The Anti-Corruption Commission (ACC) has forwarded cases that involve 16 Royal Insurance Corporation of Bhutan Ltd (RICBL) staff and three private individuals to the Office of the Attorney General (OAG).

It has also written to the board’s chair to take punitive action against them and other officials of the RICBL.

The commission has also written to the Governor of Royal Monetary Authority (RMA) to take appropriate actions against them for breaching RMA regulations in force.

The letters were sent on December 29 when the commission forwarded its findings and draft charges in connection to the irrational financial transaction between the RICBL and Nubri Capital Private Ltd and Sherab Reldi Higher Secondary School in Mongar, fraud and collusion in the settlement of false insurance claims, and embezzlement cases.

The letter to the RICBL board pertaining to punitive administrative action against the chief executive officer (CEO), executive director (ED) and other officials stated the essence of the overall findings, summary of the findings referred to the OAG for criminal prosecution, and findings of administrative in nature and recommendation for implementation by the board.

The letter stated that investigation revealed multitude of serious corporate governance glitches and questioned the safety of public funds and credibility of the top leaders in the RICBL. It stated that there is a total lack of ethical tone at the top, which is gradually breeding and expanding.

“Evidences gathered during investigation apparently confirmed serious ethical violations, intimidating behaviour towards employees, fraudulent behaviour, conflicting interest and so on,” the letter to the board stated.

“Instances of overpriced equity injection and investment in loss making ventures circumventing the board’s approval process, masterminding in the manipulation of insurance claim process, facilitating third party to rob one of the RICBL’s core business areas, charging millions of Ngultrums (embezzlement) without documented evidences are some of the investigation findings of corporate wrongdoings that are gravely threatening the going-concern issue,” the latter stated.

The investigation also revealed significant financial management loopholes in both the operational and core business areas. As corrupt intent of some of these issues could not be proven, ACC referred six issues to the board with the recommendation for administrative action and restitution of mismanaged amount.

The management has six different approved budget heads to meet expenses relating to hospitality and entertainment, public relations, ex-gratia and donations. However, these budget heads were found overlapping and the management had taken the liberty to meet expenses without proper bills and records. The commission recommended the board to restitute Nu 0.897 from CEO for gifts and presents procured without proper bills and receipts.

The commission also recommended that appropriate action be taken against the ED for using private number plate on a government car and to restitute Nu 1.387 million along with penalty of 24 percent per annum from CEO for payment of Nu 2.5 million contrary to the hired private Toyota Prado being insured at Nu 1.219 million only.

The car was hired for the CEO which met with an accident at Khasadrapchu on November 28, 2015. The management paid Nu 2.5 million to the owner of the hired car to amicably resolve the issue. ACC has recommended to take administrative action against three other officials as they failed to report the issue to the board for directives and guidance.

The letter also stated that ED has breached the RICBL Service Rules and Regulation 2009 by engaging in private trade, which apparently had conflict of interest. It is alleged that ED in partnership provided consultancy services  andcharged Nu 2.10 million to the promoter of GIC-Re Bhutan.

“This is a serious moral outrage constituting huge conflict of interest and actually deserves criminal prosecution but could not be pursued due to lack of clinching evidence to prove beyond reasonable doubt and recommended appropriate administrative action on ED.

“In view of the investigation findings of significant nature, the commission is of the strong belief that the top executives have seriously breached the fundamental principles of corporate governance of transparency, accountability and probity. Therefore, considering the gravity of the investigation findings, the commission recommends the board to sanction appropriate administrative actions,” the ACC letter stated.

In the letter to the Governor, ACC stated that RMA issued the investment guidelines for insurance business in 2015, which requires RICBL to draw investment policy annually that must be approved by the board.

The commission, however, found that the management completely disregarded this statutory requirement and made investments (equity) of Nu 25.22 million at a premium of Nu 18 per share in Neethsel Private Ltd in Pasakha and Nu 30 million in Sherab Reldi School in Mongar, both in 2016.  The management, the commission found, had conveniently applied the credit limit threshold prescribed in the Credit Manual 2011 to decide on the quantum of investment.

Findings revealed that credit and investment were two different concepts and deriving authority from one concept and applying it on the other by circumventing the board’s approval process was a gross exploitation of authority. It was also found that the premium aspect of the investment lacked transparency as it was agreed upon between the proponents and the RICBL’s two top executives only. ACC recommended the board to annul the investment and impose appropriate administrative action on the CEO and ED.

The commission stated that the action taken against the officials must be submitted to ACC within 30 days to bring the matter to logical conclusion.

ACC also stated that in the event the commission is not satisfied with the action taken by the board, the commission will be compelled to invoke section 139 of the ACAB and may take necessary actions on it.

ACC revokes suspension of top RICBL executives

Meanwhile, ACC has rescinded the suspension order of top two RICBL executives.

The rescinding order was written to the RICBL’s board chairman on January 3 after the commission forwarded its investigation findings and draft charges to the OAG for public prosecution.

CEO Namgay Lhendup and ED Sonam Dorji were suspended on July 7 last year based on the order from ACC.

“On completion of the investigation, the commission hereby revokes with immediate effect the suspension order pertaining to the CEO and ED respectively,” reads the ACC letter.

The letter further reads: “However, the board may note that while the commission is revoking the suspension, the board must make its considered decision to either reinstate the CEO and ED or suspend them from service as deemed appropriate with reference to the ACC letter of December 29, 2017…The board may consider Supreme Court’s (SC) directive issued through its judgment on July 17, 2012 to determine their suspension.”

According to the SC ruling, competent authority may consider circumstances for placing a public servant under suspension like cases where continuance in office will prejudice the trial or likely to seriously subvert discipline in the office or organisation, matters involving corruption, embezzlement or misappropriation of government money, possession of disproportionate assets, misuse of official powers for personal gain.

The ruling also states that the suspension may be desirable in cases involving moral turpitude, serious negligence and dereliction of duty resulting in considerable loss to the government, and if the charge is connected to the official position of the public servant.

“If the decision is not to suspend them, the board must then ensure that their presence in the office must not prejudice the evidences and the witnesses gathered by the commission during the course of investigation, until such time the OAG formally registers the case in the court of law,” says the ACC letter.

The commission normally writes to the competent authority to suspend a public servant during the course of investigation to ensure non-interference and prevent possible destruction of evidence or continuance of the malfeasance by an individual while in office. The SC ruling of 2012 states that ACC must ensure the investigation is completed expeditiously and charges filed in the court in cases of prosecution or served on the official in cases of departmental proceedings within three months.

In exceptional cases where it is not possible to adhere to the time limit, ACC must submit a report explaining the reasons for the delay and in all matters involving suspension. “It must be resolved within a maximum period of 12 months in the case of civil servants or appointees and 90 days in the case of persons holding elective office,” says the SC order.

It further reads: “Once charges are filed public interest should be the guiding factor in deciding to place a public servant under suspension, and the competent authority must have the discretion to decide this taking all factors into consideration. Long periods of suspension while putting the employee concerned under undue hardship, involves payment of subsistence allowance without the employee performing any useful service to the government.”

RICBL’s chair of board, Topgyal Dorji, confirmed that he received ACC’s letter and said that a copy of the letter was being distributed to the board of directors.

“The board is expected to meet next week to discuss the ACC order,” Topgyal Dorji said.

Rinzin Wangchuk