MUSHTAQ GHUMMAN
ISLAMABAD: Chief Executive Officer (CEO), National Insurance Company Limited (NICL), Capt Jamil Akhtar Khan has brushed aside all allegations leveled by the commerce ministry against him and the company’s performance during his tenure.
In a six-page letter to the Additional Secretary Commerce, Mian Asad Haya-ud-Din, Jamil contended that “I am surprised to know that it is felt that my performance appears to be falling short, whereas the fact of the matter is quite to the contrary. The financial performance of NICL has improved in 2015 and 2016. The pre-tax profits and investment income of NICL in the last year is at an all-time high and pre-tax profit for the year 2016 has increased by 29 percent over the previous year, as you may have seen from the ten year performance report of NICL sent to the Ministry of Commerce.”
He further claimed that financial leakages and expenses under different heads have been curtailed drastically during this period as can also be seen in the report. For instance a considerable decrease of 63 percent can be seen from the ‘repair and maintenance’ head of accounts. Similarly decrease in management and administrative expense is also noticeably obvious.
The CEO maintained that ‘focus on cleaning up of NICL of dishonest and corrupt employees’ was a major KPI outlined by the Prime Ministers’ office and he has relentlessly been pursuing this objective, against all obstacles and political pressure. In this regard, as a first step, over twenty employees linked to corruption, fraud and embezzlement of funds in the past have been dismissed lawfully from NICL in the last year or so. “Unfortunately, these ex-employees have now started a concerted and mala fide campaign against me. Some of these ex-employees are quite connected politically and are using all their resources and political connections to spread false information and discredit me, in order to get re-instated in NICL. The names of these individuals are stated in the ten year report submitted to the Ministry of Commerce,” he further wrote.
CEO NICL in his letter submitted the following points in his reply: (i) that he has never been “convicted” by the SECP at any time as has been wrongly alleged, thus there is no question of conveying such information to the Ministry. In fact SECP cleared him for appointment in NICL which they could not have done if he was convicted by them. “This false, baseless and defamatory allegation is being spread by the same disgruntled, corrupt ex-employees without any substantiation, for vested interest. The same allegation was also reported to SECP that categorically stated in their letter of April 21, 2017 that no penalty or punishment has been imposed on me in person.”
ii- With regards to appointments against 13 key posts in NICL only 9 positions were filled and the balance 4 have not been filled as no candidate who applied, qualified on merit. Appointments on key positions was part of the KPIs wherein as CEO he was required to identify and fill key positions deemed necessary to ensure effective governance and efficient management. All appointments have been made with the concurrence of the Board of Directors and the Ministry of Commerce, and strictly on merit. The appointments were of highly skilled nature and above the equivalence of grade 16 and people of all provinces have been taken, in line with the regional quota policy as best as possible, without having to compromise on merit. After the approval of the Board, a letter was duly sent to the Ministry of Commerce along with the list of those positions to be advertised. Initially, the Ministry sought certain clarifications thereon, hence the advertisement to appoint was deferred and a meeting of the entire Board of Directors with the then Secretary of Commerce, Azmat Ranjha was held. Thereafter, a letter was written on 26.07.2016 to the Ministry for obtaining approval/NOC for placement of advertisements for the positions stated. On August 17, 2016, the Ministry of Commerce wrote to the Establishment Division for approval and NoC, who then directly placed the advertisement in the leading newspapers. It may be noted that the advertisements for key appointments were not placed by NICL but by the Establishment Division on the instructions of the Ministry of Commerce. Thereafter a rigorous exercise was carried out for shortlisting of candidates by the Board’s HR committee, after which the entire Board got involved in the final selection process including the Additional Secretary Commerce, Dr Aamer Ahmed who was a Director on the NICL Board, representing the Ministry of Commerce. The entire process is well documented and minuted as part of Board’s meeting.
iii- Appointment of the Company Secretary is a statutory position governed by the Companies Ordinance and part of the CEO’s KPIs given by the Prime Minister. The position was advertised with full involvement and concurrence of the Board of Directors and thereafter the Board itself, including the Additional Secretary Commerce on behalf of the Ministry, Dr. Aamer Ahmed, shortlisted, interviewed and finally selected the most suitable person for this slot. He has brought to the notice of Additional Secretary Commerce Mian Asad Hayaud Din that a letter of June 7, 2011 from the Ministry of Finance re: “public sector companies”, states that “The Board of Directors are competent to run the affairs of the corporate entities registered with SECP and any governmental instructions are not capable of superseding the control and decisions of the Board of Directors, nor are such instructions directly applicable to the companies unless adopted by the board.”
