Financial Scandal Roils Bhutan: Phajo Nidup Accused of Double Mortgaging Assets Worth over Nu 1.1 Billion

Contents

1. Background and Background
2. Phajo Nidup’s Financial Scandal: Double and Triple Mortgage Cases
3. Beyond Mortgage Fraud: Irregularities and Collusive Roles
4. The Role of the Credit Information Bureau (CIB) and Audit Findings
5. Phajo Nidup’s Modus Operandi: A Case Study
6. Victims’ Frustration and Responsibility
7. Efforts to Combat Fraudulent Activities: Statements from the RMA and the ACC

Background 🔗

Phuentsholing, Bhutan - The owner of Choden Transport and Bhutan Ply, Phajo Nidup, has been at the center of a growing financial scandal in Bhutan, with multiple banks, land buyers, and the Anti-Corruption Commission (ACC) filing cases against him.

Double and Triple Mortgage Cases 🔗

The controversy began due to reports of Nu 657 million in double mortgage cases in Phuentsholing, with all assets linked to Phajo Nidup falling under the Non-Performing Loans (NPL) category. A Royal Monetary Authority (RMA) source expressed that the total figure might change as calculations continue.

Irregularities and Potential Collusion 🔗

The issues go beyond fraudulent mortgage deals, with concerns about exceeding permissible loan limits, processing irregularities, and potentially collusive roles of financial institutions and local authorities.

The Role of the Credit Information Bureau (CIB) and Audit Findings 🔗

Victims initially approached the Royal Bhutan Police (RBP) about the case but were directed to the ACC. Following an assessment, the ACC found signs of suspected collusion between financial institutions and local authorities and referred the matter back to the RMA. Another source, privy to the audit findings of the Royal Audit Authority (RAA), revealed Nu 300 million in suspicious transactions related to Phajo Nidup at the Bank of Bhutan (BoB), including double mortgaging the same asset, loans obtained through the submission of work supply orders as collateral, and loans exceeding the appraised value.

Phajo Nidup’s Modus Operandi: A Case Study 🔗

An example of Phajo Nidup’s modus operandi involved a 5-acre, 33-decimal plot in Pekarzhing, Phuentsholing Thromde. Phajo took advantage of litigation over the land by clearing the debt and then sold it to unsuspecting victims, who used loans from other financial institutions to buy it. In one instance, a victim named Buddha paid Nu 14 million to Phajo but has yet to recover his money or obtain the Thram.

Victims’ Frustration and Responsibility 🔗

Multiple victims have accused Phajo of misrepresenting the fact that the land was partially mortgaged at other banks, leading to double mortgage agreements and the inability to obtain land certificates (Thrams). They have expressed their frustration, not only with Phajo but also with the Phuentsholing Thromde and banks for not doing proper due diligence.

Efforts to Combat Fraudulent Activities: Statements from the RMA and the ACC 🔗

The Phuentsholing Thromde Executive Secretary, Lungten Jamtsho, acknowledged the problem’s systemic nature and reminded banks to release loans only with original land certificates to potentially deter such fraudulent deals. Bank representatives, such as BoB and T-Bank, expressed their commitment to recovering outstanding loans. The RMA and the ACC have called for increased transparency and collaboration among financial institutions and local authorities to prevent and counteract such fraudulent activities more effectively in the future.