Sheikh Rehana lived Beximco’s rent-free London house

Have plan to take shelter there again

Mizanur Rahman, London: The secret arrangement, involving an offshore company, raises conflict of interest concerns as the conglomerate has benefited under the AL government.
Sheikh Rehana, the influential sister of ousted prime minister, subsisted rent-free in a North London property owned by Beximco, one of Bangladesh’s largest business conglomerates that has benefited since Hasina came to power in 2009. Estate agents say that the market rent at such a property would be about £4,000 per month (Tk 4.8 lakh). She has also plan to stay that house again after arriving in London from Delhi. But the UK government will not allow them in Britain, a source told Daily Industry.
The ultimate ownership of the house remained unclear for years as it was purchased in 2011 using an offshore company, Ladybird Properties Ltd., registered in the Isle of Man, a British self-governing dependency and well-known tax haven. The company register shows that Ladybird Properties is part of a Russian doll of shell companies and, as such, provides no information on its ultimate or beneficial owner.
The actual owner of Ladybird Properties – and of the London property where Sheikh Rehana lived – is Shayan Fazlur Rahman, who is described in official documents as “an advisor” to the Board of the Beximco group but allows himself to be referred to as its “director”, and was described three years ago as the “executive director of the Beximco group.” To protect Rehana’s privacy, we are not revealing the address of the property.
Shayan, who also holds British citizenship, is the son of Salman Fazlur Rahman, the joint founder and vice-chairman of the Beximco group, and was an advisor to the former prime minister with cabinet rank. Both men, father and son, are involved in the arrangement to allow Sheikh Rehana to live in the property, rent free.
“This is a fairly typical shell company secrecy scheme which has often been used in London,” Robert Barrington, professor of Anti-Corruption Practice at the Centre for the Study of Corruption in the University of Sussex, told. “The unanswered question here is whether one party has received an undue financial benefit from providing favours to the other, and it would be reasonable to expect full disclosure of all dealings between the company and the government to allay any suspicions.”
Since the Awami League came to power, the benefits that the Beximco Group are reported to have received include the rescheduling by state-owned banks of huge unpaid loans by Beximco and the company gaining the position as the monopoly for-profit distributor of the Oxford-AstraZeneca Covid-19 vaccine.
In 2009, prime minister appointed Salman F Rahman as her personal Private Sector Development Affairs adviser. Subsequently, following the controversial 2018 national elections, Hasina appointed Rahman, as Private Industry and Investment adviser to the prime minister, which gives him the status of a member of her cabinet.
Bangladesh has rules that restrict civil servants (not members of parliament) and their family members receiving gifts which place them “under any form of official obligation to the donor”. There is also a law that requires ministers and civil servants to deposit with the government any physical gifts or presents they receive worth above a certain amount of money.
However, unlike many other countries, there are no rules or laws in Bangladesh requiring members of parliament or the prime minister to prevent conflicts of interests that could arise if they or their close family members receive wider financial or other benefits.
The importance of removing conflicts of interests to ensure good governance is widely accepted. The Organisation for Economic Co-operation and Development (OECD) in its toolkit for preventing conflicts of interests says, “Identifying and resolving conflict-of-interest situations is crucial to good governance and maintaining trust in public institutions.”
Rehana’s living arrangements raises questions regarding the nature of the relationship between the Bangladeshi ousted prime minister and the conglomerate, making Sheikh Hasina vulnerable to claims that government decisions which benefited Beximco and its executives were linked in some way to the gift of free accommodation to her sister. It may also make the conglomerate similarly vulnerable to assertions that it provided largesse to the prime minister’s sister seeking business or other benefits.
The law also applies to existing offshore companies that own property in England and Wales, like Ladybird Properties Ltd., which is required to register information about its owner, Shayan Rahman by January 1st 2023. At the date of publication, Ladybird Properties Ltd. has not registered with Companies House.
Ben Cowdock, Investigations Lead at Transparency International UK, told, “Holding property via companies in secrecy jurisdictions like the Isle of Man has long provided a way to conceal the true ownership of UK real estate. […] If the new property register is to be effective in highlighting issues such as arrangements that could amount to conflicts of interest overseas, it’s essential that Companies House is given the resources needed to make these rules stick.”
