Aamra Networks faces BSEC probe over use of rights issue funds

The market watchdog has ordered a full inquiry into the utilization of rights-offer proceeds by Aamra Networks after an on-the-spot inspection raised doubts over the company's claimed investments.
Aamra Networks raised Tk 929.79 million through rights shares in May last year and claimed to have utilised the entire fund within the same month.
In an order issued on December 4, the Bangladesh Securities and Exchange Commission (BSEC) asked a three-member committee to submit a probe report within 60 working days.

While offering the rights shares, the company said a portion of the fund would be used for network upgradation and expansion within 9-12 months of receiving the money. However, the auditor said in a fund utilisation report that the equipment had already been purchased with a bridge loan before the issuance of the rights shares.
"The company already had the system for which it raised the fund through the rights offer," said BSEC spokesperson Md Abul Kalam.
This means the company may have carried out related-party transactions through which investors' funds were diverted to another company, he said, adding that the BSEC would take action if any fund diversion is detected.
The roles of the company's board of directors, top management and auditors in the use of the funds will come under scrutiny during the probe.
Kalam said a team from the securities regulator raised a red flag after inspecting Aamra Networks.
"They suggested an inquiry into the company to identify wrongdoing or misuse of funds," he said.
Aamra Networks raised the fund last year for purposes including upgradation and expansion of its networking system.
In a report submitted to the Dhaka Stock Exchange in September last year, the auditor certified that the company had fully utilised the fund by May of that year.

The BSEC inquiry committee will look for evidence to verify the company's investments, Kalam said.
"Many things took place there unlawfully. The regulator will take action against the auditor if the probe body does not find the authenticity of his report," he added.
According to the terms of reference set for the three-member committee, it will verify whether the upgradation and expansion of the company's networking system actually took place.
Out of the total fund, more than Tk 104 million was spent on network upgradation and Tk 604.05 million on network expansion, according to the auditor's fund utilisation report.
The inquiry committee has also been asked to examine whether the products were purchased at market prices. The company will have to provide documents to substantiate its claims.
If required, investigators will verify the information by visiting vendors from whom the items were purchased, the probe order said.
The regulator has also instructed the committee to examine whether the auditor fulfilled its responsibilities in certifying the fund utilisation.
In July 2018, the regulator warned Aamra Networks, which was listed in 2017, over non-compliance with securities laws related to the disclosure of price-sensitive information.
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