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The government claims that Le Meridien had benefited by Nu 76.88 million from the additional incentives
The government claims that Le Meridien had benefited by Nu 76.88 million from the additional incentives

Govt. asks ACC to investigate fiscal incentive granted to Le Meridien

The government has written to the Anti-Corruption Commission (ACC) to look into a conflict of interest case involving former Works and Human Settlement Minister Yeshey Zimba in connection to fiscal incentives (FI) the last government had granted.

Lyonchhen Tshering Tobgay said the government has requested the ACC to look into the matter and assess whether the case merits investigation.

ACC officials said that they received the letter on the evening of January 25.

“The commission would follow due process in determining the merit and urgency of the case like in any other case,” an ACC official said.

According to a press release from the Prime Minister’s Office, in addition to existing fiscal incentives that were in force since 2010, the DPT government had approved an additional FI titled as ‘Revised List of Incentives for Tourist Standard Hotels-April 2013’ at its 156th Session of the Cabinet with enforcement tenure until December 31, 2015. It also stated that there was no Parliament to be reported to by then and, three days before the Government was dissolved on April 20, 2013, the newly devised additional FI was declared on April 17 for enforcement.

“The present government is of the view that there were elements of policy corruption, abuse of official power and functions, failure to declare obvious conflict of interest and official misconducts involved in granting the additional fiscal incentive,” the press release stated.

It stated that the former minister’s daughter is the owner (partner) of an FDI incorporated hotel venture in Thimphu called M/s Bhutan Hotel Ltd. (now operated as Le Meridien) which was under active construction at the time of approving the additional fiscal incentive.

“As the Prime Minister was absent during 156th Session of the Lhengye Zhungtshog, Lyonpo Yeshey Zimba chaired the session at which the additional fiscal incentive was approved,” it stated. “ Hence, Yeshey Zimba had not only failed willfully to ‘Declare Conflict of Interest’ as required by law but had even chaired the very 156th Lhengye Zhungtshog which allowed him to exercise edge over other members in leading towards the approval of additional FI.”

It also stated that the declaration of the ‘additional fiscal incentive’ was not only timed to bypass reporting requirement to Parliament, but was also well synchronised to gain optimum benefit by M/s Bhutan Hotel Ltd. as its tenure from April 2013 to December 2015 was seemingly designed for the benefit of hotels readying to acquire those tax exempted items.

“Besides offering optimal benefit to Le Meridien, the additional FI was neither targeted to attract more investments in the area of domestic or FDI hotel constructions, nor did it offer benefit to the hotels that were at the verge of commissioning their operations,” the press release stated.

It further stated that according to official records, Le Meridien alone had benefited by Nu 76.88 million from the additional incentives. Hence, out of 92 hotels, M/s Bhutan Hotel Ltd. alone had benefitted by 41.20 percent of the total tax exemption amount. “The sequence of events thus compels this Government to view Lyonpo Yeshey Zimba as having acted on vested interest.”

Lyonpo Yeshey Zimba, being one of the Cabinet Ministers, had willfully failed to declare conflict of interest as required by law and had apparently committed official misconduct in leading the decision making process that has hugely benefited his family member, the press release stated. “Further, besides being a serious policy corruption to use official powers to favour his own family member, Lyonpo Yeshey Zimba’s conducts clearly tantamount to commission of outright corruption if he is also found to have personal ownership interest in the hotel venture.”

The communiqué read: “The Government is of the view that if such law breaching conducts of a nation’s Cabinet member is knowingly not brought to the notice of the ACC for necessary due process of law, it would not only tantamount to being disservice to the nation but could also encourage other public officials to conduct such corrupt practices in future. However, the merit of the case is subject to due determination by constitutionally independent ACC and other line agencies of the state based on credible evidence alone.”

Governments used to grant FI to boost economic investments from time to time. However, such practice was put to an end in May 2017 when the present Government decided to table FI as money bill before Parliament.

The well established standard practice before May 2017 was to first identify potential areas of economic growth, determine revenue implications by Department of Revenue and Customs, put up final FI proposal to the Lhengye Zhungtshog for its approval, report to the National Assembly and then declare the duly approved FI through public notification for enforcement.

The former minister was not available for comment.Opposition Leader Pema Gyamtsho (PhD) said that since MP  Yeshey Zimba is out of the country he could not comment on his behalf.

The Opposition Leader, however, questioned the government’s intent at the wrong time. “The intent of bringing up this issue now is highly questionable,” he said.

He said that the last government was dragged to the court on tax issue when the present government was in the Opposition. “They should have also pointed out and raised the issue when the Cabinet endorsed and granted FI during that time only,” the OL said.

OL also said that the then Opposition was aware about the Cabinet’s decision. “But they never questioned on this?” Pema Gyamtsho asked, adding that the role of the Opposition is not to wait for the government to make mistakes and point it out later.

Rinzin Wangchuk

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