How Salman F Rahman Became the Mafia of the Financial Sector

Salman Fazlur Rahman, better known as Salman F Rahman, was once one of Bangladesh’s most influential businessmen and politicians. The Daily Star has labeled him as the ‘Architect of the Default Culture‘ due to accusations of defaulting on loans amounting to around 360 billion BDT (36,000 crore) from several banks. As the Prime Minister’s Private Sector Industry and Investment Adviser, he has used political influence wherever necessary to his advantage, becoming what some call a financial mafia in Bangladesh. Considering his ancestry includes Isa Khan, one of Bengal’s most successful Zamindars and the leader of the Baro-Bhuiyans, it might not seem surprising that he has treated the public’s money in the banks as his own. In today’s article, we’ll explore how Salman F Rahman rose to become a financial mafia in Bangladesh.

Overview

Salman F Rahman was born on May 23, 1951, into a prominent Muslim Zamindar family in Shainpukur village, Dohar Upazila, Dhaka. His father, Fazlur Rahman, was a renowned lawyer and served as the Chief Whip of the Parliament led by Sher-e-Bangla A.K. Fazlul Huq, the Chief Minister of undivided Bengal. Later, he became the Revenue Minister in Suhrawardy’s government and served as Pakistan’s Education and Commerce Minister until 1953. His mother, Syeda Fatina Rahman, was the daughter of Syed Muhammad Atiqullah, a Zamindar from the historic Jangal Bari in Kishoreganj. His maternal family was descendants of the Haibatnagar Dewan family, one of the Baro-Bhuiyan zamindars, making them descendants of Isa Khan.

Salman F Rahman passed his Higher Secondary examination from Notre Dame College, Dhaka, and enrolled in the Physics Department of Dhaka University in 1968. Later, he graduated from Karachi University. In the mid-1960s, he joined the family business, which was in the jute mill industry. He married Syeda Rubaba Rahman, and they had a son named Shayan Fazlur Rahman. Their daughter, Samaila Namreen Fazlur Rahman, tragically passed away in a car accident in London in 2001.

Salman F Rahman’s Industrial Enterprises in Bangladesh

In 1972, he and his elder brother, Sohail Fasiur Rahman, founded the Bangladesh Export Import Company Limited (BEXIMCO), which exported seafood and bone meal to Europe in exchange for importing quality medicines. In 1976, the two brothers established Beximco Pharmaceuticals Limited (Beximco Pharma). Later, on December 31, 1981, they partnered with the Dubai-based Galadari Brothers Group to establish AB Bank, one of the country’s first private banks. The bank officially started operations on April 12, 1982. From 1994 to 1996, Salman also served as the president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI). Gradually, Beximco grew to become one of the largest private industrial enterprises in Bangladesh, operating in sectors such as textiles, pharmaceuticals, seafood, real estate, construction, information technology, media, ceramics, financial services, and energy. Beximco is currently one of the largest private-sector employers in Bangladesh and employs over 70,000 people worldwide.

Entry into Politics

In the mid-1990s, alongside expanding his business, Salman F Rahman entered politics. He first formed a party called the ‘Prosperous Bangladesh Movement’ and later joined the Awami League. In 1996, just four months after the Awami League came to power, he used political influence to engage in a financial scandal in the stock market. Until the BNP came to power in 2001, Beximco was one of the country’s top private conglomerates. However, during BNP’s rule, the business faced some downturns, a trend that continued during the caretaker government’s time, leading to Salman spending nearly two years in jail. When the Awami League regained power in 2009, he was appointed the Prime Minister’s Private Sector Development Advisor. Over this long period, he allegedly used his influence to withdraw large sums of money in the name of loans from various banks.

Salman F Rahman’s Loans from Bangladesh

According to The Business Standard, the Anti-Corruption Commission will investigate Salman F Rahman’s involvement in financial irregularities amounting to approximately 360 billion BDT (36,000 crores). Out of this, there is an allegation of embezzling 270 billion BDT (27,000 crore) from a single branch of the state-owned Janata Bank, which accounts for 65% of the total loans from that branch. Besides banks, he is also accused of visibly embezzling 6.6 billion BDT (660 crore) from the stock market, with an additional 200 billion BDT (20,000 crore) being taken through fraud and forgery.

