Bangladesh News

The Privatisation Commission (PC) wasted over Tk 17 crore of public money violating privatisation regulations in the process of making the now uncertain Rupali Bank sales deal with the Saudi prince.

The commission violated sub-section 16 of section (11-i) of Privatization Regulations 2001(Revised) by taking an amount as security deposit from the highest bidder Saudi prince, which was lesser than what it was supposed to take in accordance with the rules.

The commission received only US$100,000 as security deposit instead of the $8.25 million mandated by the PC regulations, as it stipulates that the amount of the security deposit should be a minimum of 2.5 percent of the total sale price.

If the PC followed the regulations it would receive over Tk 56 crore as security deposit from the Saudi prince as the buyer had agreed to buy the bank’s 67 percent stake at a cost of US$330 million at the time of primary agreement, said a source in the ACC quoting from a primary investigation report regarding the matter.

Md Nurul Islam, deputy director of the ACC, conducted the primary investigation and submitted his report to the anti-graft commission recently, sources said.

The investigation also found that the PC arranged a series of high profile international road shows to sell the bank’s shares spending Tk 17 crore, some of the venues for which were selected whimsically while some persons were also included in the team unnecessarily.

The commission showcased Rupali Bank’s assets at the road show which travelled to Mumbai, Kuala Lumpur, Karachi, London and Dubai between March 12 and March 29 in 2006.

The World Bank and the International Monetary Fund also endorsed the road show, terming it as essential and unavoidable in an exercise of this nature.

Besides, the investigation report said the PC also got involved in misconducts in the selection process of potential buyers by declaring Summit Industrial Mercantile Corporation and JJ Finance as fit to participate in the bidding despite their not having the necessary funds.

The report also alleged although the advertisement of the expression of interest to sell the bank said ‘companies who would participate in the bid should have as capital a minimum amount of US$100 million’, the PC however declared the two companies fit which had only $7 million and $20 million as capital.

ACC Director General (Admin) Col Hanif Iqbal said the commission conducted the primary investigation regarding the issues and a report has already been submitted for consideration.

If the ACC approves the report and asks its officials to go into further investigation, then necessary steps will be taken in that direction, he added.

He said issues of violating privatisation regulations, the overpriced road show, and flaws in selecting qualified bidders were investigated.

The Saudi prince, who had agreed to buy Rupali Bank, slashed more than US$270 million off the amount he had originally been willing to pay for the state-owned enterprise, claiming he had been misled about the size of the bad debts the bank has.

In a recent letter to Chief of Army Staff Gen Moeen U Ahmed, the prince said he is now willing to pay only $185 million instead of the $456 million he had originally offered last year.

The government that owns 94 percent of Rupali Bank’s shares decided to sell 67 percent of its shares in order to appease the World Bank and the International Monetary Fund, who had imposed reforms in the banking sector as a condition for granting loans to the government.

The total amount of assets of Rupali Bank as showed in December 2005 stood at $1.07 billion with over 493 branches across the country.