Lifetime Ban for Salman F Rahman and Other Influential Figures in Capital Market Scandal: Uproar Over IFIC Bond Fraud

In one of the most high-profile financial scandals in the history of Bangladesh's capital market, the Bangladesh Securities and Exchange Commission (BSEC) has declared several prominent individuals, including former IFIC Bank chairman and Beximco Group vice-chairman Salman F Rahman, his son Ahmed Shayan Fazlur Rahman, and former BSEC chairman Shibli Rubaiyat-ul-Islam, as persona non grata in the capital market for life.

This decision was made at BSEC’s 965th commission meeting held on Wednesday (30 July), chaired by current BSEC chairman Khondaker Rashed Maksud, and later announced through an official press release.

According to BSEC, on 4 June 2023, during its 871st commission meeting, approval was granted for a bond titled “IFIC Guaranteed Sreepur Township Green Zero Coupon Bond” worth Tk 1,500 crore, of which Tk 1,000 crore was the issue value. A consent letter for the bond was issued on 12 July that year.

The issuer of the bond was Sreepur Township Limited (STL), a newly formed real estate company with an authorized capital of Tk 500 crore and a paid-up capital of Tk 335 crore. Within just one month of its formation, the company applied to raise funds and, within four days, withdrew Tk 248 crore in cash under the pretense of land purchase/development, which BSEC found suspicious.

Crucially, although IFIC Bank PLC was not the issuer of the bond, it appeared as the guarantor and heavily promoted the bond using slogans like “IFIC Amar Bond” (IFIC My Bond), misleading general investors into believing that the bond was directly issued by IFIC Bank.

Following an investigation by a BSEC inquiry committee, the final report submitted to the commission led to the following punitive actions:

• Salman F Rahman: Then chairman of IFIC Bank — fined Tk 100 crore and banned for life from all capital market activities.
  
  

• Ahmed Shayan Fazlur Rahman: Then vice-chairman of IFIC Bank — fined Tk 50 crore and permanently banned from the capital market.
  
  

• Shibli Rubaiyat-ul-Islam: Former chairman of BSEC — banned for life from involvement in the capital market for violating bond and Sukuk processing regulations.
  
  

• Imran Ahmed: Then CEO of IFIC Investments Limited — barred from all capital market-related activities for five years.
  
  

• Shah Alam Sarwar: Then managing director of IFIC Bank — subject to enforcement action.
  
  

• ECRL (Credit Rating Agency): Fined Tk 10 lakh for negligence in fulfilling its responsibility in bond rating.
  
  

• Dr. Sheikh Shamsuddin Ahmed: Then BSEC commissioner — banned from the capital market for five years.
  
  

This incident has reignited painful memories of the 2010 stock market crash, during which a government investigation committee identified 60 individuals, including Salman F Rahman, as having profited from market manipulation. That report warned that influential individuals must be kept under strict regulatory surveillance to prevent similar incidents in the future.

It is worth noting that Salman F Rahman was also the Private Sector Industry and Investment Adviser to Prime Minister Sheikh Hasina during her tenure. Analysts believe this move sends a strong message towards ensuring transparency and accountability in the country's capital market.