BM Special Corporate Investigation
The Bangladesh Securities and Exchange Commission (BSEC) has recently approved a proposal of sellout 19 crore shares of Ring Shine Textile Limited by which the country’s one of the largest spinning mill can operate smoothly.
But investors smell a rat behind the permission that the Ring Shine Directors who allegedly laundered over Tk 3000 crore are set to be escaped from one of the biggest financial crime unpunished.
The company directors have allegedly earned the money by showing inflated valuation of the company, selling out placement shares, bank loan embezzlement and workers provident fund misappropriation. They also have not paid amounts due to the Bangladesh Export Processing Zones Authority.
Ring Shine Textiles former chairman Sung Jye Min, director Sung Wey Min, Hang Siew Lai, Hasio Hai Hey, Sung Wen Li Angela, Sung Chung Yao, Sheao Yen Shin, Hsaio Liu Yi Chi and Chuk Kwan-most of them are Singaporean and Indonesian citizens could not flee from Bangladesh as Detective Branch of Police has seized their passports for money laundering allegations, sources said.
Besides, the investors also have raised concerns about the ability of the proposed company Wise Star Textile and Its Managing Director Wong Jammy Kwok Chan to buy Ring Shine Textile Limited.
According to the BSEC new decision it proposed to allow indemnity to the new directors for financial crime committed by the previous directors but said nothing about the previous directors.
The circular reads “No Enforcement and Legal actions will be initiated against new proposed companies and its directors with regard to irregularities non-compliance and offence committed by previous sponsor shareholders and directors”
It decided that the proposed companies will takeover the existing whole liabilities including bank liabilities and assets of Ring Shine Textile Mills Ltd. along with huge negative net worths resulting from fictitious assets
Faruque Hossain, a share holder of the company who has been regularly participating the AGM of the Ring Shine Textile until 2018, said this is one of the largest spinning mills in Bangladesh which the Wise Star has not capacity to operate. “Besides, Mr. Wong Jammy Kwok Chan, who is an employee of a group of companies, has money laundering allegations against him. “How he can operate such giant company. The deal must have some ploy behind the scene” Mr Faruque told Business Mirror.
Ring Shine Textile Limited the largest fully integrated textile company with a dominant presence in the Cotton and Polyester segments was established by Singaporean Citizen Shao. Later, after launching operation Mr. Shao was fall sick and his relative Sung Wey Min was brought in Bangladesh and was made Managing Director. Later Mr Wey Min brought Shao’s son and daughters and other relatives- all of them had no experience of running spinning mills, sources said.
Mr. Wey Min later with assistance from a local Group of Company started a series of misappropriation into the company including inflated valuation, getting huge loans from Premier Bank, sold placement shares following the inflated valuation.
The management also did not paid a single amount to BEPZA for as per the contract with this state owned agency.
“After all misappropriation and money laundering, one fine night all the directors and foreign employees left Bangladesh,. Later a team of diplomats brought them back Bangladesh and seized their passports and other documents,” Mr Faruque said
He said many of the important officials of Ring Shine Textile Ltd also involved into the misappropriation and earned huge amount of money.
The principal activity of this company is spinning of acrylic yarns, manufacturing and marketing of gray and finished fleece fabrics of various qualities and different types and qualities of dyed yarn to 100% export oriented factories.
According to the BSEC circular “Wise Star Textile Mills Ltd” – a private firm run by listed Queen South Textile’s will takeover of the company after the approval of its general investors. The Ring Shine’s new board of directors held an extraordinary general meeting (EGM) to consider the proposed takeover of sponsor directors’ shares of the company by Wise Star Textile Mills Ltd and its nominees.
The company raised Tk150 crore in fixed price method in 2019 when Professor M Khairul Hossain was the chairman of the BSEC. But after approval, the company could not run operation due to numerous issues. Ring Shine Textiles current bank dues stand at Tk550 crore, and more Tk80 crore remains unpaid to BEPZA.
An official of the BEPZA said already a few meetings have been arranged with Wise Star Textiles in this regard, but there is no final update till now. BSEC gave the NOC to BEPZA, saying Ring Shine can be handed over to an interested party if it complies with all rules.
Earlier, Union Group, a local company showed interest in taking Ring Shine over but ultimately did not go with it because of the huge debt burden of the company.
The company’s earning decreased by 45% to Tk39.46 crore in the business year 2022-21 against Tk71.49 crore in the previous year. The net loss after tax of the company stood at Tk19.23 crore alone in 2021-22 year.
The company was listed on the stock exchanges in 2019 by issuing pre-IPO shares, also known as placement shares, to its existing sponsor-directors and 73 external local shareholders, the company became a Tk285.05 crore paid-up capital company from Tk9.95 crore. But 11 sponsor-directors and 33 external shareholders did not make any payment against their allotted shares. In September 2020, its production stopped because of Covid-19 pandemic.
Meanwhile In January 2021, the stock market regulator restructured the company’s board in a move to bring the company out of its worsening condition. For this, the regulators appointed seven independent directors to monitor company’s overall condition and make a plan on how to operate it. In June 2021, the factory went back into production.