Governance snags cast long shadow over probe

As the Bangladesh Securities and Exchange Commission (BSEC) continues its investigation into Robi Axiata Limited, attention has increasingly shifted from accounting practices to the company's corporate governance framework and whether it provided adequate independent oversight of decisions affecting one of Bangladesh's largest listed companies.

A review of investigation-related documents, court filings and corporate records by the Daily Observer indicates that former Chief Executive Officer (CEO) Mahtab Uddin Ahmed submitted conflict-of-interest complaints to three separate corporate forums in October 2021. However, the same individual held positions in all three forums, and no documented response to the complaints has been found.

The documents show that during the relevant period Thayaparan S. Sangarapillai simultaneously occupied six key positions across Robi and its parent company, Axiata Group.

Until February 2021, he served as Chairman of Robi's Board Audit Committee before becoming Chairman of Robi's Board of Directors. At the same time, he was a director of the Axiata Group Board, a member of the Axiata Board Audit Committee�"which oversees whistleblower complaints and internal investigations�"and also served as a director of edotco Group, an Axiata subsidiary. 

According to the documents, Robi and edotco were involved in commercial disputes exceeding Tk 1.10 billion relating to tower infrastructure lease arrangements. These included a Tk 719 million VAT rebate dispute and a Tk 386 million dispute over outstanding payments for anchor sites. The documents further state that former Axiata Group CEO Dato' Mohd Izzaddin bin Idris had issued a written warning on the matter by email.

The governance concerns deepened on January 22, 2022, when Robi's Board appointed Sangarapillai as chairman of the committee investigating allegations against the former CEO, despite the fact that he had already been named in written complaints alleging a conflict of interest.

According to the documents, the former CEO had submitted separate complaints to Robi's Board of Directors, the Axiata Group Board and the Axiata Board Audit Committee on October 12, 2021. Because Sangarapillai held positions in each of those bodies, the documents argue that there was effectively no independent forum left to consider the complaints.

The complaints also named Dato' Izzaddin Idris, then Group CEO of Axiata, alleging a conflict of interest. As Group CEO, he held the principal authority over nominations to Robi's Board of Directors.

The documents further show that although Robi's Board accepted the former CEO's resignation on October 31, 2021, the company later issued him a dismissal letter on May 22, 2022.

The records raise the question of whether a company can lawfully dismiss an individual approximately nine months after accepting his resignation and after he had already ceased to be an employee.

Nine days after the dismissal letter was issued, Dato' Izzaddin Idris retired as Group CEO of Axiata under what the documents describe as "mysterious circumstances".

According to sources familiar with the documents, one of the fundamental principles of corporate governance is the existence of independent oversight at different levels of an organisation. A board audit committee is expected to operate independently of the board of directors, while a parent company should independently oversee its subsidiaries and whistleblower mechanisms should function without undue influence.

The documents contend that the presence of the same individual across multiple oversight bodies weakened those safeguards and compromised the independence expected under accepted governance principles.

The investigation has also drawn attention to Robi's obligations as a listed company.

More than 100,000 retail investors became shareholders through Robi's Initial Public Offering (IPO) in 2020. Under Clause 5.6 of the BSEC Corporate Governance Code, listed companies are required to disclose material corporate events to investors.

However, according to the documents, several significant developments were not disclosed in either the company's 2021 or 2022 annual reports. These include the dismissal of the former Managing Director and CEO, the resignation of two independent directors from the investigation committee citing "undue interference", the Tk 2.27 billion lawsuit filed by the former CEO, and lawsuits filed by five officials before the Labour Court and the High Court.

Although both annual reports received unqualified opinions from external auditors, the documents state that none of these developments was disclosed to shareholders.

According to the documents, investors who bought, sold or retained Robi shares during that period were therefore not informed of material corporate developments relating to the company's governance.

The documents further note that Robi declared a dividend equivalent to 97.8 per cent of its annual profit in 2025, the highest in the company's history. They argue that if the accounting treatment currently under BSEC investigation is ultimately found to have affected the company's reported financial results, shareholders who made investment decisions based on those disclosures would have a direct interest in the outcome of the probe.

BSEC's investigation is currently examining the accounting classification of transactions, possible failures to disclose material information, the role of directors holding multiple positions, whether the arm's-length principle was followed in Robi-edotco transactions and the company's internal investigation process.

Meanwhile, the former CEO's lawsuit challenging his dismissal remains pending before the High Court Division. Although the commission had initially expected to complete its investigation within 60 days, it has yet to publish its findings, while the High Court has also not delivered its judgment.

The Daily Observer repeatedly attempted to obtain Robi's response. Chief Corporate and Regulatory Officer Mohammed Shahedul Alam did not answer calls made to his mobile phone, while an SMS seeking comment also went unanswered.

BSEC Executive Director and Spokesman Md Abul Kalam said the investigation remains ongoing and has taken longer than originally anticipated because of the number of issues involved.

"The investigation into various matters related to Robi is ongoing. Although an initial timeline of 60 days was set, the probe could not be completed within that period because of the number of issues involved. Once the investigation is completed, BSEC will take action regarding any irregularities that are identified," he told the Daily Observer.