold off by local influential figures. After taking control of the land, there are now attempts to sell it."
A branch manager from Sonali Bank’s Dhaka Zone informed KalerKantho that Hallmark Group is now an almost defunct company. Their business has collapsed, and the bank has not been able to recover its loan. Furthermore, even when their assets are put up for auction, no one is willing to purchase them due to legal complications.
AnonTex Group: In the aftermath of the loan default, AnonTex Group, a client of Janata Bank, has become a struggling enterprise.
Between 2008 and 2014, Janata Bank provided substantial loans to 22 companies under the Enntex Group, despite irregularities, fraud, and the concealment of information.
Excluding the imposed interest, the bank is still owed 6,550 crore taka by these companies..
A former employee of AnonTex Group revealed that they once had 22 factories in Tongi. Two of the factories were shut down due to a mysterious fire three to four years ago. Over time, the factories continued to close due to financial constraints.
Currently, only four to five factories remain operational.
The owner of the factories left the country before August 5.
Bismillah Group: Another major incident in the banking sector, following the Hallmark scandal, was the loan fraud involving Bismillah Group, a manufacturer of terry towels.
In 2012 and 2013, Bismillah Group took out loans amounting to nearly 1,200 crore taka by presenting fake documents, and subsequently laundered the funds abroad through fraudulent letters of credit (LCs).
Of the factories established by Bismillah Group, only Saharish Composite Towel Mills Limited, located in Baherarchala, Sreepur Municipality, Gazipur, remains operational. However, the factory is now barely functioning, with a significant reduction in staff and limited production, effectively operating in name only.
Evaly: Due to widespread irregularities in e-commerce, the board of directors of the online business platform Evaly was dissolved, leading to a disruption in its operations.
To date, the company has not been able to recover, and thousands of customers have yet to receive their money back.
Following a High Court order, a five-member board, led by retired Appellate Division Justice AHM Shamsuddin Choudhury Manik, took over the management of Evaly on October 18, 2022.
Despite holding nine board meetings over the following three months, the board failed to achieve any meaningful progress, resulting in the resignation of all its members.
The experience of nationalization has been largely unfavorable
After the Liberation War, the country embarked on a process of nationalization.
In 1974, the Bangladesh Jute Mills Corporation (BJMC) was established to manage 83 private jute mills, including Adamjee.
However, this initiative did not yield the expected results.
In 2002, the government shut down Adamjee Jute Mill and provided all its workers and employees with a golden handshake as compensation.
Similarly, on July 1, 2020, the government announced the closure of 26 state-owned jute mills under BJMC. Like Adamjee, these mills had been operating at a loss for years.
Despite the closure of these mills, BJMC's losses have continued to rise. In the 2022-23 fiscal year, the corporation posted a loss of approximately 213 crore taka.
By April of the 2023-24 fiscal year, the losses have increased to 225 crore taka.
Trillion-Dollar loss in China: In China, there have been recurring attacks on the private sector under the pretext of fighting corruption, eroding investor confidence.
Towards the end of 2020, the government sought to tighten its control over several major technology companies. The primary targets of this scrutiny and regulatory crackdown included the country’s leading e-commerce platform Alibaba, top gaming company Tencent, food delivery service Meituan, search engine giant Baidu, and e-commerce powerhouse JD.com.
At that time, the companies were fined for allegedly monopolizing the business sector. This government control lasted for 18 months.
The share prices of China’s top five technology companies dropped between 40.4% and 71%. As a result, these companies collectively lost $1.1 trillion in market value.
This led to a decline in innovation and many employees lost their jobs.
Appointment of administrators in the garment sector?
Since the interim government took office, the past three months have witnessed growing unrest in industrial zones, with workers demanding overdue wages, bonuses, and other benefits. Despite several attempts to resolve the issue, the instability persists.
In response, the government has issued a warning that administrators will be appointed if factory owners fail to settle the outstanding payments.
This warning was delivered by Brigadier General (Retd.) M. Sakhawat Hussain, the Interim Government's Labour and Employment Advisor, during a meeting with ministry officials on Tuesday, following the recent restructuring of the Ministry.
What Are the Owners Saying?
Mohiuddin Rubel, the owner of Denim Expert in the Karnaphuli EPZ, "In privately-owned businesses, where there is an owner, I have doubts about how effective this approach will be in bringing positive results."
Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI), told KalerKantho, "In the current changed circumstances, business and trade are struggling. The overall impact of the law and order situation, high bank interest rates, and inflation has severely affected the country's economy. In addition, some private business owners have become targets of political vendettas and have been blacklisted. Furthermore, the looming fear of administrators being appointed to their companies is further undermining their morale."
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told KalerKantho, "Regardless of political ideology, an entrepreneur should be seen as a businessperson, not a political figure. If we destroy domestic industries through media trials without due process, it will have a negative impact on the economy and employment."
BB Governor Dr. Ahsan H. Mansur said, "Beximco has been unable to pay its workers' wages for several months. The government is now covering their salaries and allowances. A receiver has been appointed to revitalize the group. Appointing a receiver at Beximco does not mean it is being shut down; rather, it is being revived. The effort is to keep the company operational."
He further added, "We do not want any business or industry to shut down, as they provide significant employment opportunities. Additionally, no company’s accounts have been seized, and none will be."
Source: Kalerkantho
Translated by ARK/Bd-Pratidin English
