The Office of the Attorney General (OAG) has dropped the case of public fund embezzlement against the former chief executive officer of Royal Insurance Corporation of Bhutan (RICBL), Namgyel Lhendup.
In his letter written to the Anti-Corruption Commission’s (ACC) chairperson yesterday, Attorney General (AG) Shera Lhendup stated that OAG had reviewed the case diligently and determined that the case in Chapter V does not merit to initiate criminal prosecution against the former CEO of RICBL.
The ACC forwarded the case to the OAG on December 29, 2017 alleging Namgyel Lhendup had embezzled public fund of Nu 237,907 from the company’s Ex-Gratia Fund and CEO’s public relations Fund without endorsement of management committee. The commission implicated the former CEO for seven counts of embezzlement of funds or securities by public servant. In one count, he was implicated for withdrawing Nu 80,000 to donate to Dongkola lhakhang and a Rinpoche but failed to produce any supporting documents.
AG Shera Lhendup stated that to meet various natures of expenses, the RICBL board approved six different budget heads, including two- ex-gratia fund and CEO’s PR fund, which are relevant to the present case. The fund, which disburses from this ex-gratia budget-head, is subject to prior endorsement of the core management team comprising of CEO, executive director and five general managers of different departments. Clause 6.3 of the General Insurance Claim Manual 2011 defines Ex-gratiaas “… a payment for losses outside scope of insurance policy considered in special cases on grounds of good business relationship and policy.”
CEO’s PR fund is at the sole discretion of the CEO for fulfilling corporate-social-responsibilities by way of donations and other contributions.
The letter stated that the citation of wrong budget-head caused procedural lapses. While there was the ex-gratia fund, there did not exist a budget head called “CEO’s Ex-gratia Fund.” CEO’s personal assistant (PA) had processed the PR fund release on several occasions by citing it as CEO’s Ex-gratia Fund.
The heads of General Administration Department & ADM approved, and the funds were released from the ex-gratia fund” instead of CEO’s PR Fund without the endorsement of the management team as required. “It is on this basis that the ACC alleges the CEO for embezzlement of funds by a public servant,” AG Shera Lhendup stated in his letter.
He stated that the wrongful citation of budget-head was neither notified to the CEO nor informed to his PA for necessary corrections. “The joint statements deposited with ACC by the dealing officials of RICBL maintained that the CEO cannot be held accountable for the alleged release of funds as it was the dealing officials whose failure had resulted in the disbursements of funds from the ex-gratia fund,” AG stated.
While determining CEO’s culpable intent or if he had issued any instructions to withdraw money from the ex-gratia fund, OAG found that the CEO consistently maintained in his statements that the funds should have been released from the CEO’s PR fund and that he never instructed his PA or other dealing officials to disburse the funds from the ex-gratia fund. That assertion by the CEO, according to AG, is corroborated by the statements of the dealing officials who maintained that they received no directives from the CEO for such fund release.
For CEO’s PR Fund, the board approved Nu 500,000 each for the financial years 2016 and 2017. Of that allocated budget, the CEO spent Nu 200,000 in 2016 and Nu 85,000 in 2017. While reviewing, the OAG found that there was a balance of Nu 300,000 in 2016 and Nu 415,000 in 2017.
For ex-gratia fund, the board also approved Nu 450,000 for the financial year 2016 and Nu 460,000 for 2017. The total release made from the ex-gratia fund for the two years was Nu 237,907 and remained a total balance of Nu 672,093.
“Any unused budget in those two budget-heads lapsed annually in favour of the company at the end of each fiscal year,” the letter to ACC stated. “The receipts for the alleged amount spent by the CEO has been fully accounted and their receipts validated by the ACC at various stages of the investigation and on reviewing the case by OAG.”
Based on theses findings, the OAG concluded that the release of funds from the ex-gratia fund was due to the wrong citation of budget-head by the CEO’s PA as there was sufficient balance amount in the CEO’s PR Fund to meet the alleged releases. It also stated that the CEO fully accounted for the budget he had released to fulfill corporate-social-responsibilities, and had personally gained no material benefits from the alleged funds that he had spent.
The letter stated that it is incontrovertibly conclusive that the CEO had neither gained any material benefits from the alleged embezzlement nor had intent to misuse funds from the Ex-gratia Fund for his own vested interest as he still had unused funds under CEO’s PR Fund which got annually lapsed.
“The alleged offence is thus nothing more than administrative lapses on the part of the dealing officials of RICBL,” AG Sheral Lhendup said. “The case is being dropped from the prosecution proceedings and, in all our humility, we are of the view that the case did not merit to be forwarded to OAG for prosecution.”
ACC’s Commissioner Jamtsho said that ACC will review their report vis-a-vis OAG’s letter on Monday.