Meera Agro’s listing hits a snag

In a strange turn of event, Pinaki & Company, one of the oldest auditor in Bangladesh, sent out a denial that it had audited the balance sheet of Meera Agro Inputs attached with the draft prospectus to raise Tk 5 crore from the small capital board of the Dhaka Stock Exchange.

Meera Agro was on course to issuing 50 lakh ordinary shares in the first quarter of this year to raise funds for land development, modernisation and expansion of existing projects and meet working capital demand.

“Our former Chattogram branch office’s pad may have been used in the audit report. However, our Chattogram office was closed on December of 2014 and practicing certificate of the concerned branch office partner Narayan Roy was cancelled,” said the auditor in a letter to the DSE and the Bangladesh Securities and Exchange Commission on January 28.

The Daily Star obtained a copy of the letter and the draft prospectus.

“Narayan Roy was our partner once upon a time,” Pinaki Das, senior partner of Pinaki & Company, told The Daily Star yesterday

However, Roy is not allowed to conduct any audit under the name of Pinaki & Company since December 14, 2014.

But it appears that he is still using the letterhead and signing off on audit reports.

“This is illegal. ICAB now can take steps against the Roy,” Das added.

Contacted, Muhammad Farooq, president of the Institute of Chartered Accountants of Bangladesh, said he is not aware of the issue yet.

“I am going to take the information now and we will definitely take steps against false auditing,” he added.

In the draft prospectus of Meera Agro, a mobile number was given in the letterhead of Pinaki & Company.

One Afsar Ul Haque received the phone and said he is not connected with Pinaki & Company. But he admitted advising Meera Agro to appoint the auditor.

“I don’t know why my mobile number was given in the letterhead of Pinaki & Company.”

Asked if he was aware that Narayan Roy was no longer a part of the auditor, he said: “This is not known in the market.”

One of the top official of the DSE said the stock exchange has informed the issue manager of Meera Agro, AAA Finance & Investment. “We are taking steps within our limits,” he said preferring anonymity.

Mohammad Obaydur Rahman, managing director and chief executive officer of AAA Finance & Investment, pointed the finger of blame at the authorities concerned.

The issuer has appointed Narayan Roy without knowing that he was running a fraud firm on the name of Pinaki & Company. “Actually, it is tough for a small company to know who is a fraud and who is not.”

Just after being informed of the issue, AAA Finance & Investment has withdrawn the application of qualified investor offering.

“We know that it is totally illegal. How a false auditor auditing reports and none is taking steps against him? Is there no one to stop such fraud auditors?”

Rahman said now they are assigning another auditor and will resubmit the draft prospectus, which is going to be costly for them too.

“This is a surprise to us,” said Syed Abdullah-Al Mamun, managing director of Meera Agro, adding that the seed producer did not appoint the audit firm.

The episode can be viewed as a foot note in the long list of irregularities centring the stock market, which is now battling a bad rap.

“This is how investors’ confidence in the market plummets,” said Abdul Mannan, a stock investor.

Auditors should be accountable for their works.

“A fraud auditor is working but none is taking steps against him. This is not good sign for the country,” he added.

Mohammad Mohiuddin Ahmed, executive director of Financial Reports Monitoring Division at Financial Reporting Council (FRC), said he will check the issue but he cannot take any punitive action.

“[Roy] is a common man -- he is not an auditor. I can only punish the company.”

But even then, FRC is not yet authorised to take actions against the companies.

FRC was established in 2016 by the government under the Financial Reporting Act with the view to ensuring transparency in the financial reports of listed and non-listed companies.

“The DSE and BSEC can punish both the issue manager and the company,” Ahmed added.

Contacted, Saifur Rahman, spokesperson of the BSEC, passed on the responsibility of handing out punishment to the DSE.

“As the auditor wrote the letter to the DSE, the stock exchange should do something first. If the DSE refers the issue to us we will take steps,” said Rahman, who is also executive director of the BSEC.