Salman F. Rahman, the founder of Beximco and investment advisor to Sheikh Hasina’s government over the past 15 years, is currently at the center of various financial irregularities, corruption, and abuse of power controversies. However, being in the midst of controversies is not new for this once-powerful businessman and politician. Over the last three decades, his name has frequently surfaced in relation to stock market scandals and defaults in the banking sector. With his white beard and immaculate white panjabi-pajama, Salman F. Rahman does not appear to be the mastermind behind the downfall of millions of investors in the stock market. His appearance has even earned him the nickname “Darvesh” (saint). From the time the Awami League first came to power under Sheikh Hasina in 1996 until the government’s fall in August 2024, there were numerous allegations connecting him to various stock market scandals. Yet, mysteriously, he was never brought under the law. In today’s video, we’ll tell you how Salman F. Rahman became the “Darvesh” of the stock market.
Overview
In the mid-1990s, along with expanding his business ventures, Salman F. Rahman ventured into politics. Initially, he formed a political party called ‘Samriddha Bangladesh Andolon’ (Prosperous Bangladesh Movement). Later, he joined the Awami League. Just four months after the Awami League came to power in 1996, the Bangladeshi stock market faced a major crash, and Salman F. Rahman’s name emerged as a key player behind it. However, through his political influence, he remained beyond the reach of the law at that time. In addition to the stock market scandal, he was also labeled as a loan defaulter. Until the BNP came to power in 2001, Beximco was one of the top private sector groups in the country. Although Salman F. Rahman did not get involved in any new controversies during the BNP’s regime, he became a loan defaulter. In a 2007 cable published by WikiLeaks, the U.S. ambassador to Dhaka described Salman F. Rahman as “one of the largest loan defaulters in Bangladesh.” He was even jailed on charges of financial fraud during the caretaker government’s rule in 2007-2008.
In 2009, when the Awami League returned to power, Salman F. Rahman was appointed as the Private Sector Development Advisor to Prime Minister Sheikh Hasina, a position he held until 2018. His scope of work was expanded in 2019 when he was appointed as the Prime Minister’s advisor on Private Industry and Investment, a position he held until the fall of the government in 2024. After the Awami League’s return to power in 2009, the stock market in Bangladesh saw a rapid increase in the index for the next two years. However, in 2011, the stock market experienced another major crash, and once again, Salman F. Rahman’s name surfaced. Yet again, he remained untouched by the law.
The first controversy surrounding Salman F. Rahman began in 1996. It is said that within four months of the Awami League government coming to power, Salman F. Rahman was directly linked to a major stock market scandal. In June 1996, after the Awami League took charge, the DSE (Dhaka Stock Exchange) index surged from 1,000 to 3,000 points within just a few months. Several new companies were listed on the market through IPOs. However, the market’s upward trend halted by November of the same year, and the stock market faced a significant crash. To identify those involved in this scandal, a commission was formed under the leadership of Jahangirnagar University professor Amirul Islam Chowdhury. The investigation committee submitted its report on the stock market crash to the government on March 27, 1997. The report uncovered that, through fraud and manipulation, stock prices were artificially inflated to swindle hundreds of crores of taka from ordinary investors. The report revealed that around 30 fake companies were listed in the market to deceive investors and that shares of several companies were fabricated and sold to investors. Various evidence regarding the manipulation of stock prices and the subsequent crash was presented in the report. The investigation committee’s report also indicated the involvement of Salman F. Rahman, Beximco Group, and Shinepukur. The report contained several recommendations, based on which cases were filed against 15 institutions and 36 individuals. However, it was not possible to frame charges against Beximco and Shinepukur, who were major participants in the scandal. In fact, the day after the case was filed, Salman F. Rahman, Vice Chairman of both companies, secured interim bail from the High Court. The High Court even ruled that no charges could be framed against them. Although the Securities and Exchange Commission (SEC) appealed the court’s decision, no legal action has been taken against him to this day.
