Sajeeb Group fire leads to domino effect
Multiple banks and insurance companies are involved with Sajeeb Group and all of them have been found to have disregarded its non-compliance with safety guidelines
The fire at the Shezan juice factory that killed 52 workers has also caused a domino effect on banks and insurance companies that had betted on a bad horse.
In paper, the juice factory was all compliant with banks and insurance companies but not in practice.
The deadly fire at the factory, an affiliate of Sajeeb Group, proves how the whole business ecosystem compromises safety compliance only for money.
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Multiple banks and insurance companies are involved with Sajeeb Group and all of them have been found to have disregarded its non-compliance with safety guidelines, which finally dragged them into trouble.
The business group has loans amounting to around Tk2,000 crore with dozens of banks and non-bank financial institutions and has a risk coverage worth Tk700 crore with two insurance companies.
A business setup requires safety compliance of its establishment for getting loans from banks. Fire insurance and fire licence are mandatory too to get loans. Moreover, banks make an inspection over safety compliance issues every year.
But in reality, banks have extended loans to the group, compromising on the factory's safety issues.
Sajeeb Group had already been under financial stress because of its business slowdown for the last several years. As a result, it rescheduled loans with several private banks. Mutual Trust Bank has recently rescheduled its loans of around Tk70 crore.
In this situation, the deadly fire at its juice factory has raised concern among all banks over loan repayments.
When contacted, a senior executive of Pubali Bank that lent Tk300 crore to the business group, said they have already sent a letter to the insurance company claiming the coverage.
They have all papers about fire insurance and clearance from the fire service department about the factory's safety compliance, he also said.
The business group has an annual business turnover of Tk1,500 crore only with Pubali Bank. The group's total annual business turnover has been estimated at around Tk10,000 crore, given its bank loans.
Banks have a responsibility to ensure safety compliance of a factory through an inspection prior to approving a loan, but they cannot do so to stay in a competition of roping in big business groups, said a senior executive of Mutual Trust Bank.
If a bank refuses to give a loan to businesses on account of not complying with safety rules, another will come up to lend them. Even foreign banks give them loans despite their non-compliance, he added.
There should be an independent body, like Accord and Alliance in the garment sector, to ensure safety compliances of other sector factories, he also said.
Sajeeb Group availed a risk coverage from two insurance companies – Desh General Insurance Company Limited and Continental insurance Ltd.
Of the total coverage amounting to Tk700 crore, Desh General has a 55% share and Continental Insurance 45%.
The insurance companies were supposed to ensure safety compliance before giving the risk coverage.
When contacted, Md Abul Kashem, chief executive officer of Desh General Insurance, said the fire accident occurred at a time when they were preparing for an inspection in the factory.
Asked about when the factory availed the insurance coverage, he said he does not have any information.
They have already appointed a survey firm to measure losses caused by the fire incident, Kashem added.
According to both the fire service and civil defence department and the Electronic Safety and Security Association of Bangladesh, the building had two staircases against the minimum requirement for four based on the building floor area.
The exits were barricaded and the door to the roof, an escape for many, was also locked.
Furthermore, Sajeeb Group's building did not seem to have any fire extinguishers, but the irony is – the company itself is an importer of firefighting equipment.
Meanwhile, Home Minister Asaduzzaman Khan on Saturday, while visiting the fire-ravaged factory, told reporters that those who would be found even the least negligent would be brought to book.
"Separate investigations are underway; police also filed a case and eight people were arrested. After a thorough investigation, legal action will be taken," he added.
Sajeeb Group was established in 1982. The business group opened a super shop called "One Stop" several years back but was forced to close it down because of a lack of sales. The failure in running the super shop put the company under financial stress, according to bankers.
The group's beverage sales fell by around Tk800 crore last year under the pandemic impact, say company insiders.
Sajeeb Group runs factory operations at 11 buildings in Narayanganj with over 6,000 workers. It also has factories in Gazipur. The country's largest auto rice mills located in Rajshahi belong to this group as well.
According to Sajeeb Group's website, MA Hashem is the chairman and managing director of the company, while Hasib Bin Hashem is deputy managing director and Tareq Ibrahim is a director.
The businesses under the group are Sajeeb Corporation, Hashem Foods Limited, Hashem Auto Rice Mills, Sajeeb Food and Beverage Ltd, Hashem Agro Processing Limited, Takaful Islami Insurance Ltd, Hashem Flour Mills Ltd, Sajeeb Homes Limited, MARS International, Sajeeb Logistics, Savvy Foods, according to the information available on the group's website.
According to sources, the group also exports some food items and beverages.