UK parliament connection
The revelation about the ownership of the property may also prove embarrassing to the UK labour MP Tulip Siddiq, who is the daughter of Sheikh Rehana. In December 2021, Siddiq became Shadow Economic Secretary, one of whose responsibilities had been representing the labour party in relation to recent new legislation that requires all offshore companies owning property in the UK to reveal the identity of their beneficial owners. She also become minister before few days.
“For too long, the Conservatives have stood by as dirty money from Russia and elsewhere has flooded into the UK,” the MP said in March 2022. “That’s why it is so important that the government’s proposals for Companies House receive proper scrutiny.”
Before she became a member of parliament Siddiq used to work for the Awami League, the party led by her aunt, Sheikh Hasina, and in December 2019, Channel Four News claimed that at the last national election, the UK wing of the Bangladesh ruling party was heavily involved in campaigning for her, effectively takingover a Labour Party rented office. Siddiq claims this is categorically untrue.
Siddiq has also long held negative views on offshore companies owning property in London in the context of the capital’s housing crisis, despite her mother’s circumstances.
When Tulip was first campaigning to be an MP in 2015, and a few years after her mother moved into the house, she supported “restrict[ing] the sale of property to overseas buyers.” And soon after her election as a MP, she again criticised the use of offshore companies buying London property.
“The current lack of regulation on this kind of property acquisition is intolerable, and is pricing Londoners out of a future in their city,” she complained. “I have no reservations in saying that local people should get first refusal on buying properties in the capital.”
“House prices are being artificially inflated by offshore trusts snapping up new properties, and the government’s lack of action is testament to their inability to deal with the housing crisis,” she noted.
A statement from Tulip Siddiq’s parliamentary office said that the MP “had never lived” at the house where her mother lives, “She is not involved in her mother’s housing arrangements and has not lived with her mother since she left to go to university.”
“No untoward relationship”
Shayan Rahman confirmed that he is the beneficial owner of the property and that Sheikh Rehana has had a licence to reside there.
With regard to the offshore company arrangement, he says the house purchase was conducted in a fully legal and compliant manner and that its ownership is held via an established, fully-licensed, independent corporate and trust service provider based in the Isle of Man.
However, he and his father deny that this is part of any untoward relationship.
His father, Salman Rahman, explains the financial assistance to Sheikh Rehana by saying that after the assassination in August 1975 of Sheikh Rehana’s father, the then president of Bangladesh, along with 16 other members of his family – which included his good friend Sheikh Kamal, the brother of Sheikh Rehana – he has felt obligated to assist Rehana. Rahman says he felt compelled to take Sheikh Kamal’s place as an elder brother to an orphaned sister and will always feel obligated to help her. He argues the history of his long-standing and close relationship with Sheikh Rehana is well known in Bangladesh, and their respective children are also close family friends.
Rahman added that the success of Beximco has been achieved through the brothers’ business acumen and not government influence. He stated that Beximco did not enjoy any undue privileges in the course of restructuring its loans and that Beximco was one of several large conglomerates that had to restructure its loans following the introduction in 2015 by the Bangladesh Bank, of a new policy, known as the Large Loan Restructuring Policy.
Sheikh Rehana acknowledged last year that she lives rent free in the property owned by Shayan Rahman but there is nothing untoward in the arrangement as the Rahmans are her very close personal friends. She also claims that the arrangement has the added benefit for the Rahmans in that they know their house is being well looked after by someone that they trust and care about.
Rehana is also understood to claim that this arrangement provides an additional layer of security for herself, as having her address on the public record could place her in additional danger from those who wish her harm.
Beximco and Rahman family
Beximco – which stands for Bangladesh Export Import Company – is probably Bangladesh’s biggest conglomerate, and was established soon after the independence of the country by Salman Rahman, now vice-chairman of the company, and his brother Sohail Rahman, its chairman.
The company started off in pharmaceuticals and has now diversified into a range of industries including textiles, real estate development, construction, trading, marine food, information and communication technologies, media, financial services, and energy. Beximco Pharma, the group’s pharmaceutical producer, was the first Bangladeshi company to be listed on the London Stock Exchange. The Bangladeshi conglomerate consists of four public companies and many private companies.
