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| Kathmandu, Friday March 14, 2003 Falgun 30, 2059. |
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Central Bank threatens stern action against
DTT
Post Report
KATHMANDU, March 13 : In a bold step against Delloitte Touche
Tomatsu (DTT) for its continuing non-response to initiate formal dialogue to settle the
compensation claim, Nepal Rastra Bank (NRB) has warned of initiating stringent legal
actions if DTT does not respond by April 12, 2003.
A highly placed source of the NRB informed
The Kathmandu Post that the central bank sent a letter to the DTT last week urging it to
make a concrete response by April 12.
"If the DTT ignores the deadline, the
NRB will have no option other than to go for arbitration to realise the claimed
compensation amount," the source said.
In addition to initiating arbitration
process, he further said that the central bank would also take steps to blacklist the DTT,
which among others, would bar any company associated with the DTT to operate inside the
country.
"If the NRB decides to blacklist the
DTT, such decision would be circulated to all major donor agencies including the World
Bank and would also be pasted in the NRB’s web site," he informed.
After the DTT’s unilateral breach of the
management take-over contract of Rastriya Banijya Bank (RBB), the NRB, in January sent a
letter to the DTT claiming a compensation of about Rs 500 million for the financial loss
that the central bank incurred.
The NRB had asked the DTT to either
compensate the contract value signed between them or substitution value that the NRB has
to bear while constituting a new management team for the RBB.
However, in its first official response to
the compensation claim of the NRB, the DTT had refused to pay the compensation, but had
urged the NRB to initiate negotiations to find out an amicable solution to the problem.
In response to the call of the DTT for
dialogue, the NRB in February had expressed its readiness for the dialogue and had asked
the former to respond immediately specifying the venue and date of negotiations.
According to concerned officials, despite the
readiness of both the DTT and the NRB to initiate negotiations for an agreeable solution
of the problem, the continuing venue dispute has been the greatest hurdle in furthering
the process. The NRB has been maintaining that Kathmandu should be the venue for the
negotiation.
The DTT, in its earlier communication with
the NRB had refused to come here citing fragile law and order situation of the country.
The NRB has argued that since various international seminars and conferences are being
held in Kathmandu, the security situation of the country is good enough for negotiations,
said the source.
As per the agreement, in case of arising any
complications, both the parties are first required to initiate negotiations for amicable
solution to the dispute. If that fails, then both parties shall go for arbitration. Either
party can go to court, if the arbitration fails to satisfy them.
The DTT, which had signed a contract with the
NRB in January last year to take over management control of the RBB, unilaterally breached
the contract some seven months ago on the grounds of weak security condition of the
country.
The NRB has claimed that the action led to a
huge loss due to DTT’s initial delay and eventual cancellation of the management
take-over contract.
According to a report, the RBB alone had to
bear a loss of about Rs 10 million a day due to the unnecessary delay in the process. The
breach of trust by the DTT also played a crucial role in weakening the financial condition
of the bank due to which the non-performing assets climbed to 48 per cent.
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