FAS Finance’s new board to appoint auditor to find irregularities

To protect the investors' interest, the new board of FAS Finance and Investment will appoint an auditor to find out irregularities and assess the present situation of the non-banking financial institution.

The new board has made the decision at a meeting recently.

A board member seeking anonymity said the new board is working to save the company from drowning and that is why it has decided to appoint an auditor to evaluate the current situation of the institution.

He said the auditor will review the financial statements, financial health, and financial performance, verify books and accounts and assess loans, investment process and asset quality to identify anomalies, lapses, liabilities with banks, financial institutions and others.

The auditor will submit a report with several recommendations for further improvements of the company, he added.

In 2019, the company plunged into big trouble because of loan scams, particularly by controversial businessman Prashanta Kumar Halder, who is known as PK Halder.

According to an Anti-Corruption Commission (ACC) report, using entities like People's Leasing and International Leasing, PK Halder has also swindled Tk1,300 crore from FAS Finance in the name of several companies that exist on paper only. 

On 31 May this year, in order to protect the interests of investors, the Bangladesh Securities and Exchange Commission (BSEC) restructured the board of FAS Finance.

The commission has nominated five independent directors, while two directors will be nominated from among the shareholders who hold a minimum of 2% share of the company's paid-up capital.

The stock market regulator also appointed A Wahab & Co as a special auditor to audit the company's financial statements for the year that ended on 31 December 2019.

The newly-appointed independent director Mohammed Nurul Amin, former managing director of NCC Bank and Meghna Bank Ltd, has been selected as chairman of the company.

Other independent directors are Mohammed Saifuddin Khan, an associate professor at Dhaka University; Barrister General Abu Sayed Mohammad Ali; Dr Syed Abdulla Al Mamun, deputy chief executive officer of Credit Rating Information & Services Limited; and Mohammad Salim, faculty member of the Bangladesh Institute of Capital Market.

Sources said the company was run by Nitol Niloy Group.

Abdul Matlub Ahmad, chairman of the group, and his family members administered various activities of FAS Finance as nominated directors.

According to sources, corporate practice in FAS Finance was sound till 2012.

But Abdul Matlub Ahmad and his family members later began veering away from this company. Finally, they sold all the shares of the company in 2014.

P&L International and Reptile Farm, which are allegedly responsible for the downfall of the company, bought the most shares of FAS Finance.

Both P&L and Reptile are owned by PK Halder, a fugitive in a case filed by the ACC.

As of 30 November 2020, P&L International and Reptile Farm held 5.37% and 7.83% shares of FAS Finance, respectively.

The company has not declared any cash dividends since its listing.

FAS Finance's reserves and surplus stood at negative Tk120.28 crore, after adding Tk16.20 crore as revaluation reserve.

The auditor informed that the company's classified or non-performing loans (NPLs) stood at Tk1,311 crore for 2019, which is 73% of the company's total loan advance and lease investment.

In 2019, the company's revenue was Tk175.18 crore and its net loss was Tk146.47 crore.

At the end of the first nine months of the financial year 2020, its net loss stood at Tk127.34 crore.

The company was listed on the stock exchanges in 2008. As of May 2021, sponsors and directors owned 13.2%, institutions 12.14%, and general investors 74.66% shares of the company.

The last trading price of FAS Finance at the Dhaka Stock Exchange was Tk6.50 per share on Wednesday.