Lull and bitter storm
Wednesday, 25 May 2011
Shamsul Huq Zahid
The recent stock market collapse, obviously, has its social, political and economic fallout. The economic fallout is already evident from the ongoing liquidity crunch in the banking sector. And there are thousands of individual investors who are worst-hit, economically. One needn't be an expert to understand that the market crash might exact a political toll at some point of time. If not others, some old guards of the ruling party could sense the possible political fallout of the recent share scam. That is why they took the floor on 'point-of-order' in the last Monday's session of the parliament, grilled the finance minister and blamed him for not taking appropriate actions against some 'so-called Awami Leaguers' who were involved in the scam. It is difficult to pinpoint the negative impact of the market crash on the society. But the crash, besides causing economic sufferings, has unsettled the normal life of thousands who have burnt their fingers. One can easily dump these investors as dumb, ignorant and greedy people and can even issue a verdict that they deserve what they have got. But any responsible government cannot wash its hands off just by rebuking the investors. It has to dig deep into the scam to bring the culprits to book. There is a growing frustration that the government of the day is not doing enough to this direction though the finance minister claims otherwise. The government has done what is very easy to accomplish. It has removed the chairman and members of the Securities and Exchange Commission (SEC). Questions, however, have been raised about the removal of, at least, two SEC members who, reportedly, were relatively clean in carrying out their duties and responsibilities. But the responsibility of the government as far as punishing the real crooks is concerned does not end there. One does have genuine reason to feel pity for poor Khandaker Ibrahim Khaled, who headed the stock market scam probe body. Not only his personal credibility is being questioned in public, he has been dragged to court, allegedly, for being unfair in his observations about some people in the report that has submitted to the government. It is suspected that the masterminds of the scam are behind all these moves. In the meanwhile, statements of different sorts---some are even conflicting in nature--- from men in power and speculations have created lots of confusion among the investors. The statement of the home minister asking the Dhaka Stock Exchange (DSE) authorities to issue identity cards to the general investors and install close-circuit (CC) cameras in and around DSE building has left some unsettling effect on the market. The stock prices fell sharply on the first couple of days of the current week. It is understood that the measures the home minister suggested are meant to ensure uninterrupted business activities in the main business district of Motijheel. It remains a part of her responsibility as the home minister to ensure peace and tranquility at all places, including Motijheel. But small investors, who are already aggrieved by their financial loss, have taken the minister's directives as an added insult to their injury. Yet she has to face a very obvious question--- why is her ministry not taking enough actions against the individuals and institutions who are responsible for the stock market collapse? Siphoning off investors' fund through fraudulent means is a criminal offence and the home ministry cannot keep its eyes shut in this respect. However, the statement of the finance minister in response of criticisms made by some lawmakers in the House Monday last would remove the fear among the investors relating to imposition of tax on stock trading and mandatory submission of tax-identification numbers by the investors. The time may not be right for implementation of such decisions but, ideally speaking, the stock market should not be made a tax haven since tax exemptions and lack of accountability in any market allure the crooks to multiply their ill-gotten money through deceit and fraud. The market is rife with speculations that the government might allow in the next budget the whitening of black money through investment in stock. Some leaders of the bourses during a meeting with the finance minister last Sunday wanted the government to offer the facility. But the finance minister preferred to remain silent on the issue. In fact, the government would unnecessarily expose itself to criticism if it decides to offer the facility which is unlikely to make any impact on the prevailing stock market situation. There is no reason to believe that holders of black money would rush in to the market to buy shares under the prevailing circumstances. Money of all colours--- black, white and grey--- usually finds it way into the market when opportunities are there to make overnight profits. The present market, actually, is for genuine and informed investors who believe in long-term investment. Finally, the finance minister deserves appreciation for his announcement that the SEC would be allowed to operate freely and without any interference. In the recent past, it seemed that SEC's business was everybody's business. However, weak leadership at the regulatory body was largely responsible for it. It is expected that the government would amend the SEC ordinance to omit or revise the clause that empowers it to poke its ugly nose in the affairs of the regulatory body. zahidmar10@gmail.com
