BB to hold talks only if credible foreign investor involved: Governor on Arman's Nagad proposal

The Bangladesh Bank will hold talks with lawmaker Mir Ahmad Bin Quasem Arman's law firm only if there is a credible foreign investor interested in investing in Nagad, Governor Ahsan H Mansur said.

Responding to a question regarding a letter for an investment proposal in mobile financial services provider Nagad, the governor told The Business Standard that he had not officially received the letter.

He said the document, which recently went viral on social media, did not include the name of any credible investor.

"The law firm must be clear about who the investors are and what experience they have in the relevant field," he said.

"If Bangladeshi investors want to invest, the name of a foreign investor will not be allowed," he added.

Arman told The Business Standard this afternoon (23 February) that several international investment firms have expressed interest in investing in Nagad, adding that his law firm is only facilitating coordination.

In this regard, a letter has been sent to the Bangladesh Bank governor, and they are expected to meet with him soon to discuss the matter in detail.

"We are only carrying out the coordination work," he said.

On 8 February, three days before the 13th parliamentary election, Arman, son of the late Jamaat leader Mir Quasem Ali, wrote to the central bank governor, requesting permission to conduct an audit to assess the company's position ahead of any potential investment.

According to the letter, Arman wrote: "You are well aware that the said meeting was a desire of mine, and I sought your kind support for my keen interest in obtaining a licence and establishing a digital bank to march with the global financial sector through the use of emerging technologies, digital innovation and platforms.

"This dream and determination are inherited by me with the mission to provide inclusive, digital and ever-growing, impactful financial services to the people of my country. In pursuit of this vision, some potential foreign delegates have already associated with me and are interested in investing in such a business."

He added that he had learned during a meeting about "Nagad Digital Financial Service", now under the direct administration of the Bangladesh Bank due to alleged irregularities during the previous government.

The company is expected to be transferred to new ownership and management following due diligence.

"It will be a great honour and opportunity for me to take up such an alternative," the letter said, adding that after discussions with his foreign investors, they were ready to move to the next stage.

That would involve a forensic audit to obtain a clear and comprehensive picture of the company's financial, operational and business position, including its strengths, weaknesses and risks.

"Therefore, I anticipate your utmost support in arranging the necessary measures with Nagad Digital Financial Service and allowing us to conduct a forensic audit to understand the actual situation of this financial service, in order to work out the best possible plan to manage the business and arrange future necessary investment."

A top executive of Nagad said he was unaware of such a proposal, adding that investors typically contact the central bank directly.

Moreover, this is not the way to invest in Nagad as the government-appointed independent board of Nagad has submitted a future roadmap to the Bangladesh Bank, recommending a restructuring of ownership, he added.

According to the roadmap, there are two paths: a forceful takeover or unilateral restructuring, and a negotiated settlement.

The board notes that a forceful takeover could trigger complex legal challenges, whereas negotiated restructuring appears smoother as the owners of Nagad Limited have shown interest in reaching a deal.

Insiders warn that attracting strategic partners will be significantly harder if the takeover is forced.

Earlier, in August last year, Bangladesh Bank Governor Ahsan H Mansur said the postal department did not have the capacity to operate Nagad and announced plans to privatise the MFS.

He said new strategic investors would be brought in within three to four months.

Following the change of government, the Bangladesh Bank appointed an administrator on 21 August and six assistant officers to directly manage the company.

Officials from the central bank and BPO then took physical control of Nagad's offices.

Meanwhile, several former Nagad executives – including ex-MD and CEO Tanvir Ahmed Mishuk – are facing legal action for alleged fund embezzlement.

The Bangladesh Bank has also filed a case against former chairman Syed Mohammad Kamal and 22 others over the alleged fraudulent creation of Tk645 crore in e-money without backing reserves.

Later, a committee was formed to find a way to restructure Nagad, and it has already submitted a report on the ownership change strategy.

Meanwhile, the Bangladesh Investment Development Authority issued a Request for Expression of Interest on 31 August to appoint a financial advisory firm to sell Nagad.

However, no final measure appears to have been taken to resolve Nagad's ownership dispute over the past one and a half years.