The Bangladesh Securities and Exchange Commission (BSEC) has asked Fareast Islami Life Insurance Company Ltd (FILICL) to explain several of its activities since 2013 and submit detailed documentation relevant to the transactions.
According to a special auditor of the securities regulator, the top tier life insurer gave Tk191.7 crore to two cooperative societies over the 2013-2018 period, and the money appears to have been laundered through the transaction.
In a letter to the company's managing director earlier this month, the BSEC also highlighted some huge investments, spending and transactions that might lack due diligence and transparency.
However, Fareast Life Managing Director Md Hemayet Ullah outright rejected the allegations while talking to this reporter over phone on Saturday.
"We have replied to the BSEC letter and I can say there had been no money laundering as it is being perceived," he said.
The irregularities BSEC pointed out
Fareast Life formed two cooperative societies – namely the Fareast Islami Life Insurance Company Limited Employees Cooperative Society and the Prime Islami Life Insurance Company Limited (PILICL) Employees Cooperative Society.
Both life insurance companies were under control of MA Khaleque.
It appears that through the two cooperative societies, Fareast Life laundered Tk191.7 crore over the period of 2013-2018, according to the regulator's letter seen by The Business Standard.
The BSEC also said the money was not deposited in the bank accounts of the cooperative societies, but was instead transferred to other unknown accounts.
In the letter, the BSEC asked for every detail of the bank accounts and transactions along with the meeting resolutions of Fareast Life management, board of directors and audit committee based on which the transactions had been made.
Fareast Life was also asked to submit the name of the persons who were in different responsible positions within the company.
The company paid Tk858 crore over the 2013-2018 period for "land and land development." The BSEC asked for the ownership deed, mutation and other land department documents alongside the documents certifying regulatory approval and internal due diligence.
BSEC also sought the list of auditors who had okay-ed Fareast's financial statements over the long period alongside engagement partners, directors and executives who were involved with the transactions.
The company opened a series of bank accounts with eight banks and a few non-bank financial institutions (NBFIs). BSEC finds that the company had fixed deposits with 11 branches of the said banks and NBFIs, but the assets were used as lien against TK370 crore in loans taken by companies which were ultimately owned and controlled by the then Fareast chairman, directors and top executives.
Fareast Life had a Tk687 crore investment in various securities at the end of 2018. Of that, Tk453 crore was in related parties and had no valid documentation to support the investments.
BSEC asked for evidence to determine whether the investments were made by the corporate management of Fareast Life or not. Also the company was asked for details of the beneficiaries of the investments.
The company has also been asked to submit the name of the members of the internal committees responsible for keeping an eye on the transactions.
BSEC Executive Director and Spokesperson Rezaul Karim told The Business Standard the letter was sent based on the special auditor's findings and now the regulator is analysing the information alongside explanations from the company.