Reps uncover 'fraudulent practices' in MDAs

dimeji akinloye

October 25, 2016 5:14 AM

The insurance companies and the MDAs allegedly connived to defraud the Federal Government in insurance premiums annually.

House of Reps

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The insurance companies and the MDAs allegedly connived to defraud the Federal Government yearly in insurance premiums - running to billions of naira, Punch reports.

An ad hoc committee of the House, while grilling the chief executive officers of some insurance firms on Monday, confronted them with the findings.

The committee found that most insurance firms receive premiums in excess of the amount due to them from the MDAs.

According to the lawmakers, this raises the suspicion that heads of the MDAs later retrieve the overpaid premiums and convert them to private use.

In his opening remarks at the probing session in Abuja, Mr. Adekunle Akinlade, Chairman of the committee described the discovery as "alarming."

He said: "It is noteworthy to state here that this ad hoc committee has no intention to go on a witch-hunt of any individual, group of persons or organisation but rather carry out its mandate within the ambit of the law, which is to establish that monies were paid to civil servants.

"Although, we have identified very alarming infractions running into billions of naira, they will not be made public at this point in time as we are still consulting with the relevant law enforcement agencies and financial institutions to ascertain the level of complicity of those involved."

The first insurance executive questioned was the Managing Director of Standard Alliance Insurance, Mr. Bode Akinboye.

The committee flagged "infractions" in covers the firm signed with the MDAs.

The firm was said to have invoiced N625,000 as gross premium on a vehicle worth N12.5 million. It was insured by a Federal Medical Centre.

But the premium paid was N900,000, with a difference of N275,000.

"The premium received is higher than the gross premium invoiced. Standard Alliance, therefore, claims to have received an amount in excess of their entitlements to the tune of N275,000 as contained in this report."

Another questionable premium payment was in the Ministry of Works, the firm reportedly paid N900,000 as against the N150,075 premium due to it, with a difference of N749,000.

The insured sum was N30 million.

Akinboye, however, argued that his firm applied the standard practice in insurance business.

He stated that policies involved other costs that could be added later to the premiums.

"There are payments for other classes of business," he added.

He was said to have unsatisfactorily defended the N128,666 invoiced as the premium for an insured sum of "1, 580."

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The insured sum was also recorded in asterisk as both committee and the MD could not determine whether it was in dollars or naira.

But, it was clear to both sides that the N128,666 premium was higher than the insured amount.

"How can the premium be higher than the sum insured? This is in respect of the Presidential Fleet. Was the 1,580 in dollars or naira? It is smaller than the premium of N128,666," Akinlade asked.

Akinboye replied: "This must be a typographical error. The sum insured is in dollars, but definitely not 1,580,” he told the committee."

Also accused of the same 'questionable practice' was Regency Alliance Insurance Plc.

dimeji akinloye