Directors linked to Beximco leave Fareast Islami Life quietly
2022-formed board drew flak as directors included from ‘shell companies’
After the fall of the Hasina-led government, individuals connected to Beximco Group resigned from the board of Fareast Islami Life Insurance. In addition, the independent directors appointed by the securities regulator also stepped down.
Following the resignation of the BSEC-appointed board, sponsor shareholders Fakrul Islam, Mokaddes Hossain, Nazneen Hossain, Shamsul Haque, Helal Miah, Ayesha Husne Jahan, and Muslima Shireen assumed control of the company.
The stock exchanges, however, did not release any disclosure regarding the change.
In February 2022, the Bangladesh Securities and Exchange Commission (BSEC) restructured the board of the scandal-hit Fareast Islami Life Insurance by appointing independent and shareholder directors, aiming to restore transparency and integrity to the life insurer.
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In 2022, the Shibli Rubayat Ul Islam-led BSEC allowed Beximco Group Executive Director Mostafa Zamanul Bahar and Shanta Asset Management Vice Chairman Arif Khan as directors of the life insurer nominated by Tradenext International Limited.
The regulator also allowed Beximco Pharma Chief Financial Officer Ali Nawaz, Beximco Textiles General Manager Masum Mia and businessman Jahurul Islam Chowdhury to become directors as nominated by Jupiter Business Limited.
The regulator also appointed seven independent directors to the life insurer.
Before receiving approval from the BSEC, Tradenext International acquired a 9.91% stake, and Jupitar Business purchased 9.9% of the shares in Fareast Islami Life Insurance. Both firms then applied to the commission for directorship positions within the life insurer.
A Fareast Life Insurance director, who preferred not to be named, told The Business Standard that although Beximco executives had previously served on the board of the company as associates of Beximco, they no longer hold those positions.
He added that the directors resigned in August and a new board has since been formed. On 14 March this year, the BSEC issued a warning letter to Tradenext International for violating securities laws. The letter mentioned the company's address as Paramount Heights, 7th Floor, Box Culvert Road in Dhaka's Purana Paltan. However, during a visit this week on Wednesday, it could not be found at the address.
Ali Nawaz said, "I am not aware of whether Jupiter Business is an associate company of Beximco."
When asked why he was nominated by Beximco, he explained, "Salman F Rahman [Beximco Group vice chairman] told me that the government wants to improve the position of the insurance company. As part of this, he offered me the role of representative for Jupiter Business. Accordingly, I was nominated as a director."
He added, "The sponsors of the life insurer came to the office and informed us that they would be taking control of the company, so I resigned."
Jahurul Islam Chowdhury said, "I am also a sponsor shareholder of the company. I served the company as chairman till 2003."
He further stated, "I have never heard of Jupiter Business and am unaware of its operations. One day, Salman F Rahman called me and asked to become a nominated director of Fareast Life.
"Those who were forced out of the company returned after the fall of the government. And I resigned as they wanted to take responsibility. But I have no business relationship with Salman.
"I was also asked to be on the new board, but I don't have enough shares to become a director."
Arif Khan stated, "I have been elected as a director at Shanta Life Insurance. According to the law, no one can serve as a director in two life insurance companies simultaneously. Therefore, I have resigned from the board of Fareast Life Insurance."
He further said that he has no relation with Tradenext International.
In April 2021, insurance regulatory authorities appointed the chartered accountancy firm Shiraz Khan Basak & Co to audit Fareast Islami Life. The audit firm revealed that Tk2,367 crore had been embezzled from the company.
Former chairman Nazrul Islam, former director MA Khalek, former CEO Hemayet Ullah and several former directors and senior officials of Fareast Islami Life were found to be involved in the corruption, according to the audit.
