The non-life insurance company, which generates revenue by selling motor, fire, marine insurance policies, among others, said the fund was used to pay rental installment for a building which it had hired for 15 years. [break]
“But in reality, this never happened and the money probably went into the pockets of the company´s promoters,” a reliable source at the Insurance Board, privy to the case, told Republica.
The case of misappropriation of public funds came to light during an on-site inspection conducted by the Board, the insurance sector regulator, around one-and-half months ago.
Soon after the case was unearthed, the Board warned the company to immediately return all the money. So far, almost half of the sum of around Rs 26 million has been retrieved. The IB has now given the company a deadline of May 4 to return the rest of the money with 16 percent interest.
“We could have taken action against the company soon after the malpractice was noticed. But we decided to give them an opportunity after the company pledged not to make such mistakes again. We hope it will abide by the regulator´s instruction and return all the money within the deadline,” the source said.
However, Laxmi Bahadur Shrestha, one of the promoters of the company, said the incident was a non-issue. “Such small matters do not deserve space in your newspaper,” he told Republica over the phone Monday evening.
NB Insurance is a firm promoted by NB Group, which runs a host of companies and financial institutions such as Nepal Bangladesh Bank, Nepal Credit & Commerce Bank, Nepal Sri Lanka Merchant Bank, Nepal Bangladesh Finance & Leasing Company, Harisiddhi Brick & Tiles Factory and National Hydropower Company. The insurer generated revenue of Rs 213 million in the last fiscal year, of which almost 80 percent had come from motor insurance business, according to data compiled by the regulator.
Since the beginning of 2012, at least three insurance companies have faced the regulator´s ax.
In January, all transactions of Asian Life Insurance were suspended after the insurer distributed dividends among its promoters and public shareholders by going against the directive issued by the Insurance Board. A month later, the regulator suspended the motor business transaction of Lumbini General Insurance after it was found selling products to promoters in credit, failing to settle claims in time and haphazardly issuing policies without proper evaluation of risks.
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