Kathmandu. Bangladesh National Insurance Company embezzled 310 million taka (local currency) in 2022. The Insurance Development and Regulatory Authority (IDRA), in its special audit report, had imposed a fine of only Rs 5 lakh for the embezzlement.
However, the company was not directed to deposit the embezzled amount in the company’s fund. Moreover, the IDRA did not issue any directive to deposit the embezzled VAT and tax money in the government treasury along with the premium.
In addition, the company was fined Tk 500,000 for spending more than Tk 9.73 million. However, the company was cleared of the charge of illegal expenditure by imposing a fine without further investigation into whether the money was embezzled in the name of overspending.
The IDRA had sent a letter to the company on August 26. The company started its business in the country’s insurance market in 1996. It was listed on the stock market in 2016.
The company’s board of directors includes the family of Meghna Group owner Mustafa Kamal. He is the president of the company.
Mustafa’s wife Beauty Akhtar, his three daughters Tehmina Mustafa, Tanjima Mustafa and Tasneem Mustafa, his son Tanvir Mustafa and her husband Taif bin Yusuf are also on the board of the company. The company is mainly run by Mustafa and his family.
The Mustafa family owns 1,67,28,334 units of shares in the company. This is 37.80 percent of the total shares of the company.
How did the premium of Tk 31 crore come to be embezzled?
According to the Special Audit Report, the financial statements of Bangladesh National Insurance (BNIC) showed a total premium income of Tk 905.4 million for the year 2022. However, according to bank statements, the total deposits in the company’s three bank accounts stood at Tk 121.71 crore in 2022.
According to this, the company had embezzled premium income to the tune of Tk 31.17 crore without reporting financial statements.
The IDRA has slapped a fine of Tk 5 lakh on the company for this fraud. The fine was imposed under Section 130 of the Insurance Act, 2010.
However, the company says that the premium income is shown on the basis of net premium and policy. The total premium is deposited in the bank. These include VAT, stamp duty, deposit premium, refund, cheque dishonour, etc.
The company has claimed that the advance premium, collection and cheque dishonour received last year were also deposited in 3 bank accounts. The total bank deposits of the company in these three sectors are Rs 20.82 crore.
Although IDRA did not accept the review petition and imposed a fine of Tk 5 lakh, it did not conduct any further investigation or special action into the receipt of substantial upfront premium, collection of the previous year and cheque dishonour. Further, IDRA has not ordered the embezzled premium of Rs. 31.17 crore to be deposited in the company’s fund.
Similarly, IDRA has not issued any directive to deposit the embezzled VAT and tax money in the government treasury along with the premium.
Company irregularities{
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In 2022, the approval for management expenses of Bangladesh National Insurance was Tk 307 million. The company spent Tk 40.44 crore on this account. The company spent Tk 9.73 crore more than the prescribed limit on this account. Which is illegal.
The IDRA has imposed a fine of Tk 5 lakh on the company for the irregularities found in the Special Audit Report. In other words, the IDRA has cleared the company of the charge of illicit expenditure of Tk 9.73 crore.
However, the IDRA has not directed further investigation into whether the money was siphoned off under the guise of additional expenses.
On the other hand, the special audit report in 42 policy cases has revealed tariff rate violations by the company. The company issued these policies in violation of Section 17 of the Insurance Act, 2010. The regulator cleared the company of this charge by imposing a fine of 1 lakh taka for this violation.
Apart from this, IDRA had also imposed a penalty of Tk 1 lakh on the company for harassing customers by delaying payment of insurance claims in violation of the Insurance Act. However, in response to the company’s review petition, IDRA waived the fine.
