Citing poor performance, ADBL board fires CEO Budhathoki

KATHMANDU, Oct 20:

The board of directors (BoD) of Agricultural Development Bank Ltd (ADBL) has removed the state-owned bank´s CEO Tej Bahadur Budhathoki from the post, citing unsatisfactory performance.

The meeting of BoD held late Saturday evening decided to terminate Budhathoki´s contract. He was appointed to the post for a four-year term through open competition on November 27, 2011.

The BoD took the decision based on the evaluation report submitted by a three-member performance appraisal committee.

Earlier, the committee led by board member Chhetra Bahadur Sejuwal had submitted its report to the BoD, concluding that CEO Budhathoki´s performance was not up to the mark.

"The BoD has decided to oust the incumbent CEO on the basis of the ToR which clearly states that he could be either retained or removed on the basis of performance report of the committee," ADBL Chairman Pramod Kumar Karki told Republica. "The committee did not find his performance satisfactory. We sought clarifications from him twice. But we were not convinced by his clarification."

Karki also said the BoD had given Budhathoki some instructions last year which he did not bother to heed. "During his term, many financial indicators, including the corporate governance, operating costs, deposit collection and lending, among others, did not meet the target,” he added.

However, Budhathoki denies any wrongdoing. "The decision came all of a sudden. All the accusations leveled on me are completely false. You can see the actual financial situation of the bank under my leadership if you go through our financial statement," Budhathoki told Republica. "The bank has achieved solid growth and is making profit. Almost all the indicators of the bank are good.”

According to the unaudited financial statement of the bank for the fiscal year 2013/14, its net profit fell to Rs 1.5 billion last year compared to Rs 2.29 billion of 2012/13. Operating profit, net interest income, write back amount from the possible loan losses have declined in the last fiscal year, while the bank´s heavy spending under the staff (Rs 3.35 billion) has drawn criticism from the bank´s public shareholders.

The deposit and loan mobilization of the bank has, however, rose to Rs 65.83 billion and Rs 57.51 billion, respectively, in 2013/14, up from Rs 54.48 billion and Rs 49.69 billion in the previous year.

“While comparing the position of the bank when I took over the management, the bank has grown by leaps and bounds. The NPL has come down drastically, profit has gone up substantially and the growth has remained healthy,” Budhathoki said, adding, “I have followed all the board´s instructions of the board except those which are irrational.”

The decision comes in the wake of agitation by staff union at the bank, close to the ruling party Nepali Congress, as well as the concerns showed by the Commission for the Investigation of Abuse of Authority (CIAA) on sanctioning of loans to a medical college without following due procedures. CIAA had also showed concern on the release of huge amount to CEO Budhathoki as travel allowance.

Ousted CEO Budhathoki said he would challenge the BoD´s decision in the court. "As I have been unjustifiably removed, I will seek legal remedy within a day or two,” he added.

Source: Republica