B Mirror Report: Associated Oxygen was listed on the stock market in 2020 through placement fraud. To bring the company to the stock market, a horrific fraud was committed in the prospectus, including forged signatures, by a syndicate led by Kazi Saifur Rahman of NRB Equity Management and Matiur Rahman of the “goat scandal” fame. They were assisted by another well-known stock market figure and Chairman of Anwar Galvanizing, Manwar Hossain.

Although BD Finance Capital Holdings was named as the issue manager in the company’s IPO prospectus, all the actual work was carried out by NRB Equity Management. They even submitted the file by forging the signature of BD Finance Capital’s then Acting Managing Director and CEO, Barun Prasad Pal.

According to market insiders, this is one of the largest fraud incidents in the history of the capital market, and the entire syndicate must receive exemplary punishment. At the same time, BD Finance Capital cannot evade responsibility for not opposing these acts and for working according to the demands of other merchant banks. They too committed serious punishable offenses.

Regarding this matter, Mohammad Abul Kalam, Director and Spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), told Midea that one institution cannot act as issue manager under the cover of another. If NRB Equity Management carried out all the work behind BD Finance Capital in the case of Associated Oxygen, then both institutions committed serious irregularities.

Since BD Finance Capital was the designated issue manager, it was their responsibility to conduct the issue management work. NRB Equity Management had no scope to do so. He also described forged signatures in the prospectus as a major fraud and said the Commission would investigate and take legal action.

BD Finance Capital Holdings is a subsidiary merchant bank of Bangladesh Finance (BD Finance). Ownership of these companies includes Manwar Hossain, one of the leading figures of the Anwar Group and a controversial figure in the stock market. Anwar Galvanizing, under his leadership, has already been fined for stock manipulation.

On December 10, 2024, BSEC fined nine individuals and institutions a total of BDT 705.7 million for manipulating BD Finance shares. Anwar Galvanizing, led by Manwar Hossain (its chairman), was fined BDT 71 million. The company’s shares were also manipulated.

Kazi Saifur Rahman is a controversial figure in the stock market. Although he is not a direct owner of NRB Equity Management, he leads it from behind the scenes. The firm is owned by his wife, children, and other relatives. In 2013, BSEC banned him for five years and his merchant bank for one year for attempting to obtain IPO approval using false and fraudulent financial statements.

The syndicate led by Saifur Rahman and Matiur Rahman takes large quantities of placement shares worth crores of taka without paying cash, in exchange for bringing weak and unqualified companies to the stock market. BSEC has already punished them for taking placement shares in ACME Pesticides and Ring Shine. This syndicate brought the weak Associated Oxygen to the market and took 15.6 million placement shares without cash, valued at BDT 156 million.

Within three years of listing, the Dhaka Stock Exchange (DSE) found that the company’s production operations had stopped. Due to business losses and loan defaults, Basic Bank put the company’s assets up for auction.

Associated Oxygen came to the stock market through issue manager BD Finance Capital Holdings. The then Acting MD and CEO, Barun Prasad Pal, did only nominal work to bring the company to market, despite knowing about fake accounts and discrepancies in share money deposits.

When contacted, Barun Prasad Pal said that one day his management (Manwar Hossain) suddenly told him to handle the Associated Oxygen issue. However, NRB Equity Management had completed the placement two years earlier.

They approached him only 1–2 months before submission, saying they would use BD Capital’s name solely as issue manager. An issue management fee of BDT 2 million was agreed upon. The file was submitted using only BD Capital’s name, while all other work was done by NRB Equity Management. He said he signed only 10–15 documents and did not sign vouchers or every page of the prospectus those signatures were forged.

He said he was a physics student and did not understand accounts. He had worked in portfolio management and never handled issue management before. He signed documents under board pressure, only to allow the use of the firm’s name. He did not review all company documents, did not read the prospectus, did not review placement shareholder lists, and did not know the company’s personnel. He claimed BD Capital as an institution was involved, but he bore no personal responsibility and committed no wrongdoing. He said he wanted justice for the real offenders and would cooperate fully if BSEC called him.