iv- It is absolutely incorrect to state that no expansion or improvements have been observed in the company’s business and that it has been on the decline since the accused CEOs appointment. Quite the contrary, a perusal of the ten year financial performance report of NICL provided to the Ministry will prove otherwise. The gross premium earned by NICL in the year 2016 is Rs.6.55 billion, which is 29% higher than in 2015 and as mentioned earlier, the pre-tax profit for the year 2016 is the highest ever achieved in the last ten years and stands at Rs.4.64 billion. Improvement and success of a company’s business is measured in terms of its financial performance. The CEO claimed he has introduced in NICL for the first time, the concept and practice of “pre-risk inspections”, has progressively increased NICL’s net retention levels and has drastically reduced the reinsurance costs, thereby improving the bottom line of the company substantially.
v- Regarding irregular past appointments that were done during the years 2009 to 2014 numbering over 350 employees, the Ministry of Commerce has been kept constantly informed. Complete investigation and inquiry has been conducted which has been submitted to the Ministry of Commerce and which the Ministry has also acknowledged receiving. Further, full details of the irregular appointments as well as the persons’ responsible for such appointments have been sent to FIA. The FIA has also summoned the individuals responsible on the company’s complaint and they are currently investigating the matter.
vi)- Litigation in NICL has been a feature since 2009. A lot of litigations have been inherited. In the last one year of the CEOs appointment litigations have been initiated by the employees linked with corruption, fraud and embezzlement of funds, and/or those found to be appointed irregularly and/or whose degrees are fake have been dismissed lawfully from NICL. In exercising their right, these ex-employees are now trying their best to get re-instated through the court. Further, some of the litigations have also been disposed of in favour of NICL by the court.
vii- With regards to the purchase of properties by past managements in 2009-10, these cases are being investigated by NAB and FIA and the people responsible are being pursued by them. They are the specialised investigating agencies and NAB has also successfully recovered an amount of over Rs.490 million for NICL. FIRs have also been lodged against Mohsin and Akram Warraich, for a further receivable amount of Rs.422 million. The CEO claimed he has personally met with the DG NAB and written to FIA to issue red warrants against these absconders.
viii- As regards purchase of Dubai property, FIA got the property re-evaluated and submitted the report in the Supreme Court after which the case was disposed. However, it was discovered after the CEOs appointment that the title deeds of the Dubai properties are not in the name of N1CL as a substantial amount is still due to the developer/management company and until the title is transferred in the name of NICL the properties cannot be rented out. Negotiations are going on to get as much discount for NICL as possible with the developer and are in the last stages to clear the dues and transfer the title in the name of NICL. Without the title documents, the company can neither get those premises re-appraised nor rent them out. The company was able to negotiate a discount of 25 percent from the developer/management company which translates into a substantial saving.
ix- The outstanding amounts from cases pending with FIA/NAB have mostly been recovered except in the case of Mohsin Warraich who has absconded and an FIR has been registered against him.
“I have also been following up with both the NAB as well as FIA and personally met the DG, NAB Lahore as well as the DG, NAB Karachi to speed up the matter. Meanwhile, we are also vigorously pursuing against them in civil courts,” he added.
x- Status of updated manuals is as follows: (i) Investment Policy Manual - got approved by the Board & implemented;(ii) code of conduct - got approved by the Board & implemented;(iii) whistle-blower policy - got approved by the Board and implemented;(iv) Anti-Corruption and Anti-Fraud Policy - got approved by the Board & implemented;(v) operations’ Manual - draft is ready & is in the process of being approved by the Board and ;(vi) HR Manual - draft is nearing completion; thereafter it shall be presented for Board’s approval & then implemented.
xi- Contrary to what has been stated, it is the change of obsolete and inefficient management systems that is being gradually replaced with efficient management systems that may have been the cause of discomfort for some individuals and/or vested interest groups. New and capable inductions have been made at key management positions. As a result, significant improvement has been achieved, particularly in the vital area of expense controls, compliance, employees’ attendance, discipline and centralised procurement process, coding of company’s assets and documenting in the form of Asset Register etc.
One of the CEOs biggest achievements, according to him, at NICL may be the gradual shift of manual claims processing which is subject to misuse, to completely automated claims processing and all future claims and backlog of the previous two years has also been duly entered accordingly.
“Sir, I trust that I have adequately addressed all the issues raised by you and have been able to dispel the misconception that the performance of NICL has deteriorated since my appointment. As you can see from the ten year performance report of NICL being submitted to you again, there have been across the board improvements in all key areas in the financial year 2016. I am exerting my utmost to achieve these targets under the overall guidance of the Board of Directors as well as of the Ministry of Commerce to safeguard the interests of NICL in all respects. I thank you and your Ministry for the constant support and assure you that I along with my team are doing our utmost, with sincerity to turn NICL around,” Khan said while concluding the letter sent on May 18, 2017.
