Ex-BSEC chief Shibli Rubayat arrested by DB
His arrest comes just days after the Ministry of Home Affairs cancelled his passport and imposed a travel ban on him, alongside eight other former BSEC officials, on 29 January
Shibli Rubayat Ul Islam, former chairman of the Bangladesh Securities Exchange Commission (BSEC), has been arrested in a case filed by the Anti-Corruption Commission.
He has been arrested from the Dhanmondi area of the capital tonight (4 February), Rezaul Karim Mallik, the chief of the Detective Branch (DB) of Dhaka Metropolitan Police (DMP), confirmed to The Business Standard.
It could not be immediately confirmed in which case he was arrested.
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His arrest comes just days after the Ministry of Home Affairs cancelled his passport, alongside eight other former BSEC officials on 29 January. The ministry also imposed a travel ban on them preventing them from leaving the country.
The other eight individuals are former BSEC commissioner Sheikh Shamsuddin, former BSEC executive directors Mahbubul Alam, Saifur Rahman, and Rezaul Karim; former BSEC directors Sheikh Mahbub-Ur-Rahman, Mohammad Mahmudul Haque; former additional director SK Md Lutful Kabir; and former BSEC joint director Md Rashidul Alam.
Earlier on 9 October 2024, a Dhaka court had also issued a travel ban on Shibli amid an ACC investigation against him on charges of amassing illegal wealth and money laundering.
Allegations have been raised regarding widespread looting in the capital market during Shibli Rubayat-ul-Islam's tenure.
Shibli, a member of the pro-Awami League Blue Panel at the University of Dhaka, quit his tenure as the BSEC chairman prematurely just five days after the fall of the Sheikh Hasina-led government in the face of a mass uprising on 5 August 2024.
He joined the commission in May 2020 and ended his tenure while facing a slew of allegations, including resorting to autocratic practices, facilitating market manipulators, and approving companies with poor fundamentals to raise funds from general investors.
The banking and insurance professor was reappointed on 28 April last year for a second four-year term as the BSEC chairman.
Following his resignation, the Bangladesh Financial Intelligence Unit froze the bank accounts of eight individuals, including former BSEC chairman Shibli Rubayat-Ul Islam, his son Zuhayer Sarar Islam, and six others connected to the stock market for 30 days on 10 August 2024.
Later, on 21 August, the BSEC ordered the country's stock exchanges and the Central Depository Bangladesh Limited to freeze shares of 11 individuals, including Shibli, his son Zuhayer Sarar Islam, and nine others connected to the stock market.
Steps and allegations
Since the BSEC, led by the recently departed chairman Shibli Rubayat-Ul Islam, took charge in May 2020, the stock exchange's capabilities have deteriorated significantly.
Officials at the country's premier bourse have alleged that frequent intervention by the Shibli-led BSEC has largely undermined the DSE's ability to ensure transparency, accountability, and fair practices in the capital market and the listed companies.
During the COVID-19 pandemic, after assuming the position of chairman for the commission, he took several steps to improve the market, including restructuring the boards of various companies, making it mandatory for sponsor-directors to hold 30% of the shares, and reviving companies that had been inactive for years.
Allegations against Shibli Rubayat's commission include that more than 50 weak companies were given the opportunity to raise funds from the capital market through initial public offerings (IPOs), resulting in losses for general investors.
The commission is accused of not taking strict action against share manipulators. Instead, during his tenure, it allegedly allowed certain influential market circles to engage in manipulation. Market participants have also complained that the manipulation cycle has faced only nominal punishment.
In 2020, a regulation was introduced requiring sponsor-directors of listed companies to hold a minimum of 30% of shares. However, this regulation was not implemented despite extensions over time.
Stock exchanges are the primary regulators of the capital market, responsible for overseeing companies' compliance with listing rules. The commission is also criticised for undermining the independent authority of the stock exchanges.
After Shibli Rubayat took charge, the board of directors of about two dozen companies was dissolved, and new independent directors were appointed by the regulator.
When entrepreneurs from some companies fled after raising capital, those companies ceased production. To revive these companies, ownership was transferred by allowing the old entrepreneurs to sell their shares to new investors.
The commission also provided several benefits to the new entrepreneurs. Despite this, the commission did not take action against the non-functional companies' irregularities.
It should be noted that the commission established a separate SME platform for small-cap companies, as well as an ATB Board and a platform for government Treasury bill and bond transactions.
The Capital Market Stabilisation Fund (CMSF) was formed using undisbursed dividends from shareholders in various companies over the years.
However, the central bank raised objections regarding the formation of this fund. As a result, around 100 companies, including banks, insurance firms, and non-bank financial institutions, have not deposited their dividends into the CMSF.
