LIC didn’t answer my RTI questions about the amounts of money
repudiated since 1997 till 2010. In my opinion, it could be because of three reasons:
It has not computed these amounts at all.
It has omitted these entries altogether from its Books of
Accounts. (I've verified this from reliable sources)
It will show how large amounts have been repudiated
arbitrarily and illegally.
For LIC, with respect to its resigning ex-employees, it is a case of ‘Out
of sight, Out of mind and also Out of its Books of Accounts!’
What is surprising is LIC’s submission that it does not need
such data for the regular working of the Corporation; hence it has not
maintained it. In a Financial Institution every paisa must be accounted for;
whether paid or payable to anyone.
LIC gave me a list of names of 5 ex-employees of the Western
Zonal Office and 40 ex-employees of the Central Office (All Class I Officers; and only pertaining to 2010), whose arrears’ payments
were repudiated. This data is incomplete as it does not pertain to all offices of the Corporation, as asked for, through my RTI application; and neither does it contain information with respect to the other employee cadres like Class II, III & IV. It didn’t inform me the amounts repudiated with respect to
each of these ex-employees, though I had asked for this information in my RTI
application.
Just as payments due to its policy-holders are accounted for
scrupulously, so should the payments made or to be made its employees or
ex-employees. Had LIC computed the repudiated amounts and shown these entries,
they would have appeared as Liabilities in its Balance Sheet, since the
repudiated amounts are payable but not paid. But LIC has just chosen to omit
these entries altogether under the pretext that since they are not payable,
there is no need to account for them! Hence the Balance Sheet of the
Corporation shows a skewed picture.
What is even more appalling is the fact that none of the
Auditors, either Internal or External, seem to have pointed out this glaring
lacuna in their Audit Reports since 2000! This is a dangerous and unsettling trend
for a Financial Institution, especially for a Public Sector Life Insurance
giant like LIC. LIC has vast amounts in its Reserve Fund and is the trustee of public
money. Can it afford to make such omissions? Should it be allowed to get away
with such omissions, for so many years to boot?
In future, if any resigning ex-employee, were to file and win
a case against LIC in a Court of Law, how does LIC propose to pay the arrears
and other dues to that employee? It will probably withdraw this money
from its Reserve Fund. Thus the accounting entries would differ from the
situation wherein the payments would have been duly accounted for, through provisional entries; in the first place. If LIC had made provisional entries for the repudiated amounts, it could have easily informed me the repudiated amounts.
A Financial Institution must be scrupulous in all its
accounting entries, under the correct heads of accounts so that it can avoid
jugglery later. LIC obviously thinks otherwise!
