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An anonymous letter has been sent to the ACC and the company’s board 

Grievances: Accusing the Royal Insurance Corporation of Bhutan Ltd (RICBL) management of lapses, misuse of authority and favoritism, an anonymous letter has been sent to the Anti-Corruption Commission (ACC) seeking investigation.

RICBL heads accused of mismanagement

An anonymous letter has been sent to the ACC and the company’s board 

Grievances: Accusing the Royal Insurance Corporation of Bhutan Ltd (RICBL) management of lapses, misuse of authority and favoritism, an anonymous letter has been sent to the Anti-Corruption Commission (ACC) seeking investigation.

A copy of the letter, which Kuensel also received, accused the executive director for irrational investment in a private fund management company, Nubri Capital stating that he is also one of its promoters.

It’s alleged that RICBL had invested Nu 100M (million) in Nubri Capital on February 5, 2013 at an annual interest of 9.25 percent. Four days later, RICBL borrowed Nu 108M from Nubri Capital at a monthly interest of 11.75 percent.

The letter also alleges that Nubri Capital made several investments with RICBL at varied interest rates, the highest being 12.25 percent annually.

The monthly interest of over Nu 1M paid to Nubri Capital, according to the letter, was enough to run overhead costs for Nubri Capital while it proved as indirect expenses for RICBL.

“These investments were all withdrawn on December 31 last year following objections from the Royal Monetary Authority (RMA),” the letter alleged.  “However, the investment of Nu 100M in Nubri Capital continued.”

The letter also alleged no fixed borrowing or lending term between RICBL and Nubri Capital. “When Nubri Capital was in need of fund, RICBL invested in it and when Nubri Capital had enough fund, it was deposited back for a higher interest,” the letter alleged.

From February to April 2013, RICBL had borrowed about Nu 161M from Nubri Capital, it has been alleged.

Kuensel learnt that the Royal Audit Authority (RAA) had also audited this case and shared its observations to the management.

The management has also been alleged of making unadjusted cash payments to some employees. For instance, the letter alleges that on January 1 last year, an employee had taken about Nu 143,000 from the cash counter and was adjusted at the end of the year after an internal audit memo was issued.

It has also been pointed out that some employees take cash from the counter when they are in need by simply producing a small note at the cash counter.

The management has also been accused of treating similar cases of misuse of funds by employees differently.

From 2013 to 2015, about six employees who served at various RICBL branch offices were made to resign compulsorily following misuse of fund. However, it has been alleged that the chief executive officer’s (CEO) nephew who had misused motor vehicle insurance money received from one of the vehicle dealers was made to refund and transferred to another department.

“The heads of departments are the ones who showed employees how the cash are to be used for personal gain,” the letter alleges.

RICBL clarifies

RICBL’s executive director Sonam Dorji refuted all ‘wild allegations’ which he said was made to tarnish the company’s image.

However, he admitted that he was a promoter of Nubri Capital but maintained that he did not influence any decisions on the investment in Nubri Capital. “RICBL’s service rule doesn’t forbid us from owning shares or be a promoter,” he said.

Sonam Dorji said the decision to invest was that of the Asset Liability Committee chaired by the CEO. He added that as he owned 10 percent of the shares at Nubri Capital, he had declared his conflict of interest when the committee made the decision to invest.

Like Nubri Capital, Sonam Dorji said that he owns shares in Punjab Bank, Tashi Bank, Bhutan Development Fund, Penden Cement and Druk Wang Alloys, among others.

As one of the promoters, Sonam Dorji said he had also submitted his resignation in 2011, which the board agreed in principle but was never relieved from duty.

Sonam Dorji then served as the finance general manager and was later promoted as the executive director in April 2012.

On the interest rates and fund transactions with Nubri Capital, Sonam Dorji said that RICBL maintains funds in similar manner with all financial institutions. “We’ve about Nu 1.35B as fixed deposits through which we get six to eight percent monthly interest,” he said. “As for Nubri, we were offered a better interest rate at 9.25 percent.”

Besides, Sonam Dorji said that Nubri Capital also offered fixed deposits for less than 45 days while the financial institutions do not.

Sonam Dorji said that the board was aware of him owning shares and other ventures such as an accounting firm and the GIC-Bhutan Re Ltd. After the board recommended that he reduce his stake in such ventures, Sonam Dorji said he closed the accounting firm and reduced his share to 10 percent from 20 percent in Nubri Capital.

“If the RAA findings contravene the service rules and state that it was not in norm with the company policy, I am ready to leave RICBL,” Sonam Dorji said. “Even if found that Nubri Capital had unfairly benefitted, I stand to resign.”

The allegation on unadjusted accounts, Sonam Dorji said is also untrue. He also denied that the employee, who is the CEO’s nephew, misused any fund. The employee was transferred because his performance was not up to the mark.

On the treatment of cases of misuse of fund, Sonam Dorji said that if it involved third parties, the ACC and court were involved. If not, he said, cases are resolved in line with the service rules.

RICBL’s CEO, Namgyal Lhendup in a telephone interview said the complaints in the letter came from affected employees and that the allegations were not severe.

He said that the ACC had forwarded the case to RAA after which the auditing was carried out. “We will have an exit meeting with RAA soon during which we’ll clarify things on Nurbi Capital,” he said. “If convinced, RAA will drop the case, if not, we’ll be held accountable.”

Initially, Namgyal Lhendup said the rules and procedures on investing in Nubri Capital were not clear which lead to such issues. “Since 2013, we have been sensitive and cautious with this issue,” he said. “We invest wherever we have better options and in this case, it was Nubri Capital and there’s no conflict of interest.”

Whatever RICBL invested in Nubri, Namgyal Lhendup said was redemption fund in the form of bonds to be paid to investors on maturity. “In case of Nubri, we had the provision to withdraw the fund before the maturity period where as other financial institutions don’t allow such options.”

A copy of the letter was also submitted to the RICBL board, which was dismissed stating it was from an anonymous source.

Kinga Dema

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2 comments

  1. RICB and corruption, a never ending episode. God save the RICBL with responsible board member and effective executive management. Its high time that board members wake up from hibernation. They have been sleeping too long for last few years. We the citizen and shareholders are disappointed with one scam after another.

  2. After observation of corruption and conflict of interest, it is not fair to say ED want to resign from RICB job. Is this a fair to say even in a first place?. If found guilty ED should be punish as per the law. If the concern official are left un-punished, when will Bhutan become free of corruption? In Bhutan corruption happens many times mainly in financial institution, Why?

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