Life Insurance Corporation investments worth Rs 10,000 crore is under the government’s scanner for alleged nexus between top company officials and brokers for making gains at the expense of the institution.
The finance ministry also refused to divulge any further information under Section B(1) (h) of the RTI Act 2005, which state that providing information will impede the process of investigation or apprehension or prosecution of offenders.
“The issue was first discussed at the board meeting of LIC last year. It was alleged that some company officials in connivance with brokers fix a price band for a particular scrip and then leak this information to brokers, who in turn take position on that stock,” said the official requesting not to be identified.
The allegation is that the brokers make gains when the insurer buys those scrips at the upper range of the price band and the profit is then split with company officials. Another government official said that in some cases the insurer was selling some scrips at a lower price and buying them at a higher price within a matter of a few days.
