Finance minister’s letter suspended amid Best Holdings controversy

The finance ministry has issued a notice directing the authorities not to take any action on the basis of a letter, purportedly signed by Finance Minister AHM Mustafa Kamal, amid a controversy over Best Holdings’ bid for a direct listing.

In his letter dated Sept 8, Kamal had recommended an amendment to the rules on the process of direct listing in the capital market relaxing the requirements for the infrastructure development firms.

It also called for the rules for fixing share prices to be relaxed.

The office of the finance minister issued the latest notice on Thursday, halting the implementation of the recommendations of the previous letter until further notice.

Under the existing legal framework, the direct listing privilege is only afforded to government firms.

But Best Holdings Ltd, which is also in the agriculture and construction business, applied to the Dhaka Stock Exchange and the Securities and Exchange Commission on Nov 12 for 'special permission' for direct listing to take advantage of the finance minister’s recommendation.

The commission, wary of the letter's veracity, on Tuesday ordered the DSE to halt the process of direct listing sought by Best Holdings, the owning company of Le Meridien Hotel, to raise capital in the market. The letter did not mention Best Holdings.

The SEC order sparked controversy over the first letter sent in the name of Kamal after it was reported by the media.

Finance Minister Kamal could not be reached for comment.

The market watchdog has also decided to dig deep to avert overseeing a probable shady deal. It has raised several other questions and sought explanations from the premier bourse. The direct listing of Best Holdings will not go ahead until all the issues are settled, the BSEC said in a recent letter.

RACE Asset Management, owned by Chowdhury Nafeez Sarafat, and state-run Investment Corporation of Bangladesh are the issue managers of Best Holdings, which is trying to raise more than Tk 2.38 billion through a direct listing.

Those pulling strings to get the direct listing of the company tried to wield influence over the process in a clear breach of rules, said several people related to the market.

“It's going to be a big fraud. The regulator must act against it now,” said a former DSE director, who requested to be anonymous.

The direct listing of Best Holdings was included as an additional agenda for the 983rd meeting of the DSE board of directors which was scheduled for Thursday.

A direct listing of Best Holdings will breach at least five sections of the rules under which the capital market operates, the securities regulator pointed out.