VK Sharma replaces SK Roy as LIC chairman

Economic Times‎‎: New Delhi: Saturday, September 17, 2016.

The government has replaced SK Roy as chairman of state-owned Life Insurance Corporation of India with Managing Director VK Sharma.

The change was announced late on Friday. The finance ministry is said to have initiated a departmental enquiry against Roy, allegedly over investments made by LIC in real estate firm Unitech in 2008-09.

Roy had already submitted his request for voluntary retirement from the country's largest insurer. "An enquiry has been initiated and a response has been sought from Roy," said an official with knowledge of the development. Roy, who has 10 days to respond, is exploring legal options, other people said. There was no response to questions on the matter emailed to the finance ministry spokesperson and LIC.

Calls to Roy on his mobile phone went unanswered. Unitech couldn't be immediately reached. According to the official cited above, the case pertains to defaults on debt and securities worth Rs 750 crore. "There was a Rs 200-crore loan and Rs 550-crore investment through subscription of non-convertible debentures of the company," said the official. "Roy did not take action despite the fact that more than 70 cheques presented by Unitech had bounced."

Roy became LIC chairman in June 2013.

Unitech's default of the Rs 200-crore loan surfaced in December 2013.In response to a Right to Information (RTI) query filed by ET last year on the Unitech investment case, the finance ministry said it wouldn't provide details.

It cited a section of the RTI Act that relates to information that may impede investigation, apprehension and prosecution of offenders. After Roy sent in his resignation, which was later accepted as a request for voluntary retirement, his application was sent to the Central Vigilance Commission (CVC) for clearance under the existing rules, another official said.

"Objections were raised from CVC, citing the ongoing investigations in the Unitech case and therefore it was decided to seek responses from Roy," he said, adding that the ministry was already pursuing the case independently.

"Roy did not take action in the Unitech default case." Under the existing procedure, once Roy files his reply, the finance ministry will further investigate the matter and share its findings with the CVC.

Notice period was to end next week

"The final decision on penalties will rest with government. If he is exonerated, the file will be sent to CVC for clearance and his VRS (voluntary retirement scheme) application will be processed," said the first official. Having resigned three months ago, Roy's notice period was to end next week. The latest development has raised eyebrows across the financial markets.

Earlier in the year there had been talk of differences with the government over investments in equity and LIC's contribution to the proposed stressed asset funds. "As per the existing rules he will be allowed to go but his benefits will be withheld," said the second official cited above.

The government often calls on LIC to help bail out asset sales that are in danger of failing as an investor of last resort. Other LIC chiefs have also run into trouble. In May 2011, TS Vijayan was demoted to managing director amid allegations of irregularities. After being exonerated by the Central Bureau of Investigation (CBI), he was made head of India's insurance regulator.