The Investment Corporation of Bangladesh (ICB) has twice declined to approve the annual accounts of six mutual funds managed by RACE Asset Management Company (AMC), citing operational irregularities and the absence of RACE’s managing director from trustee committee meetings.

The six funds are EBL 1st Mutual Fund, Trust Bank 1st Mutual Fund, 1st Janata Bank Mutual Fund, IFIC Bank 1st Mutual Fund, First Bangladesh Fixed Income Fund and EXIM Bank 1st Mutual Fund.

As ICB serves as trustee for the funds, its approval is required before their annual financial statements can be published. The failure to approve the accounts has prevented the funds from publishing financial statements for fiscal years 2024-25 and 2025-26.

Consequently, unitholders have been unable to obtain updated information about the financial condition of the funds. The funds have also been unable to hold annual unitholders’ meetings for two consecutive years.

ICB officials said the corporation adopted a more cautious approach following its experience with Universal Financial Solutions (UFS), another asset management company accused of misappropriating money from mutual funds.

According to ICB officials, the corporation had previously approved accounts of UFS-managed funds despite the absence of its managing director, Hamza Alamgir, from trustee meetings. Alamgir later fled with a substantial amount of money from several portfolios, and the misappropriated funds have not been recovered despite legal intervention.

An ICB official said the corporation would not approve the RACE funds’ accounts unless the AMC’s managing director or chairman was physically present at meetings with the trustee committee.

Although RACE’s managing director submitted signed financial documents, he did not attend the meetings. ICB officials also said that if he was abroad, the documents should have been authenticated through the relevant Bangladesh high commission, which was not done.

Under existing rules, mutual fund financial statements must be signed by the managing director or chairman of the concerned AMC, who is also expected to attend meetings with the trustee committee.

ICB officials said concerns also arose over several investment-related issues involving RACE-managed funds.

One major issue involves RACE’s claimed investment in corporate bonds issued by Regent Spinning, a concern of Habib Group. After failing to recover the investment, ICB filed a lawsuit against the company. Regent Spinning, however, told the court that RACE would have to establish the existence of the claimed investment.

ICB subsequently sought bank transaction records from RACE to verify the investment but has yet to receive the required documents, according to officials.

RACE had reportedly stated that shares of Regent Textile, another Habib Group company, were provided as collateral against the investment. However, ICB said those shares were not held by the trustee.

Another concern relates to RACE’s investment in bonds issued by listed Best Holdings. The investment agreement reportedly required 75 per cent of the assets to be liquidated at maturity, with the remaining 25 per cent converted into Best Holdings shares.

Although the conversion price had been fixed at Tk 35 per share, the conversion was carried out at Tk 65, according to ICB officials.

The trustee also raised questions over RACE representatives’ participation on the board of Multi Securities after funds were invested in the company. ICB officials said such involvement was not permissible under the applicable rules.

Multi Securities had also been used as an intermediary in transactions between issuer companies and RACE, with some investments in unlisted securities reportedly routed through its accounts.

ICB officials said the irregularities identified in the RACE-managed funds had been brought to the attention of the securities market regulator.