Photo : Collected
The Insurance Development and Regulatory Authority (IDRA) has suspended the board of Sonali Life Insurance Company for embezzling Tk 187.84 crore and also appointed Brigadier General (retd) SM Ferdous as an administrator for six months to run the insurance activities of the listed company.
IDRA Director and Spokesperson Md Jahangir Alam told The Daily Messenger Ferdous had started his duties on Sunday.
He said Hoda Vasi Chowdhury and Co had done an audit, which proved the allegations of financial irregularities and corruption against Sonali Life former chairman Mostafa Golam Quddus and several directors. That is why the board was suspended, he added.
IDRA sources said the administrator appointed by the regulator would soon conduct a full audit of the company by a qualified local or foreign firm.
The administrator will submit a report to the authorities as soon as possible as per Section 96(1) of the Insurance Act 2010 and conduct all activities, including insurance policy issuance, according to Section 95(3).
The Hoda Vasi report said shares worth Tk 9,16,50,000 were issued in the names of Sonali Life directors Noor-E-Hafza, Fauzia Quamrun Tania, Shafia Sobhan Chowdhury, and Sheikh Mohammad Danial without taking money from them.
Loans of Tk 8,95,00,000 from South Bangla Agriculture and Commerce Bank against the company's FDR were taken and Tk 1,55,00,000 was withdrawn from the savings account no 0002130000334. A total of Tk 10,50,00,000 was withdrawn and deposited in the company's account no 0002622000073. The money was shown as the purchase price of the shares of the said directors.
Quddus created opportunities for irregularities by keeping seven family members on the company board and establishing family dominance. He did so by transferring shares among his wife Fazlutun Nessa, son Mostafa Quamrus Sobhan, daughters Fauzia Quamrun Tania and Tasnia Quamrun Anika, Mostafa Quamrus Sobhan’s wife Shafia Sobhan Chowdhury, and Tasnia Quamrun Anika’s husband Sheikh Mohammad Danial and then fulfilling the requirement for holding the minimum number of shares.
In addition, Tk 1,87,84,15,966 was embezzled from the company through 17 types of irregularities, including illegally paying Tk 18 crore – Tk 3 crore every month between July and December 2023 – to Quddus' company Dragon Sweater without the approval of the board, said the report.
To take effective measures for protecting the interests of Sonali Life clients and about fund embezzlements, the company directors on April 4 were asked to submit a written statement within five working days. The board members were then asked to go to the IDRA on 18 April and give explanations.
In their statements, the board members admitted the irregularities.
Later, IDRA Director Abdul Majid in a written statement said the information given by the company's chairman and directors reveals that shares were issued in favour of Quddus and his family members while they also received monthly salaries. Besides, the insurer gave money to the companies owned by Quddus.
Majid also said Quddus and his family members admitted that they had spent the company’s funds on travel, education, and healthcare abroad. Quddus claimed that he had taken the money for office rent that he was eligible for.
But this contradicts the documents, such as the company's book of accounts, ledger, system-generated vouchers, cheques, etc. The expense was not shown as office rent in the company's annual financial report and audited accounts. This proves that the money was used to cover personal and family expenses and also transferred to the companies owned by Quddus.
Moreover, for the office of the company established in 2013, a rent agreement of Tk 184.52 crore was made in 2013 by determining the year-wise floor area demand between 2013 and 2027. Besides, the signing of the contract by the sponsor director, also the son-in-law of the building owner, instead of the chief executive officer or the chairman on behalf of the company was unreasonable, unacceptable, and an instance of trickery.
It was claimed that the board was not informed about the liability and payment of interest by taking loans of Tk 204.37 crore against the FDR of the company. This is unacceptable and an attempt by the board to evade its responsibilities.
On the other hand, Quddus admitted the payment of Tk 74.4 crore (claimed as office rent) to the company owned by him, which is contradictory.
In view of incomplete data storage or concealment of information, a non-transparent accounting system, the absence of internal control system, transacting large amounts of money using cash cheques, taking bank loans by using FDR as a collateral, and almost all the bank signatories, including the chief executive officer, being members of the same family, the insurer is operating in such a way that the interests of the company and its clients are being seriously undermined through irregularities and misappropriation of funds.
In this situation, the Sonali Life board has been suspended for six months as per Section 95 of the Insurance Act 2010 to take effective measures to protect the interests of the insurer and the clients.
Messenger/Fameema