In 2006, another unprecedented scam occurred in Bangladesh’s financial sector. Although no concrete evidence was found, it is widely believed that Salman F. Rahman was the mastermind behind this incident as well. In 2006, the Privatization Commission began the process of selling Rupali Bank. A Saudi prince named Bandar bin Mohammed Abdul Rahman Al Saud participated in the tender, offering $450 million for 93% of the bank’s shares. This was seen as extremely positive news for the bank. Naturally, following such news, Rupali Bank’s share price skyrocketed from BDT 400 to BDT 3,400. It later emerged that Salman F. Rahman had already purchased a significant number of Rupali Bank shares. However, it was later revealed that no Saudi prince by that name even existed. The whole act of purchasing Rupali Bank was staged using a fake individual posing as a Saudi prince. Salman F. Rahman took advantage of the increased share prices and sold off his shares. According to information from Daily Jugantor, he swindled BDT 9 billion from the stock market. It is believed that, due to his strong ties with Middle Eastern countries and the fact that he was the one who benefited the most from Rupali Bank’s share manipulation, Salman F. Rahman was the mastermind behind this entire incident.
In 2009, when the Awami League returned to power, Salman F. Rahman was appointed as the Prime Minister’s Private Sector Development Advisor, a position equivalent to a cabinet minister, making him untouchable. According to a Bloomberg report from 2011, after the Awami League came to power in 2009, the Bangladeshi stock market grew by 62% that year and continued to grow by 83% the following year. Despite the continuous growth over two years, in January 2011, the stock market declined by nearly 10% (9.7%), and in February, it further dropped by 30%. After that, ordinary investors began to lose faith in the Bangladeshi stock market. During that time, many investors were completely ruined, and some even resorted to suicide. Following the 2011 stock market crash, news about Salman F. Rahman’s involvement resurfaced in several national newspapers. According to Daily Kaler Kantho, Salman F. Rahman’s name appeared in the investigation report on the stock market manipulation conducted by Khondaker Ibrahim Khaled in 2011.
In the 2011 stock market manipulation case, Salman F. Rahman was accused of artificially inflating share prices, selling off his own company’s shares while disregarding stock market regulations, and deceiving investors. According to the Securities and Exchange Commission (SEC), selling sponsor shares of a listed company requires prior approval from the SEC, followed by a 30-day notice through the stock exchange. However, it was alleged that Salman F. Rahman, along with the directors of Beximco Limited, Beximco Textiles (Bextex), Beximco Pharmaceuticals, and Beximco Synthetics, broke the law by selling large quantities of shares without following these rules. While they failed to give prior notice of the share sales, they did release price-sensitive information to raise the share prices of the companies. Notable announcements include Beximco’s acquisition of nearly half the equity stake in GMG Airlines for BDT 300 million in 2009 and its acquisition of Bangladesh Online in August of the same year. Other announcements that led to increased share prices include Beximco’s purchase of shares worth BDT 1.6 billion in Unique Hotel and Resorts in June 2010, its acquisition of Dhaka-Shanghai Ceramics in July, and Beximco Textiles’ purchase of shares worth BDT 350 million in Northern Power Solutions Limited in August 2010. Between 2009 and 2010, Salman F. Rahman and the directors of Beximco’s four subsidiaries sold sponsor shares worth nearly BDT 16.5 billion without prior announcements. At the same time, Salman F. Rahman leveraged his influence to pass a preference share issue for Beximco Pharma, raising BDT 4.1 billion from the stock market with a premium. Shinepukur Ceramics collected BDT 2.86 billion and Beximco Textiles BDT 6.35 billion during that period. Although this was a violation of securities law, the regulatory body SEC did not take any action against him.
