Home ›› 28 Aug 2022 ›› Front
The founding directors of Fareast Islami Life Insurance Company Limited, in collusion with the management, have embezzled Tk 982 crore, the biggest insurance scam in the country’s history.
Former chairman of the insurance company Nazrul Islam and members of the board of directors misappropriated the money in accomplice with its former chief executive officer (CEO) Md Hemayet Uliah, alleges an investigation report by the Insurance Development and Regulatory Authority (IDRA).
The IRDA formed a probe committee on October 4, 2021 regarding allegations of various irregularities against Fareast Islami Life Insurance Company’s former Chairman Nazrul Islam.
IDRA Director Shah Alam was the head of the investigation committee and the other members were Director (Law) Mohammad Shafiuddin and two officers--Abu Mahmud and Shamshul Alam.
The IDRA has recently submitted the probe report to the finance ministry, said sources at the ministry.
In September last year, the Bangladesh Securities and Exchange Commission (BSEC) dissolved the board of directors of Fareast, a listed company, after allegations of corruption surfaced against its chairman Nazrul Islam. The irregularities allegedly took place between 2010 and 2020. In the same month, the finance ministry directed the IDRA to investigate into the allegations and submit a report.
The BSEC recently nominated Bangladesh Insurance Association President Sheikh Kabir Hossain as the chairman of the reconstituted board of directors of the insurance company.
Asked whether any action would be taken against former chairman Nazrul Islam, Kabir Hossain told The Business Post that carrying out an investigation against any individual or punishing him is not their responsibility.
“Settling down all debts and turning this company around is my job as the chairman of the board of directors. The board will only take action if the IDRA instructs,” he said.
Tk 191 crore embezzled forming two institutions
Two cooperative societies, Fareast Islami Life Insurance Employees Association and Prime Islami Life Insurance Employees Association, were established consecutively in 2003 and 2016 as subsidiaries of Fareast Insurance.
Tk 120 crore and Tk 71 crore were allocated against the two non-existent associations, according to the IDRA probe report.
Tk 592.94 crore misappropriated through illegal loans
Different amounts of loans were provided from various banks, where Fareast Islami Life had deposits, to several organisations including Molla Enterprise, Azad Automobiles, Mithila Textiles, Mithila Properties, Prime Finance Capital Management, Fareast Finance, PFI Properties Ltd, Prime Asia University and PFI Security. Fareast Islami Life was the guarantor for all those bank loans.
As per the Insurance Act, a fixed deposit of an insurance company cannot be used as a lien or collateral. But, according to the IDRA investigation report, all the directors including the chairman of the board of directors and the company’s chief executive officer embezzled Tk 592.94 crore loans taken from different banks against the lien of Mudaraba Term Deposit Receipt (MTDR) accounts of Fareast Islami Life.
Tk198.35cr misappropriated in name of land purchase
The investigation report says, in 2013, Fareast Life Insurance’s subsidiaries Fareast Islami Life Insurance Employees Association and Prime Islami Life Insurance Employees Association bought 739.50 decimal land in Mirpur area in the capital at a price of Tk 14.30 crore. But, the two subsidiaries sold the land to Fareast Life Insurance at a higher price of Tk 198.35 crore in 2016.
To complete the task, fake minutes of the company’s board meetings have been prepared fraudulently adding these issues as additional agendas which are not included in the actual minutes of the board meetings, the report alleges.
According to IDRA’s investigation report, the board of directors indulged in all these irregularities by an accomplice with Md Hemayet Uliah, the former chief executive officer (CEO) of the insurance company.
The post of CEO is contractual and appointed for three years. He cannot in any way become the president of the association of regular and permanent employees of the company. The most surprising thing is that Hemayet was both the buyer and seller of the land in question. He did this unethical act to allow the board of directors embezzle money, the probe mentioned.
Accomplices of the embezzlement
According to the investigation report, from 2010 to 2021 (until the dissolution of the board of directors), former chairman Nazrul and other directors and top officials of the company were directly involved in these irregularities.
Nazrul was the chairman of the company during the whole decade of irregularities. He also rewarded former MD and CEO Hemayet Ullah in various ways for his cooperation in looting money.
Professor Dr Iffat Jahan, MA Khalek, Sabiha Khalek, Shahriar Khaled, Rubaiyat Khaled, Sarowad Khaled Simin, Md Tanjirur Haq, Md Deacon, Md Helal Mia, Dr Md Mokaddes Hossain Jahan, Nazzin Hossain, Manwar Hossain, Md Shamsul Haque, Muslima Shirin, Md Sohail Arif and Abdul Awal were the directors of the company at different times.
ABM Hossain Ahmed, Md Nazrul Islam Molla and Md Akhter Hossain Sannamat were independent directors of the company. The former chairman Nazrul Islam, who is currently staying abroad, could not be reached despite repeated attempts made by The Business Post.
