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Alleged Financial Crime Case Involving Phajo Nidup Rocks Phuentsholing: Double Mortgages, Collusion, and Millions at Stake

Phuentsholing, Bhutan - The bustling commercial hub of Phuentsholing has been rocked by an unfolding financial crime scandal, with businessman Phajo Nidup at the center. As owner of Choden Transport and Bhutan Ply in Phuentsholing, Nidup is facing allegations of defrauding many banks and land buyers in the area, with estimated losses totaling over Nu 1 billion.

The Web of Deceit

In this intricate web of deceit, several banks, Phuentsholing Thromde, and even the Anti-Corruption Commission (ACC) have become embroiled in the controversy. Multiple cases have been filed in the Phuentsholing Dungkhag and Chukha Dzongkhag courts, while some victims have even reported the matter to the ACC.

The Royal Monetary Authority’s Discovery

Sources familiar with the investigation reveal that the Royal Monetary Authority (RMA) discovered approximately Nu 657 million in suspicious loans - double and even triple mortgage cases on the same assets classified as Non-Performing Loans (NPLs) - all belonging to Nidup. The figure could change, as calculations are still ongoing.

Bank of Bhutan’s Findings

Further complicating matters, the Bank of Bhutan (BoB) reportedly found around Nu 300 million in irregularities linked to loans given to Nidup. The issues include double mortgaging of the same asset, obtaining loans under the guise of work supply orders, excess valuation of loans, and selling land that had already been mortgaged.

Other Affected Institutions

The Royal Audit Authority’s (RAA) ongoing audit of BoB has unearthed several instances of this nature, with memos issued and replies awaited from the bank. DrukPNB has also reportedly been affected, with losses amounting to around Nu 50 million. T- Bank and BNB have disclosed smaller amounts due, approximately Nu 10 million and Nu 50 million, respectively.

The Credit Information Bureau’s Failure

The Credit Information Bureau (CIB) system, which was expected to prevent such fraudulent activities, failed to catch these dubious transactions. According to sources, the CIB is flawed since it relies on information provided by banks. In cases where a person applies for loans from multiple banks concurrently, the checks by banks would appear clean on the CIB, leaving room for financial manipulation.

Illustrative Case: The 5-Acre Plot in Pekarzhing

One particularly illustrative case involves a 5-acre 33-decimal plot in Pekarzhing, Phuentsholing. The land, originally owned by Menuka Nirola, was mortgaged with DrukPNB for Nu 28 million between 2011 and 2018. After legal issues arose, the parties looked for a buyer, and Nidup stepped in, purchasing the land by paying off Nirola’s debt.

The Consequences

In the meantime, Nidup told several individuals that he held a mortgage on a part of this land with the Bank of Bhutan. Consequently, would-be buyers took loans from BoB using the collateral to buy the land from Nidup but, ultimately, could not secure the Thram (the land certificate) due to the double mortgages.

Affected Individuals

One affected individual, Buddha, had paid Nu 14 million to Nidup but still has not received his Thram or his money back.

The Role of Phuentsholing Thromde and Banks

The Thromde’s role in this saga comes under scrutiny as well, as Thromde land records did not flag potential double mortgages in some cases. The banks, accused of not doing proper due diligence, are also being held accountable for not checking other banks’ records before granting loans.

Allegations of Collusion and Questions of Transparency

As allegations of collusion between Nidup, the banks, and even Phuentsholing Thromde continue to circulate, many affected parties question the transparency and accountability of financial institutions and local authorities. The RMA, ACC, and other relevant bodies have yet to release official statements or information on the current status of these investigations and proceedings.