Fareast Islami Life Ins facing
FROM PAGE B1
With about 3,000 of these clients’ policies having matured, many of them flock to the company’s local office every day in a bid to get back their deposit.
“However, the head office is not providing refunds,” the official added.
Abdul Hai, head of Fareast Islami’s Lalmonirhat branch, said policyholders are not getting their money back due to the company’s lack of liquidity.
“It is not possible to say when the claims will be settled,” Hai said, adding that he even stopped coming to office on a regular basis to avoid the mounting pressure from claimants.
Sheikh Kabir Hossain, chairman of Fareast Islami, said the company is “sick” as it owes a lot of money while its owners are in jail.
The government had set up a new board of directors to restore Fareast Islami to its previous position, but they have not made much progress so far.
“Due to this sickness, it is not possible to pay back debts at the required rate,” said Hossain, who is also president of the Bangladesh Insurance Association.
Another reason is that new clients are not coming to open policies anymore as the company has gotten a bad reputation, meaning that there is a lack of incoming funds to clear the debt, he added.
Jahangir Alam, spokesperson of the Insurance Development and Regulatory Authority (Idra), said Fareast Islami was issued several directives to pay outstanding claims.
In addition, their activities are being monitored, he added.
As per unaudited data of the Idra for 2022, Fareast Islami currently owes Tk 4,559 crore in claims.
Of this amount, the company has settled just Tk 970 crore, or 21.29 per cent, of the total claims.
In April 2021, the Idra appointed Shiraz Khan Basak and Company, a chartered accountant firm in Bangladesh, to conduct a special audit on Fareast Islami.
The auditor then submitted a report to the Idra in May 2022.
As per the report, Tk 2,367 crore has been embezzled from the company. Apart from this, accounting irregularities amounting to Tk 432 crore were detected.
Nazrul Islam and MA Khaleque, former chairmen of Fareast Islami, Hemayet Ullah, former chief executive officer, and former directors and senior officials were found involved in the embezzlement.
The money was embezzled in mainly two ways: purchase of land at prices higher than the market value and bank loans availed mortgaging the company’s Mudaraba Term Deposit Receipt (MTDR).
The MTDR is a profit bearing account based on the Mudaraba concept that offers returns on money deposited for a fixed period of time.
In September 2021, the Bangladesh Securities and Exchange Commission dissolved the company’s board of directors. That same month, the then chief executive officer, Hemayet Ullah, was sacked by the Idra.
At present, Fareast Islami operates through independent directors.
Md Main Uddin, a professor of banking and insurance at the University of Dhaka, said clients would not have suffered for claims had the regulator played its role properly and had the intention to protect the interests of people.
“In order to retain confidence and trust of people on the insurance sector, the government can create an emergency fund to settle claims of real policyholders of the company,” he said.
“The government can later realise the fund by liquidating assets and investment of the insurers. Otherwise, people will lose confidence,” added Main.