Olympic share market scam case stalled for 23 years
Thursday is set for the defendant’s counsel to update the special tribunal about the High Court stay order on the case proceedings
Trial in a case against Olympic Industries Limited, over the 1997 share market scam, has yet to begin though 23 years have gone down the line.
Though the case is now with the special tribunal formed to settle stock market related disputes, there is a High Court (HC) stay order on the case proceedings. Thursday is set for the defendant's counsel to update the tribunal about the stay.
Though 4 May, 2020 was initially set for the hearing, the tribunal deferred it to Thursday [12 November] due to pandemic-led shutdown.
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The accused in the stock scam case are Aziz Mohammad Bhai, his father and then-company chairman Mohammad Bhai and Olympic Industries. The second accused, Mohammad Bhai, has already died while Aziz Mohammad Bhai is living abroad at present.
In 1994, the share price of Olympic Industries Limited increased 44 times from Tk124 to Tk5,511 due to the company's excessive issuance of right shares. When the price went up, Olympic's stockholders, directors and company associates made a quick buck by selling the shares.
Subsequently, a case was filed with Dhaka Chief Metropolitan Magistrate's Court in 1997 in the wake of the then Securities and Exchange Commission's (SEC) investigation. In 2015, the case was transferred to the special tribunal.
According to sources, after the issuance of right shares in March 1994, Olympic Industries again announced their issuance in November that year to set up a cement factory. However, the company later moved to build a battery, electric bulb and juice plant instead of a cement factory.
In 1996, the company announced the issuance of right shares, again, to set up a cement factory, prompting an abnormal rise in its share price. And a part of the investors, the company's directors and associates, made a profit by selling the shares at the spiralled price.
Selling shares at an exorbitant rate after increasing the price with a right share issuance announcement and providing stockholders with incorrect information is a violation of the Securities and Exchange Ordinance, 1969. Under section 24 of the ordinance, it is a punishable offence.
Olympic Industries initially was Bangladesh Carbide Limited – a battery manufacturer – and later it switched to the confectionery industry and turned into a major biscuit manufacturer on the local market.
According to the case documents, Olympic Industries issued 1.35 lakh right shares at a Tk200 premium in March 1994. On 23 November of that year, the company offered to sell 5.40 lakh right shares which were Tk100 each to the premium of Tk1,025 – much higher than the company's assets. The company did not provide any information to the securities regulator about the use of funds for such issuances.
Despite announcing it would set up a cement factory, Olympic's annual general meeting on 13 December, 1995 announced plans to build a battery, electric bulb and fruit juice plant – moving away from its previous decision.
In 1996, the company again recommended three right shares against two shares at a premium of Tk500 for cement plant construction and other purposes. The overvalued premium raised the share price from Tk124 to Tk5,511.
Most of Olympic's stockholders, teaming up with some brokerage houses, were active in trading stocks outside of the Dhaka Stock Exchange. Company Director Mohammad Bhai alone sold 10,000 shares while the company's associate Ambi Pharmaceuticals sold 20,161 shares at that time.
