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Govt scraps Rupali deal with Saudi prince PDF Print E-mail
Tuesday, 11 March 2008

Staff Correspondent

The government Monday cancelled a deal on Rupali Bank sale with Saudi prince Bandar Bin Mohammad Bin Abdul Rahman Al Saud, an adviser said.

Finance adviser AB Mirza Azizul Islam said that the cabinet committee on economic affairs took the decision since the Saudi prince failed to deposit the money in time in line with the deal provisions.

He said the committee also asked the Privatisation Commission to take the state-run bank off its privatisation chart for now. "After the decision, the proposal on the privatisation of Rupali has been sent back to the finance ministry," the adviser told reporters after he chaired the meeting at the Cabinet Division.

Replying to a query on whether compensation would be sought from the Saudi Prince, the adviser said: "We will take a decision after examining the contract documents if there is any direction on the compensation." Initially, the Saudi prince won the purchase bid for a 67.26 percent stake in Rupali for $330 million in 2006.

But later the prince offered to buy another 26 percent government stake for $128 million. Private investors hold a 6 percent stake in the bank. The government agreed to sell its 26 percent stake to the prince, which means the prince was supposed to take a 94 percent stake of the bank for $458 million.

But there were some unsettled matters including the bank's $270 million liabilities of bad debt. Earlier in December, the prince's senior adviser Sir Frank Peters had told in an email that prince Bandar was confident of a quick resolution to the outstanding issues for the benefit of both parties.

The issue became volatile after the prince suddenly reviewed the prices he earlier wanted to pay. In December, prince Bandar made a new offer in a letter to army chief General Moeen U Ahmed, and the Privatisation Commission found that he wanted to pay $185 million instead of the previous offer of $458 million.

Monday's meeting also made a number of decisions on the relocation of tannery industry from Hazaribagh to the Export Processing Zone at Savar.

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