The recent stock market collapse, obviously, has its social, political and economic fallout. The economic fallout is already evident from the ongoing liquidity crunch in the banking sector. And there are thousands of individual investors who are worst-hit, economically. One needn't be an expert to understand that the market crash might exact a political toll at some point of time. If not others, some old guards of the ruling party could sense the possible political fallout of the recent share scam. That is why they took the floor on 'point-of-order' in the last Monday's session of the parliament, grilled the finance minister and blamed him for not taking appropriate actions against some 'so-called Awami Leaguers' who were involved in the scam. It is difficult to pinpoint the negative impact of the market crash on the society. But the crash, besides causing economic sufferings, has unsettled the normal life of thousands who have burnt their fingers. One can easily dump these investors as dumb, ignorant and greedy people and can even issue a verdict that they deserve what they have got. But any responsible government cannot wash its hands off just by rebuking the investors. It has to dig deep into the scam to bring the culprits to book. There is a growing frustration that the government of the day is not doing enough to this direction though the finance minister claims otherwise. The government has done what is very easy to accomplish. It has removed the chairman and members of the Securities and Exchange Commission (SEC). Questions, however, have been raised about the removal of, at least, two SEC members who, reportedly, were relatively clean in carrying out their duties and responsibilities. But the responsibility of the government as far as punishing the real crooks is concerned does not end there. One does have genuine reason to feel pity for poor Khandaker Ibrahim Khaled, who headed the stock market scam probe body. Not only his personal credibility is being questioned in public, he has been dragged to court, allegedly, for being unfair in his observations about some people in the report that has submitted to the government. It is suspected that the masterminds of the scam are behind all these moves. In the meanwhile, statements of different sorts---some are even conflicting in nature--- from men in power and speculations have created lots of confusion among the investors. The statement of the home minister asking the Dhaka Stock Exchange (DSE) authorities to issue identity cards to the general investors and install close-circuit (CC) cameras in and around DSE building has left some unsettling effect on the market. The stock prices fell sharply on the first couple of days of the current week. It is understood that the measures the home minister suggested are meant to ensure uninterrupted business activities in the main business district of Motijheel. It remains a part of her responsibility as the home minister to ensure peace and tranquility at all places, including Motijheel. But small investors, who are already aggrieved by their financial loss, have taken the minister's directives as an added insult to their injury. Yet she has to face a very obvious question--- why is her ministry not taking enough actions against the individuals and institutions who are responsible for the stock market collapse? Siphoning off investors' fund through fraudulent means is a criminal offence and the home ministry cannot keep its eyes shut in this respect. However, the statement of the finance minister in response of criticisms made by some lawmakers in the House Monday last would remove the fear among the investors relating to imposition of tax on stock trading and mandatory submission of tax-identification numbers by the investors. The time may not be right for implementation of such decisions but, ideally speaking, the stock market should not be made a tax haven since tax exemptions and lack of accountability in any market allure the crooks to multiply their ill-gotten money through deceit and fraud. The market is rife with speculations that the government might allow in the next budget the whitening of black money through investment in stock. Some leaders of the bourses during a meeting with the finance minister last Sunday wanted the government to offer the facility. But the finance minister preferred to remain silent on the issue. In fact, the government would unnecessarily expose itself to criticism if it decides to offer the facility which is unlikely to make any impact on the prevailing stock market situation. There is no reason to believe that holders of black money would rush in to the market to buy shares under the prevailing circumstances. Money of all colours--- black, white and grey--- usually finds it way into the market when opportunities are there to make overnight profits. The present market, actually, is for genuine and informed investors who believe in long-term investment. Finally, the finance minister deserves appreciation for his announcement that the SEC would be allowed to operate freely and without any interference. In the recent past, it seemed that SEC's business was everybody's business. However, weak leadership at the regulatory body was largely responsible for it. It is expected that the government would amend the SEC ordinance to omit or revise the clause that empowers it to poke its ugly nose in the affairs of the regulatory body. zahidmar10@gmail.com