Sonali Bank to put businessman Salman F Rahman’s family property up for auction

Bangladeshi business tycoon Salman F Rahman’s family property in Dhanmondi is about to go under the hammer.

Sonali Bank has initiated the move to auction the pricey property after Salman and his elder brother Sohail F Rahman failed to repay the loan they had taken earlier for embattled GMG Airlines.

The state-run bank is looking to recollect its funds by auctioning off the house in Dhanmondi as mortgaged property.

On Jul 12, the bank issued a notice through the Bangla daily Ittefaq, stating that GMG Airlines owed the bank over Tk 2.28 billion, until May 30 this year.

The auction will be held at the Motijheel office of Sonali Bank on Aug 3 if the sum remains unpaid, it said. The one Bigha plot and everything on it will come under the hammer.

Salman now lives in Gulshan.

But the businessman remains hopeful that the matter will be resolved before the date fixed for the public sale.

“We have already secured a stay order from the High Court. Therefore, there is no reason for holding that auction on Aug 3," he told bdnews24.com on Thursday night.

“And we will settle this before it comes to that,” he said.

But Sonali Bank’s acting Managing Director Dider Md Abdur Rob said on Thursday that no-one had contacted them with regards to a settlement.

“We will auction the property according to the notice we issued… There will definitely be an auction on Aug 3,” he asserted, speaking to bdnews24.com.

As for Salman’s claim of having a court order against the bank’s move, he said he had only 'heard it from people'.

“But we have not received any court document, or anything in writing about what this stay order is abou … which is why I’m saying, there will be an auction.”

The loan sum sanctioned in 2006 for GMG Airlines was Tk 1.65 billion. The borrowers now owe over Tk 2.28 billion because of accruing interest on the loan.

The bank tried every means to get the money back before opting for an auction, said Dider. “From final alerts to legal notices, we followed every procedure.”

After everything failed, the compelling decision was taken to sell the mortgaged property, he said.

If no buyer takes part in the auction or if the house remains unsold, or if the price it fetches is insufficient to write off the loan, the bank can start a case at the Money Loan Court.

Salman Rahman is the vice chairman of the Beximco Group, one of Bangladesh’s largest business entities.

Recognised as being highly influential, he had made it to the list of loan frauds several times in the past.

He was among the individuals accused of orchestrating a scam in 1996 that artificially pushed up share prices to rob investors of billions of taka. He was named in the case initiated by the Bangladesh Securities and Exchange Commission.

A stay secured from the High Court in 2014 halted the case proceedings.

The Sonali Bank’s auction notice names Salman as the chairman of GMG Airlines, but the position is actually held by his son Shayan F Rahman.

GMG is in trouble not only with the bank, but also at the stock exchange.

The company has not paid back in seven years Tk 3 billion it had taken from the market by cooking up its financial reports. The airlines sold its placement shares in 2009 to raise money from the market.

After the scam became public, the company, facing serious flak, was denied market listing. But those who invested in placement shares did not get their money back.

A company can sell its shares to certain investors to increase its capital before setting its Initial Public Offering or IPO. The move is called private placement.

Salman F Rahman (File Photo)

If the company fails to get a public listing, the placement money is returned to the investors, along with the interest for the period of possession.

GMG Airlines, while selling placement shares, took Tk 50 for each share, adding Tk 40 as premium to the original price of Tk 10. It ended up raising Tk 3 billion from the market. 

Set up in 1997, GMG planes began ferrying passengers on domestic routes from the following year. It suffered losses for a straight seven years, putting the company Tk 420 million in the red.

In 2009, the Beximco Group bought the majority of the airline shares. In 2010, the profits soared – over Tk 780 million in the first nine months.    

Khondkar Ibrahim Khaled, who investigated the share market scam of 2010, said in his report that their balance sheet from 2008 abruptly recalibrated the surplus to Tk 330 million.

The GMG explained they had revalued two of their aircraft. But the planes were quite old, demanding a reduction in value instead of an increase. 

So, the company, with a paid-up capital of Tk 1.66 billion, was out to collect another Tk 3 billion from the market. But the fabrication of financial reports came to be known and the regulators refused its IPO request.

Shahab Sattar owned GMG before it was bought by Beximco.

He still owns a handful of the airline’s shares and fills in the position of its largely ‘powerless’ managing director.