Kleptocracy: How former taxman Matiur Rahman profited from pre-IPO shares


In a scandal that has shocked Bangladesh, former National Board of Revenue (NBR) official Md Matiur Rahman is at the center of allegations involving insider trading and significant financial misconduct. An investigation by The Daily Star has uncovered that Matiur, along with his family members, amassed tens of millions of Bangladeshi takas through strategic investments in pre-public shares of various companies. This article delves into the details of the investigation, exposing the intricate web of stock market activities and family connections that facilitated these illegal gains.

Md Matiur Rahman, a high-ranking official in the NBR, has been embroiled in controversy for some time. His wealth came under scrutiny after a high-profile incident involving an expensive sacrificial goat, which was flaunted on social media by Mushfiqur Rahman Ifat, allegedly his son from a second marriage. The goat, worth BDT 1.2 million, highlighted the extravagant lifestyle of Matiur’s family and prompted a deeper investigation into their financial activities.

Matiur, who joined the government service in 1994 and was transferred to customs in 1998, held various important positions within the NBR, including the presidency of the Customs, Excise, and VAT Appellate Tribunal. Despite his relatively modest official salary of Tk 78,000 per month, Matiur and his family have accumulated an extraordinary level of wealth through investments in the stock market, specifically through placement shares.

Placement shares, or pre-public shares, are offered privately to select investors before a company goes public. This form of share trading is typically reserved for investors who have a prior association with the company, allowing them to purchase shares at a lower price before the Initial Public Offering (IPO). While this practice can be legitimate, it becomes problematic when the investor has access to insider information or holds a regulatory position that could influence the market.

In Matiur’s case, his position within the NBR provided him with access to confidential information about companies’ financial health and upcoming IPOs. This advantage allowed him and his family members to purchase placement shares at significantly lower prices, which they could then sell for substantial profits once the companies went public.

Dhaka’s leading English newspaper The Daily Star in its investigation revealed that Matiur and his family held a staggering 98,041,492 shares across at least 15 publicly listed companies. The shareholders included his immediate family members, such as his first wife Laila Kaniz Lucky, his second wife Shammi Akter Shibli, his children from both marriages, and various extended family members.

A significant portion of these shares were acquired between 2013 and 2018, during which Matiur held key positions within the NBR. However, the investigation traced some of these shares back to as early as 2002. The sheer volume of shares held by his family members, along with their strategic investments, suggests a well-coordinated effort to exploit their insider status.

The investigation also uncovered that 36.5 percent of the shares were bought in the names of five companies owned wholly or partially by Matiur and his family. These companies, with a combined paid-up capital of BDT 68.2 million, were set up or acquired during the years when Matiur was in power. The companies include Global Shoes, Global Max, SK Trims, Anik Trims, and Synergy Trading.

The pattern of share acquisition by these family-owned entities mirrors that of the individual family members, often occurring on the same days or within close proximity. For example, on May 2, 2010, Global Shoes bought placement shares from ML Dyeing Ltd on the same day that Matiur and his immediate family members purchased shares in the company. This coordinated purchasing pattern further illustrates the insider trading practices at play.

The cumulative purchase value of the shares held by Matiur and his family is estimated to be over BDT 1 billion, assuming they were bought at a face value of Tk 10 per share. The current market value of these shares in publicly listed companies is approximately BDT 1.75 billion. However, it remains unclear if they still hold all these shares or have invested in additional companies not yet identified by The Daily Star.

Government service rules strictly prohibit officials from engaging in speculative trading or making investments that could influence their official duties. Moreover, public officials are barred from investing in stocks where they have insider information. Matiur’s actions, as revealed by the investigation, clearly violate these rules. His acceptance of placement shares, consultancy roles for IPOs, and discounted share purchases are all indicative of insider trading and misuse of his official position.

Despite the clear violations, repeated attempts by The Daily Star to contact Matiur and his family members for comments were unsuccessful. Phones were found switched off, and messages went unanswered, indicating a reluctance to address the allegations publicly.

Former Bangladesh Securities Exchange Commission (BSEC) chairman Faruq Ahmed Siddiqi has voiced strong opinions on the matter, questioning why no action was taken against Matiur and his family for such blatant violations. He emphasized that placement shares are often given as favors, and the fact that so many companies favored Matiur points to serious misconduct.

Siddiqi further highlighted that providing consultancy services and receiving shares in exchange is a clear conflict of interest and a breach of government service rules. He called for strict action against Matiur and his family to uphold the integrity of public service and the capital market.

The scandal surrounding Md Matiur Rahman and his family’s insider trading activities has brought to light the vulnerabilities in Bangladesh’s regulatory framework. It underscores the need for stricter enforcement of rules and greater transparency in the financial dealings of public officials. As the investigation continues, it remains to be seen what legal and regulatory actions will be taken to address this egregious misuse of power and privilege.

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