27 big Destiny buys cancelled

The government has cancelled 27 purchase deals of Destiny Multipurpose Cooperative Society Ltd (DMCSL) involving more than Tk 300 crore for gross violation of the cooperative law, said a top official of the Department of Cooperatives (DoC).
The void deals include purchase of Best Aviation, a local private airline, for Tk 66.27 crore and Alpana Chhayachitra (Ananda Cinema Hall at Farmgate) for Tk 65.65 crore.
With the cancellation, it has now become the legal obligation of the DMCSL management committee to get back the money the cooperative firm had spent for making the purchases. Otherwise, the 12 members of the committee must pay the money in equal shares.
Amiya Kumar Chattopadhyay, additional registrar of DoC, a government organisation to facilitate and regulate cooperative societies, said the DoC cancelled the deals last month because the cooperative firm did not take prior approval from it for making the investments.
According to the law, a cooperative society must take prior approval from the DoC before making any investment above Tk 5 lakh.
“When we reviewed Destiny's audit report for fiscal 2010-11, we found it had already invested in 27 entities out of 34. But it [Destiny] sought permission a year after making the investments, which is a gross violation of the law,” said Amiya.
These deals are now void, he said.
DoC documents show that the DMCSL applied to the cooperative authority in fiscal 2011-12 for permission to invest more than Tk 394 crore in 34 entities.
The proposals included purchase of Best Aviation and Alpana Chhayachitra for Tk 132 crore.
Destiny Group also sold its sister concerns to its cooperative arm DMCSL, putting the money of its several lakh members at risk, as some of these concerns exist on paper only.
Of the DMCSL's purchases, more than Tk 80 crore was spent for buying 15 of Destiny Group's sister concerns, including its multilevel marketing wing Destiny-2000 Ltd, at more than Tk 16.78 crore, according DoC document.
The DMCSL bought controversial Destiny Tree Plantation project for Tk 4.7 crore and also Destiny Transit System, Air Destiny, Destiny Security Force and D2K Express for Tk 7 crore each without DoC's permission.
The purchases include Destiny Developers, Destiny Saasco Properties, Destiny Environment and Savings Energy, and Destiny Nihaj Jute Spinners.
“We served a show cause notice on DMCSL for concealing information in its annual report for fiscal 2010-11. But it failed to respond to the notice,” said Amiya.
He said the DoC gave approval to DMCSL's 34 purchase deals in good faith without examining its accounts thoroughly.
According to the cooperative law, the DMCSL management committee, headed by Rafiqul Amin, has to get back the money spent for making the purchases.
“All responsibilities now fall on the management committee. They have to get back the money spent for making these investments. Otherwise, the 12 members of the committee have to pay the money in equal shares,” said Iqbal Hossain, another additional registrar of the DoC.
Rafiqul and other committee members violated the law by concealing information on the DMCSL's purchases made in fiscal 2010-11, said Iqbal.
“They have cheated DMCSL's general members and made the investments at will.”
If they ultimately fail to pay the money, they would face criminal charges, said Iqbal.
DMCSL has seen an astronomical rise in its capital, shareholders, profit and investment since 2009. Its paid-up capital went up to nearly Tk 300 crore in fiscal 2009-10 from Tk 5.53 crore a year ago. The figure jumped to nearly Tk 1,200 crore in fiscal 2010-11.
Loans and investments grew to Tk 569 crore in fiscal 2010-11 from less than Tk 23 crore in fiscal 2008-09. They rose more than 213 percent between fiscal 2009-10 and fiscal 2010-11.
DMCSL that got registered with the DoC in 2005 came under the spotlight after a Bangladesh Bank inquiry found proof of its involvement in illegal banking.
The central bank's report said illegal banking by the cooperative firms has been creating disorder in the country's financial sector.
Following the report, the DoC, National Board of Revenue and the Anti-Corruption Commission initiated probe into Destiny Group's activities.