In the intricate web of Bangladesh’s political and financial landscape, few figures loom as large as Salman F Rahman. His rise to power was nothing short of meteoric, fueled by a shrewd understanding of both corporate strategy and political maneuvering. But as with many stories of unchecked ambition, his journey is also one of manipulation, corruption, and a dramatic fall from grace. As the country grapples with the aftermath of his financial misdeeds, it becomes imperative to dissect the intricate details of his actions and the broader implications they have had on Bangladesh’s economy.
Salman F Rahman's contributions went beyond his role as a businessman; he was also an advocate for social change and economic development. As vice-chairman of Beximco Group and a trusted adviser to Sheikh Hasina, he wielded enormous influence, often blurring the lines between public interest and personal gain. Not only does his story depict the tragic downfall of an individual, but it also serves as a powerful warning that illustrates the devastating effects of unbridled power and the intentional undermining of accountability.
Exploiting the Banking Sector
Salman’s financial empire was built on a foundation of exploitation and manipulation, with Bangladesh’s banking sector being one of his primary tools.
One of the most glaring examples of Salman's financial misconduct is the staggering debt his associated companies owe to several banks in Bangladesh. According to documents obtained by The Business Standard, companies linked to Salman F Rahman owe around Tk36,865 crore to seven banks, including state-owned banks such as Janata Bank, Sonali Bank, Rupali Bank, and Agrani Bank, as well as private banks like National Bank, IFIC Bank, and AB Bank.
The extent of his influence became particularly evident in his dealings with state-owned banks like Janata Bank. Beximco Group, under Salman’s direction, managed to secure loans totaling Tk23,070 crore from Janata Bank, far exceeding the bank's single borrower exposure limit.
Rahman exploited Janata Bank to a point where the state-owned institution was crippled by the sheer volume of loans it extended to Beximco. This not only crippled Janata Bank’s ability to function effectively but also exposed depositors' money to significant risk. The bank barely managed to show a net profit of Tk55 crore at the end of 2023, thanks to forbearance on maintaining required provisions against default loans.
Salman's political connections shielded Beximco from repercussions despite their chronic defaults. The central bank’s decision to suspend financing from the Export Development Fund (EDF) due to Beximco’s overdue loans was one of the few instances where any form of accountability was enforced. However, this was not enough to curb Salman's activities. His ability to manipulate banking regulations and secure favorable terms for his businesses, even as they defaulted on their obligations, is indicative of the broader systemic issues within Bangladesh’s financial institutions.
Salman’s exploitation of the banking sector extended beyond Janata Bank. His influence over IFIC Bank, where he held the chairmanship for 14 years despite owning only 2% of the shares, allowed him to abuse the bank’s resources for personal gain. The bank’s issuance of a bond worth Tk 1,000 crore for Sreepur Township Ltd (STL), a newly-formed real estate company in partnership with Beximco Group, is a prime example of this. The bond, guaranteed by IFIC Bank, placed the full liability on the bank, risking depositors' funds and exemplifying how Salman prioritized his interests over the financial health of the institutions he controlled.
The Dark Legacy of Stock Market Manipulation
Salman F Rahman’s manipulation of Bangladesh’s stock market is another dark chapter in his legacy. His role in the 1996 stock market crash remains one of the most significant financial scandals in the country’s history. During this period, the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) saw an unprecedented rise in share prices, particularly of companies with weak fundamentals. New investors, lured by the promise of quick gains, rushed to invest in these “junk stocks,” only to be left devastated when the market inevitably crashed.
The crash of 1996 was not solely a result of market failure. Salman and other influential figures orchestrated the artificial inflation of share prices, capitalizing on the influx of inexperienced investors. When the market reached its peak, these “bad actors” sold off their holdings at a substantial profit, leaving ordinary investors with worthless shares.
An inquiry committee formed after the crash identified 65 companies where manipulation was most apparent, with Salman’s role being highlighted as one of the masterminds behind the scheme.
The aftermath of the crash saw many investors financially ruined, some even driven to suicide. Yet, despite the clear evidence of manipulation, Salman continued to wield significant influence over the stock market in the years that followed. His involvement in the 2011 stock market crash further cemented his reputation as a manipulator of financial markets. The market once again experienced a surge reminiscent of the 1996 bubble, only to crash in January 2011, leading to widespread financial losses.
Even after the 2011 crash, Salman’s influence remained pervasive. The government’s attempts to reform the stock market, including the appointment of Dr. M Khairul Hossain as Chairman of the Bangladesh Securities and Exchange Commission (BSEC), were plagued by allegations of nepotism and failure to curb market manipulation.
Salman’s ability to push through IPOs of weak companies and manipulate market regulations further destabilized the market, leaving investors vulnerable to the same tactics that had caused the previous crashes.
Manipulating the Bond and Debenture Markets
Salman also played a significant role in damaging investor confidence in Bangladesh’s debenture market. In the mid-1990s, Beximco issued four debentures with a tenure of 10 years, raising around Tk 100 crore. However, when the time came to repay the funds in 2004 and 2005, Beximco defaulted. It wasn’t until 2021, 15 years after the debentures had matured, that the company repaid the outstanding funds. This delay not only harmed investors but also stunted the growth of the debenture market in Bangladesh.
Salman’s exploitation of the financial system continued with his manipulation of the bond market. In 2021, Beximco issued the country’s largest sukuk, raising Tk 3,000 crore. However, the process was marred by allegations of coercion and undue influence. Salman reportedly pressured institutional investors to subscribe to the sukuk, and when the response was lukewarm, he used his influence to extend the subscription period multiple times. He even "forced" Bangladesh Bank to change its regulations, allowing banks to invest borrowed funds in sukuk, which was originally designed for the stock market, not for shariah-compliant bonds.