Beximco has had a reputation of being a loan defaulter. In 2007, a US diplomatic cable described Salman Rahman as “allegedly one of Bangladesh’s biggest bank loan defaulters” in Bangladesh. In 2009, soon after the Awami League came to power, the finance minister named Beximco Textile as the country’s biggest bank defaulter owing Taka 353.89 crore (£30 million). He also said that other Beximco companies were significant defaulters: Shinepukur Holdings was sixth on the list with an Tk 134.35 crore (£11.5 million) loan default, and Beximco Knitting had a Tk 81.06 crore (£7 million) default.
Following the election of Sheikh Hasina as prime minister in 2009, banking insiders in Bangladesh point to Beximco moving most of its banking away from private banks to state-owned banks. In August 2014, Beximco is reported to have approached the country’s central bank, Bangladesh Bank, to ask for a restructuring of its outstanding loans of Tk 5245 crore ($503 million). This resulted in Bangladesh Bank issuing a new large loan restructuring policy which other companies could also apply for. According to a media report, 11 business groups took up the opportunity, with Beximco loans accounting for one-third of the total rescheduled loans.
Three years later, Beximco was again in trouble and approached the central bank for further rescheduling of the loans it had with the state-owned Sonali bank, which agreed. Following this, Iftekaruzzman, the Executive Director of Transparency International Bangladesh, criticised the agreement: “Loan defaulters irrespective of identity or status cannot be allowed to dictate terms to Bangladesh Bank and cause non-compliance of its own policy-decision to get illegitimate extension of endless privileges of rescheduling, nor can Bangladesh Bank allow itself to be held hostage and continue to accumulate ever greater risks to the sector.”
In response, Beximco blamed previous governments for the conglomerate’s financial situation: “The seven years of constant discriminatory behaviour during the BNP and caretaker regimes against Beximco also led to a liquidity crisis within the company, as a result of which we were unable to make timely payments to the banks. The ramifications were so severe for a large company like ours is that we are yet to recover from it.”
In a letter to the New York Times, Salman Rahman also said: “Had the restructuring not taken place, we would have been forced to close down our operations resulting in the loss of over 60,000 jobs, which would have impacted the country’s economy adversely.”
Apart from his various titles of “executive director” and “adviser” of the Beximco Group, Salman Rahman’s son Shayan Rahman is a director of a number of individual Beximco companies. Shayan is also a member of the advisory board of the British Asian Trust set up by King Charles, when he was prince, and he is chair of its Bangladesh section.
Codes of conduct
Many countries have adopted codes of conduct or laws which seek to uphold high ethical standards of members of parliament and ministers including removing conflicts of interest or any appearance thereof. In the UK for example, the ministerial code states: “Ministers should not accept any gift or hospitality which might, or might reasonably appear to, compromise their judgement or place them under an improper obligation.” This “well established and recognised rule” also applies “if gifts etc are offered to a member of their family.”
In Bangladesh, there is a 1979 regulation, the Government Servants (Conduct) Rules which impose restrictions on gifts that a civil servant or members of his family can receive. This states, that “no government servant shall, except with the previous sanction of the government, accept, or permit any member of his family to accept, from any person any gift the receipt of which will place him under any form of official obligation to the donor.”
There are no similar obligations on members of parliament or ministers in Bangladesh. The ex-minister Saber Hossain Chowdhury introduced a bill in 2010, “The Code of Conduct of the MPs Bill” that contained seven guidelines to limit conflicts of interest, but this has not been taken up for debate.
These kinds of codes are intended to try and prevent corruption, or the appearance of corruption. In 2021, Bangladesh is ranked low down in Transparency International’s corruption perception index – listed 147 out of 180 countries in the world. In 2013, the World Bank cancelled its $1.2 billion loan to the government for the construction of the Padma Bridge over what it called a “high-level corruption conspiracy among Bangladeshi government officials,” which the prime minister has rejected, claiming that the allegations represent “a conspiracy” against the country.
The prime minister, Sheikh Hasina – the sister of Rehana – has stated publicly that she does not “tolerate corruption”, has warned against frauds in the name of her family, and has supported a number of anti-corruption drives. Critics, however, suggest that the government’s anti-corruption campaigns are opportunistic or politicised, pointing to widespread corruption where it has taken no action.