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'DNA' investigation: ICICI Lombard cheated govt of crores of rupees

Monday, 2 July 2012 - 10:00am IST Updated: Monday, 2 July 2012 - 1:34am IST | Place: Mumbai | Agency: DNA
ICICI Lombard GIC Ltd, India’s largest privately-owned general insurance company, has allegedly swindled the central government of crores by forging beneficiaries and enrolling thousands of ineligible people.

ICICI Lombard GIC Ltd, India’s largest privately-owned general insurance company, has allegedly swindled the central government of crores by forging beneficiaries and enrolling thousands of ineligible people under the Rajiv Gandhi Shilpi Swasthya Bima Yojana (RGSSBY), a health insurance scheme for artisans.

In 2009- 2010, ICICI Lombard denied genuine beneficiaries of their insurance claims under RGSSBY. It also made fake accounts of policy holders and charged the government several crores as premium against fake enrolments. Sources, backed by documents, say the company pocketed the premium.

As per guidelines, the Union textiles ministry contributes about Rs800 towards RGSSBY premium and beneficiaries, depending on category, pay around Rs100.

In 2009-2010, the government signed a MoU with ICICI Lombard to enrol 8 lakh artisans across the country in the fourth year of RGSSBY. Of the 8 lakh, 30,000 were from Rajasthan. Documents show fake enrolments were used to meet the target and at least 20 per cent of the total enrolments are dubious.

Deepak Srivastava, former national manager of ICICI Lombard’s fraud control unit and now associate vice president, HR, confirmed the racket. He said the fraud unit receives several complaints annually regarding fake enrolments.

After a whistleblower complaint alleging the involvement of directors and senior management in misappropriation of public funds released under the RGSSBY, a probe was ordered. The investigation by the fraud control unit indicted several ICICI Lombard officials for systematically cheating the government. It showed that in Rajasthan alone, around 11,000 enrolments were fraudulent.

No insurance, only false assurance: To meet its target of 30,000 artisans, ICICI Lombard approached the Rajasthan Khadi & Gramodyog Board in Jaipur with a proposal to cover its workers. But the board is registered with the ministry of micro-, small and medium enterprises (MSME) and thus is ineligible for the scheme.

In 2009, the Khadi & Gramodyog Board sought clarifications from the finance ministry and from former mines and minerals minister Santosh Bagodia in this regard.

They forwarded the letters to the ministry of industries that replied saying societies registered under MSME were not eligible for schemes funded by other ministries. The board secretary turned down ICICI Lombard’s proposal.

However, as the yearly target deadline loomed, ICICI Lombard officials approached the board again with a proposal to cover khadi workers under a different scheme — the Khadi & Gramodyog Karigar Swasthya Bima Yojana. As 50,000 workers were affiliated, enrolling them at once would have saved company officials extra work. However, this scheme was just RGSSBY with a new name. New pamphlets were printed to lure the board to the new scheme meant only for khadi workers. Finally, 11,000 workers were enrolled, flouting policy guidelines.

A circular issued by the textile ministry’s handicraft division’s development commissioner says every fresh RGSSBY enrolment should be certified by the respective Asst. Development Commissioner of handicraft to ensure authenticity. However, this was ignored by the insurance firm.

Documents with DNA found that officials fabricated figures of policy renewals too. ICICI Lombard claimed it renewed 24,000 policies in the fourth year of the scheme that was way above the actual renewals.

Besides this, ICICI Lombard also destroyed cards issued under the scheme. On July 28, 2010, executive director Alok Agarwal, customer service head Sanjay Dutta and vice president Birendra Mohanti, decided to destroy about 16,000 insurance cards issued to Khadi Gramodyog. In violation of rules, many of them were destroyed.

This was a deliberate attempt to stop policy-holders from claiming insurance money, says Srivastava. “My report that was diluted by the management detailed how ICICI Lombard, misappropriated government funds and tried to cover it up,” he said.

This is just the story in Rajasthan. Documents show ICICI Lombard adopted similar malpractices in Assam, West Bengal, Arunachal Pradesh and other states. The firm declined to comment saying the matter was sub-juice. In April 2012, Srivastava filed public interest litigation (PIL) on the matter in the Bombay High Court.

Email correspondence in early 2011 between the fraud control unit and ICICI Lombard chief executive Chanda Kochhar shows that she was informed. But she has not taken any action so far.

The matter has not moved forward since. “I contacted the bank after nine months in December 2011 to know the case’s status. They refused to share their findings and asked me to forget the matter,” said Srivastava.




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