Government Suspend Ramadoss, New India Assurance CMD

17 August 2011 - Which Way to Pay

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Government Suspend Ramadoss, New India Assurance CMD

The Government has suspended the New India Assurance Company’s Chairman and Managing Director M Ramadoss. The suspension comes as the CMD is accused of alleged irregularities in granting credit insurance cover to Paramount Airways during his tenure as the head of the Delhi-based Oriental Insurance Company.

Following Ramadoss’ suspension, United India Insurance chief G Srinivasan has taken up the post of CMD for New India Assurance in addition to his current positions.

The allegations against Ramadoss are being investigated by the Central Bureau of Investigation (CBI). This comes as an addition to a case is also pending against Ramadoss with anti-corruption watchdog, the Central Vigilance Commission.

With regard to the CBI, it is alleged that Ramadoss entered into criminal conspiracy with Paramount officials regarding the provision of credit insurance cover to the airline; a violation of the existing rules and regulations of the Insurance Regulatory and Development Authority (IRDA). The credit insurance provided under Rasmadoss guaranteed the payment of Paramount Airways debt in the case of default. As such, Oriental Insurance provided credit insurance amounting to Rs 14-25 crore to Paramount Airways in 2008-09. The credit insurance was purportedly toward multiple bank guarantees for covering fuel purchases. Indeed, Paramount Airways took out loans of around Rs 400 crore from five major banks to pay for fuel and had reportedly defaulted in repaying before all their planes were de-registered in 2010.

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