Regulator suspends Sonali Life Insurance board, appoints administrator

The insurance regulator has suspended the board of Sonali Life Insurance for six months after confirming allegations of fund embezzlement against the company's sponsor-directors.

In an order issued on Thursday, the Insurance Development and Regulatory Authority (Idra) also appointed an administrator to manage the operations of the insurer during this period, ensuring oversight and stability in the wake of financial misconduct.

Earlier in January this year, the Idra appointed the chartered accountant firm Hoda Vasi Chowdhury and Co to conduct a special audit at the life insurer following the fund embezzlement allegations against its owners.

The insurance regulator found that four directors – Noor-E-Hafza, Fauzia Quamrun Tania, Rupali Insurance Company, Shafia Sobhan Chowdhury, and Sheikh Mohammad Danial – of the company bought shares worth Tk9.16 crore without making any payments.

Subsequently, they falsely reported Tk10.50 crore as payment for these shares, withdrawing funds from the company's fixed deposit receipt at South Bangla Agriculture and Commerce Bank.

Between July and December 2023, former chairman Mostafa Golam Quddus illegally received funds totaling Tk18 crore without any board approval.

He also obtained a bank loan of Tk195.43 crore against the company's FDR by submitting fake board meeting minutes. Of this fund, he embezzled Tk84 crore by transferring it repeatedly to different accounts, said Idra.

In FY23, Quddus provided Tk7.86 crore to Dragon Sweater, which he owns, illegally from the insurer's funds. His family also received Tk2.24 crore from the company as salaries. Additionally, two directors of the company took Tk1.60 crore illegally from the company as additional dividend payments.

Besides, Quddus received Tk1.58 crore for the treatment, tourism, shopping, and foreign study of his daughter from the company.

The former chairman also embezzled Tk8.26 crore from the company. Of this amount, Tk1.82 crore was spent on purchasing an air conditioner, Tk15 lakh on gifts for a marriage ceremony, Tk11.75 lakh for birthday celebrations, Tk9.27 lakh for purchasing cows for sacrifice animals, Tk3.42 lakh for family entertainment, Tk5 crore for family foreign tours, and Tk1.52 crore as a gift for policy renewal.

According to Idra, Quddus informed the board that the amount paid to his firms, Dragon Sweater, Dragon IT, and Imperial Convention Center, was duly justified. However, proper evidence justifying such large expenses was not found.

During the hearing, the former chairman confessed that he issued shares in favour of himself and his family members, received a monthly salary, foreign travel expenses, and other costs, including education and treatment abroad. However, he claimed that he took this money for his office rent.

The company's book of accounts, ledgers, system-generated vouchers, bank advice, and check documents do not match his claim. Furthermore, this expense was not shown as office rent in the company's annual financial report and audited accounts.

The discovery of personal and family expenses in the company's funds, along with taking cash and transferring money to a company owned by Quddus, appears to have been claimed as rent.

Noor-A-Hafza replied that she paid the amount for placement shares issued in her name through a pay order, a photocopy of which is enclosed.

She admitted to receiving a salary of Tk3 lakh per month and additional dividends. She accepted the money as it was given to her legitimately, and now she is willing to return the money.

She admitted to signing some checks issued by the insurer to Quddus's company as the then chairman and claimed that she signed as Quddus instructed her to do so without fully understanding.