Looting the Banking Sector

It’s difficult to pinpoint exactly when Salman F Rahman became a loan defaulter. However, a 2007 cable published by WikiLeaks, sent by the U.S. Ambassador to Bangladesh, mentioned Salman F Rahman as “one of the biggest loan defaulters in Bangladesh.” From this, it can be inferred that Salman F Rahman had become a loan defaulter from the early years of the Awami League’s first term in power. Just as he ignored many regulatory policies and bent the rules to suit his interests in the stock market, Salman F Rahman similarly forced banks to seek permission from Bangladesh Bank to adopt policies favorable to him regarding loans. According to The Daily Star, in 2014, Beximco rescheduled its previous loans. He claimed that Beximco Group had faced a liquidity crisis due to politically motivated credit restrictions between 2001-08, blockades and shutdowns by opposition parties in 2013-14, and the repayment of 8 billion BDT in loans during the first three years of the Awami League’s second term after 2009. At that time, the group had an outstanding debt of around 52.45 billion BDT from seven banks. Salman F Rahman then applied to the central bank for an urgent loan rescheduling.

Loan rescheduling refers to when a borrower requests a bank or financial institution to change their loan repayment terms. Typically, if a borrower cannot pay the loan’s EMI or full payment on time, the bank adjusts the repayment schedule at the borrower’s request, making it easier for the borrower to repay the loan. Loan rescheduling can involve extending the loan tenure, reducing the EMI amount, or even lowering the interest rate. However, in most cases, when a loan is rescheduled, the interest rate tends to increase. Upon Salman F Rahman’s request, Bangladesh Bank relaxed the rescheduling policy for borrowers with over 5 billion BDT in loans on January 29, 2015. Under this new policy, instead of a 10% down payment, borrowers could reschedule their defaulted loans for 12 years by paying only 1-2% as a down payment. Eleven business groups, or conglomerates, took advantage of this opportunity and rescheduled loans amounting to 150 billion BDT, one-third of which belonged to Salman F Rahman’s Beximco Group.

Loans for Various Company

Additionally, under this new policy, Sonali Bank rescheduled Beximco’s 10.7 billion BDT loan, allowing them to repay the amount over 12 years at an interest rate of only 10%, lower than the then-highest market rate of 14%. The repayment period was set to end in 2027. Beximco was supposed to repay 574 million BDT in six installments between September 2016 and December 2017, but the group made only two payments and defaulted on the rest. Despite this, Sonali Bank mysteriously did not cancel Beximco Group’s rescheduling privilege or file any lawsuits against them. Instead, the loan was rescheduled again in March 2018, and this time, although the bank’s rules required a 10% down payment, Beximco didn’t have to pay a single penny.

According to a report from The Business Standard (TBS), various companies owned by Salman F Rahman have taken loans amounting to approximately 368.65 billion BDT from seven banks. Out of this, Beximco Group and its 28 affiliated companies took over 230.7 billion BDT from Janata Bank alone. According to a report from Ittefaq, Salman F Rahman alone took loans amounting to nearly 269.54 billion BDT from a single branch of Janata Bank, accounting for 65% of the total loans from that branch. These loans were taken between 2021 and 2023 from the bank’s Dilkusha and Motijheel branches in the name of Beximco Group and 32 connected companies. Some of the loans include 22.16 billion BDT for Beximco Limited, 9.36 billion BDT for Beximco Fashions, 8.85 billion BDT for Bextex Garments, 10.5 billion BDT for Yellow Apparels, 3.6 billion BDT for Beximco Pharmaceuticals, 16.9 billion BDT for Crescent Fashions and Design, 17.58 billion BDT for Aces Fashions, 16.86 billion BDT for New Dhaka Industries, 12.5 billion BDT for International Knitwear and Apparels, 7.98 billion BDT for Apollo Apparels, and another 140 billion BDT from 22 other companies. Initially, most of these loans were taken under anonymous names, but Bangladesh Bank later instructed Janata Bank to show the loans under Beximco’s various companies, exposing how Janata Bank was used as a personal bank for Beximco and Salman F Rahman. The loans given to Beximco accounted for 37.5% of Janata Bank’s total defaulted loans. These loans were granted to Beximco in complete violation of banking laws. According to bank regulations, no bank can lend more than 25% of its paid-up capital to a single entity or individual, yet Salman F Rahman’s Beximco Group received loans amounting to nearly 950% of Janata Bank’s paid-up capital. Janata Bank’s total disbursed loans amounted to nearly 980 billion BDT, of which about 26% went to Beximco and its subsidiaries, with 26 companies exceeding the single borrower limit. As a result, Janata Bank is now unable to issue new loans. Using his position as the Prime Minister’s Private Sector Industry and Investment Advisor, Salman F Rahman bypassed banking laws to obtain these massive loans with the help of the Janata Board and senior officials at Bangladesh Bank.

