Emerald Oil Industries Limited, a company listed on the stock market, is not complying with the law. Year after year, the company continues to violate various laws. Furthermore, the company’s financial statements have raised concerns among auditors. Despite receiving investments of nearly 20 crore Bangladeshi Taka, the company has not deposited the funds in its bank account. Additionally, despite selling goods worth more than 155 crores Bangladeshi Taka, Emerald Oil has failed to collect payments from its customers. The company has also neglected to submit income tax returns for several years. The latest inspection report from the auditor of Emerald Oil, as obtained from the Dhaka Stock Exchange (DSE), reveals these alarming details.
The company operating in the Food and Miscellaneous category has been found to be violating various laws, including the Companies Act of 1994, the Labor Act of 2006, and the Income Tax Ordinance of 1984, according to the auditors’ opinion.
According to the report, Minori Bangladesh Limited, in the most recent financial year, invested Tk 23 crore 27 lakh 35 thousand 44 in Emerald Oil as a shareholder’s money deposit. During this period, Minori received 19 crores 98 lahks 64 thousand 944 Taka from the company. However, the company has not deposited this amount into its bank account. The company has informed the auditor that due to the misconduct of the previous management team at Emerald Oil, the bank is not providing any assistance. The company is also unable to access the previously opened bank account, which is now inactive.
The auditing institution has revealed that as per the financial report for the fiscal year ending on June 30, 2022, the company possesses assets, plants, and equipment worth 48 crores 73 lakh 32 thousand Taka. However, the authenticity of these assets could not be verified. Moreover, Emerald Oil has not conducted any revaluation of its assets in accordance with IAS-16 in the latest financial year.
Former Managing Director (MD) of Emerald Oil, Syed Hasibul Gani Galib, has sold products worth 155 crores 66 lahks 53 thousand 675 Taka. Despite such a substantial volume of sales, Emerald Oil has not received the corresponding funds. The company has not provided any information to the auditor regarding the process of recovering these funds. Consequently, this amount of 155 crores 66 lahks Taka has become a loss for the company instead of income.
According to section 81 of the Companies Act 1994, every company is required to hold an Annual General Meeting (AGM) once a year. Failure to comply with the AGM requirement, as per section 82 of the Companies Act, can result in penalties for both the company and its officers. The Registrar of Joint Stock Companies and Firms (RJSC) has legislation in place, within 21 days of the AGM, for companies to submit their annual reports and provide information to shareholders and directors. However, Emerald Oil has failed to conduct the AGM for several years and has not provided this information to the RJSC. As per the auditor’s opinion, Emerald Oil has violated the Companies Act of 1994.
As per the auditor’s opinion, Emerald Oil has not provided the latest tax assessment status. Consequently, the company’s actual tax liability could not be determined. Since the fiscal year 2014-15, the organization has been in violation of Section 75(1) of the Income Tax Ordinance 1984 by not filing tax returns. Furthermore, the company has also failed to comply with provision number 16 of article number 52 of the Income Tax Ordinance 1984, which states the applicable areas for VAT and tax deductions. Despite the existence of this provision, the company has not fulfilled its obligations in this regard. While showing a tax deduction of Tk 3 lakh 58 thousand 600 instead of Tk 10 lakh 856, the auditor has not found evidence to support their claim.
According to the Bangladesh Labor Act 2006, it is mandatory for companies or organizations in Bangladesh to establish a Workers’ Profit Participation Fund (WPPF) for the benefit of their employees. Five percent of the company’s profits are required to be deposited into this fund. Despite the requirement to deposit the funds within the first nine months of each fiscal year, Emerald Oil has failed to contribute any amount to the WPPF since the 2015-16 financial year, as stated by the auditor. Interestingly, the company has mentioned the existence of this fund in its financial statement. Consequently, the auditor has expressed an opinion that the company has violated the Labor Act 2006.
To obtain further information on this matter, the Managing Director and spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), Mohammad Rezaul Karim, informed the financial correspondent that the restructuring of Emerald Oil’s board was carried out in the interest of investors. Their responsibility includes initiating the company’s production. The sales (revenue) that the company had previously generated will be collected in accordance with accounting standards. The BSEC’s Chief Accountants Division will verify this upon receiving the audit report. Compliance with accounting standards will also be assessed. If there is any non-compliance by the company’s management, appropriate measures will be taken. The Commission will also take action for any violation of other laws if the Securities Law allows. The BSEC always works in the best interest of investors, and in the case of Emerald Oil, it will ensure compliance with all relevant laws.