Salman’s dark past with GMG Airlines further illustrates his pattern of manipulation. After Beximco acquired half the equity stake in GMG in 2009, the airline's financial performance seemingly improved overnight, showing profits that were later discovered to be fictitious. GMG’s financial fraud not only deceived investors but also resulted in significant losses for Sonali Bank, which had lent the airline Tk 247 crore with a guarantee from Beximco. When GMG failed to repay the loans, Salman successfully halted the bank’s attempt to auction his and his brother’s property in 2016, further showcasing his ability to evade accountability.
A Desperate Attempt to Escape
As the walls began to close in on Salman F Rahman, his actions became increasingly desperate. In a dramatic turn of events shortly before Sheikh Hasina's resignation, Salman allegedly attempted to flee the country after a final act of financial misconduct. On August 4, just days before his arrest, Salman managed to secure $30 million from the Export Development Fund (EDF) with the assistance of top officials at Bangladesh Bank. This illegal transaction, which was likely an attempt to amass resources before making an escape, led to the resignation of four top officials from Bangladesh Bank, including Deputy Governors Kazi Sayedur Rahman and Khurshid Alam.
The involvement of high-ranking officials in Salman's illegal transaction paints a vivid picture of his immense influence and the widespread corruption within Bangladesh's financial institutions. The resignation of these officials, though a step towards accountability, highlights the broader issue of how easily state resources can be exploited by those in power.
Salman's attempt to flee the country with misappropriated funds was not only a desperate act but also a complete betrayal of the trust bestowed upon him by the public and the institutions under his control.
As he tried to escape from Sadarghat, Salman was arrested alongside Anisul Huq, the former law minister. This dramatic arrest added another layer of intrigue, as Salman, who was once recognized for his famous 'Dorbesh Baba' image with white hair and a flowing beard, had abandoned this persona in a futile attempt at disguise. He had shaved his beard and dyed his hair black, hoping to slip away unnoticed.
However, the sight of the fabled Salman F Rahman, dressed in a lungi and being hauled off with his hands tied with a rope, shattered the illusion of invulnerability. This striking image serves as a vivid reminder that justice can reach even the most influential individuals.
The Long Shadow of Corruption
Salman F Rahman’s financial crimes have left a long shadow over Bangladesh’s economy. His exploitation of the banking sector and manipulation of the stock market have caused significant financial instability, particularly in state-owned institutions like Janata Bank. The loans extended to Beximco and other companies associated with Salman were often rescheduled or restructured with little regard for the financial health of the lending institutions. This practice not only jeopardized the stability of these banks but also eroded public trust in the financial system.
Moreover, Salman’s manipulation of the stock market has stifled its growth, depriving Bangladesh’s economy of potentially robust financial instruments. His actions have set a dangerous precedent, where financial misconduct is tolerated as long as one has the right political connections. This has created an environment where financial institutions are unable to function independently, leading to a concentration of risk and a lack of accountability.
The broader implications of Salman’s actions are felt across the country. The manipulation of the stock market in 1996 and 2011, coupled with his exploitation of the banking sector, have had a lasting impact on Bangladesh’s financial system. The repeated cycles of market manipulation and the resulting financial crises have discouraged investor confidence, both domestically and internationally. The damage to the country’s financial reputation will take years to repair, and the legacy of Salman F Rahman serves as a stark reminder of the consequences of unchecked power and corruption.
The Path Forward: Rebuilding Trust and Accountability
As Bangladesh moves forward from this dark chapter, it is imperative that the lessons learned from Salman F Rahman’s case lead to meaningful reforms in the country’s financial and regulatory systems. The fall of Salman should serve as a catalyst for change, highlighting the need for greater transparency, accountability, and oversight within both the banking sector and the stock market.
One of the key areas that require immediate attention is the strengthening of regulatory bodies like the Bangladesh Securities and Exchange Commission (BSEC). The BSEC must be empowered to act independently and free from political influence to effectively oversee the stock market and prevent future manipulations.
The appointment process for key positions within the BSEC and other regulatory bodies should be transparent and based on merit, rather than political connections.
Additionally, the banking sector needs to undergo significant reforms to prevent the kind of exploitation seen in the case of Janata Bank and IFIC Bank. Strict enforcement of single borrower exposure limits, along with tighter regulations on loan rescheduling and restructuring, are essential to prevent the concentration of risk in a few large borrowers. The central bank must also be held accountable for its role in overseeing the financial health of these institutions, and any instances of corruption or misconduct must be dealt with swiftly and transparently.
The legal framework governing financial crimes must also be strengthened to ensure that individuals like Salman F Rahman are held accountable for their actions.
This includes not only prosecuting those directly involved in financial misconduct but also addressing the systemic issues that allow such crimes to occur. The judicial system must be equipped to handle complex financial cases and ensure that justice is served in a timely manner.
Salman F Rahman’s story is a cautionary tale of what happens when power and influence go unchecked. His rise to power, fueled by exploitation and manipulation, ultimately led to his downfall and the destabilization of Bangladesh’s financial system. The impact of his actions will be felt for years to come, as the country grapples with the aftermath of his financial crimes and works to rebuild trust in its institutions.
As Bangladesh moves forward, it is essential that the lessons learned from Salman’s case lead to meaningful reforms that prevent such abuses of power from happening again. The country’s financial and regulatory systems must be strengthened to ensure transparency, accountability, and independence. Only then can Bangladesh hope to rebuild its financial institutions on a foundation of integrity and trust, ensuring that the legacy of Salman F Rahman serves as a reminder of the importance of vigilance in protecting the public interest.
