Financial Crime World

Title: Phajo Nidup Under Investigation for Suspected Fraud: Double Mortgaging Assets Worth Nu 657mn in Phuentsholing

Background

  • Phajo Nidup, owner of Choden Transport and Bhutan Ply in Phuentsholing, is under investigation for alleged fraud
  • Filed complaints in Phuentsholing Dungkhag and Chukha Dzongkhag courts
  • Several banks and land buyers affected
  • Estimated financial loss: Nu 657mn

Investigation & Involved Parties

  • Royal Monetary Authority (RMA) identifies Nu 657mn in double and triple mortgage cases in NPLs
  • ACC investigating possible collusion by staff in banks, Thromde, and other entities
  • RBP initially involved, but the issue was sent back to the RMA

Impacted Banks

-drukpnb, BNB, and RICBL have significant exposure to Phajo Nidup’s business deals

  • RMA reported an additional Nu 300mn in questionable loans and misappropriations from the Bank of Bhutan (BoB)

Concerns Regarding Credit Information Bureau (CIB)

  • Victims question why CIB failed to identify double mortgaging instances
  • CIB relies on data supplied by the banks and has loopholes for concurrent loan applications and monthly record updates

Prevalence of Non-Performing Loans (NPLs) in Bhutan’s Financial Institutions

  • High levels of NPLs in many institutions
  • Partly due to inadequate collateral or insufficient checks by banks

RMA and CIB’s Role in Preventing Fraudulent Activities

  • RMA is requesting information from bank technical committees for further action
  • Emphasis on the CIB to provide real-time or updated information
  • Banks are responsible for issuing double mortgages as they perform lien noting

Phajo Nidup’s Perspective

  • Accused of deceit and misrepresentation by victims
  • Phajo Nidup denies allegations, stating he only introduced loan opportunities
  • Aims to repay what he owes and claims assets outweigh liabilities
  • Began his career in Phuentsholing as a clerk in the Truck Association
  • Opened Choden Transport in 2013
  • Reportedly had around 13-14 land cases in court during 2017-2019, settled without banks’ involvement
  • Entered real estate, bought land, and mortgaged it to acquire more assets, including a water bottle factory
  • Struggled as a manager due to lack of formal education

Conclusion

  • Scrutiny on financial transactions to prevent fraudulent activities is crucial
  • Institutional improvements should be prioritized to address high NPL levels and maintain overall financial health in Bhutan