Financial Scandal Rocking Phuentsholing: Phajo Nidup’s Alleged Multi-Million Dollar Double Mortgage Scheme

Phuentsholing, Bhutan - Phajo Nidup, the owner of Choden Transport and Bhutan Ply in Phuentsholing, is at the center of a growing financial scandal involving multiple banks and land buyers in the bustling town. This report details the allegations against Nidup, the estimated financial implication, and the potential role of various stakeholders.

Allegations against Phajo Nidup

Phajo Nidup’s dealings have resulted in several ongoing or imminent legal cases against him in the Phuentsholing Dungkhag and Chukha Dzongkhag courts. Some claimants have also lodged complaints with the Anti-Corruption Commission (ACC).

At stake is an estimated Nu 657 million ($10.1 million), though this figure could change as calculations continue. The Royal Monetary Authority (RMA) discovered around this amount in double and even triple mortgage cases involving assets owned by Nidup. These represent Non-Performing Loans.

Victims initially went to the Royal Bhutan Police (RBP) to file a complaint. Once identified as complex cases, RBP directed the complainants to the ACC. Suspected collusion from financial institutions, Phuentsholing Thromde, and others has complicated the issue, leading the ACC to forward it to the RMA.

Significant Irregularities

The RMA found significant irregularities in loan approvals, double mortgaging on the same assets, and the roles of various financial institutions and Phuentsholing Thromde.

The central question is how these transactions, involving double mortgages and undiscovered collusion, could have taken place without triggering alarms in the Credit Information Bureau (CIB) system.

Questionable Loans uncovered by the Royal Audit Authority (RAA)

In a separate investigation, the RAA—during its audit of the Bank of Bhutan (BoB)—revealed an astounding Nu 300 million ($4.3 million) in questionable loans to Phajo Nidup. Similar irregularities were identified, including double mortgages, loans granted in the names of his companies, loans secured against work supply orders, and excessively valued loans.

When contacted, Druk PNB and the Bank of Bhutan were reluctant to provide information regarding the ongoing case. A source from BoB disclosed that the court case pertains to around Nu 50 million ($735,000).

The Double Mortgage Scheme

A case involving a parcel of 5 acres, 33 decimals in Pekarzhing, under Phuentsholing Thromde, sheds light on the modus operandi employed by Nidup in his alleged double mortgage schemes.

Menuka Nirola, the initial landowner, had allowed another individual to take a Nu 28 million loan from DrukPNB on her land between 2011 and 2018. However, issues arose, and the case went to court. To avoid potential financial loss, the litigants wanted to sell the land. Phajo Nidup offered to pay the Nu 28 million, leading to the Thram being transferred to him. Phajo then cleared the loan at DrukPNB.

Additionally, Phajo reportedly told several individuals that he had part of this land mortgaged in the Bank of Bhutan. Desiring to buy more land from him, they agreed to loans (with Phajo as their guarantor) using the remaining portions of their land as collateral. However, it was later discovered that the land had already been mortgaged to other financial institutions.

This pattern has repeated with many victims, who have blamed not only Phajo but also the Thromde for not informing them about the land records and the banks for not thoroughly checking double mortgages. Two other cases, involving a Sonam and a Samten, under Phuentsholing Thromde, have mirrored these events. Both individuals have won cases against Phajo in court and still wait for their owed compensation.

If you have any information or insights on this ongoing issue, please get in touch. Stay tuned for further developments.