ACC forwards Paro BNB fraud and embezzlement case to OAG

Update: The Anti-Corruption Commission (ACC) has forwarded a Nu 2.051 million (M) case of fraud and embezzlement by a Bhutan National Bank Ltd (BNBL) branch official in Paro to the Office of the Attorney General (OAG) for prosecution earlier this month.

The commission recommended the government prosecutor to charge the loan disbursement payment module (LDPM) official on 148 counts of embezzlement of funds or securities by a public servant and six counts of tampering of documents.

The investigation determined that the accused, who was at that time placed in the section of the Paro branch, had routinely siphoned off huge amounts of funds from the bank between 2013 and 2015. The money was supposed to be deposited into respective loan accounts of the BNB customers after collecting the cash.

The commission found that the proceeds of crime were processed through fraudulent practices by using 28 bank account numbers belonging to BNB customers, including the official’s spouse and friends.

The LDPM official was accused of misappropriating the clients’ money amounting to Nu 0.658M from term loan routine collection accounts, and Nu 0.399M from the LDPM account for loan recovery through clearing and transferring the same to his spouses’ and friends’ accounts. This was made possible by tampering the employee list by inserting his (spouse) and friends’ names as employees of agencies for which remittances for loans were made, the commission’s findings stated.

In two incidences, the accused was alleged to have embezzled Nu 12,300 by directly debiting another branch’s loan routing account without proper documentation and counter entry. He also embezzled clients’ equated monthly installments (EMI) amounting to more than Nu 0.981M.

The commission also established that the official had directed the proceeds of corruption to various customers’ accounts with or without knowledge of them in order to minimise the risk of detection and to conceal it from the supervisor and colleagues.

The official told the commission that the money was obtained from friends and was later credited to their accounts by debiting the general ledger account and credited to the official’s spouse and friends’ accounts. The official then withdrew those amounts later by using an ATM card for personal use.

The commission requested the OAG to restitute Nu 2.05M from the accused with applicable interest rate to the state.

Process of loan payment

There are two processes being followed to initiate the loan repayments like cash deposits over the counter and other banks cheques received and sent for the collection. Usually the employee/agency of the clients send the cheques along with the list.

Through the counter, the customer deposits the cash at the teller’s counter and the teller provides an official receipt acknowledging the receipt of the cash. A copy of the receipt is maintained with the teller and also one copy is forwarded to the LDPM staff. When the teller conducts the transaction, he or she debits the cash and credits the term loan collection routine account.

Upon receiving the receipts from the teller, the LDPM officer is required to verify the same by debiting the term loan collection routine account and crediting the client’s loan account.

Under the second method, other bank cheques are received for loan repayment along with the list provided by the employer of the clients. The cheque is then sent for collection to the relevant bank. Upon receipt of confirmation from other bank, the customer service forwards the list to the LDPM staff for debiting the relevant bank accounts and simultaneously crediting the LDPM account. After this, LDPM staff are required to debit the LDPM account for clearing and credit client’s individual account.

The issue surfaced after a client, who had taken a loan from BNBL, complained that Nu 20,000 was not credited into his loan repayment account. The official in question refused to pay the shortage.

BNBL then sent internal auditors from Thimphu to audit the loan accounts and found that the funds were being misused. The matter was forwarded to the police, who then referred the case to the ACC for further investigation on May 16. The commission began its investigation from June 27.

Rinzin Wangchuk

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