Irregularities cost Delta Life Ins Tk 3,687cr

Embezzlement of funds, corruption, revenue evasion, and mismanagement by the suspended board and management have cost Delta Life Insurance Company Ltd Tk 3,687 crore in financial losses, according to a new audit.

Appointed by the Insurance Development & Regulatory Authority (IDRA), ACNABIN Chartered Accountants carried out the audit into the insurer. The findings of the audit have not been made published.

According to a letter signed by IDRA Director Md Shah Alam to the financial institutions division on December 1, a review of the interim report submitted by the audit firm showed that Delta Life Insurance faced a loss of Tk 3,687 crore because of funds embezzlement, corruption, revenue dodging, and mismanagement.

"The report also mentioned about incidences such as money-laundering," said the letter.

When contacted, Alam said: "I issued the letter after gleaning information from the report of the audit firm. I don't know much more than that."

SM Shakil Akhter, executive director and spokesperson of the IDRA, said he could not comment without looking into the audit report.

Earlier on October 17, the IDRA sent another letter to the financial institutions division, giving some idea about the irregularities at the insurance company. 

The company's suspended board and management embezzled cash by withdrawing money using fake expenses, it said.

Cash was embezzled by withdrawing money for tax office expenses at the verbal instruction of the chief executive officer, submitting fake bills in the name of maintenance work and fake food bills, in the name of surrender of fake policies, and showing lower claims in order to receive higher dividends.

The company's directors also breached laws by holding higher stakes into the company.

According to the October letter of the IDRA, six members of a same family hold 22.78 per cent shares combined in the company, against the limit of 10 per cent.

Md Quddus Khan, the administrator at the insurance company, said: "It would not be appropriate for me to say anything for or against the report."

"I have been given the responsibility to manage the company. That's where I'm trying to give the highest attention."

Adeeba Rahman, the immediate past chief executive officer and a shareholder-director of Delta Life, called the report incomplete.

"While preparing the report, no comment was taken from us," she told The Daily Star.

The trouble at Delta Life came to the fore after Adeeba's application for the renewal of the job was rejected by the IDRA on November 16 last year.

The reasons, cited by the regulator, were revenue evasion and financial irregularities, non-cooperation of auditors during investigations, citing false information to become the CEO, and failures to comply with IDRA guidelines.

On December 7 last year, Delta Life complained to the Anti-Corruption Commission that IDRA Chairman M Mosharraf Hossain sought a bribe of Tk 50 lakh for giving approval to the reappointment of the CEO and renewing the actuarial valuation basis.

At a press conference on February 7 this year, Delta Life executive director Chowdhury Qamrul Ahsan alleged that the IDRA chief was threatening to unfairly dissolve the company's board.

Four days later, the insurance regulator appointed former IDRA member Sultan-ul-Abedin Mollah as its administrator, saying it was needed to protect policyholders' interests and unearth breaches of rules that came to light following special and investigative audits into the insurer.

He was later replaced by Rafiqul Islam, a former joint secretary. On October 13, Quddus Khan, another former member of the IDRA and a former additional secretary, was appointed as the new administrator.

The VAT Audit, Intelligence and Investigation Directorate of the National Board of Revenue has filed a case against Delta for evading Tk 35.18 crore in value-added tax.

Mosharraf Hossain could not be reached for comments.

Set up in 1986, Delta Life is conducting its operation through 1,000 plus offices across the country.

The insurer has a life insurance fund of Tk 4,200 crore, an official of the company said.