CIB arrests two EIC auditors for fraudulent deals

KATHMANDU, December 29: Central Investigation Bureau (CIB) of Nepal Police has arrested a chartered accountant each from two accountancy firms for aiding Everest Insurance Company (EIC)’s top management to commit financial frauds.

The police picked up Jagadish Agrawal of J Santosh and Company, and Gopal Agrawal of Agrawal and Company, to question them on their role in aiding the company clean the balance sheet of unauthorised financial transactions.

Former CEO Kebal Krishna Shrestha and assistant general manager Anil Dhungel of the company have both been already arrested by the police for misappropriation of funds worth Rs 25.09 million. During investigation, CIB also discovered that the company’s CA firms had aided the management hide the unauthorised payments in the balance sheets of fiscal years 2008-09 to 2011-12.

Along with taking unlawful payments from the company, ex-CEO Shrestha is accused of settling insurance claims worth Rs 42 million made by Himalayan Snax Ltd even before the surveyor had filed the final report regarding damages. After almost two years of haggling with the company’s management, the insurance regulator — Insurance Board — had requested the police to investigate the matter and make needful arrests for criminal prosecution.

Managing director of Himalayan Snax — the manufacturer of Mayos instant noodles — is Rajendra Khetan who was also serving as Everest Insurance’s chairman at the time.

“We have also submitted our report underlining the involvement of Rajendra Khetan in duping the company by getting the insurance claims paid of the policy for which Himalayan Snax had not paid any premium,” said a highly placed source at the Insurance Board.

IB is pursuing criminal charges on Khetan calling his actions fraudulent, however, CIB has yet to arrest him.

“We had handed over enough evidence for the police to make the arrest,” informed the official.

Along with heading Himalayan Snax and Everest Insurance, Khetan is involved in Gorkha Brewery, Bottlers Nepal, Laxmi Bank and PrimeLife Insurance, among others. He had also served as member of the last Constituent Assembly.

Everest Insurance is currently being run by a team deployed by IB who suspended the then CEO Shrestha, the company’s board and former chairman Rajendra Khetan back in October. Last year, IB had suspended the company’s fire portfolio asking it to get the insurance claims paid in the case of Himalayan Snax refunded. However, the then management and board did not fulfil the regulators’ conditions.

The regulator stepped in and took over the management as the company’s employees demonstrated against the management’s apathy towards running the company properly.

(Source: THT)