A deal undone

On October 13th 2019, bdnews24.com, one of Bangladesh’s leading news portals, reported that it had received Taka 50 crore ($5.8 million) investment from a “major fund manager” company, LR Global. “It’s a very encouraging endorsement of our brand of journalism that we have pursued for the past 13 years,” the report quoted the portal’s co-owner and Editor-in-Chief Toufique Imrose Khalidi. “In 30 years of my investment experience globally across multiple sectors, I have rarely seen a company like bdnews24.com that has such great future potential […],” added Reaz Islam, the CEO of LR Global. “The digital platform of bdnews24.com has endless possibilities.”

Exciting times for bdnews24.com, until the Bangladesh Securities and Exchange Commission (BSEC) held an emergency meeting and issued a press statement the same day noting that it had halted the investment deal as it was in breach of BSEC rules relating to mutual funds.

If such a decision had involved the Daily Star or the Prothom Alo — independent newspapers that had been a deep thorn in the government’s side over the years, and had already suffered some blows as a result — one would immediately have assumed that this was a politicised decision geared towards harming the newspapers.

bdnews24.com, however, is different from these two news outlets. Though it has never been overtly partisan and still remains a trustworthy source of news on Bangladesh, since 2009 the news portal increasingly came to be seen as a minor cheerleader for the Awami League government, and was often perceived (though Khalidi himself would deny this) as a promoter of stories helpful to the party and the prime minister. Indeed, in December 2018, Khalidi set up the Editors Guild, a government friendly version of the more independent Editors Council.

This is why it would not be expected that the Awami League government would punish bdnews24.com, a friendly media outlet, by halting the investment deal. It seemed possible that the BSEC decision may have been an independent and neutral enforcement decision by the regulator.

However, just two weeks later, the situation for bdnews24.com became more problematic. On November 4th 2019, the Anti-Corruption Commission (ACC) wrote to Toufique Imrose Khalidi asking him to respond to corruption allegations. An ACC spokesperson said subsequently that the agency was looking at Khalidi’s “acquisition of wealth beyond a known source through irregularities and corruption.” His accounts were frozen and suddenly his news website itself was in jeopardy.

To paraphrase Lady Bracknell (from Oscar Wilde’s play, The Importance of Being Earnest), to have one regulatory decision against you may suggest carelessness, but, in Bangladesh, to have two such consecutive decisions within a few days suggests harassment.

Suddenly, things started looking very different. Should Toufique Imrose Khalidi’s name be added to the growing list of persecuted Bangladeshi editors and media owners? Is he facing the same fate as Abdus Salam, the former owner of Ekushey Television who was imprisoned in 2015 for pornography; or, Mahfuz Anam, the editor of The Daily Star, who faced 17 sedition cases in 2016; or, Matiur Rahman, the editor of the Prothom Alo, who is now facing criminal charges over the accidental death of a student at an event organised by his newspaper?

While the legal cases against Abdus Salam, Mahfuz Anam, Matiur Rahman and some other owners and editors were all instituted by or on behalf of the Awami League government, Khalidi’s predicament seems to illustrate something else, that is how press freedom in Bangladesh is not only vulnerable to direct state repression and censorship but also from powerful businessmen using their influence over state agencies to protect their own private interests.

There remains much that is not known about the mechanics of how the BSEC and the ACC came to their decisions, but several individuals well-briefed about the bdnews24.com-LR Global deal certainly believe that the regulatory decisions may have much to do with Chowdhury Nafeez Sarafat, one of the main shareholders of RACE Asset Management, Bangladesh’s top manager of mutual funds.

Though Sarafat is not publicly well known, he is amongst Bangladesh’s most influential pro-government businessmen. Hailing from Gopalganj, the prime minister’s home district, he is now the chairperson of Padma Bank (formerly Farmers Bank), which has received significant investments from RACE Asset Management’s mutual funds. One observer of the Bangladeshi share markets, who is not involved in the bdnews24.com deal, said of Sarafat that he wields significant power in share market circles and everyone in the sector “seems to be terrified of him”. Another observer said, “[Sarafat] is extremely powerful, very close to No. 1, the prime minister. He has direct access.”

