Take stern action against embezzlers

It is disconcerting to learn that a major insurance company of the country—Fareast Islami Life Insurance—has been accused of allowing its former chairman and directors to siphon off policy holders' deposits worth more than Tk 2,100 crore between 2010 and 2020. This major financial irregularity was discovered following an audit done in the company, which was commissioned by the Bangladesh Securities and Exchange Commission (BSEC) after receiving complaints that the insurer had failed to meet customers' claims and clear matured policy-holders' payments.

A report in this daily says that the commission has 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. Reportedly, after receiving a primary audit report, the BSEC in August restructured the company's board by appointing 10 independent directors. According to the audit report, the directors embezzled the funds by showing enhanced prices while buying land, investing in their own companies and offering advances to fraudulent cooperatives. It has come to the open now that the procurement of land by the insurer at artificially high prices was aimed at laundering corporate cash by a group of directors and the former chairman. A letter to the government by the executive director of BSEC says that direct capital erosion of Tk 858 crore happened at different times over the last decade. As an example, it has been cited by the audit team that in 2015, the insurer bought 28 decimals of land in Kakrail for Tk 172 crore, which was originally priced at Tk 19.6 crore.

The special auditor also found records of transactions of huge amounts of money to two fraudulent cooperative societies, which were in fact vehicles to launder corporate cash off the Fareast Life Insurance Company. Investigation by the BSEC further revealed that the corporate books of accounts show 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.

We understand the criminal act of laundering deposits of unsuspecting clients has been masterminded by a league of unscrupulous people for a long period. It is surprising, however, that it took 10 years for the gatekeepers to detect the crime. The term insurer is no doubt a misnomer for a company that ate up clients' deposits, instead of safeguarding them. We hope that the clients will now get their money back, and the criminals will be punished as per the law of the land.