The finance ministry has appointed an observer to the troubled Sonali Life Insurance and asked the Insurance Development Regulatory Authority (IDRA) to appoint two independent directors to the board of the life insurance company.
The directive that came months after the insurance regulator appointed an administrator at the company to protect the interests of policyholders.
In an order by the Financial Institutions Division (FID), the ministry appointed Md Shah Alam, additional secretary at the FID, as observer.
Finance Adviser Salehuddin Ahmed approved this step to address the ongoing issues after the IDRA suspended the board of directors and appointed an administrator at Sonali Life.
According to a letter issued in September, the FID has issued four directives to resolve the complications that have arisen after the administrators' appointment.
The letter said the IDRA must appoint two independent directors to the company, under the condition that Sonali Life Insurance withdraws all the writ petitions it has filed, to resolve the legal complications. IDRA will also take the necessary steps to appoint one of these directors as the chairman of the interim board.
Additionally, the audit firm appointed by IDRA must submit its audit report upon the completion of the audit.
The letter emphasised that the interim board should expedite the process of forming a regular board, by the regulations, and ensure a smooth transition of responsibilities.
In mid-August, around 200 officials of Sonali Life Insurance staged a protest, accusing the chairman of the insurance regulator of corruption and demanding his resignation. The protesters also called for the removal of the administrator appointed by the regulator at the premises of IDRA.
The demonstration occurred shortly after Sheikh Hasina resigned from the post of prime minister on August 5 following a mass uprising.
An audit earlier revealed that Sonali Life Insurance's former chairman Mostafa Golam Quddus, along with six of his family members, embezzled at least Tk 187.84 crore from the company. Quddus, who is also a former president of the Bangladesh Garment Manufacturers and exporters Association.
On July 25, the Anti-Corruption Commission filed a case against eight individuals, including Mostafa Golam Quddus, his six family members, and a relative, over the embezzlement.
IDRA appointed Hoda Vasi Chowdhury & Co last July to conduct a comprehensive audit into the allegations of corruption and irregularities at Sonali Life Insurance.
