Order to investigate various allegations against Fareast Stocks including misappropriation of money

The Bangladesh Securities and Exchange Commission (BSEC) has ordered an investigation into the various issues of First Stocks and Bonds Limited, a brokerage house once owned by MA Khalek, accused in the money laundering case. An investigation committee of 4 members has been constituted for this purpose. The constituted committee has been directed to submit an investigation report to the BSEC within the next 60 working days after looking into whether there has been any deficiency, misappropriation of money, irregularities and manipulation as integrated customers of the institution.

According to the BSEC sources, an order in this regard has been issued recently.

The directions of the BSEC have called for an inquiry into 9 matters. These are – cash and securities information of all customer accounts, consolidated customer account balances, statement of all customer shares held with CDBL, paid up capital of the company, amount of negative equity and how many customers it belongs to, management and board directors, debt and taxes against the company. It is asked to inquire whether there is any pending action or any previous action taken, opinion on the viability of the institution and any other matters.

The members of the investigation committee are – Additional Director of BSEC Mollah Md. Miraj-us-Sunnah, Deputy Director Sultan Salah Uddin, Assistant Manager of CDBL. Muzaffar Mahmood and a designated officer of the Dhaka Stock Exchange (DSE) have been ordered to conduct an inquiry into the matter.

The directive said, the Commission is of the view that it is necessary to conduct an inquiry into the said matter in the interest of the capital market and general investors. Therefore, under the powers given in the Securities and Exchange Ordinance, the commission is instructing the four people to investigate those matters.

At the end of June 2018, DSE received information about the illegal use of funds from the consolidated customer accounts of 18 brokerage houses. In this, Far East had a deficit of Tk 1 crore 13 lakh. Fareast Stocks again applied for additional time in February 2023 as the period for making up the shortfall has expired. At that time the company got 5 months time.

MA Khalek was the Chairman of Far East Stocks and Bonds Limited. He was an entrepreneur. Khalek built many institutions including universities, banks, insurance, securities companies. He held various positions including the chairman of these institutions. It is alleged against him that he embezzled about 1 thousand 300 crore taka by using that opportunity.

Allegedly, since 2010, he started withdrawing money from various institutions. Then in 8 years he grabbed 1 thousand 283 crore taka.

Then on January 30, 2023, in a case under the Prevention of Money Laundering Act, the CID suspended the seizure order of the court on the Tk 150 crore house of MA Khalek in Baridhara, Dhaka. At that time, it is said that the CID was investigating the allegation of embezzlement of Tk 516 crore against him.

Then on April 4, 2023, CID filed a case against Khalek and 17 people on charges of embezzlement and trafficking of Tk 116 crore. In the statement of that case, it is said that from September 6, 2009 to February 25, 2019, MA Khalek himself and his associates including relatives converted the money into wealth and smuggled it abroad.

The other accused in the case are – former CEO of the organization Tarafdar Jahangir Alam, former CFO Zahidul Haque, MA Khalek's wife Sabiha Khalek, son Shahriar Khaled Russo, daughter Sharwat Khaled, son-in-law Tanvirul Haque and father-in-law Fazlul Haque and Abul Kashem Molla, Rashed Mohammad Mazharul, Khashruba Sultana. Artists, Sheikh Yusuf Ali, Mahbooba Sultana, Dilruba Sultana, Nazrul Islam, Mizanur Rahman Mostafa and Kazi Shahriar. CID will investigate the case. Among the accused, MA Khalek and Nazrul Islam were arrested at that time.

It is known that various investors deposited checks or cash of Tk 89 crore 4 lakh 56 thousand 397 in Far East Stocks and Bonds Limited. Although the money was shown as BO of the investors, it was not deposited as the bank of the company. That is, misappropriation has been done by showing fake deposits. Apart from this, the investors concerned with the interests of the defendants deposited checks totaling Tk 13 crore 24 lakh at various times. But checks are dishonored due to various reasons (insufficient endorsement, mismatch of signatures, wrong writing of amount etc.), which is shown as reversal entry (deposit).

Meanwhile, the accused have colluded with each other and embezzled Tk 13 crore 50 lakh by misrepresenting the information by putting Tk 36 crore 36 lakh 41 thousand 125 instead of Tk 22 crore 86 lakh 41 thousand 125 in the sum of the company's account.