The Chattogram Port Authority’s (CPA) Tk77.68 crore investment in stocks and non-banking financial institutions (NBFIs) – Tk5.19 crore in shares of ICB Islamic Bank Ltd and Tk72.49 crore in the Investment Corporation of Bangladesh (ICB) – has been stuck for over a decade, according to a recent audit report.
Despite repeated attempts, the authority has been unable to recover the funds, the report says.
The report labelled the investments as “unlawful”, noting they were made “in defiance of finance ministry directives prohibiting such actions”.
However, officials claim that when the investments were made, the rules prohibiting such actions had yet to be put in place.
According to the financial statements of the Finance and Accounts Department of the CPA for the fiscal year 2022-2023, the port authority purchased shares of Z-category ICB Islamic Bank Ltd worth Tk5.19 crore in 2008.
As of 10 September, the price of each share had fallen to Tk3.30, resulting in a loss of Tk3.52 crore.
According to the CPA Finance Division, since the price has dropped, the CPA has not sold the shares, leaving the funds stuck for over 16 years.
The audit report mentions that the investment violated finance ministry directives issued in 2018 – ten years after the investment was made.
Mohammad Shah Jahan, senior finance officer of the CPA, said that during the restructuring of ICB Islamic Bank (formerly The Oriental Bank), the Bangladesh Bank instructed the CPA to convert its fixed-term deposits into shares due to the bank’s weakened financial condition.
He added that the CPA board approved the decision to purchase shares through a resolution in line with these instructions.
Meanwhile, the audit report reveals that the authority invested Tk72.49 crore in the Investment Corporation of Bangladesh (ICB) in 2011.
The Finance Department of the CPA claimed that the investments were made following a CPA Board decision during the 2008-2009 fiscal year after the Ministry of Finance requested the CPA to invest in the ICB through a letter.
The audit report stated that although the Finance Division permitted investments in 14 listed NBFIs, the ICB was not on this list.
“When the investments were made, neither the CPA Act of 2022 nor the Finance Division directives were in effect, and there was no restriction on investing in those sectors,” explained Mohammad Shah Jahan.
The Finance Department of the CPA also noted that the ICB has been regularly paying interest on the investment.
However, the CPA recently wrote to the ICB requesting the return of its investments, but the ICB has yet to respond.
Earlier, reports indicated that the CPA had invested over Tk1,144 crore of port funds in Fixed Deposit Receipts (FDRs) with financially weak banks, receiving personal favours in return. These funds are also currently stuck, as the banks do not have sufficient liquidity to repay the amount.
