The Matiur magic in stock market

When most investment professionals at Motijheel were struggling to stay afloat in the stock after the 2010 crash, Matiur Rahman, a senior revenue official suspended recently, outsmarted them all.

Matiur and his family received pre-IPO (initial public offering) placement shares from at least 20 firms that should have cost him around Tk50 crore, if he had paid the face value, or even less if he got them free of cost like that from the controversial Ring Shine Textile.

The period is known to regular market investors as the dark decade for Bangladesh's IPO market that saw too many undeserving stock exchange listings.

But it was high time for Matiur to make his fortune without risks; he maximized his gains manifold mainly from the secondary market.

He himself acknowledged in a media interview last week how his pre-IPO placement shares in Fortune Shoes generated him over six times return in a few years.

According to analysts, even if he had sold the pre-IPO shares at a 3-4 times profit in 2-3 years, the family already had a stock market fortune of at least Tk150 crore by the pre-IPO placement.

What was his magic?

It was his power as a top revenue official and the nexus he created.

Market people said virtually taking no risk and enjoying a free ride abusing his power at the revenue office was his stock market magic lamp.

He abused his different powerful posts at the National Board of Revenue offices over years to build a nexus, get shares of so many non-compliant private companies at a little or no cost, help them go public and exit at a peak price before the firms started to show their actual weak faces followed by depression in their stock prices.

However, he boasted his own stock trading "skills."

To justify his wealth, Matiur himself announced his stock market acts that are nothing but insider trading, said market experts.

"I buy stocks in the companies' tough times, advise them for a turnaround and sell at high prices during good days," he told the media last Wednesday.

Does he have a regulatory licence to advise companies eying stock market listing? Can he do it holding a public office position? Questions remain.

In fact, according to investment bankers who talked to TBS, IPOs influenced by Matiur and his allies were a certain shot as their listing process was being expedited in every step.

Stock market expert Abu Ahmad, a former professor of economics at the University of Dhaka, said stock market and honest investors have been suffering due to the nexus of corrupt powerful people.

"You will barely find Matiur-gang backed IPO's of quality, see their performance post the exit of the placement shareholders," he added.

"They used the placement shares as a tool of pump and dump schemes. The market and investors are bearing the consequence," he added.  

Acme Pesticides, Associated Oxygen, CNA Textile, Dominage Steel, Fortune Shoes, Kattali Textile, Lub-rref Bangladesh, Ring Shine Textile and ML Dyeing were among the IPOs that were backed by Matiur, as revealed by their prospectuses.

Each of the companies are struggling in business since the pump and dump schemes expired post listing.

Ring Shine was a revealed case of "unpaid paid-up capital", said stockbrokers. Issuing crores of free shares for people like Matiur, the company ruined the honest investors who paid for its shares at any stage.

Trading at Tk15 to over Tk20 post listing, Ring shine shares having a face value of Tk10 now are trading at Tk3.6 a piece at the Dhaka Stock Exchange.

Two top tier investment bankers of the country told TBS seeking anonymity, most of the companies listed in the past one and half decade were non-compliant ones, they showed a rosy picture to the investors and lenders and the opposite to the tax authorities.

For instance, Islam Oxygen having its roadshow for IPO failed because of the fact later revealed that it hid revenue and profits to the tax authority.

Matiur helped many firms in many such cases by accepting fake tax files and letting firms go public.

"Unlike most others, Matiur was very intelligent," said a brokerage veteran, adding that he himself and his family members barely entered the secondary market manipulation game as he loved to avert risks and enjoy the free ride.   

Insider trading 

The Bangladesh Securities and Exchange Commission Executive Director and Spokesperson Rezaul Karim told TBS securities regulations don't prohibit government officials' investment in stocks.

However, if it is evident that anyone from his or her privileged position uses exclusive information to gain from trading securities, that is insider trading and a punishable offence.

The regulator was yet to discover insider trading by Matiur as far he knew, said the BSEC official.  

However, Rezaul Karim added, the commission is always open to act upon requests from other agencies of the government and it also launches investigations upon written complaints by anyone, of course having a prima facie ground.

A top BSEC official told TBS yesterday afternoon that the BSEC was going to order the Central Depository Bangladesh Limited to freeze the beneficiary accounts of Matiur and his family members.

Md Jahurul Haque, a commissioner of the Anti-Corruption Commission (ACC), said according to the Public Servants Act, there is no legal restriction on government employees buying savings certificates or investing in the stock market. However, any investments and earnings from the stock market must be disclosed in the official's or employee's tax return, he added.

He further mentioned that if allegations of stock price manipulation arise, the ACC will investigate the timing, type of company shares bought and sold, and whether there was any manipulation. If any irregularities are found, actions will be taken against the responsible individual.

The ACC Commissioner affirmed that the ACC has already started the investigation and that all facts will eventually be uncovered.

ACC acting upon complaints against Matiur

Previously, Matiur Rahman was granted 'clean certificates' by the ACC four times

But this time ACC looks serious.

ACC Commissioner Jahurul told TBS yesterday that a decision was made on June 4 to investigate Matiur Rahman's assets based on complaints which were found to be worth investigating after preliminary assessment.

He stated that the ACC is investigating the allegations regarding Matiur's assets as well as examining reports published in the media.

An official said a complaint against Matiur of amassing wealth beyond known income was filed with the ACC in May. The complaint was backed by substantial documentary evidence.

"We have already requested relevant agencies to verify the amount of land, plots, flats, and company shares transferred in the names of Matiur, his two wives, their children, and other close relatives," he said, claiming that significant information has already been obtained.

Not just in Dhaka, Narsingdi, and Feni, Matiur and his family members own property in Chattogram, Noakhali, Gazipur, Tangail too.

"Additionally, preliminary information has been obtained regarding substantial wealth laundered to Canada, the UK, and Dubai. Ownership of a shopping mall in Singapore has also been found in the name of one of Matiur's children," the official said.

The investigation team official said that to obtain information about foreign assets, a letter will be sent to the Bangladesh Financial Intelligence Unit (BFIU) this week.

According to ACC sources, based on separate allegations against this official over the span of the last 18 years, the ACC conducted investigations in 2004, 2008, 2013, and 2021. However, the ACC concluded these investigations by officially closing the cases, indicating that no evidence of wrongdoing was found. Consequently, any further investigation and subsequent actions concerning Matiur Rahman by the commission were halted.

Asked how Matiur got the clean chit, ACC Commissioner Zahurul said, "At that time, the investigating officers perhaps did not find any truth in the allegations."

ACC lawyer Khurshid Alam Khan told TBS that since a new investigation has now started, the ACC will also review the previous allegations as part of the current investigation.

Meanwhile, a source from the ACC has confirmed to TBS that Matiur has already left the country.