Facing accusations of corruption, an American Insurance company operating from the United Arab Emirates, has ordered its permanent representative in the Kingdom to suspend payment of shareholder dividends estimated at tens of millions until further notice. The company's decision comes after it was accused of setting up an allegedly illegal investment fund and taking money from shareholders and employees estimated at more than SR50 million. On top of this, a government body has decided to cancel its insurance contract with the company, for which it paid annually more than SR50 million. This is because the company has allegedly no legal contract allowing it to operate in the local market. In addition, it has been accused of failing to fulfill its pledges to clients it signed on locally. The American company, which has been operating in the Saudi market for at least 20 years, allegedly used the illegal fund to make investments, using money deducted from the salaries of employees. The fund is not licensed to make these investments. Sources said a Ministry of Interior committee has started conducting an investigation into complaints filed by employees regarding the deduction of money from their salaries for these investments. It has also been learnt that a committee from the office of the Riyadh Emir is investigating allegations that some employees have been sacked without any legal basis. The company, operating in the Kingdom without a Saudi Arabian Monetary Agency (SAMA) license, allegedly sacked 120 employees two months ago without any warning. This includes some employees who have worked for the company for 10 years. The Labor Office in Riyadh is also looking into the complaints. A SAMA official said that companies that have no licenses and which operate in the Kingdom through representatives, have been banned from issuing or renewing insurance policies from Feb.17 this year. Muhammad Aal Thunaiyan, the lawyer of the complainants, said that in addition to the company's alleged violation of local regulations, “it has become clear that the money received from the clients are all transferred to a high-risk investment fund that is not monitored by SAMA”. “SAMA regulations stipulate that an insurance company is only allowed to transfer and invest 20 percent of the company's capital outside of the local market.” The company is “also evading paying insurance policies that are estimated at tens of millions of riyals”. He confirmed that the matter is being investigated by committees from SAMA, the Labor Office and the Ministry of Interior.
