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Daylong drama centring notification on stock investment

Investors demonstrate demanding stabilisation of the capital market in front of Dhaka Stock Exchange on January 18, 2012. Photo: The Daily Star

SHORTLY after issuing a notification Wednesday evening asking public servants to refrain from investing in the capital market, the government withdrew it.

An official of the Press Information Department confirmed The Daily Star about withdrawal of the notification around 8:00pm, almost an hour after issuance of it.

Interestingly, a few hours before issuance of the notification, M Khairul Hossain, chairman of the Securities and Exchange Commission, the stockmarket regulator, told the press that no decision was taken at Monday’s cabinet meeting to stop public servants from investing in the share market.

At 6:57pm Wednesday, The Daily Star received the notification from the ministry of public administration by fax, which directed government employees not to invest in stockmarkets.

“No Government servant shall make, or permit any member of his family to make any investment likely to embarrass or influence him in the discharge of his official duties,” read the notification.stockmarket notification

The ministry move came two days into a cabinet decision to remind public employees of the investment stipulations.

The ministry notification, signed by senior secretary Abdus Sobhan Sikder, cited ‘The Government Servants (Conduct) Rules 1979’ in reminding the public servants of the stipulations.

The first sub-rule of Section 15 of the Service Rules titled ‘Speculation and investment’ topic says, “No Government servant shall speculate in investments. For the purpose of this sub-rule, the habitual purchase and sale of securities of notoriously fluctuating value shall be deemed to be speculation in investments.”

The notification also cited another sub-rule that says no government servant shall make any investment the value of which is likely to be affected by some event “of which information is available to him as a Government servant and is not equally available to the general public”.

If any question arises whether a security or an investment is of the nature referred to the abovementioned sub-rules, the decision of the government will be considered final, Section 15 added.

On Monday, the cabinet decided to remind public employees about the service rules that prohibit involvement in profit-making activities, including stock business, without prior permission.

At the meeting, a couple of ministers drew the cabinet’s attention to the huge number of government employees and their dependants being engaged in the stock business. This, the ministers observed, had been hampering public service. Besides, employees with stock investments tend to take a hostile attitude towards the government when their shares slump.

Agreeing with the observations, Prime Minister Sheikh Hasina enquired about the Government Servant (Conduct) Rules 1979 and directed the ministries concerned to remind the employees about the stipulations.

“We all know that stockmarkets are risky. We also know that it is not appropriate for military and civil officials to get involved in this kind of business,” prime minister’s press secretary Abul Kalam Azad said while briefing newsmen after the meeting Monday.

Former bureaucrats welcomed the government move.

Government officials should not be allowed to engage in stock trading where there might be scope for a conflict of interest,” said Akbar Ali Khan, a former finance secretary and adviser of the caretaker government.

“Even where there is no conflict of interest, the government still can impose a ban as their involvement could hamper government activities,” he said.

On Tuesday, authorities of Dhaka and Chittagong stock exchanges suspended trading on both the bourses fearing negative impact on the markets.

The DSE authorities opined the same day that the government should allow public servants to invest for the sake of the capital market.

On Wednesday, the DSE authorities delayed the start of trading by half an hour.

Fearing that share prices, which have been experiencing persisting downtrend, might face even worse situation, many small investors sold their issued hurriedly.

At the end of trading hours, the benchmark general index of the DSE stood at 4,695 points losing 168 or 3.47 percent.

Of the issues traded, 239 declined, only 14 advanced while two remained unchanged.

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