In a shocking turn of events, Uttara Finance continues to indulge in extravagant expenditures despite serious allegations of financial discrepancies. The recent actions of this non-bank financial institution (NBFI) raise questions about its governance and accountability, leaving investors bewildered and frustrated.
Financial Discrepancies: A Deepening Crisis
Uttara Finance’s troubles began when Bangladesh Bank rejected its financial report in 2019, citing significant anomalies. An audit conducted by KPMG Bangladesh in 2020 revealed discrepancies amounting to Tk 5,300 crore.
The situation escalated in 2022 when the central bank took drastic measures, removing the managing director and dissolving the board of directors. A new board was formed in January 2023, but their efforts seem to have made little difference.
Lack of Transparency
Since 2019, Uttara Finance has failed to publish any financial reports. This lack of transparency means investors have not received dividends for five years and have no clue about the NBFI’s current financial health.
- Past Performance: From 2014 to 2017, investors enjoyed a 30% dividend, which dropped to 20% in 2018.
- Current Value Erosion: The share price has plummeted from Tk 55 in 2019 to a mere Tk 15.80 today.
Voices of Concern
Investor Abdul Mannan articulated the frustration many feel, stating, “I was drawn to the company for its good track record. Now, I’m left in the dark about my investment.” This sentiment is echoed by numerous investors, general, institutional, and foreign, who collectively own 8.09 crore shares, making up approximately 61.56% of Uttara Finance’s total shares.
Lavish Spending Amidst Financial Woes
Despite these troubling issues, Uttara Finance has approved extravagant expenditures. For instance, the board recently sanctioned the purchase of two Honda CR-V 1.5 Turbo SUVs for around Tk 1.54 crore for its chairman and managing director.
Furthermore, the company spent Tk 15.62 lakh on a “strategic business meeting” in Cox’s Bazar, flying 25 top officials and board members to one of the country’s priciest hotels. Some board members even brought their spouses along, further inflating the costs.
A Response from Leadership
When approached for comment, the current chairman, Mohammad Maksudur Rahman, defended these decisions. He explained that the central bank rejected the financial report due to a lack of consideration for KPMG’s findings.
He added that they struggled with financial reporting due to frequent changes in CFOs and a reliance on paper records rather than digital systems.
“We’re in the process of getting our financials in order. An audit firm is checking our records from 2003 to 2019, and we hope to publish the 2019 report soon,” Rahman stated.
The Need for Accountability
While Rahman assured that the board has taken measures to improve governance, the recent expenditures have raised red flags. Toufic Ahmad Choudhury, director general of the Bangladesh Academy for Securities Markets, described these spending habits as a gross violation of corporate governance.
“The regulators should seriously examine Uttara Finance’s actions and uncover its true financial condition,” he said.
Rezaul Karim, an executive director and spokesperson for the Bangladesh Securities and Exchange Commission (BSEC), echoed these concerns, promising that the regulator would scrutinise whether Uttara Finance has been negligent in submitting its financial reports and holding annual general meetings.
Steps Toward Recovery
Despite the current turmoil, Rahman insists that Uttara Finance is on a path to recovery.
- Financial Report: The company aims to finalise its 2019 financial report shortly.
- CFO Transition: A new CFO is set to join next month, with hopes of streamlining financial operations.
- Dividend Payments: Once the BSEC approves the financial report, Uttara Finance plans to resume dividend payments.
The Road Ahead
For investors, the road to clarity remains steep. With dividends suspended and share prices dwindling, the community is left wondering if the company’s leadership can genuinely navigate these turbulent waters.
- Transparency: Regular financial updates and open communication are crucial to restoring trust.
- Accountability: Leadership must be held accountable for past decisions and future directions.
Conclusion
Uttara Finance’s recent lavish expenditures amidst serious financial discrepancies reflect poorly on its governance and accountability. Investors deserve transparency and clarity regarding their investments.
I believe that meaningful change must occur if Uttara Finance hopes to regain the trust of its investors and restore its reputation. The coming months will be critical in determining whether the NBFI can turn its fortunes around or if it will continue to spiral downward.
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