Administrator appointed to Delta Life Ins

The Insurance Development & Regulatory Authority (IDRA) yesterday appointed an administrator with immediate effect to one of the sector's leading entities, Delta Life Insurance Company, explaining that it was to protect policyholders' interests. 

Meanwhile, the VAT Audit, Intelligence and Investigation Directorate filed a case against the Delta under the VAT act alleging that it had evaded paying Tk 35.18 crore in VAT. The insurance regulator's logic behind appointing Sultan-ul-abedin Mollah, a former IDRA member, was the unearthing of many rule and regulation breaches, which came to light through special and investigative audits.

The IDRA ran the special audit through the Howladar Yunus & Co in 2019 and then the investigative one through the Fames & R Chartered Accountants to verify allegations of shareholders and policyholders. "On the basis of the Delta's answer on audit objections, we found that there were breaches of rules and regulations in at least 22 ways," the IDRA said in a show cause notice.

In some cases, the company's answers were not acceptable to the auditor. Moreover, in cases where the company did acknowledge breach of rules, there were no statements on when and how it will be corrected, read the notice. The Fames traced 25 specific ways through which interests of policyholders have been impacted. It recommended running more investigations encompassing 10 ways through which there has been a breach of rules, said the IDRA.

The notice asked the company why its board of directors should not be suspended for four months and an administrator appointed. A reply was sought within January 28, 2021. The IDRA extended the deadline to February 11 following a prayer of the company. But the insurer finally informed that it would file a writ petition rather than provide an explanation to the IDRA, said the letter over the administrator's appointment. But the High Court will not hear the petition and so it is a responsibility of the IDRA to take up the initiative of issuing a show-cause notice abiding by the insurance act, the letter said.

According to the insurance act 2010, there are many reasons validating such an appointment of the IDRA for managing an insurer. "If an insurer carrying on insurance business is acting in a manner likely to be prejudicial to the interest of holders of insurance policies or failing to fulfil the solvency margin requirements…," reads one reason. "…in this case, it may, after giving opportunity to the insurer to be heard, suspend the Board of Directors and appoint an Administrator to manage the affairs of the insurer under the direction and control of the Authority," it says. Last year the IDRA had suspended the board of directors of BAIRA Life Insurance Company and appointed an administrator.

The Delta administrator will run an audit through a renowned firm and an actuary firm along with continuing to run the business. The administrator will also have to submit a report to the IDRA within four months, reads the appointment letter. "The government gave me the responsibility to protect policyholders' interests," said Mollah in a press briefing yesterday. The appointment is a result of the company not assisting the IDRA-appointed auditors and the subsequent audits finding the rule and regulation breaches, he said.

"To submit the IDRA report, we will appoint two leading auditors," he said, adding "Our activities will help protect interests of policyholders and shareholders." In another press briefing last Sunday, former Delta CEO Adeeba Rahman said they had "objections on the auditor's findings". Moreover, one auditor is not enlisted with Bangladesh Bank, she said. In the meeting, the insurance company accused IDRA Chairman M Mosharraf Hossain of demanding Tk 50 lakh in bribes in exchange for approving the reappointment of the company's CEO and refraining from appointing an administrator.

The insurer filed this complaint with Anti-Corruption Commission (ACC) on December 7, 2020 alleging the bribe demand and sent another letter to the commission on December 9 alleging that Hossain was pressing for it. Afterwards, Hossain filed a general diary with Motijheel Police Station stating that one official of the insurance company tried to bribe him and that all recordings of mobile conversations provided as evidence had been tampered with. The chairman also filed a court case against six Delta officials. The court had ordered the Police Bureau of Investigation to investigate the case and submit a report last Wednesday. Sources said it was yet to be complied with.

Delta VAT Evasion Case

A team led by Saima Parveen, the directorate's assistant director, investigated the insurance company's financial transactions from January 2013 to December 2017 based on specific allegations of VAT evasion, said the directorate in a statement. Afterwards, the team prepared a report by verifying data obtained from copies of treasury invoices and other documents submitted by the institution at different times, it said.

During the period, the company was fund to have evaded paying VAT of Tk 16,24,27,905 alongside Tk 18,92,62,828 in interest, taking the total to Tk 35,16,90,733.

The investigation team further said to have unearthed that the company resorted to various forms of fraud and deception to refrain from paying the VAT, which is a punishable offence under the VAT act.

The administrator, Sultan-ul-abedin Mollah, said he was yet to know of the case and would take steps after consultation with the IDRA and lawyers.   

Source: The Daily Star