NICL scandal: FIA yet to register new cases, despite SC orders

Audit report details well over Rs5b in losses to the insurance company.

LAHORE:

The Federal Investigation Agency (FIA) has not yet registered a fresh case against the people allegedly involved in embezzling over Rs5 billion out of the National Insurance Company Ltd (NICL), despite orders from the Supreme Court to do so.

FIA officials told The Express Tribune that they are still busy completing investigations relating to charges that have previously been filed against the alleged financial frauds at the NICL, which were also begun on the orders of the Supreme Court as well as the federal commerce secretary.

The Supreme Court gave orders for the new investigation four weeks ago in response to an audit report received from the company that detailed well over Rs5 billion in losses to the state-owned insurance company that were caused by financial mismanagement and suspected fraud.

The biggest loss to the company came as a result of its investment in the United Arab Emirates real estate at the height of the property boom in the Middle East. Yet the audit report alleges that the prices paid by the NICL were higher even than the already inflated prices prevalent in the market at the time.

The inflated prices, coupled with the fact that the NICL has not been able to collect rents on those properties, has resulted in a net loss of Rs5.4 billion to the insurance company. It is unclear if the lack of rent is due to poor market conditions in the Middle East real estate sector or because of bad management.

The 61-page audit report also details several other investments made by the insurance company that either had below-market return rates or outright losses. It is unclear if the management is accused of poor investment judgement or outright fraud.

Insurance companies typically collect premiums from their clients to cover against the risk of specific events that may occur in the future. They then take those funds and make a variety of investments, including in instruments such as stocks, bonds, mutual funds, real estate and alternative investment vehicles.

The NICL embezzlement case investigation has dragged in its net several prominent politicians and their children, including Moonis Elahi, a member of the Punjab Assembly, and Mohsin Warraich, son of former federal cabinet member Habibullah Warraich.

Published in The Express Tribune, May 18^th, 2011.