Insurance Development and Regulatory Authority (IDRA) in an investigation has found the involvement of the Board of Directors of Delta Life Insurance Company limited (DLICL) in embezzling Tk 3,687 crore and other irregularities.

A letter signed by IDRA director (Deputy Secretary) Md. Shah Alam was sent to the secretary of Financial Institution Division (FID) on December1, 2021 in this regard.

The IDRA analyzing the provisional interim report, prepared by a charter accountant firm, revealed that management and the Board of Directors of  DLICL has  embezzled Tk 3,687 crore by tax evasion and   money laundering.

The insurance regulator suspended the Board of Directors of Delta Life Insurance and appointed an administrator to run the company in February this year.

DLICL evaded VAT worth Tk 35.17 crore. The VAT Audit Intelligence and Investigation Directorate of the NBR filed a case under the VAT law against the company after getting evidences of the evasion through an investigation.

Earlier, a team of the VAT AIID led by its assistant director Sayma Parveen carried out the investigation based on allegations for the period between January 2013 and December 2017.
On December 17, 1986 the journey of Delta Life Insurance Company began. The company provides different types of insurance services through its array of products catering to the need of people belonging to different strata of the society.
Services included traditional insurance coverage along with savings: Ordinary Life, Gono-Grameen Bima, Group & Health Insurance.
Delta Life is conducting its operation through 1000 plus offices across the country.^[1]

Fareast Islami Life Insurance allowed its former chairman and directors to commit serial financial crimes and siphon off policy holders' funds worth more than Tk 2,100 crore between 2010 and 2020, found an audit recently. The audit was commissioned by the Bangladesh Securities and Exchange Commission after receiving allegations that the insurer has failed to meet customers' claims and matured policyholders' payments.

After receiving a primary audit report from A Wahab & Co. Chartered Accountants, the BSEC in August restructured the Fareast Life board by appointing 10 independent directors.

The commission already directed the Central Depository Bangladesh Ltd (CDBL) to freeze all shareholdings into Fareast Insurance and other listed companies by specific individuals, their families or entities under the control of the individuals. The directors embezzled the funds by showing manipulated prices while buying land, investing in their own companies and providing advances to fraudulent cooperatives, the special audit found.

It is evident that the procurement of land by the insurer at artificially high prices were all designed to launder corporate cash by a group of directors notably including Md Nazrul Islam, former chairman, said the BSEC in a letter to the finance ministry on November 24.

"A direct capital erosion of Tk 858 crore happened at different times over the last decade," read the letter signed off by Ripan Kumar Debnath, executive director of the BSEC.

For instance, in 2015, the insurer bought 28 decimals of land in Kakrail for Tk 172 crore from Islam's brother-in-law and father-in-law. The two had bought the land in the same year for about Tk 19.6 crore.

Islam's wife later received Tk 115 crore through bank transfer from her brother and father, the auditor found. Meanwhile, the insurer launched two cooperative societies and made advances of Tk 191 crore to the organisations, the letter said. though the books showed advances to the two cooperative societies, the money actually did not flow into their bank accounts. "Importantly, one of the cooperative societies was dissolved in 2016 and the money remained unaccounted for." The special auditor concluded that both the cooperative societies were fraudulent vehicles to launder corporate cash off the Fareast Life Insurance Company.

The insurance company's balance sheet for 2018 showed that Tk 686 crore was kept as investment in shares and bonds. A careful enquiry into the corporate books of accounts revealed that the company made term deposits with different banks, forged resolutions of the board meetings and facilitated those banks to extend loan facilities to 13 parties including sponsor-directors and their entities, the BSEC said. When all of them did not repay the loans and interests, the banks liquidated the deposits of Fareast Islami Life Insurance. These are unlawful transactions leading to laundering of cash of Fareast Insurance worth Tk 659 crore, the letter said.

Islam, Md Hemayet Ullah, the then managing director of the insurance company, and MA Khaleque, a sponsor-director, are particularly found to have actively planned and executed it and ultimately laundered corporate resources to their private gains, it said. The insurer invested Tk 369 crore as term deposits with several banks from 2013 to 2016. Khaleque borrowed Tk 312 crore against the lien of the term deposits of the company and then ultimately defaulted.

The lending banks then liquidated the corporate term deposits and an adjustment was made in the books of Fareast Islami Insurance recording Tk 421 crore as loans and investments to Khaleque. Khaleque reached an agreement with the insurer in 2018 admitting his liability of Tk 369 crore to the company, the letter said.

"It is evident that serial financial crimes and money laundering took place while Md Nazrul Islam acted as the chairman of the company," the BSEC letter said. The audit committee is an important board committee of the company; they failed to deliver the minimum oversight so an enhanced enquiry and investigation is required to identify their role in the criminal activities, it said. Management activities have a fiduciary responsibility to safeguard corporate resources but the commission gathered ample evidence that management executives actively colluded with controlling shareholders.

"It is highly likely that top-level management executives schemed out corporate resources for their private gains."
As many as four independent audit firms carried out financial audits and three others conducted corporate governance audits of the insurer from 2010 to 2019, according to the BSEC letter.

They failed to gather sufficient evidence regarding massive fraud and money laundering so they need to be held accountable for their failure.
The commission already directed the CDBL to freeze all shareholdings into Fareast Insurance and other listed companies by specific individuals, their families or entities under the control of those individuals.

"The company's board and the management did the forgery in collusion, so we could not stop them early," said Shakil Akhter, executive director of the Insurance Development Regulatory Authority and also its spokesperson.

"We usually appoint the managing director and expect the MD would inform us if any illegal demand comes from the board of directors. But, the management did not inform us. When the insurer failed to repay the insurance claim and people came to us, we found out then that the company is in trouble."

It is tough to stop corruption early until the management of the companies does not inform the IDRA, he added. The Daily Star contacted Islam, Ullah and Khaleque multiple times but none responded at the time of filing of the report last evening. "Despite the corruption, we are now paying back the claims slowly," said Mahamudhul Hasan, company secretary of Fareast Islami Life Insurance. "We knew an independent auditor audited the company's financials, and the BSEC also asked for documents to investigate. We are trying to help the BSEC in their investigation," Hasan added. Contacted, BSEC Chairman Shibli Rubayat Ul Islam said the stock market regulator's tasks is almost complete as they unearthed the corruption and informed all the related authorities. The IDRA should have unearthed the case as the primary regulator. "But they did not do it. We did it considering the benefits of shareholders, the policyholders and the whole economy. Now, the IDRA, the finance ministry and the Anti-Corruption Commission will work on it," he added.^[2]

You can see how those innocent peoples scream after losing their life savings.

Insurance isn’t a scam and while they’re at it making money as a business, they’re also paying out legitimate claims.