United stands divided

Infograph: TBS

In 1978, four steadfast friends embarked on a journey together, and in 1986, two more close friends joined them, collectively laying the foundation for what would evolve into a colossal empire – the United Group. What began as a modest trading business blossomed into a conglomerate, amassing assets exceeding Tk30,000 crore.

Their camaraderie was so unshakeable that each friend was bestowed with identical homes in the upscale United City at Satarkul in the capital. However, as time progressed, the unity that once defined the group gave way to discord.

Today, the once-united front is splintered, with two friends who entered the group in 1986 – Faridur Rahman Khan and Abul Kalam Azad – asserting that they have been unjustly denied their rightful shares of profits and access to the board of directors.

However, United Group denied the allegations.

The fracture became apparent in 2020 when the first generation of the entrepreneurs went in advisory roles to onboard their offspring as directors and Moinuddin Hasan Rashid, son of the founding managing director and the largest shareholder Hasan Mahmood Raja assumed the role of group chairman, alongside his existing position as managing director.

This discord led to legal action in December 2022, as aggrieved partners Khan and Azad filed a case, where they complained about no access to board and a share of profits from the group's major holding company United Enterprises and Company Ltd.

Last month saw Khan and Azad returning to court, this time seeking redress for the disconnection of power, water and gas in their residences. The court ruled in their favour, restoring the crucial utilities and further underscoring the deepening division within the once-united conglomerate.

"Despite holding 5% shares of the company each, my two clients and their offspring have been deprived of board participation, dividends," said Khandaker Reza-E-Raquib, lawyer for Khan and Azad.

"The holding company owning diversified businesses we built together, investing our lifelong efforts, has Tk9,000 crore in retained earnings due to the huge annual profits and over the last one decade it did not pay any dividend," Khan told TBS, adding, "The other partners also denied our board participation."

He said, "Nowadays, they even refuse to recognise our contribution to the company alongside our shares. They, using the company management, are even trying to discontinue the equal facilities we have long been enjoying as partners.

"Following the unpleasant experiences, we tried to sell off our stake to the partners who are controlling the business now, but they did not help us get rid of it."

His lawyer Khandaker Reza-E-Raquib said Khan and Azad as part of their plea for protection of the two minority shareholders, also sought an order from the court for an independent audit.

Azad told TBS, "It is painful to see your son being deprived of control of your stake in a business by your partners and their sons."

Hasan Mahmood Raja, who owns the major 36% shares of the group was not immediately available for a comment, while his elder son, Moinuddin Hasan Rashid declined to comment on a sub judice matter and advised to talk to his lawyer.

KM Tanjib-ul Alam, lawyer of United Group, said the allegations were "false and baseless. In fact they tried to weaken several internal causes against them that emerged due to their corruption."

The holding company was preserving cash for reinvesting in businesses and both Khan and Azad had signatures on the board decisions.

When the second generation was taking over in 2020, the group followed internal meritocracy to let each assume their deserving roles and sons of the two plaintiffs were assigned with various responsibilities and they failed to prove their capability for board seats, according to Alam.

He also said, both Khan and Azad joined their friends in business as paid employees and in 2009 they became shareholders without paying the capital amount needed.

"So many business transactions in the country were based on good faith and United Group was not an exception, the two former directors broke the trust of other partners," Alam said.

He said their corruption over years gradually kept unfolding since the group embraced strict corporate governance in recent years.

Khan during his role as the managing director of United Hospital paid five times to his relative for procuring medical equipment and accessories, while Azad made a fortune by corrupt deals with the company properties, claimed the lawyer of United.

Both Khan and Azad denied the allegations, while Khan said, "They have the lion's share, the control over the company and all its assets, and we don't want to be deprived of our minority rights."

He added, "Listed securities worth over Tk100 crore in my personal beneficiary owner accounts are stuck due to the United's false lawsuit, while we are not getting back the loans once we made them."

United's lawyer Alam said, "The money he used for buying stocks was not his own, it was the company's money and that's why the company secured an injunction order by the high court on selling of the securities."

Presently, United Group has 51 active firms with exposure in power, real estate, retail, manufacturing, healthcare, education, port management, textile, and chemicals.

The group's annual turnover now stands at over Tk8,000 crore and employs more than 10,000 people.