Sonali Bank Rescheduled Beximco’s 10.7 Billion BDT Loan

Not only did Salman F Rahman consider the deposits of Janata Bank’s customers as his own, but his influence also extended to the country’s foreign exchange reserves. Bangladesh Bank created the Export Development Fund (EDF) to facilitate the country’s import-export trade, offering loans at a minimal interest rate of 3-4%. Beximco Group’s four companies took over 56 million USD (over 5.5 billion BDT) in loans from the EDF through Janata Bank and have yet to repay. Four officials from Bangladesh Bank, who resigned on August 12, 2021, helped Salman F Rahman obtain these loans. After the Janata Bank-EDF incident, Bangladesh Bank barred Janata Bank from disbursing EDF loans, but even then, Janata Bank never took any action against Salman F Rahman.

Another victim of Salman F Rahman’s financial mafia activities is the IFIC Bank. Despite holding only 2% of the bank’s shares, he served as the bank’s chairman for almost a decade, while his son, Shayan F Rahman, served as vice-chairman with a 2% shareholding. Salman F Rahman secured loans amounting to around 60 billion BDT from IFIC Bank through 11 different companies, including Sreepur Township (10.2 billion BDT), Sunstar Business (6.15 billion BDT), Fareast Business (6.14 billion BDT), Cosmos Commodities Limited (6.12 billion BDT), Apollo Trade International Ltd. (4.55 billion BDT), and several others. After holding the bank captive for nearly a decade, Bangladesh Bank finally dissolved the board led by Salman and formed a new 6-member governing body on September 4, 2021.

In addition to the loans from IFIC Bank, Salman F Rahman still owes 18 billion BDT to Sonali Bank, over 10 billion BDT to Rupali Bank, more than 14 billion BDT to Agrani Bank, approximately 30 billion BDT to National Bank, and 6.05 billion BDT to AB Bank, which he founded. Through these loans, Salman F Rahman has captured over 360 billion BDT from these banks, an amount sufficient to build a Padma Bridge. Yet, none of these banks have ever taken a strong stance against him to recover the money. In 2016, there was an attempt to auction off Salman and his elder brother’s property to recover the 2.47 billion BDT in loans taken in the name of GMG Airlines with Beximco as guarantor, but Salman was able to block the auction by exerting his influence.

According to a TBS report, most of the 360 billion BDT taken from the banks through loans has been laundered abroad. His son, Shayan F Rahman, is also involved in this money laundering. Shayan owns a buying house in Dubai called RR Global Trading. Through 18 companies owned by Beximco Group, RR Global Trading exported goods to Dubai and Saudi Arabia with an export value of approximately 14.85 billion BDT. However, the investigating agency has revealed that the export earnings never made it back to Bangladesh. Salman F Rahman has long been accused of money laundering through under-invoicing and over-invoicing. CID’s investigation found that Beximco Group has laundered at least 135 million USD abroad through 18 subsidiary companies. Apollo Apparels laundered approximately 23 million USD, Bextex Garments laundered 24 million USD, International Knitwear and Apparels laundered 25.2 million USD, and Aces Fashions laundered 24.39 million USD. All these companies are subsidiaries of Beximco Group, according to CID’s Financial Crimes Unit Inspector Md. Moniruzzaman, the group opened credit letters for product exports and secured loans from domestic banks for 80% of the value but did not bring back the export proceeds nor repay the loans.

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