Kathmandu-Authorities are investigating allegations that a small group of directors and promoters misused the capital fund of Himalayan Reinsurance for personal gain. The Nepal Police and the Department of Money Laundering Investigation are probing the case under criminal charges of financial fraud and insurance fraud, along with money laundering.

The investigation began after it was found that around Rs 5 billion from the company’s fund had been used by promoters and directors to purchase shares through their personal accounts.

The misuse of a public company’s resources for the benefit of a few individuals has exposed a new dimension of financial crime.

The Insurance Authority had conducted a preliminary probe and concluded that the company’s funds had been mobilised through illegal means.

On the same issue, the Securities Board of Nepal investigated how such funds entered the capital market. A report prepared under the leadership of Executive Director Rupesh K.C. has already been approved by the board, which has decided to forward it to the Nepal Police for further investigation.

The board’s findings show that the fund diversion model used in Himalayan Re, involving a group led by Deepak Bhatt and Sulabh Agarwal, has also appeared in other companies. Sources close to the board say such misuse is particularly evident in insurance companies.

The study found that company funds were used to purchase shares, with directors and associated individuals benefiting directly. It also pointed to widespread organised practices such as market manipulation and cornering in the capital market.

Once the board’s report reaches the police, further investigation will proceed.

‘If the investigation continues in this manner, similar patterns seen in Himalayan Re, where around two dozen businesspersons may be implicated, are likely to emerge in many other companies,’said an official involved in the probe.