Corruption: The Office of the Attorney General (OAG) has filed two criminal cases against three prime accused and 11 officials of Druk Punjab National Bank (PNB), Thimphu branch, along with the employer in connection with the fraudulent repatriation of Indian Rupee (INR) worth 61.369 million.

In the two separate criminal charge-sheets of 319 pages registered with the Thimphu dzongkhag court on October 25, the OAG charged the defendants for deception, collusion, forgery, kickbacks and fronting as they repatriated INR illegitimately from Druk PNB to India in contravention to the  “Operational Guidelines for Indian Rupee Transactions” issued by the Royal Monetary Authority.

The three prime accused – Pramod Kumar Shah of Kailash Vegetables based in Phuentsholing, Kinley Penjor, former senior executive of Druk PNB, who also runs Kinxin Vegetables and Fruits and Kinxin Electronics in Thimphu, and Bom Bahadur Rai, owner of Sampang Tshongkhang, Thimphu, were charged for forgery, tampering with documents, active and passive bribery, and participation in an offence.

Based on the findings of the Anti-Corruption Commission (ACC), the OAG charged Pramod Kumar Shah, a vegetable supplier from Jaigaon, for 277 counts of tampering with documents, one count of forgery and 33 counts of active bribery of a public servant. Kinley Penjor has been charged for 71 counts of forgery, 33 counts of passive bribery and one count of commission amounting to abuse of functions.

Pramod Kumar Shah has been supplying vegetables to Thimphu, Paro and Tshimakoti, Chukha since 2009 by using his father’s trade licence of Kailash Vegetables. He was accused of using several Bhutanese licences and individuals’ names to import vegetables from India.

The record maintained with the Regional Revenue and Customs Office in Phuentsholing reveals that Pramod Kumar Shah had imported vegetables worth Nu 40.429M in the name of six vegetable vendors between 2012 to March 2014. However, bank statements show that he had remitted Nu 104.195M by using six bank accounts of vegetable vendors.

ACC found that the defendant Kinley Penjor assisted Pramod Kumar Shah in fraudulent remittance of INR from Druk PNB to various parties in India. He had not only led Pramod Shah to import vegetables by using the Kinxin Vegetables and Fruits licence, but also opened two current accounts in the name of his wife by forging her signature solely to assist him.

Modus operandi

Pramod Shah had remitted an excess amount of Nu 63.766M over the actual imported value and this was possible, according to the OAG charge-sheets, because the duo had adopted three modus operandi.

Pramod Shah and Kinley Penjor had remitted an excess amount of Nu 4.204M to India through several bank accounts by using invoices more than once. The invoices are allowed to be used only once for remittance.

The second modus operandi was remittance without invoices, where Kinley Penjor, in his capacity as an official of Druk PNB, had assisted Pramod Shah to remit more than INR 21.323M. He also helped him to remit Nu 35.841M without importers being involved by reflecting invoice numbers. Pramod Shah also used grocery and medical invoices to remit INR.

More than INR 61.369 million was repatriated through such modus operandi for which Pramod Shah was asked to restitute Nu 59.783M to the government based on a 9.75 percent interest rate that the government has borrowed INR from India. He had abused the privilege extended to genuine Bhutanese businesses for his illegal business.

The ACC unveiled that the businessmen in Jaigaon inconspicuously set up a financial conduit where Bhutanese currency circulating there can be brought back to the Bhutanese banking system. This was achieved through deposits into Pramod Shah and Kailas Vegetables’ accounts from Phuentsholing which was then remitted in the form of demand drafts (DD) and telegraph transfer (TT) to India from Thimphu.

The OAG also charged both defendants for active and passive bribery as Kinley Penjor received more than Nu 0.56M as a reward for assisting in fraudulent remittance of INR to India. The prosecutor requested the court to order Kinley Penjor to restitute the amount, which is categorised as a proceed of crime, to the state.

Bom Bahadur Rai is charged for 18 counts of participation in an offence as he had allowed Pramod Shah to import vegetables by using his Sampang Tshongkhang and two bank accounts.

The prosecution also requested the court to cancel the business licences of Kailash Vegetables, Kinxin Vegetables and Fruits, Sampang Tshongkhang, Pangki Tshongkhang, Khandu Tshongkhang (Paro) and Sangay Rinchen Tshongkhang and impose a fine of Nu 10,000 each.

Abuse of functions

The prosecution also charges 11 Druk PNB officials for omission amounting to abuse of functions since they have not exercised their tasks with due deligence. They also failed to verify documents such as customs declaration forms.

Druk PNB is also asked to restitute Nu 0.231M that was deducted as commission for remitting INR to the state and for failing to conduct due diligence that resulted in a huge repatriation of INR to India even without imports.

The OAG stated that despite the circulation of operational guideline for INR transaction issued by the RMA on May 1, 2012, the officials in the remittance and draft section of Druk PNB had contravened the operational guideline.

While the RMA had made import document a prerequisite for Bhutanese importers to make payments to India, the OAG stated that the officials working in the remittance counter accepted in-country grocery bills from the customers for remittance of rupees. Similarly, some bills were used more than once and remittances were allowed without any import bills.

Some implicated bank officials said that they followed the RMA’s regulation to pass remittances and transactions were done through their own accounts. Regarding forged documents, they said it is very difficult to verify whether it is genuine or not.

“Once the customs seals the documents, it is deemed to be legal and all the documents were passed based on these,” a defendant said.

ACC, which carried out the investigation from January 2014 to mid-October 2015, has established that there were existence of corrupt practices in Druk PNB and proper checks and balances from the supervisors were found to be lacking.

Kuensel could not contact the Druk PNB management for comment.

Rinzin Wangchuk