Thimphu dzongkhag court, after more than three years of court proceedings, pronounced its ruling on the case of alleged irrational financial transactions of Nu 100 million between the Royal Insurance Corporation of Bhutan Limited (RICBL) and Nubri Capital Private Limited (NCPL).
The court acquitted three defendants.
Former RICBL executive director, Sonam Dorji, was acquitted on two charges of forgery and abuse of function.
However, the court had given him the benefit of doubt by deferring the case in which the defendant was charged with failure to declare a conflict of interest. The court’s ruling on April 13 stated that there is circumstantial evidence of not declaring his conflict of interest being the promoter of Nubri Capital but could not prove it beyond a reasonable doubt.
The RICBL management invested Nu 100M at an interest rate of 9 percent per annum in Nubri Capital on February 5, 2013, and later reinvested Nu 108M at 11.75 percent in RICBL after three days.
Sonam Dorji was one of the promoters of Nubri Capital as he contributed Nu 5.334M towards its paid-up capital and held 27.67 percent of the total paid-up shares. However, Sonam Dorji had off-loaded his shares and currently holds 10 percent.
The Office of the Attorney General (OAG) stated that the RICBL’s Asset and Liability Committee (ALCO) on February 1, 2013, directed the finance and accounts department 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 ALCO meeting without declaring his conflict of interest.
The 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 were also documentary evidences where Sonam Dorji had declared his conflict of interest. These were, according to the ruling, evident from four decisions taken by the eight-member meeting on February 1, 2013, seven-member meeting on March 23, six members on June 11 and nine members on July 29. There were other evidences from the management’s 126 executive meetings held on April 4, 2012, the letter written by ED to the executive chief officer (CEO) on February 12, 2013, and CEO’s submission before the court on July 21, 2020.
“Upon a finding of circumstantial evidence not amounting to proof beyond a reasonable doubt, the court has therefore given him a benefit of doubt by deferring the case,” the ruling stated.
Regarding charges for 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.
OAG stated that Sonam Dorji 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.
He also directed the duo to borrow back Nu 108M from Nubri Capital (inclusive of RICBL’s Nu 100M).
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. “If three defendants were to be convicted, other members were also equally liable,” the court’s ruling stated.
RICBL’s ALCO is the highest decision-making committee at the management level. ALCO members include the executives and the general managers of different departments. The committee is a forum where prudent decisions in credit, funds mobilisation and assessment are taken.
The case was registered in 2019 after the Anti-Corruption Commission (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. The investigation was based on an audit report of 2015 forwarded by the Royal Audit Authority (RAA) and a complaint the commission received through an anonymous letter.
RAA report stated that the illogical conversion of the bond redemption fund as an investment into Nubri Capital had led to a revenue loss of Nu 16.814 million (M) and irregular borrowing from Nubri Capital had resulted in a revenue loss of another Nu 2.449M.