The state-run insurance company, Jiban Bima Corporation (JBC), is mired in multifarious irregularities and corruption. In the last two years, there have been financial irregularities worth Tk 1.96 billion in this company. Of this, Tk 1.54 billion alone has been spent on the surplus management.
According to the law, JBC is obliged to deposit the dividend funds in the government treasury. But the company did not deposit its profits of Tk 230 million (Tk 23 crore). It paid incentive bonuses without any approval, did not collect arrears of rent and paid lunch allowances to employees in violation of the pay structure. In addition, some employees embezzled the premium money of insurance customers. This caused the government financial losses of another Tk 180 million.
These discrepancies have been revealed in an audit report of the Comptroller and Auditor General (CAG) office based on the activities of JBC in 2018-19 and 2019-20 fiscal years. A team of CAG has prepared the report, analysing data and inspecting the head office along with the Rangpur, Khulna and Chattogram regional offices of JBC from 27 September to 21 October last year. Mohammad Muslim Chowdhury, the Comptroller and Auditor General (CAG) of Bangladesh, is expected to present the report to the president soon.
At present, in addition to the head office, JBC has 6 regional, 12 corporate, 8 sales and 439 branch offices. The investigation team estimates that the financial loss to the government will increase several times if the irregularities of the entire JBC are taken into account. When contacted, Anwar Hossain, the current general manager (GM) and the acting managing director of JBC, refused to talk about these issues.
According to the income tax ordinance, JBC is not allowed to spend more than 90 per cent of the premium revenue of the first year and 12 per cent of the renewed premium income. The rule is the same in the current insurance law too. But JBC pays no heed to these laws at all.
The audit report said that JBC’s first year premium income in the 2018-19 fiscal year was over Tk 1.08 billion (108 crore and 53 lakh). And 90 per cent of that amount is Tk 976.7 million (97 crore and 67 lakh). At the same time the amount of renewed premium income was 3.639billion (360 crore and 39 lakh). And 12 per cent of that amount is 432.5 million (43 crore and 25 lakh).
As per this assessment, the approved expenditure should have been 14.093 billion (14 crore and 93 lakh taka). However, the organisation spent 2.2062 billion (220 crore and 62 lakh), which means the JBC spent an extra amount of Tk 796.9 (79 crore and 69 lakh). In the same way, the organisation spent an extra 743.8 million (74 crore and 38 lakh) in the 2019-20 fiscal year as well. Regarding this, JBC told the audit team that the surplus expenditure had to be made due to the implementation of the national pay scale of 2015. The audit report has recommended departmental action against those involved in the irregularities.
Dividends were not deposited in the state treasury
According to the Insurance Corporation Act, 1973, five per cent of JBC’s dividend is to be deposited in the state treasury. But JBC did not deposit Tk 225.8 million (22 crore 58 lakh) in the period from 2009-10 to 2015-16 fiscal years. This information also came up in the four-point biennial evaluation of the company.
Instead of paying dividends, JBC has sought a grant of Tk 250 million (25 crore) from the Financial Institutions Department of the finance ministry to increase its paid-up capital in January, 2020. The Financial Institutions Division did not get the approval in this regard from the Finance Division despite asking. The finance department said there was no scope of the dividend being converted directly into a paid-up capital.
According to the recommendations of the audit report, the organisation must deposit the dividends to the state treasury. Only after this the company can try to increase its paid-up capital.
Embezzlement of the premium money
According to the audit report, some officials of JBC’s head office and Sylhet regional office have embezzled Tk 3 million (30 lakh) from the customers by rigging the premiums and insurance policies in the last two fiscal years. Of these, Tk 1.125 million (11 lakh and 25 thousand) was embezzled by retired deputy manager BK Baidya alone. Besides, development officer Taqvir Hossain alias Sabuj embezzled Tk 607,000; Sylhet regional deputy manager Khandaker AHM Habibullah embezzled Tk 214,000; and another deputy manager Saleh Ahmed amassed Tk 108,000.
Although JBC paid the dues to the customers, it could not recover the money from the embezzlers. However, the Anti-Corruption Commission (ACC) has filed a case to recover the money. JBC has only informed the audit team about the dismissal of Khandaker AHM Habibullah as their step against the irregularities.
Similar incidents are recurring due to the weak internal controlling system and lack of proper supervision, the report stated.
JBC could not say how many times they have contacted the ACC to know about the progress of the case.
Unauthorised bonuses
In January 2013, the Financial Institutions Division banned JBC from giving bonuses without their approval. But in violation of that, the officials of JBC have taken an incentive bonus of Tk 68.5 million (6 crore 85 lakh) in two fiscal years.
In this regard, the JBC officials told the audit team that the ban imposed by the Financial Institutions Division was only applicable for the Bangladesh Bank, not them. The Insurance Development and Regulatory Authority (IDRA) is their regulatory body. Although the administrative ministry of JBC is now the finance ministry, before 2008, it was the commerce ministry.
JBC has been giving bonus as per an order issued by the Ministry of Commerce issued in February, 1978. Therefore, the audit report has asked the employees to deduct the bonus money from the monthly salary in installments to deposit it in the fund of JBC.
Tk 50 million for lunch
According to the existing national pay structure, only 11th to 20th grade employees were supposed to get the lunch allowance. However, JBC’s officers from the first grade to tenth grade have taken an allowance of Tk 51.4 million (5 crore and 14 lakh) for lunch in two fiscal years.
The payment of allowances has the approval of the Board of Directors of the company as well as the Department of Financial Institutions. The audit report has recommended for the cessation of this expenditure and to call for the money from those who have received the lunch allowances.
Even more irregularities
The report said that JBC has spent Tk 9.6 million (96 lakh) more than the approved budget. Even taka 2.2 million (22 lakh) has been accumulated in advance. Dulal Chandra Nandi, the former general manager of the company, did not deposit Tk 1.7 million (17 lakh) in the JBC fund even after collecting the premium. JBC has collected only Tk 187,000 in the last ten years.
Although there is an obligation of 15 per cent value added tax (VAT) on the legal expenses and 10 per cent on car repairs, the bill has been paid without it. The government has lost Tk 800,000 due to this.
According to the report, senior system analyst Abu Md Shoaib and assistant system analyst Mehedi Hasan have been appointed, breaching the conditions. When asked for the documents and information in this regard, general manager Sheikh Kamal Hossain (deputy secretary), who was deputed to JBC from the administration cadre, misbehaved with the audit team instead of cooperating with them.
Role of Financial Institutions Division
JBC did not give any needed information while the audit was ongoing. When asked for the documents of the recruitment of the two analysts, Sheikh Kamal Hossain told that the required documents will not be given to audit team member Mohsin Ali and verbally threatened him saying that he could not ask for the documents in any other branches either.
Mentioning this incident, the CAG office has sent a letter to Md Asadul Islam, the secretary of Financial Institutions Division, asking to take necessary steps against Kamal Hossain on 16 November. However, the secretary did not respond.
Earlier on 16 November, the CAG office sent another letter to secretary Asadul Islam informing him of serious financial irregularities in the organisation. Although given five weeks, the secretary did not respond. Prothom Alo sent a text message to Asadul Islam on 10 January and again on 24 January asking for the reasons for not replying, but he did not respond.
Meanwhile, a request was made to the CAG office from the Financial Institutions Department on 25 January to settle the objections.
This report appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ashish Basu
