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Mumbai: Kotak Life Insurance company, a subsidiary of Kotak Mahindra Bank, has charged Hemant Kolhe, one of its fixed income dealers, with fraudulent transactions that benefited him and a few companies but led to losses for the insurer after a whistle-blower raised an alarm.
The life insurer has reported the fraud to regulators and is pursuing criminal charges against the employee who supposedly benefited by as much as Rs 2.5 crore for colluding with unlisted firms.
The police complaint filed by the company has been seen by ET.
The company filed a complaint of employee fraud against Kolhe for taking monetary favours from a third party for entering into transactions.
The life insurer has reported the fraud to RBI, Sebi and insurance regulator Irdai and is taking action against the employee.
Kolhe was in touch with external parties — Tipsons and East India Company — and used to transact at prices different from the best available prices of these instruments.
According to the report filed with the regulators, Kolhe has admitted to 70 deals in which he received money from external parties.
He used to get verbal price range from the investment team to execute a trade.
While it is a common practice to provide discretionary margins to debt dealers to make best use of market conditions and deal with market fluctuations, Kolhe used it for personal benefits.
“After the receipt of a whistle-blower complaint against Hemant Kolhe, an internal inquiry was undertaken immediately,” said Rohit Rao, chief communication officer, Kotak Mahindra Group.
“During the inquiry, it was found that Kolhe accepted approximately Rs 2.25 crores in a kickback from external parties for carrying out certain transactions on NDS-OM platform.
We have lodged a police complaint against Kolhe and have also reported the matter to the Irdai and the RBI.” A sum of Rs 1.05 crore has already been recovered from him and the insurer is trying to recover the entire amount.
Kolhe has been suspended and disciplinary actions will be taken against him.
He was a dealer and the deals were done by him on the online platform of NDS OM.
However, as the deals were done well within the mandated price range given to him, they will not have any significant impact on the funds.
Kotak Life has appointed an independent audit firm CNK - Associates LLP to carry out audit of the investment function.
The total assets under management of the company was at Rs 30,310 crores as on March 31, 2019, against Rs 25,128 crores on March 31, 2018, posting a growth of 21 per cent over the previous year.
During last year, the 10-year benchmark government security yield has gone down from 7.40 per cent as on March 31, 2018, to 7.35 per cent as on March 31, 2019, and has seen a high and low of 8.18 per cent and 7.13 per cent, respectively.
