BIFC investors deprived of dividends for six years

The Bangladesh Industrial Finance Company (BIFC) investors have been deprived of dividends for the sixth consecutive year due to the irregularities committed by its former Chairman Maj (retd) MA Mannan.

The misappropriation has created severe cash flow problems for the company, forcing it to disburse no dividends to its shareholders.

“As per Bangladesh Bank Special Inspection Report dated June 24, 2015, about Tk 518 crore was sanctioned and disbursed in favour of different borrowers in highly irregular and fraudulent ways,” said BFIC in a regulatory filing in May 2018.

The report found that the ultimate beneficiary of these loans was Major (retd) Abdul Mannan, the chairman of Sunman Group and former BIFC chairman.

The non-banking financial institution’s earnings per share (EPS) stood negative at Tk 8.10 in 2020, sharply down from Tk 12.20 in 2021, said the company in a regulatory filing with the Dhaka Stock Exchange (DSE) on Wednesday.

Its total loans, advances, and lease amount stood at Tk 837.60 crore out of the classified amount Tk 798.33 crore, it said.

The company’s bad loans, lease, and amount of borrowers related to Suman Group was Tk 621 crore, accounting for 77.79 per cent of the total classified loans, according to BIFC’s 2017 audited report.

Mannan and his family members, including his wife Umme Kulsum Mannan, falsified documents and altogether hold a 62 per cent stake in BIFC, said the central bank in 2015.

Mannan entered politics and was elected an MP from the Dhaka 10 constituency in 1991 and 2001. He was a former minister of state for the Ministry of Textiles from 1991 to 1996. Initially, he started his career as an army officer and retired as a Major in 1976.

BIFC made profits in 2014 when its EPS was Tk 0.55, the DSE data showed. The NBFI disbursed 5 per cent cash and 5 per cent stock dividend for 2014--the year it paid dividends to its shareholders.

According to BIFC, its negative net asset value (NAV) per share widened to Tk 102.37 in 2020 from Tk 94.27 in 2019, while its negative net operating cash flow per share was Tk 2.78 in 2020 from Tk 4.26 in 2019.

Founded in 1998, the BIFC’s started to deteriorate in 2008. The central bank removed Mannan’s wife, Umme Kulsum Mannan, also a former BIFC chairman, and their two daughters from the board between 2015 and 2016 for alleged involvement in sanctioning the loans unlawfully.

In 2019, the BB has asked the Bangladesh Securities and Exchange Commission (BSEC) to freeze shares of Mannan, other organisations owned by him, and people close to him from transferring shares of the company.

The central bank’s move came following an Anti-Corruption Commission (ACC) advice asking it to impose such a ban till Mannan clears the outstanding loan of Tk397.78 crore owed to BIFC, excluding interest.

At present, a court-appointed board is operating the BIFC.

In Wednesday’s regulatory filing, the company said according to the order passed by the High Court Division, Supreme Court of Bangladesh, the board decided to hold the 23rd and 24th Annual General Meetings of the BIFC through a digital platform.

Of the total company’s stake, the sponsor-directors hold 40.55 per cent, institutions 41.77 per cent and general investors 17.68 per cent.

On Wednesday, the poorly performing company’s share price remained unchanged at Tk 9.50 on the DSE.