The Bangladesh Securities and Exchange Commission (BSEC) yesterday formed a committee to look into allegations of market manipulation by Mohammed Saiful Alam and Salman F Rahman, owners of S Alam Group and Beximco Group, respectively.

The probe will also cover the family members of the two influential business tycoons during the past Awami League regime.

The four-member committee, led by BSEC Director Mohammad Abul Hasan, has been instructed to submit the inquiry report within the next 60 days.

The BSEC order in this regard referred to a news report that mentioned Salman F Rahman as a loan defaulter in the 1980s. His name also came up in the 1996 share market scam.

After the Awami League came to power in 2009, Salman reportedly had his name cleared from the defaulter list through "special privileges". He was an adviser to the former prime minister Sheikh Hasina.

An earlier market investigation committee, led by former Bangladesh Bank deputy governor Khondkar Ibrahim Khaled, mentioned Salman's involvement in exerting control even over the stock regulator.

The BSEC also cited the same news report in noting that Chattogram-based S Alam Group took over Islami Bank Bangladesh in 2017 through a political decision.

After gaining control, the group reportedly secured loans amounting to Tk 50,000 crore, which constitutes one-third of the bank's total loan portfolio, the report said.

According to media reports, Salman's past in GMG Airlines is a "textbook case of manipulation".

GMG's financial condition had been deteriorating since starting operations in 1998, accumulating a loss of Tk 42 crore until 2006.

In 2007, it made a trivial annual profit of Tk 1 crore.

Then it got a fillip, with Beximco buying half of the equity stake in GMG in 2009, and things started looking up since. The profit of GMG jumped to Tk 79 crore in 2010 without any discernible reason.

The airline showed a golden dream to the public by offering Tk 300 crore in a private sale at a 400 percent premium with the promise that it would soon be traded on the stock market. New planes would be bought and GMG would fly to new skies.

Salman is also accused of ruining the debenture market by not repaying funds within the stipulated time. The bond market was also under the influence of the businessman.

In 2021, Beximco issued the country's largest sukuk through which it raised Tk 3,000 crore.

Salman allegedly used his political leverage for the bond sales. No banks and non-banks were interested in subscribing to the bonds.

He pressurised institutional investors to park money in his company's Shariah-compliant bond-like instrument sukuk, with some banks hesitatingly investing a low amount.

The stock regulator extended the subscription time at least twice.

Salman went as far as to "force" the Bangladesh Bank to change rules so that banks could invest in sukuk by borrowing funds from a scheme designed only for the stock market, not for Shariah-compliant bonds.

His company has never admitted any wrongdoings, but people familiar with the issue say the central bank was forced to issue a circular allowing the banks to invest borrowed funds in the sukuk.