Smart corporate robbery

There is an old joke in corporate circles: a burglar breaks into a house, finds nothing worth stealing, and leaves a thank-you note for wasting his time. In Bangladesh, some of our corporate burglars are far more sophisticated. They steal first, leave no note, and then complain about policy uncertainty as if the nation owes them an apology. Some hijack entire banks, turning depositors' money into their personal treasury. Others practise a cleaner, well-mannered form of theft where everything is signed, stamped and supported by impeccable English. This modern thief does not need a mask. A valuation report from a global firm is more effective than any disguise.

Here is the magic trick. A company builds its empire in Bangladesh, using local infrastructure, serving local consumers, and benefiting from national resources. Then one morning, it announces a business restructuring, which in corporate language means ownership is quietly migrating somewhere warmer and more tax-friendly. Overnight, the company becomes Singaporean, Mauritian or Dubai-based proudly. The weapon behind this corporate migration is undervaluation. A Big 4 firm issues a report that prices the entire operation so low that even a modest corner shop might raise an eyebrow.

Consider a fictional example that feels uncomfortably real. A company valued itself at $20 million and transferred 70 percent of its shares abroad through an entirely approved and compliant process. Now the same company is preparing to sell those shares to global investors at a valuation of $500 million. The difference is $480 million in value that was created in Bangladesh but has now conveniently left the country. The country loses capital gains tax, loses foreign exchange, loses national wealth, and gains nothing but a glossy valuation report that justifies the legal looting. In another example, shares or assets were transferred at Net Book Value (NBV), which was negligible, ignoring globally accepted valuation norms such as EBITDA multiples.

People assume these events are rare outliers. They are not. Anyone who looks closely will find more. It is like lifting a stone and discovering that the insects underneath have been very busy for a long time. Once seen, it cannot be ignored.

Other countries have learned similar lessons the hard way. India tightened its foreign-exchange laws after billions quietly escaped through Mauritius-based entities. Indonesia revised its transfer pricing rules after profits mysteriously vanished from Jakarta and reappeared in Singapore. Australia introduced a diverted profits tax to stop multinationals from reporting poverty in one country while declaring prosperity in another. The global pattern is obvious.

Another variation of the smart corporate act is establishing overseas branches without proper permission. Regional or multinational companies often do not need it. These companies then trade with themselves, invoice themselves, and structure transactions so that the profit is booked abroad while Bangladesh absorbs all the costs. It is the financial equivalent of sending all your income to a cousin overseas while asking your parents to pay your bills.

Bangladesh now needs a stronger regime. Valuations must be done by accredited professionals who can be held accountable. The central bank should scrutinise all offshore restructurings to ensure national interest is protected. Country-by-country reporting must be required so profits generated here cannot be moved offshore. Companies that operate foreign entities without approval must face strict penalties. Transfer pricing rules must be enforced with seriousness, not courtesy. The Financial Reporting Council has already taken a positive step by approving a resolution that allows only professional accountants to conduct valuations. This will not end malpractice overnight, but it brings a traceable signature to every valuation, making professional accountability real.

A nation is not robbed only by masked criminals. It is often robbed by CEOs and owners in tailored suits who present themselves as visionaries while quietly exporting the country's wealth. The tragedy is that many people continue to glorify such thieves as national heroes. Unless accountability becomes real, the corporate thief will keep winning while the country keeps losing.

The writer is the president of the Institute of Cost and Management Accountants of Bangladesh and founder of BuildCon Consultancies Ltd