One example of Sarafat’s influence, that is often cited by journalists and analysts covering the financial sector, concerns how, just before the 2018 general election, RACE Asset Management, which operates the largest mutual funds in Bangladesh, influenced the finance minister’s decision to allow “closed end mutual funds” to continue to operate even after their terms had ended. This decision brought significant financial benefits for the company in ensuring continued commissions, and the company might even have faced trouble in paying back its unit holders had the fund had come to an end. This matter is now before the High Court, with both RACE and the BSEC as defendants.

It is this influence that is said to be behind the current crisis faced by bdnews24.com and its editor-in-chief. One of RACE’s main competitors is LR Global, the investment fund which sought to buy into the news portal — and in recent years there have been serious conflicts between the two companies over investments and investment practices. In emailed comments, Sarafat has categorically denied to me that he had any involvement at all in the BSEC decision regarding the bdnews24.com-LR Global investment deal. However, several individuals briefed about the deal suggest that Sarafat was worried about the potential of LR Global using bdnews24.com to publish articles critical of him and his businesses.

Sarafat’s concern may indeed have had some foundation. In June 2019, four months before the investment deal was announced, bdnews24.com had published a report questioning how Sarafat, as the chairperson of the Canadian University of Bangladesh, had managed to obtain control of a piece of land in Purbachal for the private university which had earlier been allocated for a secondary school. And soon after the BSEC intervention to halt the bdnews24.com-LR Global investment deal, the news portal published three more reports critical of Sarafat and his investment company.

The first of these reports, published on October 21st, raised questions about the Canadian University of Bangladesh, claiming that it has managed to obtain clearance to build a commercial 24-story building in a residential area in the heart of the capital city, against government rules. The other two reports, published on October 22nd and October 27th, covered RACE Asset Management and claimed that the ten mutual funds set up by Sarafat’s company were poorly performing with their worth declining by half. One of the reports included the claim that the company had “placed over 35 percent of its mutual assets in highly risky ventures, betraying the cause of thousands of small investors who trusted the company with their money.”

Though these reports, which directly challenged the integrity of the asset management company that Sarafat runs, seem well-researched and legitimate works of journalism, they are exactly what Sarafat may have feared would happen if the deal with LR Global had gone ahead.

And, surprise, within a week of their publication, the ACC initiated its investigation against Khalidi.

Speaking to journalists a few days after the ACC investigation was announced, Khalidi set out clearly who he thought was behind it, without naming names, “We did stories that hurt a very powerful lobby, and are paying the price for what I believe is good, exemplary journalism done by my colleagues. They could file a case if any word was erroneous in our reportage, or if there was any mistake in a single sentence or a bit of information. Why didn’t they file a case? Why did they choose this path?”

Sarafat denied that he was involved in either the BSEC decision to halt the LR Global investment in bdnews24.com or the subsequent ACC decision to investigate Khalidi. He said that claims about his influential position are “unsubstantiated and unverifiable hearsay” and attributing such “powers” to him as “baseless and unfounded”. He also declined to comment on the finance ministry’s decision to allow mutual funds to continue after their end date as this is a “sub judice matter” but claimed that “it was made for the greater benefit of the capital markets.”

As to the BSEC decision, Sarafat said, “[It] was made by BSEC; there was no influence from me.” He pointed to fines that the BSEC had previously imposed on LR Global in 2015, and suggested that this was sufficient reason for BSEC to investigate the bdnews24.com investment.

Regarding the ACC investigation, Sarafat said, “I did not concoct the […] charges. The allegations are consequences of Mr- Khalidi’s own actions or dealings.” He also noted that if he wanted to take action against bdnews24.com in relation to the reports it published, he had “the protection of the law.”

However, despite his denials, the chronology of what happened does point the finger of suspicion at Sarafat, who was in fact recently overheard at a public event gloating about the fiasco bdnews24.com is in.

The bdnews24.com imbroglio reminds one of the danger within Bangladesh of the unaccountable might of private actors, who are powerful enough to influence ostensibly independent regulators, and how this can affect press freedom in the country. It also suggests that however close people like Khalidi are to the powers-that-be in Bangladesh, there is always someone else who is more powerful — and that they step out of line at their own peril.●

David Bergman (@TheDavidBergman) — a journalist based in Britain — is Editor, English of Netra News.