Millennium Post

Vijayan in dock again as Jaitley clears disciplinary action

Finance Minister Arun Jaitley has finally cleared disciplinary action against Insurance Regulatory and Development Authority (IRDA) chairman TS Vijayan. Earlier, an inquiry by the banking division had recommended that a major penalty be imposed and action initiated through Central Vigilance Commission against Vijayan for his alleged direct role as a former LIC chairman in a Rs 750 crore loan default by property major Unitech.

This file was pending clearance from the Finance Minister since the last few months as the former banking secretary, SS Sandhu, was sitting over it. After Sandhu was shunted out, the file was cleared by Jaitley for immediate CVC actions. CVC is believed to have forwarded this file to CBI for registering a case.

Incidentally, the CBI had played a controversial role a few years ago in giving a clean chit to Vijayan even after having serious evidence of irregularities. Former CBI director, AP Singh, gave the clean chit to Vijayan under pressure in the controversial Moin Qureshi money laundering case. The then joint director of CBI, handling Vijayan’s case, was also repatriated back because he wanted to pursue the case seriously. According to sources, former Finance Minister P Chidambaram took special interest in putting Vijayan as the insurance regulator even though he had a “dubious” past as the LIC chairman.

IRDA is responsible for the entire insurance industry comprising of 24 life insurance, 24 non-life insurance and 3 health insurance companies of the country. Earlier, a detailed inquiry report prepared by Director Vigilance of Banking and Financial Service Division indicted Vijayan for his “deliberate bid to benefit a private party, to the detriment of LIC acting completely contrary to the law, repeatedly misleading the investment committee, submitting untruths to provide undue benefits to a chronic defaulter.”

According to the inquiry report, LIC had extended a rupee term loan of Rs 200 crore to Unitech and also subscribed to non-convertible debentures of the company worth Rs 550 crore which was procured through secondary market operations from LIC mutual funds. Terms and conditions were also modified after the loan was disbursed. Till today, Unitech has not repaid the money to LIC, forget the interest. And finally, LIC has declared Unitech a willful defaulter under pressure from the ministry.

According to the report, that money, after the sanction was granted, was supposed to be kept in an escrow account, which prohibits the borrower from using it for any other purpose other than for which the loan is sanctioned. But the senior officers did not insist for it even though it is mandatory as per the agreement. Unitech used the money for other purposes and did not follow the loan condition. 

Even after 80 post-dated cheques were dishonoured, LIC did not initiate any legal action against Unitech. It has also been found that the collateral assets which were offered to LIC during the time of sanction of the loan, were changed and altered later on, which is completely illegal. 

Even after the consistent default, LIC did not take any action to foreclose those pledged assets as well. LIC did not attempt to declare the company a ‘willful defaulter’ even when there was evidence that the company was meeting the dues of its other lenders declaring dividends etc. The inquiry also found that the then chairman, Vijayan, while seeking the approval of the investment committee for restructuring the accounts of Unitech, did not present all the facts and details to the investment committee. It was also found that the chairman delayed the action for declaring the borrower a willful defaulter.

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