NA’s legislative committee will review inclusion of fronting in the Penal Code

Assembly: While ‘fronting’ has been recognised as major source of revenue leakage for the government besides compromising the quality of public infrastructure, the current penalty for engaging in business of fronting is mere cancellation of licence and closure of businesses.

This was one of the findings of the economic affairs ministry that was assigned to carry out a study upon the Anti-Corruption Commission’s (ACC) recommendation to define fronting as criminal offence during the last session of the Parliament.

The deliberation was held in the National Assembly yesterday.

The economic affairs minister, Lekey Dorji, said word ‘fronting’ is neither in English dictionaries nor in the legal dictionaries. He said that there is no provision for fronting even in the Penal Code of Bhutan.

Lyonpo Lekey Dorji informed the House that the committee from the ministry has reviewed about seven laws, regulations and procedures. However, the use of word ‘fronting’ was not there in any of the legal documents.

The procedure for liberalisation of trade and services licences, Lyonpo said, is limited to three border towns of Phuentsholing, Gelephu and Samdrupjongkhar.

The recommendation is to overhaul the procedure and issue the revised procedure to all dzongkhags for implementation.

Another recommendation was to amend the rules and regulations for establishment and operation of industrial and commercial ventures in Bhutan 1995.

Under the existing provisions, engagement in fronting shall result in cancellation of licence and immediate closure of business. In addition to this the proposed amendment include seizure of goods and no issuance of business licence to the defaulter for the next three years.

MP Karma Tenzin suggested reviewing this provision because the offenders can always apply for a new licence in the name of their relatives.

Against the recommendation of the ministry to define fronting in the Penal Code and grading the offense of fronting as misdemeanor, MP Dorji Wangdi said that amendment to the Penal Code is not required.

He said that fronting is synonymous to “misrepresentation,” “deceptive practice” and “fraud.” He said that all these words recur in the Penal Code and that the penalties on these offenses depend on the scale of the offense committed.

“It is better to interpret fronting that way and let the scale of the offense decide the penalty,” he said, adding that there is no need to amend the Penal Code.

Some members chose to disagree with this as fronting is a cross-sectoral issue and that there are different types of fronting.

Lyonpo Lekey Dorji also said that the economic affairs ministry is working on a trade development Bill and it is expected that the Bill would recognise some issues related to fronting.

However, the ministry’s recommendation was to define fronting to mean, “leasing, hiring or permitting a business licence including contract licence registered in someone’s name to another person to operate the business or to carry out the contractual work.”

The legislative committee of the House was assigned the task to review the inclusion of a new section on ‘fronting’ in the Penal Code.

Fronting and related legislative issues surfaced after the ACC implicated several businesses in Phuentsholing. The Office of Attorney General (OAG) has labelled the case as civil while ACC considers it criminal.

Tshering Dorji