Insurance Development and Regulatory Authority (Idra) on Wednesday removed Md Hemayet Ullah from the post of chief executive officer (CEO) at Fareast Islami Life Insurance Company.
In the removal order, the insurance regulator said it has found proof of many allegations of financial and other irregularities and mismanagement against Hemayet, which hurt the interest of the policyholders and the insurer itself.
The Anti-Corruption Commission (ACC) had earlier sued Hemayet for accumulating wealth beyond the known sources of income and submitting false asset statements.
The once-an-influential executive in the life insurance industry is under a travel ban, too.
Hemayet's removal will take effect on Thursday and it offers him no indemnity against any irregularity that took place within the top-tier listed life insurance company during his tenure.
The Business Standard called Hemayet Ullah for his comments but he did not pick up the phone.
The Insurance Act 2010 empowered Idra to oust CEOs and directors of insurance companies to protect the interest of policyholders alongside saving the companies from any deterioration.
The insurance company has been directed to seek approval from Idra for the appointment of a new CEO with a view to filling the gap in the next three months.
Earlier this month, the Bangladesh Securities and Exchange Commission (BSEC) restructured Fareast Islami Life's board of directors by ousting all the existing directors and appointing 10 renowned professionals as independent directors.
The new board has been assigned to set up an audit committee comprising independent directors as per corporate governance code 2018, take initiatives to reform the top management, and try to bring back its embezzled money within six months.
Besides, the new board will take steps against those who committed financial crimes and embezzled money from the company in the last 10 years.
A year ago, the stock market regulator appointed A Wahab & Co Chartered Accountants as a special auditor to look into the company's financial statements for 2016, 2017, and 2018.
BSEC found that several hundred crores of taka had been embezzled by the company's controlling directors.
Also, there are allegations that the company does not meet the claims of its customers duly. As a result, customers suffer even after their policies mature.
Fareast Life was the top premium earner among the listed life insurers and amid the lack of governance, it is facing deterioration.
In the first nine months of 2019, the company reported a Tk63.21 crore drop in its life revenue account, while over the same period of 2020, it further decreased by Tk60.57 crore.
At the end of September last year, Fareast's total life fund stood at Tk3,308 crore and since then, shareholders got no financial disclosures of the company.
The company, which was incorporated in Bangladesh on 29 May 2000, got listed on stock exchanges in 2005.
It paid a 10% cash dividend to its shareholders for 2019.
Sponsors and directors jointly hold 30.55%, institutional investors 42.51%, foreign investors 0.71%, and general investors 26.23% shares of the company.
Fareast Life shares having a face value of Tk10 each closed at Tk67.4 on Wednesday at the Dhaka Stock Exchange.