A lot of the corruption allegations and prices centered around Nepal but a ACC team never left for Nepal
ACC used information from one of the accused traders in Nepal to find out Gypsum prices
From the beginning, it was clear that the cross border nature of allegations of corruption around the Gypsum trade and transport would be a tough case for the ACC to crack especially in the time of COVID-19.
And this is exactly what happened as the ACC team in Samdrupjongkhar could not get much evidence, and it also failed to send a team to Nepal to verify the Gypsum prices on the ground or even a team to India to find out about the transport deductions.
The above moves would have been absolutely essential to not only verify the claims on the ground where the corruption is allegedly happening but also in collecting hard evidence.
As a result, after getting nothing from a few seized computers in Samdrupjongkhar and some bank accounts, ACC announced that it has decided to stop further probe into the case.
However, the agency has not completely closed the door on the case as it has said if new information arises in future, the ACC may decide to reactivate the case.
A senior ACC official said that the case is not closed for good because once the border opens and the drivers come back then it may pick up again, but he said that for now they simply do not have enough evidence to file a case in court.
For now, the ACC is saying there is no evidence to indicate collusion and undue price fixing in the export of Gypsum.
However, the basis on how ACC arrived at its conclusions is also open for questioning.
Pricing of Gypsum
The most important and key issue in the whole case is the difference in price between Gypsum supplied from Bhutan and the price in Nepal.
The ACC in its report says the landing price of Gypsum exported by SMCL to Nepal particularly for Arvind Emporium is approximately Nepal Currency or NPR 5,386/- which is equivalent to Nu. 3,366.25. In general, the landing price of gypsum is around NPR 5000 to 8000 inclusive of the mineral rate, transportation charge and other expenses incurred.
It then says, the online market analysis of the rates for cement in Nepal is about Rs. 3500/- to Rs. 4000/- per metric ton which is more or less in the similar range and gypsum content in one metric ton of cement is only about 2 to 4 percent.
The above key information is what played an important role in ACC saying there is no collusion or undue price fixing.
However, the reporter learnt from an ACC official that the Gypsum pricing information of ACC was taken directly from one of the two main accused companies in Nepal, Arvind Emporium, represented by Executive Director Bunty Sethia.
It quite incredible to see how the ACC decided to go by Gypsum pricing information from the main accused instead of trying independent sources as the accused would never share any information to incriminate themselves.
The ACC official said that ACC could not get Gypsum prices from other sources in Nepal as they mentioned business or trade secrets.
However, what ACC did not take into account is that the Gypsum syndicate is a small and tightly knit group and this paper had to pretend to be a private Gypsum supplier from Bhutan to find out the real prices.
In several recorded phone conversations, which are still with this paper, several sources in Nepal came forward to reveal much higher prices than what ACC got from the main accused Arvind Emporium.
Bunty Sethia’s above figures given to and accepted by ACC was already disproved by a Nepalese cement factory Mega Cement Industries whose manager Bikas Saral told this paper that they buy Bhutanese Gypsum at around Nu 7000 per ton from the Nepalese dealers who import Bhutanese Gypsum and offered to drop the two main middlemen in Nepal and buy directly from Bhutan at Nu 5,000 per ton instead of the around Nu 2,000 that SMCL officially gets.
The reporter had called an associate of Arvind Emporium, Chaitu Lal Rajbongshi who owns the land and the stockyard in Biratmore that receives Bhutanese Gypsum in large quantities.
Chaitu Lal Rajbongshi in a recorded interview with The Bhutanese has said Bhutanese Gypsum sells for Nu 8,000 per ton in Nepal or 13,000 in Nepal currency.
The reporter first asked him at what price he was buying Gypsum from SMCL which he declined to reveal. He also declined to cite a rate at which he would be willing to buy Gypsum from the fictional private Gypsum company in Bhutan. He said he would have to discuss with his colleagues before disclosing such figures and information.
However, when the reporter asked about the selling price of Gypsum in Nepal he said he sells his Bhutanese Gypsum at around Nu 8,000 (Nepal currency 12,000 to 13,000) per ton to cement factories. He said this is the rate in Nepal.
The complainant had several videos and pictures of that depot piled high with Bhutanese Gypsum and also a picture of Chaitu Lal.
The reporter had called up a coal dealer in Nepal with offices in Kathmandu and businesses in Nepal and India who was interested in importing Gypsum but was unable to to break the monopoly of the Nepal Syndicate.
The dealer in a recorded statement said, while Gypsum is officially being sold at Nu 2,000 per ton on paper the real rate is around Nu 3,500 or 4,000 as Nu 1,500 is the cut in Bhutan. A middle man in India takes another cut of Nu 1,000 or so per ton and so when the final product reaches Nepal it is Nu 5000, to Nu 6000 per ton. The Nepal dealer then sells it for Nu 8,000 plus per ton (around 13,000 in Nepal currency) to cement factories and others.
An Indian truck driver in a recorded statement also noted that the real price of Bhutanese Gypsum being sold to Nepal must be around Nu 5,500 per ton as Nu 550 has been cut per 100 kg that went short form his truck by the syndicate in Nepal (1 ton =1,000 kg).
