From Insurance Vaults to the Trading Floor: 59 to Face Charges as Insurers' Billions Allegedly Fueled Private Share Deals

Charges are set to be filed on Monday against 59 people under insurance-offence provisions, on allegations that they misused billions of rupees belonging to insurance companies and channeled the money into illegal stock-market investments. The District Government Attorney's Office is preparing to register the indictment at the Kathmandu District Court, acting on the investigation report of the Central Investigation Bureau (CIB). All of the following are, at this stage, allegations and recommendations; guilt is for the court to determine.

At the heart of the case is a single alleged mechanism. The CIB has concluded that the funds of Himalayan Re-Insurance, Himalayan Life Insurance, Nepal Micro Insurance and their subsidiaries were used for personal gain — pulled from the insurers' coffers and routed through Bhrikuti Stock Broking (broker no. 55) to settle the share trades of private individuals.

To see why that matters, it helps to understand the firewall the allegation describes being breached. Insurance companies hold large pools of money — premiums and reserves set aside to pay future claims — and are permitted to invest them only under strict conditions: the approval of an investment committee, the directives of the Insurance Authority, and regulatory ceilings on exposure. According to the CIB, those guardrails were bypassed; funds were mobilized without investment-committee approval and against the Insurance Authority's directives. In plain terms, the investigation alleges that money meant to back policyholders' claims was treated as a private trading war chest.

The figures are large. The report states that Rs 2.7333 billion drawn from Himalayan Re-Insurance was used to buy and settle shares in personal client accounts held in the names of Deepak Bhatt, Raj Bahadur Shah, Shubhi Agrawal and Rishiraj Mor. In total, the CIB concludes, more than Rs 3.7385 billion belonging to various insurance companies and their subsidiaries was misused.

The investigation points to a group around Sulabh Agrawal, Deepak Bhatt and Shekhar Golchha that, it alleges, exceeded regulatory limits in deploying insurance money to buy shares and engaged in activity designed to influence the market. Among the 59 recommended as defendants are directors and officials of Himalayan Re-Insurance, officials of Nepal Micro Insurance, officers of Himalayan Life Insurance's subsidiaries, and Bhrikuti Stock Broking's executive director Sandeep Chachan.

The CIB has recommended establishing damages — bigo — of Rs 3.7385 billion against Sulabh Agrawal as the alleged principal architect, and Rs 2.892 billion against Deepak Bhatt. It has sought bigo of Rs 629 million against Shubhi Agrawal, Rs 897.1 million against Raj Bahadur Shah and Rs 230.1 million against Rishiraj Mor, along with imprisonment and fines. One point of arithmetic is worth clarifying for readers: these individual sums are not meant to be added together. Because bigo is fixed per accused on overlapping transactions — a form of joint liability for the same money — the alleged principal carries the full amount while others bear the portions tied to them, which is why the individual figures exceed the overall total rather than summing to a separate one.

The case also appears to close a gap that an earlier stage of the investigation had left open — the conspicuous question of why the figure repeatedly linked to the scheme at the top seemed absent from its scope. Sources say the CIB has now recorded the statement of Manoj Kumar Karna, then chief executive of Himalayan Life Insurance, on allegations of insider trading and misuse of insurance-sector funds, and that he too may be named a defendant when the case is filed Monday.

The money trail, by the CIB's account, runs wider still. It has found misuse of more than Rs 220 million at Himalayan Securities Banker Limited and Rs 370 million at Himalayan Capserve Limited, and irregularities exceeding Rs 253.7 million at Himalayan Investment Banker and the Himalayan Large Cap Fund — with charges recommended against the officials concerned in each.

Why the case matters reaches beyond the size of the sums. Insurance floats are not ordinary corporate cash; they are money held in trust to pay claims, and diverting them into speculative share trading is alleged to have put the insurers' solvency — and ultimately their policyholders — at risk. The harm, if proven, has a second set of victims too: by allegedly using the diverted funds to move share prices, the scheme would have left ordinary investors trading against a manipulated market. That places the case squarely at the intersection of insurance-sector governance and securities-market integrity, and makes it one of the first substantial tests of the penal teeth of the Insurance Act, 2079.

It is under sections 140 and 141 of that Act that the CIB has recommended prosecution — for misappropriation of insurance funds, insider trading and price manipulation in the securities market — seeking maximum imprisonment, fines and confiscation of the established bigo. For now, these remain charges yet to be tested. Several of the names belong to prominent figures in Nepal's business establishment, and the real measure of the case will be whether it holds up in court against well-resourced defendants — with the presumption of innocence intact until it does.