National Tea Company spends Tk29cr from rights issue funds in violation of law

Infographic: TBS

State-owned National Tea Company (NTC) has spent Tk29 crore from its rights issue proceeds in violation of directives issued by the Bangladesh Securities and Exchange Commission (BSEC).

At the same time, despite owing nearly 17 weeks' wages to tea garden workers and about six months' salaries to officers and employees, the company's board of directors has doubled its meeting fees and granted the chairman a permanent high honorarium.

For the past year, general investors have been kept completely in the dark, as the company has failed to publish any financial statements.

In a letter dated 17 October last year, BSEC clearly instructed that the rights issue proceeds could not be spent until the government's 51% shareholding was ensured. However, in July this year, the company secretly spent Tk29 crore from the fund, reportedly to repay loans, in direct defiance of this order.

The rights issue prospectus stated that the proceeds would be used for bank loan repayment, working capital support, and development of tea gardens and factories. But according to the company, confirmation of the government's shareholding requires a few more days to obtain the bank's report.

In another violation, the company's board increased directors' meeting fees from Tk6,000 to Tk12,000, disregarding both its own Articles of Association and BSEC directives. Article 128 of the company's Articles clearly states that meeting fees cannot be increased without approval at the Annual General Meeting (AGM). Furthermore, under BSEC's notification dated 22 March 2021, directors of a "Z" category company cannot receive more than Tk8,000 as meeting fees.

Previously, directors received Tk6,000 per meeting, which amounted to Tk5,400 after a 10% tax deduction. Now, after tax, they receive Tk10,800.

In addition, the company's independent director and current chairman, Mamun Rashid, has been receiving a monthly allowance of Tk75,000. A bank statement shows he was paid Tk67,500 after tax deductions. The company labeled the payment as expenses for entertainment, transportation, and residential telephone facilities. Although this allowance was introduced in February this year, it has reportedly been suspended temporarily following a shareholder complaint.

Market insiders allege that over the past several years, the state-owned company has been turned into a hub of plunder. From share price manipulation to corruption at all levels, irregularities have become routine — such as inflating the number of tea workers beyond actual staffing, and selling tea to a syndicate at below-market prices to cause deliberate losses to the company.

While directors enjoy these perks, workers remain unpaid for 17 weeks, officers and employees for six months, electricity bills for tea gardens have been overdue for six months, and the company's bank loans have swelled to nearly Tk400 crore.

Critics claim that directors have intentionally pushed the company into this dire state to convince the government that privatisation is the only solution. On the other hand, despite being aware of these issues, BSEC has taken no effective action — with allegations that the regulator is instead facilitating the chairman and directors.

When contacted, Managing Director HSM Ziaul Hasan declined to comment. The company secretary did not answer phone calls, and direct visits to the office failed to secure a meeting with either official.