The Insurance Development and Regulatory Authority (Idra) has suspended the board of directors of Delta Life Insurance for four months and appointed an administrator to run the company.
The administrator – Sultan-Ul-Abedine Molla, a former member of the regulator and also an insurance expert – would look after the company for the same four months.
He will have to submit a report on the company to Idra within the next four months, along with ensuring external audits by reputed audit and actuarial firms.
The regulator will also take care of the continuation of the company's business and operations, according to a letter issued by the Idra on Thursday.
Two retired bureaucrats will soon join Delta Life as consultants to ensure smooth administrative activities within the company, said the regulator.
According to Idra, the company failed to reply to the regulator's show-cause notice even within the extended time till Thursday.
Meanwhile, the company on Thursday filed a writ petition with the High Court seeking its order to stop Idra from appointing an administrator.
As there was no order from the court until the deadline, Idra had to actuate the plan for the appointment of an administrator, said the primary regulator of the insurance industry.
Idra had served a show-cause notice to the company for the appointment of an administrator a few weeks earlier following two separate special audit and investigation reports by two chartered accountant firms appointed by the regulator.
The Idra letter mentioned 22 audit objections by special auditor Howladar Yunus and Co, which the regulator believes are very risky for policyholders and violated insurance industry rules and regulations.
A special investigation by Fames and R has also reported 25 audit objections and called for a further investigation into 10 points, according to the Idra letter.
The company blames 'Idra chairman's mala fide intention'
On the other hand, the company's board members and top officials have been repeatedly claiming that the Idra chairman, a former employee of the company, had asked for a bribe from the insurer.
Later, the company filed a corruption case against him and submitted some audio recordings as proof to the Anti-Corruption Commission (ACC).
Idra Chairman Dr M Mosharraf Hossain has filed a countersuit on charges of defamation.
In a virtual press conference on Thursday, the company claimed that the regulator did not let Delta Life directors, its chief executive officer, and chief financial officer join a virtual hearing.
Meanwhile, company attorneys who joined the online hearing were not allowed to explain the points of Delta Life.
"They told our attorneys that the regulator would hear from us, but finished the hearing within three-minutes and then they sent an administrator to our office, wrote us about the suspension of the board," Delta Life officials claimed in the press conference.
They said the High Court might hear their writ petition on Sunday.
They expressed concern that the appointment of the administrator "with a mala fide intention and to harass the company" might end up harming the company's policyholders and shareholders.
The action might damage the reputation and harm business of the company and the administrator may also deteriorate its business if he bears any mala fide intention, Delta Life officials said.
"We would seek legal protection and also want to let people and the government high-ups know that we are being harassed," said Zeyad Rahman, a director of the company.
Delta Life, the first private sector life insurer of the country, is an AAA-rated company, and it should not be the second company after Baira Life Insurance in the industry to see an administrator, said Zeyad.
Questioning the profile of the special auditors, he also said, some minor issues identified in an audit and an investigation should never lead to the appointment of an administrator.
VAT Intelligence sued Delta Life
Meanwhile, the VAT Audit, Intelligence and Investigation Directorate filed a lawsuit against Delta Life on Thursday, accusing the company of evading Tk35.17 crore in value-added taxes (VAT) over the period of 2013-2017.
VAT intelligence officials had earlier crosschecked the company's audited financial statements, VAT office submissions, treasury challans, and other relevant documents.
Being contacted, Zeyad Rahman in a text reply told The Business Standard, "We are seeing this news on VAT for the first time. We have not received any notice regarding this and it was not in any audit reports."
"The accusation is baseless as far as I know."
"What we find most astonishing is the timing of VAT office's case filing, which coincides with the appointment of the administrator."
However, if the company is found guilty after getting the opportunity to defend its position, the company should be ready to face the consequences, said Zeyad Rahman, who is a member of the Delta Liffe's suspended board of directors.