An investigation conducted by the Bangladesh Securities and Exchange Commission (BSEC) has revealed a significant asset embezzlement scandal involving Ashraf Textile Mills Limited, one of the oldest textile firms in the country. The company had remained inactive for over a decade.

The inquiry disclosed that the company unlawfully sold land and properties valued at approximately Tk 854.9 crore, despite being delisted from the Dhaka Stock Exchange (DSE) in 2009 and halting production since 2006. The BSEC was unable to locate any banking records or transaction evidence for around Tk 72 crore of the proceeds from these sales. As a result of these financial discrepancies and breaches of corporate laws and shareholders’ rights, Ashraf Textile has emerged as a stark example of corporate wrongdoing.

Investigators discovered that 42 bighas of land in Tongi, located on the outskirts of the capital, was sold for merely Tk 85 crore, while its market value was Tk 136.54 crore—a staggering difference of about Tk 51.54 crore.

In a similar vein, 20 percent of the Ashraf Setu Shopping Complex was sold for Tk 1,272 per square foot, which was nearly half of the market price at that time. From the Tk 95 crore obtained from this deal, Tk 53.5 crore remains unaccounted for.

The BSEC has identified several significant violations by Ashraf Textile, including the failure to hold an annual general meeting (AGM) since 2009; selling land without board meeting approval; transferring company assets without notifying shareholders; illegally signing contracts, such as the agreement with Setu Corporation for the construction of a shopping complex; and maintaining financial records in a non-transparent and secretive manner.

The company’s current board has repeatedly sold assets without shareholder approval. All important decisions such as the sale of property, development agreements and the shopping complex were taken without the AGM or board’s approval. Ashraf Textiles claimed that a large portion of the land sale proceeds were used to pay provident funds, unused leave and gratuity to former employees. However, BSEC could not find any bank records or documents to support this claim. Investigators believe that these claims were actually used to cover up embezzlement.

The regulator has recommended that Tk 72 crore be recovered directly from the directors and reinvested in new projects, such as restarting production at Ashraf Textiles. BSEC has also proposed to freeze or freeze the directors’ shares until the funds are returned.

The report called on Ashraf Textile to publish an updated annual report, hold an AGM and restructure its board. In addition to re-publishing financial statements to present a fair and transparent financial picture, it also recommended the implementation of strict corporate governance rules to ensure transparency and protect investors.

Established in 1962, Ashraf Textile was one of the country’s earliest textile mills. It started its journey in Ashrafabad, Tongi, with a capacity of 12,400 spindles and a daily yarn production capacity of 420 pounds. After Bangladesh’s independence, it was nationalized but later returned to its owners. Nevertheless, the mill slowly lagged behind its competitors because of outdated machinery, employee dissatisfaction, and financial obligations.

Ashraf Textile was auctioned off after one of its creditors, Rupali Bank, was unable to collect loan payments. The board decided to shut down the factory in March 2006 as no financial institution was willing to extend new loans, and the company was officially removed from the DSE in October 2009. Online Stock Brokerage Online Stock Brokerage

The BSEC’s enforcement actions are currently in progress. Furthermore, the commission has forwarded the issue to the Bangladesh Financial Intelligence Unit (BFIU) to look into potential money laundering.