Swiss investor threatens to sue BB over ICB Islamic Bank share

ICB Financial Group Holdings AG has threatened to initiate legal proceedings against the Bangladesh Bank (BB) in the international court for allegedly breaching a 2008 agreement and failing to safeguard its investment.

Founded in Switzerland, the investment holding company is the majority shareholder of ICB Islamic Bank Limited, which was earlier known as Oriental Bank Limited (OBL).

In a letter sent to BB Governor Ahsan H Mansur on July 7, the group alleged that the central bank had failed to honour critical terms of a "Share Sale and Purchase Agreement" signed on February 28, 2008.

The agreement involved the group, the OBL, and BB, paving the way for the restructuring and recapitalisation of the OBL, which had fallen into financial troubles.

According to the letter, the group was assured that the shares it would subscribe to were free of encumbrances or claims. Based on this assurance, the group invested Tk 350 crore in the restructured bank.

However, the group claims its ownership and control over the bank have been compromised due to a series of unresolved legal challenges filed by former shareholders of the OBL.

The letter, signed by the group's chairman, Josephine Sivaretnam, noted that several cases remain pending before the Supreme Court, challenging the legality of Bangladesh Bank selling shares which had been forfeited.

It particularly highlighted a case in 2014, in which the High Court ruled that the group cannot sell or transfer the shares until the dispute is resolved, effectively freezing share transactions.

"If the former shareholders succeed in court, they would end up holding the majority stake in the bank, which would be highly detrimental to ICB Group's interests," the letter stated.

It expressed concern that the Bangladesh Bank has not taken sufficient steps to resolve the pending legal issues.

It also alleged that the central bank has failed to approve the appointment of a new managing director or CEO proposed by the bank's board in February.

Instead, the BB dissolved the bank's board and appointed one of its own officials to run the operations, the letter said.

"This insecure and tentative environment deters any investor from injecting fresh capital into the bank," it added.

The ongoing court restriction on share transfers has further discouraged potential strategic partners from getting involved, the group said.

The letter concluded with a strong warning that unless Bangladesh Bank takes immediate steps to resolve the legal disputes and protect the group's investment, the group would consider the 2008 agreement null and void.

In that case, the group would demand a full refund of its Tk 350 crore investment, along with damages. If that did not work, the group would have "no alternative but to go to the International Court to seek justice".

Copies of the letter were also sent to Finance Adviser Dr Salehuddin Ahmed and Chowdhury Ashik Mahmud Bin Harun, executive chairman of the Bangladesh Investment Development Authority.

On being contacted, Bangladesh Bank Executive Director and Spokesperson Areif Hussain Khan told The Daily Star that the dispute remains unresolved and there have been no recent developments.

He also said he was not aware of the letter sent by the group.