Finance ministry valued the damaged resort at only Nu 99.814M last year

Rinzin Wangchuk 

The Bank of Bhutan (BoB), which financed the construction of the Viewpoint Resort in Trongsa, finds itself in a dilemma with only 10 days remaining to enforce the judgment of the civil suit and if the  value of the resort would cover the loan amount.

The bank approved a housing loan of Nu 132.687M (Nu 85.891M and Nu 46.796M as a service loan) to Karma Tshering Doma (KTD) to construct the resort on a 4.703 acres of land.

Following the Supreme Court’s ruling, the Anti-Corruption Commission (ACC) wrote to the Prime Minister, requesting an exploration of the possibility of acquiring the resort that was built on State land encroached upon by KTD.

The appellate court upheld the lower court’s judgment and directed the owner to return the 4.703 acres of land, on which the resort was constructed, to the government. The ACC was responsible for enforcing the SC’s judgment passed on April 29 last year.

Will the government acquire the resort?

On July 7 last year, the Cabinet directed the Ministry of Finance to initiate the acquisition of the structures built on the impugned state land. Prior to the Cabinet directive, Prime Minister Dr Lotay Tshering had said that the Cabinet discussed the matter and agreed to acquire the structure in the interest of all parties involved: the state, the bank that provided the loan, and the owner who built the resort. He had said that it could be a good deal rather than letting the property go to waste.

A joint valuation team, composed of engineers from the Department of Engineering Services, , Trongsa dzongkhag administration, Department of National Property, and Macroeconomic Affairs Department, physically inspected and measured the property to carry out the valuation.

The team determined that the existing infrastructure could be valued at only Nu 99.814M.

Following the valuation, the Department of Macroeconomic Affairs sought consent and views from KTD regarding the valuation through written communication on August 5. In response, KTD requested the department to review the valuation so that she could at least be able to settle the bank liabilities. She claimed to have invested close to Nu 300M in the construction of resort infrastructure, which is her only asset.

However, this request was not fulfilled as the bank had already filed a civil case at the Thimphu dzongkhag court seeking reimbursement of the outstanding loan amount.

A damaged star rated hotel 

After the ACC began investigating alleged fraud and the conspiracy behind the registration of substitute land, the commission issued a freeze notice on April 3, 2015, prohibiting any transactions involving the immovable properties on the land. The operation of the resort came to a halt and eventually abandoned after the legal battle.

Today, the Viewpoint resort wears a haunted look overgrown with bushes.

On the same day that the ACC issued the freeze notice, the management of BoB wrote to the commission, requesting them to consider and protect the bank’s interests during the prosecution of the case. The letter stated that the bank had financed the hotel construction developed on the land, and the entire property, including land, buildings, and equipment, was mortgaged with the bank.

“With the freeze notice in effect, we were concerned that the bank will have no means to recover its investment if the borrower is deprived of the land,” the letter to the ACC chairperson stated. At that time, KTD’s outstanding loan amounted to Nu 164.616M.

On March 1, 2016, the proprietor requested the commission to issue clearance for maintenance and construction activities on the frozen plot, which resulted from the ACC’s investigation in March 2015. Two days later, the commission wrote to KTD, prohibiting any major construction or expansion works except for repairs and maintenance on the existing infrastructure.

The ACC registered the case with the Trongsa court on February 15, 2017. After a few months, the bank filed a case at the Thimphu dzongkhag court to recover the loan, but the court did not accept the registration of the case because it was sub-judice.

The bank then appealed to the Supreme Court (SC), requesting the registration of the recovery suit before the Thimphu court, as the matter was a civil case with the ACC involved in a criminal suit. On October 13, 2017, the SC ordered the dzongkhag court to register the recovery suit and directed that the case be deferred until the judgment from the Trongsa court was delivered.

On September 27, 2018, the ACC wrote to the Chief Judge of the Thimphu court, requesting the dismissal of the civil suit filed by the BoB, as the matter was still sub-judice, and the commission’s seizure of the property remained in force.

As per the SC’s order, the trial court scheduled the preliminary hearing for March 13, 2019, but the borrower failed to appear. Due to this, the recovery suit was withdrawn from the court.

Following the High Court’s judgment on August 6, 2021, the bank submitted an application to the SC on August 26 to recover the loan since the borrower had appealed to the SC. The SC ordered the bank to route the recovery suit through the dzongkhag court, and it was submitted four days later.

However, the lower court did not accept the registration of the case, stating that it was still ongoing with the ACC. “The bank had no choice but to wait for the judgment from the SC,” a bank official said.

The SC declared the mortgaged land as State land and sentenced KTD and her husband to prison for corruption.

Subsequently, the bank filed a case at the Thimphu court on June 3 last year, seeking reimbursement of the outstanding loan amount. “If the ACC had protected the bank’s interests and accepted our request in court, the value of the property could have been more than Nu 200M,” the official said, adding that there would have been a means to recover their investment.

However, such cases will no longer arise. The Parliament amended section 104(3) of the Anti-Corruption Act last year, stating that any frozen, seized, or confiscated movable property may be allowed to be used, operated, or resumed pending the investigation and prosecution outcome or auction by the commission, with court approval as per the rules adopted by the commission.