BSEC to seek actions against ACME Pesticides over placement share scam

The securities regulator has decided to forward its investigation report to the Anti-Corruption Commission (ACC) to take measures against top brasses of ACME Pesticides allegedly for receiving the company's placement shares without paying money.

ACME Pesticides, in its IPO (initial public offering) prospectus, claimed to have raised Tk 1.2 billion, issuing placement shares to some companies and individuals, including much talked-about revenue official Matiur Rahman. It also said that Tk 800 million out of Tk 1.2 billion had been invested by the issuer in land development, building infrastructure, as working capital, etc.

An inquiry committee formed by the Bangladesh Securities and Exchange Commission (BSEC) after the fall of the previous government on August 5 last year revealed that those companies and individuals did not pay any money for the shares that they received from ACME Pesticides.

The company, however, had shown investments of the money collected from placement shares in its financial statements while highlighting cash flows. The capital, which had purportedly been raised through placement shares, was also adjusted in the entity's bank statement.

According to sources close to the BSEC and the probe body, ACME Pesticides' managing director Reza-ur-Rahman Sinha at a hearing said the scamsters had forcefully extracted the password of the company's bank account from him.

He alleged that the scamsters had done so to fabricate the bank statement by including the fund apparently raised through placement shares.

BSEC spokesperson Md. Abul Kalam said the regulator decided to forward the inquiry report to the ACC, having found proof of anomalies committed by the company officials and other individuals.

The company officials, who are likely to come under actions by the ACC, include ACME's Chairman Shanta Sinha, Managing Director Reza-ur-Rahman Sinha, directors Ahsan Habib Sinha and KM Heluar, Chief Financial Officer Selim Reza and company secretary Sabuj Kumar Ghose.

The placement shareholders, who may also face music, include Md. Afzal Hossain, SK Trim & Industries, Md. Matiur Rahman, Bikrampur Potato Flakes Industries, Tafazzaal Hossain Forhad, Javeed A Matin, Bengal Assets Holdings, Chittagong Pesticides & Fisheries, Heritage Capital Management, NRB Equity Management, Anjoman Ara Begum, Brigadier General Sheikh Mohammad Sarwar, Touhida Akter, NRB Equity Management (MDA), Md. Ruhul Azad and Ranu Islam.

As per the securities rules, a two-year lock-in is imposed on the shares of the placement holders other than sponsor-directors.

ACME Pesticides was listed on the stock exchanges in November 2021, meaning the lock-in period should have been withdrawn in December 2023.

As a result, the placement holders, who received shares without any payment, are likely to have offloaded their shares fully or partially by now.

BSEC officials could not ascertain if that had happened.

ACME Pesticides raised Tk 300 million through an IPO for building and other construction, loan repayment, and acquisition of new machinery. But It did not pay back the loan received from a non-banking financial institution (NBFI).

Rather, the company kept the IPO proceeds in a bank as FDR (fixed deposit receipt) and received another loan against the FDR.

Then the NBFI received a court order in favour of blocking the IPO fund, said sources close to the inquiry committee.

At a BSEC meeting on Tuesday, the regulator also decided to start the process of cancelling the licence of Shahjalal Equity Management, issue manager of ACME Pesticides, for providing false information in the IPO prospectus.

Moreover, the regulator will start enforcement actions against the auditor -- Shiraz Khan Basak & Co. -- over its failure to portray the company's actual status in the financial statement before it went public.

Shafiq Basak & Co. would also come under the scanner of the Financial Reporting Council (FRC) over its failure to mention the usage of IPO proceeds in the financial statement properly.

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