5 directors of Shitalpur Steel banned from leaving country

A Chattogram court has banned five directors of Shitalpur Auto Steel Mills Limited (SASM) from leaving the country over a loan default case filed by One Bank.

Judge Mujahidur Rahman of the Chattogram Money Loan Court gave the order on Tuesday (16 May) in a case filed to recover over Tk234 crore.

The court also directed the Special Superintendent of Bangladesh Police (Immigration) to take necessary measures to prevent the defendants from leaving the country.

Besides, the defendants have been ordered to appear in court with their passports and lodge reasons explaining why arrest warrants will not be issued against them.

The five directors are - Shitalpur Steel Managing Director Md Nazim Uddin, Chairman Md Jasim Uddin, Directors Jane Alam, Mohammad Hossain and Md Mahbub Alam.

According to the court, One Bank Agrabad branch on 11 April filed a case against five directors of Shitalpur Steel for the recovery of a Tk234 crore loan. However, the defendants failed to appear before court on the scheduled date (16 May) in response to the court summon. 
 
The court issued the ban order today after bank authorities applied for an arrest warrant expressing the fear that the defendants may leave the country without paying the loan.

Moreover, it was also reported that the amount of mortgaged property (collateral security) against the Tk 234 crore debt is very low as per the case documents, as well as the bank.

According to One Bank, Sheetalpur Auto Steel Mills Limited borrowed money from One Bank in 2014 and the loan was rescheduled twice after 2017. Later, the loan was reclassified in May 2021. 

Since 2022, the company has not paid a single installment of One Bank. As a result, the company's default loan has reached Tk2,345,476,727.

Prior to filing the loan default case, the bank filed a Tk160 crore cheque dishonour (Negotiable Instruments Act of 1881) case against the owner of the company On 15 November 2022.

Five friends from Sitakunda's Bhatiari started a shipbreaking business in the nineties. Later, the initial business was shifted to set up a re-rolling factory, Shitalpur Re-Rolling Mills Limited, which had a good reputation in the general grade rod market. In 2013, Shitalpur Auto Steel Mills Limited (SASM) was established.

As an auto steel mill, SASM had been doing well for the first few years. However, the problem arose when the owners started to spend the profit, earned from the sale of factory goods, to acquire personal wealth and enjoy luxuries, rather than investing in production.

In addition, around Tk500 crore of its capital got stuck with a trading corporation which was in charge of selling the products. 

Although SASM was established with capital from the bank, the money earned from the sale of the products was not paid to the bank. This has led to the company's current bank debt standing at about Tk1,000 crore.

Apart from One Bank, Sheetalur Steel owes Tk300 crore to Islami Bank, Tk200 crore to Mutual Trust Bank, Tk100 crore to City Bank and Tk35 crore to Prime Bank. Most of these loans have been identified as classified loans.