RICBL CEO and ED suspended by ACC

The Anti Corruption Commission (ACC) on 7th July suspended the Royal Insurance Corporation of Bhutan Limited (RICBL) CEO, Namgay Lhendup and Executive Director Sonam Dorji, as part of its corruption investigation.

A source said that the investigation is into RICBL’s financial dealings with Nubri Capital which is a private fund management company in which the RICBL Executive Director is also a promoter.

The problems for the two stem from an RAA report sent to ACC.

The RAA in its 2015 Annual Audit report pointed out that RICBL Thimphu had invested Nu 100 million as bond redemption fund with Nubri Capital Private Limited and later instead of cancelling the initial contract and revising the terms of investment as advised by the Royal Monetary Authority, the Asset Liability Committee meeting held on 11th June, 2013 had discussed and considered it as other investment.

The RAA said that had the RICBL cancelled the contract with Nubri Capital Private Limited and invested the amount to loans and advances, it would have earned interest income of Nu 16.814 million.

Following the Nu 100 mn investment at nine percent per annum on 5th February the RICBL three days later on 8th February had irregularly borrowed Nu 108 million from Nubri Capital Private Limited at 11.75% interest per annum, immediately after three days.

This resulted in an avoidable interest expense of Nu.2.449 million.

RAA found that RICBL had paid interest of 11.75% on its own money which was not in line with the investment policy of the company.

The RAA forwarded the case to the ACC for further investigation.

The RAA had also pointed out violations of laws as RICBL did not furnish contractual agreement to the audit team pertaining to the funds borrowed from Nubri Capital Private Limited aggregating to Nu.11.309 million.

In the absence of legal document, the authenticity and legality of the interest rates charged, terms of borrowing could not be ascertained. The case was forwarded to the ACC too.

The RICBL’s Nu 100 million invested as bond redemption fund with Nubri Capital Private Limited was in violation of Article III, Section 14.A (Redemption Fund) of the company Registration Division’s Regulations for issue of Corporate Bond, 2012 and Sub Section B and sub section 7 (iii) of the regulations for fund management company, 2011.

The Audit in its findings also noted that RICBL has no proper control system in place to safeguard key documents from theft, destruction by insects, fire, etc.

The ACC investigation was also on the back of an anonymous letter sent to both the ACC and media houses alleging corruption in RICBL with regards to its investments in Nubri.

It said that apart from the Nu 108 mn loan Nubri had made several high interest rate investments in RICBL which was also actually borrowed from RICBL at lower interest rates.

The anonymous letter also highlighted poor company practices within RICBL.

The main focus of the ACC investigation is Nubri Capital but it may also look at other areas.

In July 2015 RICBL faced a different headache when Nu 92 mn was embezzled from its Paro branch by staff who absconded.

This resulted in a different case and investigation showing collusion and poor corporate checks and balances within the organization.