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All defendants charged by OAG and ACC acquitted

Rinzin Wangchuk 

Affirming the lower court’s judgment, the High Court (HC) stated that the Royal Insurance Corporation of Bhutan Limited (RICBL) and not its executive director had benefited from the investment of Nu 100 million in Nubri Capital Private Limited.

The HC on July 20 acquitted the former RICBL executive director (ED) and two general managers. The Office of the Attorney General (OAG), aggrieved by the Thimphu dzongkhag court’s ruling which was in favour of three defendants, appealed to the HC in April this year.

Based on Anti-Corruption Commission’s (ACC) investigation findings, OAG charged Sonam Dorji for failing to declare conflict of interest, official misconduct and forgery while general manager of AFD, Yeshey Jamtsho and the general manager of CID, Kinzang Dorji, for official misconduct. Sonam Dorji was one of the promoters and shareholders of Nubri Capital.




Grounds of acquittal

The HC established that Sonam Dorji had not influenced or coerced RICBL management to invest with Nubri Capital from the bond redemption fund (BRF). It was in line with the existing regulations in place.

“It was also proven beyond reasonable doubt that the Royal Monetary Authority (RMA) had also approved the BRF, which was supposed to be kept in escrow account, to use as statutory liquidity ratio (SLR),” the judgment  passed by three sitting judges stated.

In his testimony to the lower court on September 7, 2020, RICBL’s Finance and Account Department head, Zarna Moktan, also stated that the RICBL management invested Nu 100M at an interest rate of 9 percent per annum in Nubri Capital in February, 2013 and later reinvested Nu 108M at 11.75 percent in RICBL.

The court noted that although there was a difference of 5.25 percent in interest rate, the company made a profit by reinvesting the same amount at 17 percent per annum, which was the highest interest rate.

“Zarka Moktan’s submission to court clearly indicated that Sonam Dorji hadn’t gain anything from the investment except the insurance company,” the judgment stated.

Defendant Sonam Dorji also submitted before the court that RICB benefited 5.25 percent (17 percent -11.75 percent) per annum amounting to Nu 5.25M every year from the investment made in the Nubri Capital, contrary to the allegation that RICB lost 2.75 percent (9 percent -11.75 percent.

Sonam Dorji said that the investment was made as per the power of attorney granted by the board and the chief executive officer, which was later endorsed by the technical advisory committee of the board and the board of directors.




Conflict of interest

HC also established that there were documentary evidences where Sonam Dorji had declared his conflict of interest.  The court also noted that before setting up Nubri Capital, Sonam Dorji, then a general manager, submitted his resignation stating his intention to set up such business. The board in the first instant accepted his resignation and later requested him to continue his service in RICB and promoted him to the post of ED.  The Board noted his submission and was aware of his holdings of shares in the Nubri Capital.

OAG had stated that the ALMC on February 1, 2013, directed RICBL’s AFD to compare interest rates offered by the banks and fund management companies and to invest in bond redemption fund with whoever offered the highest interest rate. Sonam Dorji participated in the asset liability management committee (ALMC) meeting without declaring his conflict of interest.




Forgery

The ED was also charged for forgery alleging that the letter to CEO by the former ED declaring conflict of interest instructing the two general managers to implement the decisions of ALMC to invest in Nubri Capital was forged.

The court found that that the ED along with staff were present in the office, and the office was fully operational even on holiday as the statutory audit was ongoing from February 3-26, 2013. The CEO also remarked on the letter stating the Head of GAD/HRD for necessary action which confirmed that the letter was not forged.

 

The general  managers

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 the duo executed decisions taken by the committee. The ruling also stated that members of ALMC, management team and  board were aware of Sonam Dorji being the promoter and shareholder of Nubri Capital and no issue was raised on this.

In their statement, Yeshey Jamtsho and Kinzang Dorji submitted that the OAG asked them to represent as a ‘state witness’ although they hadn’t committed any offences. “After appearing before the court, the state prosecutor made us to sign on plea bargain agreement saying that it was a court procedure,” they submitted. “We also thought that we were just representing as state witnesses we signed on plea bargain as directed by OAG. We came to know the meaning of ‘plea bargain’ only after three years of court proceedings.

Sonam Dorji and Yeshey Jamtsho have already resigned from RICBL.  Kinzang Dorji was suspended from his service in 2018.




Case background

The case was registered in 2019 after the ACC referred the case to the OAG in 2018.

ACC began probing into the allegation of an irrational investment made in the country’s first private fund management company, Nubri Capital, in October 2016.

Based on a complaint letter in 2015, ACC investigated the case and dropped it.  However, the case was re-opened after the second ACC chairperson resumed office. Some alleged that the ACC pursued the case with pressure from RMA. ACC officials refused to confirm the allegation.




Who is  accountable?

ACC and OAG will have to issue an order to reinstate Kinzang Dorji to his former post at RICBL if OAG or ACC decides not to appeal.

As per the SC order issued on July 17, 2013, if acquitted at the conclusion of the trial, an individual must be reinstated and paid the full salary as arears for the period of suspension.

The SC stated that the suspension provisions in the Anti-Corruption Act may be valid but public servants or elected officials should not be suspended beyond a period of 12 months or three months respectively for the conduct of investigation. “It must be ensured at all times that the exchequer is not burdened with having to pay subsistence allowance, with the public official doing no beneficial work for the government,” SC order stated. “

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