Questions have arisen over Bangladesh Jute Mills Corporation's (BJMC) decision to sell 100,000 bales of jute sacks at a price lower than the official rate as it is set to deprive the country of nearly Tk 8 crore in revenue.
The corporation charged Dubai-based Taif International $87 for every 100 of these jute bags, which are known as Standard B Twill, which is $3 shy of its officially declared price of $90.
The total value of the sale stands at $26.1 million.
The deal took place on July 30, a day before the beginning of Eid-ul-Azha vacation and it was done without the knowledge of the BJMC's 87 listed local buyers, who usually export 80 per cent of jute goods churned out by the state-owned mills.
"We came to know about it after the Eid vacation. The BJMC should have informed us before selling the jute goods and given us the scope," said Sajjad Sohel, chairman of the Bangladesh Jute Goods Exporters' Association (BJGEA).
He said the BJGEA members had demanded a cut in the price but the state agency did not pay any heed.
The sale took place a month after the government shut its 25 jute mills, offering a golden handshake to nearly 25,000 permanent workers, and at a time when demand for jute bags is picking up in Sudan just ahead of its crop harvesting period.
The African nation is the key buyer of Standard B Twill, availing roughly 200,000 bales of jute bags from Bangladesh's public and private mills to pack grains.
Sohel said the BJGEA members were buying every 100 jute bags for $95 to export to Sudan.
The BJMC said the jute bags in question were produced over a period since 2016 and the stock stood more than 100,000 bales because of sluggish sales.
In a letter to the textile and jute ministry last month, the corporation said Taif International wanted to buy 100,000 bales at $85 per 100 bags initially. Later, both parties settled at $87.
As a result of selling the sacks below the official rate, the government will be deprived of nearly Tk 8 crore, said the BJGEA in a letter to the Federation of Bangladesh Chambers of Commerce and Industry on August 23.
"The BJMC would have benefited had they consulted the BJGEA before selling the whole stock," said Sohel.
BJMC Chairman Md Abdur Rouf said the board fixed the price.
He said the jute bags had lost weight and was prone to lose more had they been kept in storage some time more. Besides, mills were shut and there were incidents of theft in some mills.
"We have to consider that reality too," he said.
"Would the quality deteriorate too much if the BJMC holds the goods for three more months?" asked Sohel.
Rouf said the BJMC had been offering the $90 rate for a long time and it was waiting for buyers. "None came forward," he said.
Mushtaq Hussain, managing director of Golden Fibre Trade Centre Ltd (GFTCL), one of the major exporters of the BJMC's goods to Sudan, said his company bought jute goods on July 27.
The GFTCL came to know about the deal on August 4. Just the day before it had applied to the corporation to buy 104,975 bales of the bags at $90.
Later, it urged the BJMC to cancel the contract as Taif International failed to pay 10 per cent of the value of the goods within three working days from the date of the signing of the agreement.
In a letter to the textile and jute ministry last month, the BJMC said as per contract, Taif International could not deposit 10 per cent of the value of the goods by 5:00pm Bangladesh standard time on August 5.
The money was deposited on August 6, it said, seeking directive from the ministry.
The ministry, in response, said the BJMC has the authority to decide on the marketing of its goods and advised it to take a decision based on rules.
Humayun Khaled, a former chairman of the BJMC, who penned the contract on behalf of Taif International, said there was no problem with the payment.
He said the BJMC wrote to Taif International informing that 10 per cent of the value should be paid by August 6 and just that was done.
Khaled said he represented the Dubai-based firm upon request from Taif International's chairman.
Asked how a former chairman of the BJMC could get involved in a deal where the corporation stands to lose, he said, "This is not a loss."
"Why didn't anybody come to buy earlier? How many days would it take to clear one lakh bales?"
The BJGEA alleged that the BJMC discriminates against enlisted local firms as domestic buyers have to pay 50 per cent of the value of the goods in advance whereas international companies pay 10 per cent.
Rouf said there was no scope for cancelling the contract.
He said there was a one-day difference regarding the 10 per cent deposit.
"They informed us that offices opened in Sudan a day after in Bangladesh. As such, in Sudan, three working days started from August 4 and ended on August 6. In Bangladesh, the working day began on August 3," he said.
He said the contract does not specifically state that the money has to arrive according to the Bangladesh time.
"We have taken legal opinions and legal advisers say everything was lawful."
"There is a question whether we will win in international courts if we scrap the agreement. If we cancel and they go for arbitration, we may face a huge penalty," said Rouf.
However, Hussain said the corporation itself had written to the textile ministry informing that the money had not come on time.
"There is no mention of the name of the main buyer and its address as the sender of the money. The BJMC can cancel the contract on this ground," he said.
As the contract was inked in Bangladesh, the law of the land should be followed, he said.