Universal codes of corporate governance

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The Anti-Corruption Commission (ACC) has forwarded cases that involve 16 Royal Insurance Corporation of Bhutan Ltd (RICBL) staff and three private individuals to the Office of the Attorney General (OAG). It has also written to the board’s chair to take punitive action against them and other officials of the RICBL. The commission has also written to the Governor of Royal Monetary Authority (RMA) to take appropriate actions against them for breaching RMA regulations in force.

The letters were sent on December 29 when the commission forwarded its findings and draft charges in connection to the irrational financial transaction between the RICBL and Nubri Capital Private Ltd and Sherab Reldi Higher Secondary School in Mongar, fraud and collusion in the settlement of false insurance claims, and embezzlement cases.

The letter to the RICBL board pertaining to punitive administrative action against the chief executive officer (CEO), executive director (ED) and other officials stated the essence of the overall findings, summary of the findings referred to the OAG for criminal prosecution, and findings of administrative in nature and recommendation for implementation by the board.

The letter stated that investigation revealed multitude of serious corporate governance glitches and questioned the safety of public funds and credibility of the top leaders in the RICBL. It stated that there is a total lack of ethical tone at the top, which is gradually breeding and expanding.

“Evidences gathered during investigation apparently confirmed serious ethical violations, intimidating behaviour towards employees, fraudulent behaviour, conflicting interest and so on,” the letter to the board stated.

 

(Source: Kuensel, January 12, 2018)

 

  1. Why did RICBL fail to comply with the universal codes of corporate governance? Explain TWO reasons.                                                                                                                                                 (10 marks)
  2. With reference to the DHI Code of Bhutan, suggest THREE changes in the internal control mechanism of RICBL, which could have prevented the organization from getting involved in the above mentioned embezzlement case.                                                                                              (15 marks)