The ACC’s assertion that gypsum content in one metric ton of cement is only about 2 to 4 percent is also not relevant given that Gypsum exports to Nepal have been growing and there is an increasing demand and limited supply, especially of the quality Bhutanese Gypsum.
The ACC said that against the allegation on the total export of gypsum i.e. 1.989 mn metric ton in the last three years was found to be baseless as SMCL could only export 816,366 metric ton of gypsum and generated sales revenue of only Nu. 1.559 Billion, which is far behind the amount (Nu. 11.536 Billion) alleged as revenue lost to corruption according to the complainant.
However, here The Bhutanese in its very first article had disproven the 1.989 mn metric ton figure of the complainant and instead used the SMCL figure for exports of 444,000 tons of Gypsum being sold in 2019 and 329,000 in 2020 which is closer to the figure that ACC got.
When the paper questioned the complainant for the wide disparity in his export figures he said in the absence of SMCL declining to share any export figures with him he had made a rough calculation and so the SMCL export figures must be true.
The EBPL link
The ACC says that with regard to transportation of gypsum, it was found that local transporters like East Bhutan Private Ltd. (EBPL) directly engages with the importers concerned to arrange trucks to carry gypsum from Samdrupjongkhar stockyard or Rangia stockyard to the importer’s destination and there is no involvement of above alleged two officials in transportation of gypsum who are Mr. Kumar Pradhan, Marketing Specialist and Mr. Sangay Rinzin, Director of Marketing and Logistics.
Incredibly again, here the ACC ignores the basic fact that Kumar Pradhan had admitted to being one of the founders and shareholders of EBPL which he said was started as Druk Satair was winding down as a means to earn livelihood after the company shut.
He said he was to join EBPL but SMCL wanted him to stay on and so he stayed. This statement of Kumar is also on record with the paper and his shareholding in EBPL would be easy to verify.
One of the main allegations of the complainant was that EBPL collects illegal money in cash which is a minimum of Nu 3,000 from each truck (Nu 100 per ton) for each trip with amounts going well above that too. He has also given the phone numbers of 85 Indian drivers who ply Gypsum from Bhutan to Nepal under EBPL and have paid this illegal money as proof.
The complainant told this paper that this transport scam is an important part of the Gypsum price scam as the transport cost is inflated on paper and the difference is kept by EBPL in cash from each diver for each trip and the amount is huge and runs into millions.
The ACC also came up blank here as it said EBPL directly liaises with the importers to transport gypsum from Samdrupjongkhar stockyard including rendering logistics services for importers such as customs clearance, freight advance payment to truckers, and in return EBPL receives handling charges of Nu. 20 per metric ton.
ACC said such collections were used to meet other administrative expenses while transporting gypsum via India.
ACC said, since the EBPL is required to make freight advance to truckers carrying gypsum from Samdrupjongkhar stockyard, it receives large amounts of cash besides the bank remittances from both Indian and Nepal importers.
In this regard, ACC said it could not establish any compelling evidence to prove and incriminate EBPL of receiving any illegal underpayments from the transport and logistics services rendered to importers or tax evasion or income concealment.
Here the Nu 20 per metric ton figure was mentioned by the EBPL director to The Bhutanese too. But this was rapidly disproven after the paper called 14 Indian drivers who all said that around Nu 3,000 was cut from each driver and when more trucks were available even higher amounts were cut by EBPL.
All 14 Indian truck drivers have given recorded statements to The Bhutanese which has them as recorded evidence.
However, in a sign that all is not well despite a botched ACC investigation, the ACC said that owing to the nature and legality of such collection and subsequent payments by EBPL, the ACC sensitized the RMA for the need to reinforce implementation of Foreign Exchange Rules and Regulations to prevent possible money laundering schemes.
ACC contradicts its own intel
The ACC received the complaint on 1st March 2021 and after two weeks of its own intel collection it felt prima facie there was a case and got the go ahead for the investigation from the Commission on 12th March.
It was convinced enough to even file a detailed argument before the district court asking for a search warrant by showing a prima facie case of corruption.
It is now difficult to see how the ACC contradicted its own initial intel and basis for investigation which it itself had vetted and approved.
SMCL CEO Vs complainant
The current SMCL CEO is a former ACC Commissioner but it is important to mention here that at no point of the investigation was there any allegation against him.
However, it is also true that if corruption would have been proven in the Gypsum mine then the SMCL CEO would have looked very incompetent and may possibly also have faced some flak for not detecting what was happening.
It so happened that the same former organisation of the Commissioner in the form of the ACC investigated the case and without even going to Nepal or India bought hook, line and sinker what the many accused in the case had to say.
On the other hand, was the complainant whose credibility was under doubt by ACC from day one itself given that the complainant, a former contractor, had lost an earlier case in court and was unable to pay some money and so spent some time in India before coming back.
However, more then the legal trouble of complainant what should have mattered more is the information on the ground but according to a ACC official the credibility of the complainant also became an issue.
This is why ACC’s press release taking a pot shot at the complainant stated that it is important for the individuals concerned when exercising the fundamental responsibility to report corruption takes into account ‘the larger socio-economic and political repercussions’.
However, it is now clear that the ACC’s position leaves open more questions and answers for now, which is why the case is not completely closed by ACC and is awaiting more information and effort.