Moreover, Salman F. Rahman sold off placement shares of GMG Airlines, which he had acquired in 2009, in an innovative way, taking advantage of the stock market. According to The Daily Star, GMG Airlines’ business had been in decline since 1998, and by 2006, the company had incurred losses amounting to BDT 420 million. However, the company suddenly started posting an annual profit of BDT 10 million in 2007. After Beximco acquired the equity stake of GMG Airlines in 2009, its annual profit rose to BDT 790 million in 2010, with no clear reason behind this jump. According to The Daily Star, Salman F. Rahman arranged a private sale offering BDT 3 billion worth of shares at a 400% premium, raising BDT 12 billion. It was said that this fund would be used to purchase new planes and expand the business, and that the company would be listed on the stock market. However, none of this materialized. On the contrary, the SEC’s audit of the company’s financials revealed manipulation in the profit calculation. Investors who purchased shares in the private placement never even received their principal amount back.
During this time, Salman F. Rahman and several other influential individuals and major institutions were involved in manipulating the stock market, inflating share prices, and engaging in various fraudulent activities. These manipulative actions were among the primary reasons behind the stock market crash in 2011. Despite the widespread belief that Salman F. Rahman should have been removed from his position as President of the Bangladesh Association of Publicly Listed Companies (BAPLC) for a proper investigation, he continued to hold this position and participated in several stock market-related meetings. This raised suspicion that the investigation would be compromised. Even though various groups expressed their displeasure over the appointment of the key accused to a policy-making role while an investigation was ongoing, their concerns were ignored. In fact, on September 8, 2011, Salman F. Rahman joined the board of directors of the Dhaka Stock Exchange (DSE), which further diminished the chances of taking action against him. He was also accused of raising BDT 10 billion from the stock market in 2011 through IFIC Mutual Fund by presenting forged documents. Additionally, he allegedly laundered BDT 1.25 billion in 2013 by purchasing shares worth BDT 10 at BDT 75 from a loss-making company in Nepal using IFIC Bank’s funds.
Since the 2011 stock market crash, ordinary investors have lost faith in Bangladesh’s stock market, leading to a decline in investments. During this time, Salman F. Rahman began raising funds from the market again through bonds. According to TBS, in 2020-21, Beximco raised BDT 30 billion from the stock market under the name of “Beximco Green-Sukuk Bonds.” According to Daily Kaler Kantho, the funds were said to be used for the construction of Tista Solar Limited and Korotoa Solar Limited, both subsidiaries of Beximco Limited, and for the purchase of machinery for the expansion of Beximco’s textile business, as well as to ensure environmental development and preservation. Institutional investors, such as banks, insurance companies, and other financial institutions, were required to purchase a certain amount of these bonds, ensuring that Beximco had buyers for its issued bonds.
On July 4, 2023, Beximco’s sukuk bonds were converted into shares after the conditions were relaxed by the then-chairman of the BSEC, Professor Shibli Rubayat-Ul-Islam. In the case of bonds, after the term expires, the company is supposed to return the entire investment amount to investors with a profit. However, Beximco avoided repaying investors by converting the sukuk bonds into shares, forcing investors to accept Beximco shares instead of their returns. In March of the same year, a new company named Sripur Township Limited (STL) issued an IFIC Amar Bond worth BDT 10 billion. The BSEC approved this significant bond issue for a new project without evaluating the financial ability to pay interest. IFIC Bank was the guarantor for the Amar Bond, meaning that if the company failed to pay, IFIC Bank would have to cover the amount. In March 2024, just before the end of his tenure, BSEC Chairman Shibli Rubayat-Ul-Islam approved the issuance of bonds worth BDT 26 billion to invest in STL. As a result, Salman F. Rahman raised a total of BDT 36 billion for his new real estate company by putting investors at risk of not receiving their returns. Additionally, he intended to raise another BDT 15 billion through Beximco bonds this year, but this did not materialize due to the fall of the government, which had granted him unethical advantages.
According to TBS, in recent years, Salman F. Rahman has siphoned off BDT 66 billion from the stock market through visible manipulation and an additional BDT 200 billion through fraudulent schemes. He also has unpaid loans of BDT 360 billion from various banks and is accused of directly siphoning off funds from the country’s foreign exchange reserves. Despite numerous allegations of involvement in various stock market manipulations, every investigation report has spared him. On the other hand, regulatory authorities have always been scapegoated to protect Salman and others involved in stock manipulation and various other frauds in the stock market.
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