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The board of directors, including the chairman, of Swadesh Life Insurance Limited has been made dysfunctional. According to the details, the paid-up capital of the company has been embezzled, and the capital itself is currently held as a lien in the bank against a loan.
Additionally, the board, along with the company's chief executive officer (CEO) and chairman, allegedly made a transfer of 46 lakh taka in the name of an incentive.
The Insurance Development and Regulatory Authority (IDRA) has reportedly found evidence supporting the allegations against Swadesh Life Insurance Limited. Consequently, in accordance with regulatory measures, the chairman of the company, along with 12 directors, including Maksudur Rahman and vice-chairman Shahidul Ahsan, have been removed from their positions.
The remaining 10 directors are Nurul Alam Chowdhury, ABM Abdul Mannan, Farhan Ahsan, Marjanul Ahsan, Baharul Ahsan, Shamsun Nahar Rahman, Ferozul Ahsan, Kamrul Ahsan, Manjurul Islam, and Madina Tun Nahar.
Jahangir Alam, the Director and Spokesperson of IDRA, confirmed these actions, stating that, in accordance with the regulations, the paid-up capital of the company was Tk 18 crore. Of this amount, Tk 14 crore 30 lakh of the company's capital has been taken as a lien in the bank, leading to the removal of the 12 directors, chairman and vice-chairman of the company.
In a letter signed by IDRA Director (Deputy Secretary) Abdul Majid on January 4, it is stated that Maksudur Rahman, director and chairman, while serving as the director and chairman of Swadesh Life Insurance, violated Section 21 of the Insurance Act 2010. According to the letter, he obtained a loan of Tk 14.30 crore from the bank against the company's paid-up capital, and this amount was secured by a fixed deposit of Tk 13.05 crore.
This action is a serious violation of regulatory norms and legal provisions governing insurance companies. Obtaining a loan against the paid-up capital and using a fixed deposit as security may have legal consequences, especially when it breaches the regulations set forth by the Insurance Act 2010.
Section 21(2) of the Insurance Act 2010 stipulates that the paid-up capital can be deposited in any scheduled bank without any liability. However, it is alleged in the letter from IDRA Director Abdul Majid that Maksudur Rahman violated this provision.
The letter also notes that the money raised as a loan was not reflected in the company's statement for the relevant period, suggesting a potential misappropriation of funds. As a result, IDRA sent a letter on December 4, invoking Section 50(1) of the Insurance Act 2010, asking Maksudur Rahman to show cause as to why he should not be removed from the post of Director and Chairman of the Board of Directors of Swadesh Life Insurance Company Limited.
Despite providing a deadline until December 11 for a response, no reply has been received, and Maksudur Rahman has not taken the opportunity to defend himself against the allegations of violating the Insurance Act and misappropriating the interests of the insurance company and policyholders.
The decision has been made to remove Maksudur Rahman from the positions of managing director and chairman of the insurance company. This action is based on the provisions of Section 50(1) of the Insurance Act 2010, as the activities undertaken by him have been deemed harmful to the insurance company and its policyholders. According to the letter issued to Maksudur Rahman, this decision is effective from the date of the letter.
Additionally, the company's financial reports for the years 2020, 2021, and 2022 reportedly revealed illegal management expenses, commission trading despite a business downturn, and delays in paying customers' insurance claims. These actions are considered violations of Section 62 of the Insurance Act, as well as Section 58, Section 59, and Section 130 of the Life Insurance Act 2010.
In the special investigation conducted by IDRA, a concerning picture emerged, leading to hearings with both IDRA and the company's CEO and board. As a result, the company was fined 50,000 taka, and the CEO was fined the same amount for failing to provide evidence during the hearing.
When questioned about this matter, Ikhtiyar Uddin Shaheen, the then CEO, declined to comment. On the other hand, Maksudur Rahman, the current chairman of the company, stated that no removal letter had been received.
According to IDRA's investigation report, there has been a significant abnormal increase in expenses by Swadesh Islami Life over the four years from 2019 to August 31, 2022. The total actual management expenses during this period amounted to approximately Tk 39.32 crore, with an average of Tk 9.83 crore per year.
As per the provisions of the Insurance Act 2010, the expected total expenditure over the same period should have been Tk 24.17 crore, averaging Tk 6.04 crore per year. However, the company has incurred additional management expenses totaling Tk 15.15 crores, averaging Tk 3.79 crores per annum.
The company's expenditure on agent commissions over the last four years amounts to about Tk 7.84 crore. During this period, the company earned approximately Tk 35.26 crores in gross premiums, averaging around Tk 8.81 crores per annum. On average, the company is spending about Tk 116 to collect a premium of Tk 100 per year.
Since 2019, the company has not been able to incur expenses within the approved limits. Which is a violation of Sections 10 (d), 10 (g) and Sections 130 (b) and 134 of the Insurance Act 2010. Action can be taken against the company and related persons as per provisions.
Messenger/Fameema
