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ACC withdraws probe into alleged gypsum export operation

By Sonam Choki

The Anti Corruption Commission (ACC) has stated that it finds no evidence to indicate collusion and undue price fixing in the export of gypsum case that surfaced recently in Samdrupjongkhar.

The ACC had initiated investigation after it received a complaint, via email on 20 December 2020, against Mr. Kumar Pradhan, Marketing Specialist and Mr. Sangay Rinzin, Director of Marketing & Logistics of State Mining Corporation Limited (SMCL) alleging possible collusion and undue price fixing in the export of gypsum to Nepal.

The complaint alleged that the two officials were directly involved in fixing the price of gypsum thereby enriching themselves by receiving the difference money from importers and syndicates in Nepal.

Further, the ACC had received two additional information on illegal collection of money and siphoning of mineral revenue amounting to billions by Mr. Sangay Rinzin.

ACC formally launched an investigation on March 2021 and the ACC completed review of the allegations based on intelligence and ATR received from the DHI.

โ€œThe investigation found that there is no involvement of above two alleged officials in determining the prices for export of gypsum since such decision-making authority entirely lies with the Board of Directors,โ€ ACC, in its findings, stated.

ACC revealed that the major decisions of the company such as fixing mineral prices, providing strategic directions and maximizing the shareholdersโ€™ wealth and profitability of the company entirely lies upon the Board of Directors.

The ACC findings state Mr. Kumar Pradhan and Mr. Sangay Rinzin are neither a part of Board of Directors nor have any role in decision-making process but are just involved in operational functions of the company.

Given their roles, there is no evidence to suggest their influence or involvement in price fixation to favor the Nepal parties.

Based on the assessment of the average cost breakup and the available substantiating evidences, the landing price of Gypsum exported by SMCL to Nepal particularly for Arvind Emporium is approximately NPR 5,386/- which is equivalent to Nu. 3,366.25.

In general, the landing price of gypsum is around NPR 5000 to 8000 inclusive of the mineral rate, transportation charge and other expenses incurred.

Moreover, the online market analysis of the rates for cement in Nepal is about Rs. 3500/- to Rs. 4000/- per metric ton which is more or less in the similar range and gypsum content in one metric ton of cement is only about 2 to 4 percent.

The allegations on the total export of gypsum, amassing to 1,989,000 metric tons in the last three years, was found to be baseless as the total production of gypsum itself was approximately 905,153 metric tons in 2019 and 2020.

ACC stated that, of the total production in the last two years, the SMCL could only export 816,366 metric ton of gypsum and generated sales revenue of only Nu. 1.559 Billion, which is far behind the amount (Nu. 11.536 Billion) alleged as revenue lost to corruption.

With regard to transportation of gypsum, it was found that local transporters like East Bhutan Private Ltd. (EBPL)directly engages with the importers concerned to arrange trucks to carry gypsum from Samdrupjongkhar stockyard or Rangia stockyard to the importerโ€™s destination.

โ€œSMCL has no dealings in the transportation of gypsum to the importers. Hence, the investigation further revealed that there is no involvement of above alleged two officials in transportation of gypsum,โ€ ACC reveals. 

Further, the ACC thoroughly studied the assets and properties owned by Mr. Kumar Pradhan, Mr. Sangay Rinzin and their families. However, the investigation did not find any incriminating evidence to prove disproportionate assets acquired through collusion with Nepal parties/syndicate in price fixing.

Therefore, ACC stated that in view of the investigation findings, the ACC decided to stop further probe into the case. However, ACC stated that if new information arises in future, the ACC may decide to reactivate the case.

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