Beximco to sue two leading dailies

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FE Report
Beximco Group will go for legal action against two leading dailies for what it said unleashing 'vicious propaganda' against one of the leading industrial conglomerates of the country.
"The malicious propaganda has been going on for many years, which we kept ignoring and are now compelled to bring the issue before the court," said Beximco Group vice chairman Salman F Rahman at a press conference in the city Monday.
He said, "The preparation for taking legal action is on. Our legal adviser is scrutinising the matter."
"We'll fight the case vigorously," said Rahman, also the adviser to the prime minister on private sector development, as he come down heavily on the two newspapers -- Prothom Alo and The Daily Star.
He categorically refuted reports published in the two dailies at different time about the Beximco.
"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 alleged.
The dailies on July 10 reported 'incorrectly' that Bextex, a Beximco concern, had declared 10 percent stock dividend for 2008 out of revalidated reserves in 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," said Rahman.
In 2008 as per published figures, Bextex sales turnover was wroth Tk 4.76 billion, gross profit was Tk 1.67 billion and operating profit was Tk 140 million, according to him.
"So, now 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.
Rahman said, "In the very same reports both the newspapers said, I, "in connivance" with IFIC Bank Ltd and AB Bank Ltd, two private commercial banks 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," he added.
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 800 million investment from our own fund was well received by the market.
"The deal drew an unprecedented malicious "response" from the two newspapers," he said.
"The day we announced one of the largest issue 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."
Vice chairman of the group said, "Such a speculative story with serious potential repercussions on the market is unthinkable in any 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 report did have some impact, and the prices of Beximco Pharma shares fell by 0.59 per cent. Everyone knows that the existing shareholders are adversely affected when prices fall at this stage," he said.
The following day, Prothom Alo's sister concern, The Daily Star published a similar report with similar content, he said.
"All these are few glaring examples of the two newspapers writing negative stories to destabilise the capital market oppose investment in Bangladesh. This is unethical journalism which goes against the interest of the country," he added.
Rahman has alleged that the two newspapers helped the caretaker government in its attempt to implement the 'Minus-Two formula' during the two years of emergency rule beginning in 2007.
"Now, they are making efforts to implement 'Minus-One formula'," he said.
Highlighting the Group's contribution to the country's economy, the Group's vice chairman said the six listed companies of the Group have a combined market capital of US$ 1.2 billion and enjoy the confidence of 152,000 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 per cent," he claimed.
Prothom Alo, Daily
Star jt statement
Meanwhile, another FE Report adds: The Prothom Alo and The Daily Star in a joint press statement Monday said, "In a press conference this morning, Vice Chairman of Beximco group of companies Mr. Salman F. Rahman made several vague and sweeping accusations, and two specific ones, against the two newspapers.
He claimed that these two papers have been involved in a persistent malicious campaign against his company and have indulged in unethical journalism to malign his industries in order to prevent the materialisation of his companies ambitious growth plans.

"We thoroughly reject this accusation and firmly state that we strongly adhere to the highest standards of ethical journalism and its norms. We have never reported on Beximco group of Companies without relevant proof and carried their versions and comments," said the statement.
The recent media attention was focused on them when Dhaka Stock Exchange (DSE) investigated the sudden share trading of a Z category company, Bextex, just before its AGM and declaration of dividend, it added.
Regarding Salman Rahman's terming our reports as not correct on the point of declaration of dividend and asset re-evaluation, our reports were based on what the DSE mentioned in its website, which can be still viewed today. Neither The Daily Star nor Prothom Alo had made its own judgment, according to the statement.
"About the allegation of insider trading, we never accused Salman F Rahman or Beximco of indulging in it. Our report pointed out the unusual trading on that stock by two banks in close proximity of dividend declaration. Our report only brought out these facts to alert the public which we thought to be our journalistic duty to protect the interest of the investors," it said.
About his allegation on mentioning Bextex shares as junk, we would like to point out that junk shares refer to Z-category or low-performing shares in Bangladesh. The only financial newspaper in the country, The Financial Express, also refers Z-category shares as 'junk shares'. It is also an international practice as evidenced by international rating agencies using the word "junk" to describe stocks or bonds that lose investment grade. In such ratings, the raters cite weak earnings that may lead a company to defer dividend payments on securities. In a March 5, 2009 report, Fitch Ratings cut its ratings on UBS' preferred shares into junk territory and said it may cut them further. Fitch cited increased risks in the European bank's shares.
About Salman Rahman's allegation of negatively projecting Beximco Pharmaceutical's deal with Gem Global, we reported that this Cayman Islands-registered company is of little repute and has cases against it in Hong Kong. Its sudden involvement in our capital market with hot money naturally deserves media attention, which we did with the purpose of protecting our investors and the country's economy.
Salman Rahman in his written statement made reference to Transcom Group and its owner Latifur Rahman. The public clearly knows that The Daily Star and Prothom Alo are run by professional editors and the owners have nothing to do with the content of the paper. That is why these two papers have earned the readership support that they have. The hint that our reporting could be a result of anything other than professional journalism is totally untrue.
As for Salman F Rahman's response to the Amar Desh question that The Daily Star and the Prothom Alo were the architects of the "Minus Two" theory, we categorically deny it and consider it as his desperate attempt to divert public attention from the doings of his own companies. For example, a DSE website post on July 13 mentions that the SEC has formed an inquiry team to inquire certain unusual trading of shares of Bextex Ltd on the stock exchange.