A business entity in Khatunganj – the largest wholesale essential commodities market in the country – collected advance payment against Delivery Orders (DOs) from many traders, committing to supplying palm oil at a given price, but went missing without delivering the product when the price of the product went up unexpectedly.
In the first week of this month, Al Medina Traders took DOs and advance payment for the orders, from more than 50 traders, with a business transactional commitment for delivering palm oil in 10, 15 and 30 days, respectively to the traders.
The traders were supposed to get 150 trucks of palm oil on 15 July as per the DOs. In the first week of the month, traders gave DOs to Al Medina Traders for palm oil at Tk3,850 per maund (37 kilograms). The accused trading company took an advance of Tk4,000 to Tk5,000 per DO.
Meanwhile, the price of palm oil rose to Tk4,120 per maund. As such, the trading company would incur a loss of Tk40,500 per truck or DO (i.e. 150 maunds of palm oil).
On 15 July, Abdus Salam, the proprietor of Al Medina Traders, went missing, shutting down his business to avoid a loss of about Tk60 lakh on 150 trucks of palm oil.
The aggrieved traders have informed the Khatunganj Trade Association and also filed a case against the company with Kotwali Police Station to get their money back.
Mohammad Yunus, the owner of Ferdous Trading, said, "I was supposed to get 50 trucks of palm oil on 15 July. I deposited Tk2.86 lakh in Al Medina Traders' bank account. We found the company closed in the afternoon and informed the Khatunganj Trade Association leaders about the matter. Later, on 17 June, a case was filed against Abdus Salam."
Deen Syndicate Proprietor Md Diyan said he also had deposited money with Al Medina Traders for five trucks of palm oil.
Al Medina Trading took advance payment from at least 20 companies in Khatunganj against their Dos, committing to 50 trucks of palm oil for Ferdous Trading, five trucks for Deen Syndicate, 10 trucks to Tasmia Trading, 10 trucks to Mubarak Trading, five trucks for RF Enterprise, and five trucks of palm oil for Maya Enterprise.
It seems Abdus Salam of Al Madina Traders, and his brother Abdur Rahim, also a businessman in the market, are absconding, and could not be reached for comment up until this report was prepared.
Jamal Hossain, Organising secretary of the Khatunganj Trade and Industries Association, said the association tried to trace Salam but failed. They are still working on finding him.
Nezam Uddin, Kotwali Police Station Officer-in-Charge, said they have investigated the matter and determined the truth of the matter. Police are conducting an operation to arrest the accused businessman.
Several traders in Khatunganj say it has become a commonplace ploy of traders to disappear when and if they incur huge losses. Typically, when such incidents take place, the aggrieved party of traders reaches an agreement with the absconding trading party through the association or other influential traders. The bankrupt or loss-making trader typically is given the opportunity to return to Khatunganj again for business on condition of returning the money he owes to the aggrieved parties, on a mutually agreed upon payment schedule.
How Illegal Slips Are Heating Up The Khatunganj Market
In Khatunganj, edible oil, wheat, sugar and other major consumer goods are bought and sold on the basis of DOs and advance payments for them. Importers take payment for DOs in the market.
This trading involves a delivery order or sales order against a promissory note issued by importers or manufacturers to wholesalers against the purchased goods – which is legal.
But some unscrupulous wholesalers sell their DOs to middlemen for cash to manage their own cash crunch when a DO is unfulfilled– which means ownership of the goods is now split and passes on to more hands. These "hands" or middlemen then wait for a surge in commodity prices and sell the slips back to the wholesalers or other parties at prices higher than for what they had bought them.
Apart from steep local price changes, the international market of a certain item sometimes plunges overnight – which means both the DO holders and slip buyers would share in the price decline and losses, proportionate to their ownership.
The process is more or less as noted above. There are trading entities, brokerage houses, or floating brokers, who often engage in the DO and slip trading process to make a quick buck.
Seeking anonymity, Khatunganj brokers said that slip trading against a DO is more like trading stocks in a share market. An importer, through the wholesaler, leaves the DO in the market and collects the cash, while trading enterprises and brokers make their profits, on the buying and selling of DOs.