I remember to this day how, seventeen years ago, Shafiul turned up at my door, penniless.
He had been working at my firm before taking off for South Korea to earn his fortune. He labored hard for two years and returned -- richer and less sane.
We never found out what happened in South Korea to drive him paranoid, but he was soon cured -- one injection by some pill-pushing psychiatrist did the job.
In ordinary times, he would have invested the money in a business, but these were far from ordinary times.
After the Awami League came to power in Bangladesh in June 1996, the stock market mysteriously began its seductive ascent from 1,000 to 3,672 by November [1]. No one with cash in his pockets or her handbag could resist the siren call of the financial market. The heat of enthusiasm sent speculators outside the stock exchange, on to the kerb market. "The stock market's total value increased by a staggering 192.1 billion taka ($4.5 billion)." Shares traded at p/e ratios of 80: Confidence Cement, for instance, sold for 1,060 times the year's earnings after a 1,400% increase in its price.
One can appreciate how, after toiling in Seoul for twenty-four months, away from wife and children and wider family, Shafiul should wish to take an easy punt and make a fortune. There seemed no limit to the rising market, ballooning like a cumulonimbus cloud. But then it began to pour on the party.
Greed drove these speculators who got their just desserts -- all 300,000 of them, as was to be the case in the coming dotcom bust. Such sentiments were in the air: but they were wrong. That market had been rigged.
"According to the government's report, some of the country's biggest brokers were buying shares on the floor of the stock exchange and selling them on the kerb, where prices were generally 20% higher. A number of big operators are accused of arranging trades among themselves to create an illusion of strong demand. A good number of the transactions may be fictitious," reported The Economist [2].
Thirty-two arrest warrants were issued, including one for Runa Alam, head of the local office of the infamous (and soon to collapse) Peregrine Investment Holdings, and, more significantly for our story, two for Salman and Sohail Rahman, "brothers who lead the largest group of companies in Bangladesh, Beximco Group".
However, it was later found that the charges against the brothers had been brought under the wrong code! Naturally, they were released.
The prime minister, Sheikh Hasina, appeared on television in a question-and-answer session on every subject conceivable. It was a charade of 'transparency'. Among the three interviewees was one Debapriya Bhattacharya, well-known to the author since his childhood days, and well-known among the elite today (indeed, he was recently president of the Trade and Development Board of the United Nations Conference on Trade and Development, UNCTAD). He questioned the prime minister how it was that 50 million takas had been siphoned out of the country and the alleged masterminds incorrectly charged. He noted that it was regrettable, and the subject, of such enormous moment, was quietly shelved. But Bhattacharya had earned his fifteen minutes.
It so happened that Bhattacharya's mother, Mrs. Chitra Bhattacharya, was an MP of the ruling party, and the whole family was tight with the PM. This was what allowed young Bhattacharya to appear to be questioning the executive: a very well-choreographed family affair ( further shenanigans of the clan can be found here ) . As a conscientious mother, and an unconscionable citizen, she had realized early in life that unquestioning loyalty to the dynasty would advance her son's career. The prime minister should have resigned, of course, or been forced to resign -- but it must be kept in mind that she is the daughter of a dynasty, just as the leader of the opposition is a wife of the other dynasty: the democratic transition of 1990 has encumbered us with two despots where formerly we had had only one benign dictator. Neither woman is accountable for any crime, including murder and rape routinely performed by party cadres. Therefore, to expect Hasina to resign over mere financial jiggery-pokery would strike most Bangladeshis as tantamount to lese-majeste despite the number of people ruined and the loss to the economy of millions diverted to private hands. Even her associates and friends are above the law: it has been reported that Salman Rahman was a friend of the prime minister's late brother.
And what terrible fate has befallen Salman Rahman? Why, today he is the private investment affairs adviser to Awami League President Sheikh Hasina, who is also (again) the prime minister. Indeed, her party won a resounding victory at the polls (rigged by the army, it is claimed by former dictator Hussein Mohammed Ershad, who should know a cooked election when he sees one; the last two elections had also been rigged ( see article The Dual Dictatorship ); General Ershad has recently been vindicated by The Economist), and she made an old crony her investment affairs advisor. And, as deputy chairman of Beximco, how fare his finances? Well, he has found it hard to kick the habit of regarding other people's money as his own. Of the top five defaulters listed by the central bank of Bangladesh in 2009, three belonged to -- you guessed it! However, when this was reported in a newspaper, Beximco had the following clarification published in the same newspaper: Beximco Group in a clarification of The Daily Star news headlined "Beximco Textiles tops dubious list" published Wednesday said the report was based on the central bank's Credit Information Bureau (CIB) that used data of February, 2009.
'Bextex Ltd including all its amalgamated units (erstwhile Padma Textile Mills Ltd, Beximco Textiles Ltd, Beximco Knitting Ltd and Beximco Denims Ltd) have regularised all outstanding loans after February, it added. Beximco Textiles is no longer a defaulter, the clarification said. The CIB report is in the process of being updated accordingly. [3] '
The reader will recall that Sheikh Hasina won the election in December, and, it appears, the financial affairs of the Beximco group was regularized soon after the momentous electoral victory. Post hoc ergo propter hoc?
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