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Phuentsholing Businessman Accused of Major Bank Fraud: Double Mortgages and Unauthorized Loans worth Nu 1.1 Billion

A businessman from Phuentsholing, Phajo Nidup, who owns Choden Transport and Bhutan Ply, is under investigation for alleged bank fraud involving multiple financial institutions and numerous land buyers in Phuentsholing. The alleged fraud involves double mortgage cases, loans taken under false pretenses, and irregular valuations worth approximately Nu 1.1 billion.

The Case Unfolds

The case came to light when a few victims filed complaints with their respective banks, who then reported it to the Anti-Corruption Commission (ACC). Subsequently, the Royal Monetary Authority (RMA) and Royal Audit Authority (RAA) have also launched investigations into these financial irregularities.

Nu 1.1 Billion at Risk

The RMA revealed that they had identified Nu 657 million in double mortgages on assets belonging to Phajo Nidup, which are now classified as Non-Performing Loans. The RMA is still conducting calculations and expects the figure to increase. Furthermore, the RAA found Nu 300 million in irregular loans granted to Phajo Nidup and his companies in the Bank of Bhutan (BoB) alone. These loans featured issues like double mortgage, loans above evaluations, and loans on partial assets.

Multiple Banks Involved

Apart from BoB, the Royal Bhutan Bank (RBB) and Bhutan Development Bank Limited (BDBL) have also reportedly been affected by these financial irregularities, with Nu 50 million and Nu 10 million in claims, respectively. Druk PNB has declined to comment on the issue.

Red Flags Missed by the Credit Information Bureau (CIB)

The victims had initially approached the Royal Bhutan Police (RBP) to report the fraud but were directed to the ACC. After the ACC sent the case to the RMA, it was eventually sent back due to the suspicion of deeper collusion and complexities in the case. The RMA revealed that the Credit Information Bureau (CIB) might have missed these red flags since it relies on the information shared by the banks and has certain loopholes.

Modus Operandi: The 5 Acres 33 Decimals Case

One of the instances of Phajo Nidup’s modus operandi involves a 5- acre 33-decimal plot in Pekarzhing under Phuentsholing Thromde. The land originally belonged to Menuka Nirola, who had taken a Nu 28 million loan from DrukPNB between 2011 and 2018, but faced issues, leading to a court case. Phajo approached the court and offered to buy the land and pay off the loan.

Once Phajo had cleared the loan, he sold the land to multiple buyers, asking them to take loans from various banks to buy the land from him. However, these buyers ultimately discovered that the land had already been mortgaged to other financial institutions, preventing the Thram from being transferred to them.

Everyone is Pointing Fingers

Phajo Nidup’s acts of deception have left several victims, Thromde, and banks questioning each other’s roles. The victims have accused Phajo, the Thromde, and the banks for failing to catch the double mortgages, while the banks have been criticized for not performing adequate due diligence. The Thromde, as the land custodian, faces allegations of possible collusion for not alerting buyers and banks about the earlier mortgages. Meanwhile, Phajo’s case highlights the need for a more effective investigation and preventive measures to ensure transparency in the banking sector.