BANGLADESH: Salman hits out at Star, Alo

Vice-chairman of industrial conglomerate says reports by 'Daily Star' and 'Prothom Alo' about Beximco Group are "vicious propaganda"

The Daily Star
Tuesday, July 21, 2009

Salman F Rahman, vice-chairman of Beximco Group, yesterday accused The Daily Star and the Prothom Alo of attempting to implement the "minus-two formula" during the recent emergency rule.

The Daily Star and the Prothom Alo both brushed aside the allegation terming it laughable.

The Beximco boss also accused the two newspapers of launching a "malicious propaganda" against the corporate group.

"We have noted a vicious propaganda being unleashed by two national newspapers -- Prothom Alo and The Daily Star -- against one of the biggest industrial conglomerates in Bangladesh," Salman said reading out a written statement at a media briefing in the capital.

"The malicious propaganda has been going on for many years now, which we kept ignoring, and we are now compelled to bring the issue before the court of public," he said.

"For the past few years, we have seen efforts -- very conscious and often beyond anyone's comprehension -- from these two newspapers to stifle our attempts to grow, create more jobs, and expand our exports," he said.

"It is true we have gone through ups and downs as our country has in all these decades. Nevertheless, we have tried to protect the interests of our workforce as well as our shareholders," he said adding that their efforts have not always been successful for various reasons, often factors beyond business contributing to the lack of success.

He said both newspapers on July 10 this year reported "incorrectly" that Bextex, a subsidiary of Beximco Group, had declared dividend out of revaluated reserves pursuant to revaluation of its lands, buildings, and other assets.

And worst of all, the two newspapers referred to Bextex shares as "junk shares," he added saying, "It is well known to all that Bextex has world class manufacturing facilities, blue chip customer base, it is an established brand both in the domestic and international markets."

"We leave it to you to judge whether Bextex shares can be called junk shares, and the journalistic standards applied by these two newspapers," he said.

He also said the two newspapers brought allegations of insider trading against him. "This is a serious allegation, probably the worst allegation one can come up with in this context."

Referring to a deal struck between Beximco Pharmaceuticals Ltd and an American investment firm, he said, "The deal drew an unprecedented malicious response from the two newspapers -- Prothom Alo and The Daily Star."

Such a speculative story with serious potential repercussions on the market is unthinkable in any other country in the world, he claimed.

"The story was ill-motivated and lacked any substance. But common investors do get shaky by such propaganda. This is a gross violation of market regulations as defined in the Securities and Exchange Commission Ordinance," he said.

The Prothom Alo's sister concern, The Daily Star, also published a similar report with similar content, he said.

"The Daily Star story referred to the ludicrous extent of the price fall -- 0.59 percent -- to claim that investors got shaky over Beximco Pharma's deal with a US firm," he said.

The Daily Star failed to convince any analyst to back up its claim, while the Prothom Alo, misquoted a well-known analyst, Salman claimed.

Salman said the Prothom Alo is owned by Latifur Rahman's Transcom Group, which is also the majority owner of The Daily Star. "We do not intend to conduct a similar propaganda war on Mr Latifur Rahman and his Transcom Group. The world of business, we believe, should pursue interests in a more ethical manner," he said.

"We would also like to refer to another so-called news analysis that so blatantly aimed to personally malign me," he said.

SALMAN'S RESPONSE TO REPORTER'S QUERIES

In a question-answer session, a reporter from vernacular daily the Amar Desh asked Salman whether the two newspapers are against the current government, claiming that they were supporters of 1/11.

Salman replied, "These two newspapers were not only supporters of 1/11, rather they were the architects of the minus two theory."

"They ran editorials, news analyses, and front page by line stories in favour of the minus two theory. But after the minus two theory failed, they are now out with minus one theory," he said.

They are now trying to malign the government and make it feel uneasy, he said adding that they are also going against the national interest by carrying out activities detrimental to investment and the capital market.

Replying to another question on why he is not taking legal actions against the two newspapers, Salman said he is in a process of suing them. "Our lawyers are studying the issue. We will not file cases just to show off. We will fight the case vigorously and to win," he added.

When asked, how many times his companies' loans were rescheduled since their establishment, and what were the sizes of down payments for rescheduling, if there was any, Salman replied there are Bangladesh Bank specified down payment rates for rescheduling. "Whatever we did was in line with the Bangladesh Bank regulations and with its approval."

Replying to another query about why Salman disputes The Daily Star's claim that Bextex shares were "junk shares," although it was a Z category share before its graduation to A category on June 24 this year, and since Z category shares are generally referred to as "junk shares" -- he said, "I don't agreed with you that you always term Z category shares as junk shares."

"Lafarge is in the Z category, but is it a junk share?" he came back with a question of himself, terming the cement manufacturer as one of the best companies of the country.

"You have the right to create new definitions as the pen is in your hand, but if you ask anyone of the capital market, he will say that Z category shares are not always junk shares," he said.

He said junk shares are shares of those companies, which are in the Z category on the capital market despite having no existence at all.

Asked why he should not be termed as a loan defaulter, as according to his own statement, the loan rescheduling procedures for two of the Beximco Group companies have not been completed yet, and as those two companies are among the top 10 loan defaulting companies listed by the central bank -- Salman claimed that the two companies are not among the top 10 defaulters.

Claiming that he is not a loan defaulter, Salman said any running company may become a loan defaulter temporarily due to various reasons.

But it is a serious offence if one defaults on a loan wilfully, maintain no contact with the bank, and refuse to pay back, he said.

"But we have never done so. Whenever we became a defaulter, we negotiated, and were well in touch with the banks to overcome our problems," he claimed.

"Now it's up to you whether you will label me as a loan defaulter or not, and I have no comment on that. What I want to say is that my conscience is very clear, I am not a loan defaulter," he said.

"I have done everything required to stay out of the list of loan defaulters," he claimed.

Asked whether he thinks Beximco Group companies' share prices are overvalued given that the PE ratio of Beximco Ltd is 248.40, Bextex's is infinity, Beximco Pharma's is 49, Beximco Synthetic's is 132.48, BD Online's is 78.47, and Shinepukur's is 40.14, while the banking sectors PE ratio is 10, and the market's average PE ratio is 17 -- Salman said Beximco Ltd's PE ratio is not correct, and about the other companies of the group he said, "I don't recall at the moment."

He said the market will determine whether Beximco Group companies' shares are overvalued or not.

When asked how he is hoping to turn his loss incurring companies into well performing ones, he replied, "In our annual general meetings we announced the details about turning the companies into well performing ones."

He said his group faced problems including "credit line supply" during the tenure of the last BNP-led government as well as during the immediate past caretaker regime.

"But now the group is doing better, and the performance will improve more in the future," he said.

When a reporter asked Salman about the list of loan defaulters released by the finance minister, he stopped the reporter in mid-sentence and said, "Following the release of the list, the finance minister announced that I am no longer a loan defaulter, don't you know that?"

"I know many things about the owner of the newspaper that you represent. But I don't want to make those public," he tersely added.

Date Posted: 7/21/2009