Gypsum scam accused put up false denials

Two days before an ACC raid on the offices and homes of the Gypsum scam accused, the main accused in the scam in Bhutan, a syndicate member from Nepal and two transport partners in India put up detailed denials through a news article in a local private newspaper.

The lengthy front-page main article did not have a byline or the name of the reporter.

The Bhutanese had already given the accused a chance to rebut in its two articles carrying their denials and explanations in great detail and length coming to 1000 words plus combined.

The article in the private paper not only reproduced the denials already made in The Bhutanese almost word for word without adequately reflecting the charges and evidences before those denials, but also published additional denials and excuses by the accused, most of which were either incorrect or misleading.

A fleet of trucks

According to the complainant the main master mind in this whole scam is the State Mining Corporation Limited (SMCL) Marketing Specialist Kumar Pradhan.

Kumar Pradhan had denied to The Bhutanese that 14 to 15 trucks that transport Gypsum are registered in his Indian wife’s name. He said there are only 4 to 5 trucks and that too on loan. He also denied all allegations in the article in the private paper.

However, contrary to Kumar’s claim a 2014 Royal Audit Authority (RAA) performance audit report on the mining sector pointed out that Kumar Pradhan’s wife owned around 10-12 Indian registered trucks deployed for the transportation of gypsum from Samdrupjongkhar to Rangia, India.

The RAA said it could not rule out the possibility of similar engagements of even more such trucks being owned by Kumar’s wife in the absence of ownership certificates. The RAA said this is a conflict of interest in the business dealings.

The RAA further noted that there were no agreements entered into between the external transporters and the company unlike for inward transportations (from Pemagatshel to Samdrupjongkhar).

The RAA said this raises doubt on whether transportation charges fixed were based on prevailing market rates or at arm’s length basis.

The RAA report said that though it could not monetize the loss that the company would have borne but it was undoubtedly an act to pursue ulterior motives of the individual to reap undue benefits at the cost of the company. RAA said the company appeared to be at the mercy of such business dealings which possibly would have deteriorated the profitability of company through enhanced costs.

The trucks owned are 12 wheelers and 14 wheelers. A 12 wheeler truck today costs around Nu 2.3 mn per truck and a 14 wheeler truck costs around Nu 3.2 mn. This means trucks worth around Nu 34 mn to Nu 48 mn in total.

Kumar’s official pay was that of a mid-level officer.

A former Druk Satair employee based in India said in addition to the 14 to 15 trucks owned by Kumar through his wife, he is a partner in a Transport company in Assam called SK with a friend through his wife where S stands for his friend’s name and K is for his wife’s name (Karuna Pradhan).

He said Pradhan also has an interest in another transport company called BKD also in Assam but this one is not registered in his wife’s name. The former employee said that Kumar also owns a flat in Siliguri.

The former employee said all of this can be confirmed by looking at the vehicle registration records in Assam and also the Income Tax file of Karuna Pradhan in India.

The former employee said that in Bhutan, Kumar has a couple of trucks transporting Gypsum from Pemagatshel to Samdrupjongkhar.

The complainant said that the above mentioned by the former SMCL employee in India is just one aspect of Kumar’s assets in India and there is a lot more if records are looked at.

Transportation is highly lucrative when it comes to mines. Druk Satair from 2008-2012 spent Nu 621.685 mn on private transporters ferrying Gypsum who according to RAA never declared their income or paid taxes on it.

The real price of Bhutanese Gypsum in Nepal and a Syndicate

Apart from Kumar Pradhan’s vociferous denials in the private newspaper article, it also quoted Bunty Sethia, the Executive Director of Arvind Emporium who is one of the two main buyers of Bhutanese Gypsum denying a significant price difference claiming instead that Bhutanese Gypsum is sold at INR 3,400 in Nepal.

However, against this one denial by a syndicate member The Bhutanese already produced five different and non related sources including the complainant who all said the actual price is much higher.

