KATMANDU, June 27: Prime Minister KP Sharma Oli has declared publicly: “I do not commit corruption, I do not even look at the faces of the corrupt. But during the tenure of the government led by Oli, the irregularities were made public one after another. A recent example is the Himalayan Reinsurance Company.
According to sources, there is a suspicion of irregularities in granting Himalayan Reinsurance Company permission to operate as a reinsurer. An operator from the same company said the Himalayan Reinsurance Company obtained the clearance by influencing senior government officials. “We have already paid a certain amount. It has been agreed to pay the remaining amount after the start of the company’s activities,” said the operator. “We will pay the amount by collecting Rs 100 per unit.”
The Himalayan Reinsurance Company has a paid-up capital of Rs 10 billion. As it is a company of 100 million units, raising an additional amount at the rate of Rs 100 per unit will be Rs 1 billion. The Managing Director (CEO) of the Investment Board of Nepal (IBN) is close to the Prime Minister. Sources say it is a “deal” in collusion with some traders. The license was issued after private sector entrepreneurs paid an advance with a commitment to pay Rs 1 billion. The Beema Samiti has completed the formal licensing process.
As the value of reinsurance companies is high in the capital market, investors are also willing to pay an additional amount per unit. So far, Nepal Reinsurance Company is the only reinsurance company in the country. According to the Nepal Stock Exchange (NEPSE), the market value of the company’s share price in the reinsurance sector was recently Rs 1,916. Investors are prepared to pay a significant amount as the new reinsurance company will trade at a higher price once it is listed on NEPSE.
Five reinsurance companies were competing for the license according to information published by the Beema Samiti. Along with Himalayan, Prudential Reinsurance, Annapurna Reinsurance, Kathmandu Reinsurance and Genuine Reinsurance had also applied. The operators of other companies were also ready to pay large sums in the dark. The insurance committee, which requested the proposal on April 29, had given until May 19 to register the proposal. The Beema Samiti asked the founders to raise Rs 7 billion in capital in 45 days.
Some of the major business groups have been active in obtaining the license for Himalayan Reinsurance. The company has the investment of reputable businessmen from the private sector. Although some companies had already been registered with Beema Samiti, the latter had canceled the old requests for collusion with certain businessmen and reopened the request for the new company. Beema Samiti is an agency under the Ministry of Finance. So this is a big “deal” and was only possible with the involvement of someone in a senior position, the source said.
Former chairman of Beema Samiti, Devendra Pratap Shah questioned the assessment process of the insurance regulator itself. Shah said the selection process should be transparent. “The company was rushed through the middle of the blackout period,” Shah said. “The evaluation criteria have not been made public. This created suspicion. The competing companies alleged that the company that submitted the closed list had to be sealed when choosing the company from the competition, but this was not done.
The Beema Samiti said the company was selected through a competition in accordance with the published public notice because only one company was suitable after researching the market. The president of Beema Samiti is Surya Prasad Silwal. He was appointed president by the current government.
But President Silwal said permission had been granted to the most suitable company. “The company with the most points in the competition with the best business plan has been selected,” said President Silwal. “They started to blame after their companies weren’t selected.” He also added that the proposal was only requested for one company due to the small size of the market.
Some 70 percent of investments in the Rs 10 billion, or Rs 7 billion, company come from individual and institutional investments. As an IPO worth Rs 3 billion shares will have to be issued to the public, investors who get shares will now have to invest Rs 113 per unit.