The Office of the Attorney General (OAG) appealed to the High Court last week after the Thimphu dzongkhag courtacquitted three defendants in the irrational financial transactions of Nu 100 million between the Royal Insurance Corporation of Bhutan Limited (RICBL) and Nubri Capital Private Limited (NCPL) case.
OAG charged former RICBL executive director (ED), Sonam Dorji, for failing to declare conflict of interest as he had participated in the financial transaction committee meeting despite being the active promoter of NCPL.
However, the Thimphu court on April 13 had given him the benefit of doubt by deferring the case. The lower court stated that there is circumstantial evidence of not declaring his conflict of interest being the promoter of Nubri Capital, but itcould not be proved beyond reasonable doubt.
On April 25, OAG’s case screening corpus reviewed the court’s ruling and decided to appeal since the ED was accused to be the architect of investing Nu 100M in NCPL and had participated in RICBL’s Asset and Liability Committee (ALCO). The committee is a forum where prudent decisions in credit, funds mobilisation and assessment are taken.
Nubri Capital was issued a license by the Royal Monetary Authority (RMA) on November 28, 2012 as a Fund Management Company in line with the Regulations for Fund Management Company. RMA issued the investment guidelines that required the RICBL to draw up investment policy annually and must be approved by the Board.
According to OAG officials, RICBL circumvented the guidelines and had invested Nu 100M at an interest rate of 9 percent per annum with Nubri Capital on February 5, 2013, and lent back Nu 108M from Nubri at 11.75 percent after three days.
The investment contravened section 14 of the Regulations for issue of Corporate Bond 2012 since Bond Redemption Fund (BRF) must be deposited in an escrow account with any retail banks and cannot be invested in a fund management company.
The OAG also noted that the ED had participated in almost all the fund related committee meetings.
The lower court, however, established that the defendant had not influenced RICBL management’s decision to transact with Nubri Capital, but done in compliance with regulations in place. There was also documentary evidence where Sonam Dorji had declared his conflict of interest.
The court also acquitted Sonam Dorji of two charges of forgery and abuse of function.
On the charges of commission amounting to an abuse of functions and forgery the OAG framed against Sonam Dorji, the court stated the decisions to invest in Nubri Capital were made by the ALCO, which was later endorsed by the technical advisory committee of the board and the board of directors.
However, OAG stated that Sonam Dorji was the mastermind in circumventing the whole scheme. The defendant with intent to benefit Nubri Capital knowingly and purposely directed the general manager of AFD, Yeshey Jamtsho and the general manager of CID, Kinzang Dorji, to invest in bond redemption of Nu 100M with Nubri Capital and to execute the contract thereof, according to OAG.
“Both general managers not only confessed to the investigating agency but also admitted before the court that they merely acted upon the instruction of the ED,” OAG stated. “That is evident from the very fact that he manipulated/forged the back-dated letter, declaring conflict of interest to appear that ED actually delegated authority to them in signing the investment contract agreement in the capacity of officiating while the CEO was absent.”
OAG also stated that both defendants agreed to a lesser degree plea bargain agreement with the prosecution and not only aided the investigating agency to trace critical information, but also provided additional information to the prosecution through a defense lawyer.
The court also acquitted both Yeshey Jamtsho and Kinzang Dorji, who were initially charged for abuse of functions and later reduced to a violation with a plea bargain from the prosecutor, reasoning that other committee members including the CEO were not charged although decisions were taken by the committee.
OAG stated that since Yeshey Jamtsho and Kinzang Dorji already pleaded guilty over a plea bargain agreement with prosecution, there is a valid ground for an appeal derailing further deliberation.
Kuensel learnt that OAG decided to appeal fearing that ACC might take up prosecution role although the lower court had passed the ruling.
The case was registered in 2019 after the Anti-Corruption Commission (ACC) referred the case to the OAG in 2018.