What led to prevailing mess at BSEC?

Tension brewed at the Bangladesh Securities and Exchange Commission (BSEC) even before the departure of the previous chief and his team of commissioners.

The commission led by Prof Shibli Rubayat Ul Islam enforced many decisions despite opposition from commission employees.

The new commission, formed after the fall of the Hasina-led government on August 5 last year, opened investigations into anomalies and corrupt practices during the previous commission.

Internal tension escalated as, according to sources at the BSEC, the new chairman and commissioners pointed the finger at employees for the misconduct during the tenure of the previous commission.

Experts say the new commission should have worked to improve communication with BSEC staff, forging a relationship based on trust, so that they could work together for the improvement of the market. Instead, the distance between the commission and the BSEC staff widened.

So, the hope of a more functional market watchdog diminished quickly after incumbent Chairman Khondoker Rashed Maqsood and three commissioners joined the office.

Regular operations were hampered at the BSEC as staffers got divided into groups, with their feeling of insecurity intensified. They showed reluctance to take responsibility for any task, fearing blame.

Several BSEC officials said the officers, who had no involvement in any wrongdoing, also remained inactive amid a lack of support from the commission.

In such a situation, the commission kept referring to the taskforce, saying they were awaiting recommendations from it for necessary reforms to the market.

In fact, the BSEC stopped discharging its responsibility as a market watchdog.

As for actions against irregularities, the commission formed an inquiry committee to investigate alleged irregularities tied to 12 securities, including Beximco Green Sukuk Bond, and IFIC Guaranteed Sreepur Township Green Zero Coupon Bond.

It submitted six probe reports on February 11.

The role of BSEC officials behind those irregularities also came under scrutiny.

Based on the reports, the commission issued show-cause notices to 15 employees. Talking to the FE, some of them said the letters seek explanation as to why they will not be fired.

The BSEC employees say there is a conflict of interest as two members of the investigation committee are representatives of market intermediaries. The organisations that they represent might be unhappy about previous regulatory decisions involving BSEC officials.

"It is not fair if officers of the regulatory body are investigated by regulatees," said former BSEC chairman Faruq Ahmad Siddiqi.

According to a member of the inquiry committee, the reports suggested that the BSEC reward the officials, who had fought against irregularities, alongside actions against corrupt ones.

The commission has not rewarded anyone. But its actions targeting corruption triggered a wave of backlash.

On the other hand, BSEC officials, who find them being blamed for wrongdoings during the previous commission, say that the commission led by Prof Shibli made decisions and executed them. They did not have any power to play any significant role in the decision making process.

Last Tuesday, the commission sent a BSEC executive director -- Md. Saifur Rahman -- into forced retirement after the completion of his 25 years of service over some "complaints" against him.

That led to an outburst of anger of BSEC officials the following day.

After a day-long agitation on Wednesday, employees of the securities regulator demanded the resignation of the whole commission for not meeting their four-point demand.

The demands are the withdrawal of the decision on Mr Rahman's retirement, no show-cause letters to BSEC officials based on "controversial" inquiry reports, appointment of lawyers on behalf of the BSEC to contest the case filed challenging the appoints of 127 employees, and an end to "unprofessional behavior" towards BSEC officers and employees.

The next day, the BSEC chief and commissioners had a meeting with the high ups of the Ministry of Finance before returning to the securities commission with protection of law enforcers.

The chairman said he and the commissioners would not bow to any pressure and would continue duty that the government had entrusted them with.

On the same day, the bodyguard of the BSEC chairman filed a case against 16 officials, including three executive directors, for holding the chief and commissioners hostage on Wednesday.

"The tension prevailing at this moment at the securities commission should not be allowed to continue for long. It must be resolved through mutual understanding," said former BSEC chairman Mr. Siddiqi.

On measures against corruption, he said actions must be based on evidence.

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