Unable to open LCs, seven S Alam factories shut down

An inability to open letters of credit (LCs) since the political changeover on August 5 has resulted in the closure of at least seven enterprises owned by the S Alam Group, including its sugar and edible oil refineries and steel factory.

The chairman of the conglomerate, Mohammad Saiful Alam, is alleged to have weaponised his political affiliations to influence the banking sector during the previous Awami League government.

Using such means, S Alam and his cohorts became involved in the ownership of seven banks.

In late August, weeks after the fall of the Sheikh Hasina-led government, S Alam came under the scanner of various government agencies. This included the Criminal Investigation Department (CID), which launched an investigation into allegations that S Alam had laundered over Tk 100,000 crore (around $11 billion).

The seven enterprises that faced closures include its sugar and edible oil refineries and steel factory

One government agency that cracked down on the S Alam Group before the changeover was the National Board of Revenue (NBR), which filed three separate cases from May to September this year against eight companies under the group's umbrella for value-added tax (VAT) and duty evasion amounting to Tk 5,199 crore.

According to officials of the group, a majority of S Alam's family members have rushed to Singapore since the political changeover on August 5.

They further said that all of the group's business accounts as well as the bank accounts of owners were frozen following the change of government, adding that no entity affiliated with the S Alam Group has been permitted to open new LCs with banks.

As a result, the operations of several businesses ceased and the group was compelled to shut down plants that produced steel coils, sugar and edible oil, they claimed.

However, an official of the Bangladesh Financial Intelligence Unit (BFIU) said that none of the business accounts of the S Alam Group had been frozen.

Husne Ara Shikha, executive director and spokesperson of the central bank, also said that the Bangladesh Bank did not freeze any bank accounts related to the companies.

According to NBR data, the S Alam Group's imports have decreased since August 5. Although some of the goods procured under previous LCs were released in August, no new products have arrived.

Since August 5, no new import permit has been obtained from the Bond Commissionerate. There is no import history on the NBR's servers either.

According to NBR data, about 4.15 lakh tonnes of raw sugar, worth over Tk 2,738 crore, were imported from the beginning of July to November 14 this year. Of that, sugar mills under the S Alam Group imported 60,500 tonnes in July. Since then, the group has not recorded any other imports.

The situation is the same for imports of unrefined edible oil and refined palm oil, with no import history since August 10, as per NBR data.

Subrata Kumar Bhowmik, executive director of the S Alam Group, claimed several of their factories that produced sugar, soybean oil and steel have already been closed due to raw material shortages.

He told The Daily Star: "For a long time, we used to open LCs to import products in Janata Bank, Islami Bank and Exim Bank. But since August 5, we have been unable to open any new LCs. They have even cancelled old LCs. According to the rules, banks cannot cancel LCs unilaterally."

Bhowmik added that they were forced to shut down some steel factories due to a shortage of chemical products.

"For example, 11 chemical ingredients are required alongside raw materials to keep a steel factory running. Our steel factories were closed due to an inability to import chemical ingredients for the past three months."

He claimed that S Alam Group's concerns in sugar, edible oil, and cold rolled steel were now closed alongside Infinity CR Strips and Chemon Ispat Ltd.

S Alam Group's Admin and HR Department Officer Mohammad Hossain told The Daily Star that 30,000 workers are directly and indirectly employed in its import-dependent industries.

Ashish Kumar Nath, deputy manager of the Accounts Department of the S Alam Group, told The Daily Star that S Alam Vegetable Oil and S Alam Refined Sugar Mill have been closed for the past 15 days due to an inability to open LCs.