EXCLUSIVE: Prothom Alo-Daily Star journalism under fire

-- July 20, 2009


Dhaka, July 20 (—Salman F Rahman has accused top-selling dailies Prothom Alo and The Daily Star of running a sustained campaign to destabilise the buoyant capital market and discouraging foreign investment.

The vice chairman of Bangladesh's biggest business conglomerate, Beximco Group, said at a news conference at Hotel Sheraton on Monday that these two newspapers had 'unleashed a vicious propaganda for many years'.

"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.

"...Which we kept ignoring and we are now compelled to bring the issue before the court of public."

He said his group generates thousands of highly-paid jobs in Bangladesh, and its goods and services are sold in many countries in the world, bringing in much-needed foreign exchange.

"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 the dailies on July 10 reported 'incorrectly' that Bextex, a Beximco concern, had declared 10 percent stock dividend for 2008 out of revaluated reserves pursuant to revaluation of its lands, buildings and other assets. They also called Bextex shares as 'Junk Shares'.

"It is well known to all that Bextex has world class manufacturing facilities, 'blue chip' customer base, established brand both in the domestic and international market.

"In 2008 as per published figures, Bextex Sales was Tk 476 crore, Gross Profit was Tk 167 crore, Operating Profit was Tk 14 crore and after charging interest and depreciation loss was Tk 61 crores.

"We leave it to you to judge whether Bextex shares can be called 'Junk Shares' and the journalistic standards applied by these two newspapers," said Salman, who also highlighted the achievements of his group.

The former FBCCI chief said the six listed companies of the Group have a combined market capital of US$ 1.2 billion and enjoy the confidence of 1,52,000 shareholders.

"Today, despite all odds, we directly employ 35,000 people, with an annual turnover of Tk 16.5 billion. Of the total daily turnover on the Dhaka Stock Exchange, our group's shares constitute over 15%."

"On 18 January, 2009, Shinepukur Ceramics Ltd, one of the high-performing Beximco companies, signed a contract with a reputed German company to expand the export-oriented factory's capacity by 150 per cent.

"The announcement of Tk 80 crore investment from our own funds was well received by the market. We said that this was just the beginning of many such plans as a result of our return to democracy and the investors' new-found confidence in the potential of Bangladesh market.

Salman, also the adviser to ruling Awami League chief on private sector development, said on Jan 26, an American investment firm signed a contract with Beximco Pharmaceuticals Ltd, pledging to invest Tk 460 crore.

"The deal drew an unprecedented malicious response from the two newspapers. The day we announced one of the largest issues of capital in the history of Bangladesh, the Bangla language newspaper published a story under the headline 'Loss to investors feared—Beximco Pharma is selling shares to Gem Global'.

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

"Anyone with good knowledge of the capital market will understand that 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," the Becimco boss contended.

The report caused the prices of Beximco Pharma shares to fall 0.59 per cent, he alleged. "Everyone knows that the existing shareholders are adversely affected when prices fall at this stage."

The following day, he said, The Daily Star published a similar report with similar content and referred to the price fall to claim that 'investors got shaky over Beximco Pharma's deal with US firm'.

Beximco supremo questioned the way the comments of the analysts were used in the stories, including that of a Dhaka University professor.

"Isn't it obvious that if a company does not earn then investors will suffer. And if the professor's claim is right then why is SEC allowing companies to issue stock or right shares?

"Aren't the interest of their investors jeopardized? Doesn't that increase the size of paid-up capital? Why doesn't the Prothom Alo then write reports that investors loss is feared every time a company announces such form of dividend?

Beximco's shares constitute 6.17 percent of the market capitalisation of DSE and has largely withstood onslaught from these two newspapers.

Since the end of the emergency rule, the Group has displayed its ambitions through deals to expand its ceramics manufacturing capacity and buy a 50 percent stake in Bangladesh's largest private airline GMG.

According to Salman, the newspapers also claimed that he in connivance with IFIC Bank and AB Bank got engaged in insider trading.

"This is a serious allegation, probably the worst allegation one can come up with in this context. I take this opportunity to unequivocally repudiate this allegation and invite both these newspapers to either substantiate their report or publish a retraction."

"All these are few glaring examples of the two newspapers writing negative stories to destabilise the capital market and oppose investment in Bangladesh. This is unethical journalism which goes against the interest of the country.

Salman said the Prothom Alo is owned by Latifur Rahman's Transcom Group, which is also the majority owner of The Daily Star.

He added that the day he organised a meeting between Awami League president Sheikh Hasina and the leaders of the business community just before the December election, Prothom Alo published a news analysis and raised questions about her judgment.

"The only "offense" that I committed was that I, acting as the AL's chief's Adviser on Private Sector Development, issued the invitation and organised the crucial meeting attended by leaders of business."

"We do not intend to conduct similar propaganda war on Mr Latifur Rahman and his Transcom Group. The world of business, we believe, should pursue interests in more ethical manner. People of Bangladesh and the market we operate in are better judges of our actions."