Bunty’s figure is disproved by a Nepalese cement factory Mega Cement Industries who said they buy Bhutanese Gypsum at around INR 7000 per ton and offered to drop the two middlemen in Nepal and buy directly from Bhutan at INR 5,000 per ton.

Bunty also denied the comments of syndicate member Chaitu Lal Rajbongshi who he said is not at all related to his business.

However, Chaitu Lal in a recorded interview with The Bhutanese has said Bhutanese Gypsum sells for INR 8,000 per ton in Nepal or 13,000 in Nepal currency.

The complainant said that Chaitu Lal owns the land of one of the biggest depots in Biratmore near Siliguri. Chaitu Lal himself told the complainant and his colleagues that this is where Arvind Emporium keeps their Gypsum that is imported from Bhutan.

The complainant has several videos and pictures of that depot piled high with Bhutanese Gypsum and also a picture of Chaitu Lal.

A Nepalese coal dealer who is also interested to buy Bhutanese Gypsum by breaking the monopoly of the two big buyers in a recorded statement said that real price of Gypsum from Bhutan is not INR 2,015 as shown but INR 3,500 per MT with 1,500 as commission and it becomes INR 5,000 to 6,000 by the time it reaches Nepal and then it is sold for around INR 8,000.

An Indian truck driver also noted that the real price of Bhutanese Gypsum being sold to Nepal must be around INR 5,500 per ton as INR 550 has been cut per 100 kg that went short form his truck by the syndicate in Nepal (1 ton =1,000 kg).

There is also no confusion betweer INR and the Nepal currency as the paper asked for both sets of figures and used the INR figures for consistency.

On the issue of Bunty Sethia’s credibility, the SMCL CEO Kezang Jamtsho earlier himself accused the two big buyers, Arvind Emporium and Jagdamba, of being a duopoly and Gypsum syndicate that does not allow any new player to buy and supply Bhutanese Gypsum in Nepal.

SMCL on the insistence of the CEO tried supplying to a third party in Nepal in September 2019 but Arvind and Jagdamba got together and ‘killed’ the business of the third buyer by declining to buy Bhutanese Gypsum from SMCL for a month in October 2019.

The duopoly, commissions and high prices go together as the eastern and southern parts of Nepal with a lot of cement factories have a choice mainly between poorer quality Rajasthan cement brought from a great distance or good quality Bhutanese Gypsum available from a nearby area through the two agents who control the market and thus the prices.

Another source is Jammu and Kashmir in India but the operations there are small and patchy and susceptible to frequent supply disruptions. Gypsum from Kashmir reaches the northern and central parts of Nepal.

Gypsum from foreign countries like Oman or Iran would be more expensive for Nepal given the transportation costs till the port and then travelling a land distance greater than from Bhutan either via Gujarat or Haldia port in West Bengal.

Gypsum from Oman would have to be loaded on a ship and travel around 4,600 km by sea first till Haldia and then be unloaded and from there the closest route is around 650 km till Panitanki on the Nepal border.

By contrast Bhutan’s Gypsum only has to travel 457 km in a straight line and so is much cheaper for Nepal keeping transportation and logistics in mind.

14 Indian drivers confirm Nu 3,000 per truck being cut

In the original article of The Bhutanese on corruption in transportation of Gypsum the paper talked to 7 Indian truck drivers who owned their own trucks and took Gypsum from Bhutan to Nepal.

All of them alleged that EBPL in Bhutan cut a minimum of Nu 3,000 from each truck and sometimes when plenty of trucks were available it went up to Nu 8,000 to Nu 9,000. The money was cut from the advance money sent for the drivers to EBPL.

However, the Director of EBPL Kuenzang Leki who was already given due opportunity in The Bhutanese to rebut this again appeared in the private newspaper article calling it ‘false allegations.’

This time he was joined by two Indian truck owners Dinesh and Varinder Gill who owned 15 and 8 trucks respectively ferrying Gypsum from Bhutan.

The Bhutanese again interviewed seven more Indian truck drivers from the list of 85 given to ACC.

