Beximco bosses acquitted of 1996 stock market manipulation charges

The High Court has quashed two cases against Beximco Group Chairman Sohel F Rahman and Vice Chairman Salman F Rahman over stock market fraud in 1996.

The order was delivered by justices Syed Muhammad Dastagir Husain and Md Salim on Mar 16, 2015.

A full copy of the order was only recently released.

After news of the order was picked up by the media, the plaintiffs in the case, Bangladesh Securities and Exchange Commission (SEC) said it would appeal against the decision.

Beximco Group companies Beximco Pharmaceuticals and Shinepukur Holdings, Beximco Pharma Chairman Sohel Rahman, Vice Chairman Salman Rahman and the late managing director DH Khan are accused in the cases.

Salman is currently Awami League President Sheikh Hasina’s Private Sector Development Adviser.

Capital market regulators SEC started a case against 15 organisations and 36 individuals for artificially inflating the stock market in 1996 after taking bribes from investors.

The cases were transferred to a special tribunal for stock market after its formation from the chief metropolitan magistrate court.

But the accused persons and companies had moved the High Court, seeking cancellation of the cases in the meantime. The High Court later issued a rule asking why the cases should not be dismissed. It also stayed proceedings of the cases.

A significant delay followed and the cases were quashed after final hearings in March 2015.

“We have waited so long, knowing the cases had no merit,” Salman Rahman told bdnews24.com on Wednesday. “The High Court’s verdict proves it. They have said what we have always said.”

According to the judgment, no direct evidence had been found against any of the individuals or organisations accused in the two cases. Not only are the allegations against the accused unclear, they have not been defined, the High Court observed.

"The Committee failed to specify a single act or omission or incident committed by the accused persons or companies which attracts the provision of section 17 of the Ordinance of 1969," the court said.

"The Report or the complaint petitions does not specify any incident or charge with specification against the accused persons or companies in a single word nor there are any facts and figures."

"Curiously enough the Report is based on tendency, impression and on the basis of interview of certain people who were not identified and also based on unspecified media report.

"...In the present cases in hand the opposite party miserably failed to show that a formal inquiry was made which reveals specific allegation against the accused persons/companies and as such we are of the view that the impugned proceedings are not only abuse of the process of the Court but also serious miscarriage of justice which are liable to be quashed for ends of justice," it added.

In June 2015, two months after the formation of the special tribunal, two managers of Chick Textiles had been convicted for involvement in the 1996 stock market scam.

The court sentenced the company’s Managing Director Md Maksudur Rahman and Director Iftekhar Mohammad to four years in prison for artificially raising stock prices. They were also ordered to pay a fine of Tk 3 million.

“We have told the lawyers appointed by the commission to appeal against the quash order,” the plaintiff, SEC Executive Director and Spokesperson Saifur Rahman told bdnews24.com. “They will take the necessary measures once we obtain the copy of the order.” 

“The verdict was delivered a long time ago,” SEC lawyer Prabir Niyogi told bdnews24.com. “We petitioned for a copy of the order immediately afterwards, but did not receive it.”

“We only obtained a copy a few days ago. We are currently reviewing it and will reveal our plans soon.”

Asked whether SEC has requested them to appeal, he said, “I will not say anything at this time. Please ask them for comment. I can only say that you will learn of our plans soon.”

An investigation report on the 1996 share market scandal by former Jahangirnagar University vice chancellor and economics Professor Amirul Islam Chowdhury accused Beximco Pharma and Shinepukur Holdings of manipulating the stock market prices.

A number of brokers, major shareholders and executives from the two companies had been implicated in the report.