Matiur Rahman, a former senior official of the National Board of Revenue (NBR), has become the face of a scandal that reveals much deeper issues within Bangladesh’s financial sector. His admission of receiving placement shares at a discount has sparked outrage and raised significant questions about the integrity of the country’s stock market and regulatory frameworks.

Md Matiur Rahman confessed during an interview with NTV that he had received placement shares of Fortune Shoes at Tk 8, below the face value of Tk 10, before the company went public in 2016. This practice contravenes regulations that require companies to seek special approval from the High Court to sell shares below face value. Matiur’s ability to acquire these shares under such favorable terms indicates a broader pattern of manipulation and favoritism within the market.

Placement shares refer to the sale of securities to a select group of investors, which can be done publicly or privately. In theory, this mechanism allows companies to raise capital efficiently. However, in practice, it has been exploited by influential figures who leverage their power to obtain shares at significant discounts or even for free. These practices undermine the market’s fairness and erode public trust in financial institutions.

Matiur Rahman’s case is far from unique. Analysts have long alleged that companies in Bangladesh are often pressured into providing shares to powerful individuals at discounted rates to secure their business operations and facilitate their listings. This coercive practice forces companies to compromise on transparency and ethics, further entrenching corruption.

The Bangladesh Securities and Exchange Commission (BSEC) has previously identified irregularities in the allocation of placement shares. In 2021, the BSEC revealed that many individuals had received shares of Ring Shine Textiles without proper documentation of payment. This disclosure included the names of numerous influential people, highlighting the widespread nature of the problem.

Moreover, there have been cases where companies issued shares at inflated prices before abandoning plans to go public. These schemes have left general investors bearing the brunt of financial losses while the perpetrators escaped accountability. The BSEC’s failure to address these issues adequately has perpetuated a culture of impunity, enabling continued exploitation by those in power.

Rise of Matiur Rahman

Matiur Rahman’s rise to prominence is marked by his strategic use of political connections and his leveraging of power within the NBR. Born to Alhaj Abdul Hakeem Hawladar, a respected school teacher, Rahman showed academic promise from a young age. His family’s financial situation was modest until his career in the civil service took off during the post-1991 BNP regime.

Matiur Rahman’s association with BNP Finance Minister Saifur Rahman and his family played a crucial role in his ascent. Initially serving in the trade cadre of the 11th BCS, Matiur later transitioned to the revenue cadre, thanks to his political connections. This move significantly boosted his family’s financial standing. His father was nominated as the chairman of Kazi Char Union, solidifying the family’s influence in their local community.

The family’s wealth accumulation has been accompanied by numerous allegations of corruption and abuse of power. Matiur’s brother Qayyum Howladar, for instance, established a factory and several businesses in Dhaka with Matiur’s support. Howladar family’s influence in their village, Muladi Upazila, is also evident. They reportedly used their power to construct a dam, obstructing a tidal canal and causing irrigation difficulties for local farmers.

This dam, which increased the aesthetic appeal of their ancestral home, exemplifies the ways in which the family leveraged their influence to prioritize personal gain over community welfare. The villagers have faced increased costs in crop production due to the irrigation issues caused by the canal obstruction, highlighting the broader social impact of the family’s actions.

Despite Matiur Rahman’s public admission of wrongdoing on June 19, the BSEC has yet to take substantial action against him or the implicated companies. While Matiur was removed from his NBR position and reassigned to the finance ministry, this administrative shift fails to address the deeper issues at play. There has been no comprehensive investigation into Matiur’s activities or the extent of his manipulation of the system.

BSEC must take decisive action to restore public trust in the stock market. This includes launching a thorough investigation into Matiur’s case to uncover the full scope of the irregularities and identify other potential wrongdoers. The process of share allocation must be made transparent to prevent future abuses, ensuring that shares are not issued at discounted rates or without proper payment.

The scandal has exposed the fragility of investor confidence in Bangladesh’s stock market. To rebuild this confidence, regulatory authorities and the government must collaborate to strengthen the legal and regulatory framework governing stock market operations. This involves closing loopholes that allow for such irregularities and ensuring that all financial transactions are reported accurately and transparently.

Auditors and regulators should be empowered and adequately resourced to detect and address discrepancies effectively. By enhancing oversight and enforcement mechanisms, the BSEC can deter future misconduct and promote a culture of accountability within the financial sector.

The ramifications of Matiur Rahman’s actions extend beyond the stock market, reflecting broader societal issues. The manipulation of the financial system by powerful individuals exacerbates economic inequality and undermines the principles of fairness and justice. When influential figures exploit their positions for personal gain, it erodes public trust in institutions and fosters cynicism about the prospects for genuine reform.

To address these systemic issues, there must be a concerted effort to promote ethical behavior and integrity at all levels of government and business. This includes implementing stringent anti-corruption measures, fostering a culture of transparency, and holding individuals accountable for their actions, regardless of their status or connections.

Matiur Rahman scandal has shown a spotlight on the pervasive corruption and manipulation within Bangladesh’s stock market and financial sector. Addressing these issues requires a multi-faceted approach involving regulatory reform, enhanced oversight, and a commitment to ethical governance. By taking decisive action to hold wrongdoers accountable and promoting transparency, Bangladesh can restore confidence in its financial institutions and create a fairer, more equitable market for all investors.

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