A senior official of another merchant bank said that based on Pal’s statement, massive fraud occurred in the Associated Oxygen IPO. Although BD Capital’s name appeared as issue manager, NRB Equity Management worked behind the scenes and even forged the CEO’s signature. This is a grave irregularity, and all involved including NRB Equity Management must be punished. BD Capital cannot escape liability merely by allowing the use of its name; such licenses should be revoked, and responsible officials and board members punished.

Expressing regret, a DSE director said these wrongdoings are not new they are only now being exposed. From 2018 to 2020, the DSE board protested against many IPOs, blocking 20–22 companies and clashing with the then Commission. However, the Shibli Commission later approved all of them through unethical means, the consequences of which the market is now suffering.

He said that while the current Commission has imposed some penalties, the irregularities in Associated Oxygen require exemplary punishment for the issue manager, auditor, valuer, and others, along with other common names, to deter future misconduct.

Matiur Rahman is known in the stock market for a syndicate that takes placement shares without paying cash during IPOs, with Saifur Rahman of NRB Equity Management as a key associate. Through affiliated issue managers, they inflate financial statements of weak companies and bring them to market with the help of well-known auditors. In exchange, they take placement shares issued before IPOs without cash payment.

Like ACME Pesticides, Associated Oxygen was brought to the market by this syndicate with exaggerated profits and assets. In return, the syndicate took shares worth BDT 156 million, suspected to be without payment something that investigation would likely reveal, as in the ACME case.

Another DSE director said many know that Matiur’s syndicate manages entire IPO processes for unqualified companies, artificially dressing up accounts and taking shares in return, often with company sponsors also benefiting, with direct support from the former Shibli Commission. Now is the time for justice, and all companies involving this syndicate must be investigated.

Before filing the IPO application, Associated Oxygen’s paid-up capital was abnormally increased from BDT 1.2 million to BDT 800 million within just 10.5 months (December 20, 2017 to November 6, 2018).

According to page 19 of the prospectus, 99.85% of this paid-up capital was issued through placements during those 10.5 months before listing. Directors issued placement shares to themselves and others, then raised BDT 150 million through IPO.

Placement holders included Matiur Rahman (500,000 shares), his wife Laila Kaniz (450,000), his son Ahmed Taufiqur Rahman Arnab (500,000), Javed A. Matin (200,000), Bengal Assets Holdings Ltd (3,584,500), NRB Equity Management Ltd (659,669), Anjoman Ara Begum (200,000), Global Shoes (2,745,500), Global Max Packaging (200,000), and Shahjalal Equity Management (6,551,000). In total, 15,590,669 placement shares were issued.

They also took placement shares in ACME Pesticides without payment, as revealed by a BSEC investigation committee, which decided to forward the report to the Anti-Corruption Commission (ACC).

Barun Prasad Pal again said NRB Equity Management works exclusively on placements and is deeply unethical. The entire placement disaster occurred two years before the file reached BD Capital, whose name was only used.

He reiterated that BD Capital merely provided its name, did not handle placement issues, and that he was forced to sign under board pressure to keep his job.

The same auditor Siraj Khan Basak & Co.audited Associated Oxygen’s pre-IPO accounts, just as with ACME Pesticides. BSEC has already initiated enforcement action against this auditor for failing to reflect ACME’s true financial condition. Similarly, the auditor failed in its duties for Associated Oxygen, which showed rising profits before IPO but is now shut down.

According to the prospectus, profits rose from BDT 59.9 million in FY 2014–15 to BDT 109.4 million in FY 2018–19. However, the company has stopped publishing financial statements for the past two years and declared only a 1% cash dividend for general shareholders for FY 2022–23.

Despite DSE findings that commercial operations were closed, Associated Oxygen showed artificial net profit of BDT 174.6 million (BDT 1.59 per share) in FY 2022–23, prompting BSEC investigation.

DSE officials contacted the company posing as buyers and were informed that the factory had been closed for months. After DSE informed BSEC, an investigation was launched.

Attempts to contact Kazi Saifur Rahman of NRB Equity Management, Manwar Hossain of Anwar Galvanizing, Associated Oxygen CFO Delwar Hossain, and Company Secretary Md. Mustafizur Rahman by phone were unsuccessful. WhatsApp messages and emails also received no response.