Sonali Bank to put up businessman Salman F Rahman’s family property on auction

Sonali Bank initiated the move for auction after Salman and his elder brother Sohail F Rahman failed to return to it the loan they earlier took for GMG Airlines.

The state-owned bank is looking to recollect its funds by auctioning Salman’s house in Dhanmondi as mortgaged property.

On Jul 12 the bank issued a notice through the Bangla daily Ittefaq, stating that GMG Airlines owed the bank over Tk 2.28 billion, as of May 30 this year.

The auction will be held at the Motijheel office of Sonali Bank on Aug 3 if the sum remains unpaid, it said. The one Bigha plot and everything on it will go under the hammer. Salman now lives in Gulshan.

But the businessman remains hopeful that the matter will be resolved before the date fixed for the auction.

“We have already secured a stay order from the High Court. Therefore there is no reason for holding that auction on Aug 3,” he told bdnews24.com on Thursday night.

“And we will settle this before it comes to that,” he said.But Sonali Bank’s acting Managing Director Dider Md Abdur Rob said on Thursday that no one had contacted them concerning settlement.

“We will auction the property according to the notice we issued … There will definitely be an auction on Aug 3,” he told bdnews24.com.

As for Salman’s claim of having a court order against the bank’s move, he said, he only ‘heard it from people’.

“But we have not received any court document, or anything in writing about what this stay order is about … which is why I’m saying, there will be an auction.”

The loan sum sanctioned in 2006 for GMG Airlines was Tk 1.65 billion. The borrowers now owe over Tk 2.28 billion because of accruing loan interest.

The bank tried every means to get the money back before opting for an auction, said Dider. “From final alerts to legal notices, we followed every procedure.”

After everything failed, the compelling decision was taken to sell the mortgaged property, he said.

If no buyer participates in the auction, if the house remains unsold; or if the price it fetches is insufficient to write off the loan, the bank can file a case at the Money Loan Court.

Salman Fazlur Rahman is the vice chairman of the Beximco Group, one of Bangladesh’s largest business entities.

Recognised as being highly influential, he made it to the list of loan frauds several times in the past.

He was among the individuals accused of orchestrating a scam in 1996 that artificially pushed up share prices to rob billions from investors. He was named in the case filed by the Securities and Exchange Commission.

A stay secured from the High Court in 2014 halted the case proceeding.

The Sonali Bank’s auction notice names Salman as the chairman of GMG Airlines, but the position is actually held by his son Shayan F Rahman.

GMG is in trouble not only with the bank, but also at the stock exchange.

The company has not paid back in seven years Tk 3 billion it took from the market by fabricating its financial reports. The airlines sold its placement shares in 2009 to raise money from the market.

After the scam became public, the company, facing serious flak, was denied market listing. But those who invested in placement shares did not get their money back.

A company can sell its shares to certain investors to increase its capital before setting its Initial Public Offering or IPO. The move is called private placement.

If the company fails to get a public listing the placement money is returned to the investors, along with the interest for the period of possession.

GMG Airlines, while selling placement shares took Tk 50 for each share, adding TK 40 as premium to the original price of Tk 10. It ended up collecting Tk 3 billion.

Set up in 1997, GMG planes began ferrying passengers on domestic routes from the following year. It suffered losses for a straight seven years, putting the company Tk 420 million in the red.

In 2009, the Beximco group bought the majority of the airline shares. In 2010, the profits soared, over Tk 780 million in the first nine months.

Khondkar Ibrahim Khaled, who probed the share market scam of 2010, said in his report that their balance sheet from 2008 abruptly recalibrated the surplus to Tk 330 million.

The GMG explained they had revalued two of their aircraft. But the planes were quite old, demanding a reduction in value instead of an increase.

So the company, with a paid-up capital of Tk 1.66 billion, was out to collect another Tk 3 billion from the market. But the fabrication of financial reports came to be known and the regulators refused its IPO request.

Shahab Sattar owned GMG before it was bought by Beximco. He still owns a handful of the airline’s shares and fills in the position of its largely ‘powerless’ managing director.