All seven which now makes a total of 14 Indian truck drivers again confirmed 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 evidence. Their names are being protected to save them from any action by EBPL but are with the paper.

On Dinesh and Varinder the complainant said that they as transporters are either partners or beholden to EBPL for their business and will naturally want to defend EBPL and Kumar Pradhan. The former SMCL employee above already highlighted how Kumar Pradhan has interests in transport companies in India through his wife or associates.

Kuenzang Leki in the private paper article questioned how Nu 3,000 could be deducted by EBPL when there is no interaction allowed with the drivers due to the COVID-19 SOP.

Here, three of the latest Indian drivers interviewed by The Bhutanese explained that up until a year ago before the COVID-19 lockdown it was always EBPL that cut the money in cash while giving them the advance and they did not get any receipt.

However, once the lockdown started and no direct interaction was allowed in Bhutan this amount started to get cut from EBPL’s partner in India which is Hirimba who started giving the advance. The drivers all referred to a ‘Mama’ who cuts the money on behalf of Hirimba.

Trade License vs an Agent License

Kuenzang and EBPL had earlier already denied any links with Hirimba but this was not true as the paper got access to a letter from EBPL signed by Kuenzang himself appointing Hirimba to hire trucks to transport Gypsum for EBPL.

The private newspaper article also talked about Hirimba sending a copy of his ‘trade license’ to the paper issued by the Assam Government.

However, here the complainant pointed out that he himself had submitted the same license copy of Hirimba to ACC to show that Hirimba does not have the appropriate ‘Agent License’ required to handle vehicles in Assam.

Hirimba’s license is dated for 2004 but in 27th November 2020 a letter from the District Transport Officer of the Assam Government to Hirimba Enterprise says he is not allowed to park trucks in Darranga as he does not have the required ‘Agent License.’

The complainant said Hirimba’s offices had even been shut down by the Assam government for not having the ‘Agent License,’ and so EBPL is dealing with an illegal entity in Assam.

The complainant said EBPL cannot afford to let go of Hirimba even without a license for the simple reason that Hirimba would then expose the whole corruption nexus.

Under invoicing

On the issue of under invoicing the private paper article quoted an Anand Chettri who was the depot-in-charge at Rangia saying it is impossible as the weight was rechecked at the railway weight bridge when minerals where supplied through trains.

Here the complainant said Anand Chettri handled only Indian private factories who took the minerals by train and since there was no agent or middlemen there was no question of under invoicing or commissions.

He said his complaint is with regard to Nepal where trucks go and not trains.

Sales figures

The private paper article quotes EBPL saying that the Gypsum sales figures provided by the complainant are incorrect and that the media published the same figures without verifying.

The Bhutanese in its report only presented a gist of the complainant’s complaint in the introduction talking about the complaint but in its own verification it only went by verified figures and also fact checked the complainant in a few places.

The complainant had said the sale had occurred over a three-year period by assuming SMCL took over in 2018 but this paper pointed it as being for two years from 2019.

He had also calculated sales of around 1.989 mn MT but The Bhutanese got the correct figure from SMCL as being 773,000 MT for two years.

All the other figures used by The Bhutanese in the two stories was not from the complainant but based on verified and recorded interviews with 18 different people from all sides and documents.

The complainant himself said his sales figures are estimates based on the number of trucks leaving for Nepal as the SMCL has been highly in transparent and not shared even basic figures with him. He said he was even denied a test quality report for Gypsum.

There is merit to this argument as the current General Manager of Sales and Marketing Sangay Rinzin declined to provide any sale figures and prices to The Bhutanese even though it is a public company.

The SMCL CEO initially also denied to share the 2020 sale figures and had to be coaxed by the paper to give it by saying such in transparency would make the company look bad.

The complainant said that the main allegation against him is that he did not get a transport contract and so he is unhappy, but he said he no longer cares about any contract or job in the field and is only concerned that such a massive scam is taking place robbing Bhutan of its own natural resources at a time when the government does not even have money for the budget and many people are surviving on Kidu.

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