The Gypsum investigation and ACC’s limitations

From March 2021 onwards The Bhutanese did a series of stories showing a large difference in the price of Gypsum sold by the State Mining Corporation Limited (SMCL) to middlemen, the price in Nepal, illegal cash collected from Gypsum transporters, and other issues.

Initially, a person had filed a written complaint to the Anti-Corruption Commission (ACC), and shared a copy with the paper, but this paper did its own investigation, by looking at documents and calling multiple sources in India and Nepal on the matter.

SMCL was selling Gypsum to Nepal at around Nu 2,000 per ton, but this paper, after calling multiple sources in Nepal and India, found the actual price to be anywhere from Nu 5,000 to Nu 7,000 per ton. A major factory owner in Nepal even offered to drop the middlemen and buy directly from Bhutan at Nu 5,000 per ton.

The complainant, and even some dealers in Nepal, alleged that the big difference was due to big commissions being taken by middlemen, causing a loss to SMCL.

Another major allegation was that a Samdrup Jongkhar based East Bhutan Private Ltd. (EBPL) transport company in charge of arranging the transportation of the Gypsum to Nepal illegally collects a minimum of Nu 3,000 from each truck (Nu 100 per ton) for each trip, with amounts going well above that too. 

The official amount should only be around Nu 20 per ton or five times less for handling charges, according to EBPL. 14 Indian truck drivers have given recorded statements to The Bhutanese saying such an amount was cut.

Marketing Specialist, SMCL, Mr Kumar Pradhan, is one of the founders of EBPL and an active shareholder, which shows a conflict of interest too.

ACC received the complaint on 1 March 2021, and after two weeks of its own intel collection, it was felt there was a prima facie case and got the go ahead for the investigation from the Commission on 12 March.

It was convinced enough to even file a detailed argument to court showing a prima facie case of corruption in the Gypsum export and asking for a search warrant, which it got.

However, the old Achilles’ heel of ACC, which is its inability to conduct cross border investigations or even verifications (due to which it could not take up the Bhutan Lottery Scam for investigation), came up again.

It conducted a raid in Samdrup Jongkhar, but could not get much apart from a couple of computers, as the actual information and modus operandi lay in Nepal and India. ACC could also not get the statements of Indian truck drivers who were paying the Nu 3,000 plus cut per truckload due to COVID-19 protocols.

It could not send its teams to Nepal and India again due to the pandemic and jurisdictional issues.

In the end, ACC took the Gypsum pricing information directly from one of the two main accused companies in Nepal, Arvind Emporium who are the main players, and accepted their explanation at face value.

Though there was no allegation against the SMCL CEO at all, the CEO was a former ACC Commissioner.

However, the agency has not completely closed the door on the case, as it has said if new information arises in future, then ACC may decide to reactivate the case.

On the illegal cash collection from India drivers, though ACC could not get in touch with the Indian drivers to verify the figure due to COVID-19 restrictions, it said that owing to the nature and legality of such collection, and subsequent payments by EBPL, the ACC sensitized the Royal Monetary Authority (RMA) for the need to reinforce implementation of Foreign Exchange Rules and Regulations to prevent possible money laundering schemes.

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