​​​​​​​Severe anomalies found in Fu-Wang Foods’ accounts

An independent auditor has identified severe anomalies in Fu-Wang Foods' accounts for fiscal 2020-21.

MABS & J Partners has mentioned the findings in its qualified opinion in the audited financial report of FY21.

According to sources in the company, the auditor unearthed irregularities as per the requirement of the new board of the company.

Earlier in July this year, the Bangladesh Securities and Exchange Commission (BSEC) restructured the company's board and recruited five independent directors as the previous board failed to comply with the minimum shareholding of 30%.

Its board holds only a 9.26% share of the company, whereas general shareholders have 83.37%.

A new director, seeking anonymity, said the previous board and management of the company had been embezzling money through various irregularities for years. But these were never reflected in the company's audit reports.

"Immediately after taking charge, the new board realised that there were irregularities going on in the company. Therefore, the auditor was asked to audit in accordance with the appropriate law and thus the irregularities have been identified," he added.

Rahman Mostafa Alam and Co audited the company's annual accounts seven times from 2012 to 2020. In between, MABS & J Partners audited the accounts for fiscal 2015-16 only. But no auditor found any irregularities.

Rahman Mostafa Alam and Co's partner Kazi Mostafa Alam and Mostafizur Rahman were called but did not pick up their phones.

In the audit report for fiscal 2020-21, the auditor said in a qualified opinion that the company has shown sales of Tk89 crore. But the company could not provide any documents regarding its sales. 

Meanwhile, the company mentioned Tk53.15 crore receivable from its customers. But it could not provide any list of debtors of Tk32.40 crore. On the contrary, out of the list of debtors, they have given, the auditor has been able to confirm only Tk0.38 crore.

The company informed the auditor that it has an inventory of Tk28.30 crore. But it could not show the inventory worth Tk20.57 crore to the auditor.

Besides, it could not show any documents and satisfactory explanations against Tk0.28 crore given as advance against salary, Tk0.19 crore given to Bristy Biscuit Factory, Tk8.41 crore given to subsidiary company Fu-Wang Beverage and Tk1.32 crore in the raw material purchase.

Earlier in May this year, the BSEC formed an inquiry committee to investigate the whole affair, including purchases and sales of fixed assets of the company.

The company started its journey in 1997 by Thai-based investors. The then board of investment allowed the company to do business in the food processing sector on the condition of 30% exports.

But later, foreigners sold the company to local investors. Arif Ahmed Chowdhury has been the managing director of the company since then. He owns 4.49% shares in the company.

Since its inception, the company has produced various packet food items like breads, biscuits, cakes, toasts, wafer bars, chocolates, instant noodles, drinking water, carbonated drinks, and energy drinks.

The company got listed on the capital market in 2000. It paid only stock dividends to the shareholders till 2018. After the dividend policy was amended by the regulator, the company paid only 2% cash in FY19, 1.65% cash in FY2020, and recommended the same in FY21.

Its share's closing price was Tk17.40 each on Thursday at the Dhaka Stock Exchange.