Finance Minister charged by ACC over CSI Board appointment

The Finance Minister Namgay Tshering has been charged in the National Cottage and Small Industries Bank Ltd (NCSIBL) investigation of the Anti-Corruption Commission (ACC).

Lyonpo is charged with the illegal appointment of his former brother-in-law Tshewang Tashi as a Board Director in the CSI Bank.

The ACC investigation revealed that Lyonpo who is responsible for the nomination of Board of Directors of State Owned Enterprises (SOE), steered the inclusion of Tshewang to the Board of Directors, who, during the time of the nomination was being prosecuted on corruption charges, and is currently serving prison sentence (for SAI Trading case).

ACC’s investigation revealed that Tshewang was not even in the initial list of potential Board Directors, but was later dubiously included by the Finance Minister in the final list, and formal approval of the Lhengye Zhungtshog was circumvented in breach of the Public Finance Act 2007 as well as the Corporate Governance Guidelines for State Enterprise 2019.

It was also found that the same person had also been nominated for secondment to the National Credit Guarantee Support Facility and later as a Board Director of another SOE, Bhutan Development Bank Ltd.

Then Tshewang, as Chair of the Board Credit Committee in the NCSIDBL, was found to have misused his position to approve loans where he had direct or indirect proprietary and pecuniary interest.

Investigation revealed that he did not disclose his conflict of interest (CoI) in approving Nu.4.990 million loan proposal of his own son applied in the name of another person.

In another instance, he aided a loan amount of Nu.5.014 million to a person who not only agreed to rent the ground floor of his building to run a restaurant but also used part of the loans to carry out structural works on the building, including the parking.

In yet another instance, he unilaterally approved a project loan of Nu.5.727 million which had earlier been rejected twice by the Sub Credit Committee due to project viability concerns. When the proponent failed to inject 25% equity into the project, the loan was later increased to Nu. 6.873 million by remodelling the debt-equity ratio from 75:25 to 90:10 based on the approval of the National Credit Guarantee Scheme (NCGS) Committee.

The approval itself was in breach of the established procedures agreed between the government and the participating banks.

As on 18 July 2022, the outstanding loan stood at Nu.7.162 million and as a NPL.

ACC said shreds of evidence suggest vulnerabilities of SOEs to back door interference and top-down pressures to overlook due diligence in loan appraisal procedures undermining the corporate governance and exacerbating the operational risk of the project itself.

ACC said with the 2022 amendment to sections 58 and 59 of ACAB, ‘…cause loss to the State’ has been added as a corrupt offence under the provisions on commission and omission amounting to abuse of function, but it is yet to be tested in a Court of law.

It said notwithstanding this legal option, there is dire need to prioritise accountability in public discourse and by the leadership.

The Finance Minister is expected to be charged under the above sections. The ACC has also looked at conflict of interest.

The Finance Minister declined to comment and directed the reporter to talk to the Prime Minister Dasho Dr Lotay Tshering.

The PM claimed that while the original list of the FM did not have Tshewang’s name it was suggested in the cabinet by the Agriculture Minister. He said verbal instructions were given to update the list.

The PM said the ACC took issue with the fact that the matter never came to the next cabinet meeting to be endorsed as is the usual practice. The PM said he explained to ACC that it had been proposed and endorsed on WhatsApp by the ministers like in some other cases.

He said conflict of interest does not apply as the name was suggested by the Agriculture Minister.

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