Public-Private Collusion

A cabinet meeting last week appointed former journalist Sharad Ojha as the chair of the Nepal Insurance Authority, the regulator of the sector. Ojha has no qualifications for the post as required by Nepal’s Insurance Act. 

His family ties to Nepali Congress president Sher Bahadur Deuba has been cited as the reason he got to bypass appointment criteria.

This is just the latest example. Bending the law to appoint cronies and special interest groups to leadership positions in regulatory bodies has become the norm in Nepal.

Ojha’s predecessor was former Home Secretary Surya Prasad Silwal, who was suspended two months before the end of his term in December after the Commission for the Investigation of Abuse of Authority (CIAA) filed a corruption case against him in the Special Court. Days after Ojha’s appointment, the court cleared Silwal of corruption charges.

Read also: Nepal’s corruption carousel

Before Silwal, the Nepal Insurance Authority was led by Chiranjivi Chapagain, a relative of Chandra Dhakal of the IME Group. Chapagain is accused of granting approval to 10 insurance companies under dubious circumstances and favouring IME Life Insurance’s approval.

Meanwhile, intense lobbying by interest groups with ties to both Prime Minister Oli and PM-in-waiting Deuba allowed Santosh Narayan Shrestha’s appointment as the chair of the Securities and Exchange Board of Nepal (SEBON) in December. Shrestha promptly paid his dues to the groups that put him in office by making preparations to grant them permission to operate stock exchange.

Shrestha was preceded by hotelier Ramesh Kumar Hamal, the recommendation procedure and committee for whom were changed to ensure his appointment.

During his tenure, Hamal hastily amended a law that allowed specific companies to sell premium stocks amid ongoing debates,  and another one allowing the operation of stock exchanges with private sector investment instead of public companies. None of this raised eyebrows.

Hamal’s predecessor Bhishma Raj Dhungana, a former Nepal Rastra Bank official, was dismissed as SEBON chair following allegations of irregularities. 

Most of these recent individuals were appointed heads of regulatory bodies under PM Oli and Finance Minister Bishnu Paudel and probably at their behest.

The appointments at the Nepal Insurance Authority and SEBON reflect a blatant disregard for the rule of law. Such practice is also rampant in the cooperatives and real estate sectors, where illegal financial dealings and bad faith business is modus operandi.

Meanwhile, Energy Minister Deepak Khadka, also a hydropower entrepreneur, is set on ousting Nepal Electricity Authority (NEA) managing director Kulman Ghising. He previously ordered the removal of Dudhkoshi Hydropower Project CEO Bimal Gurung for criticising him on social media. 

The minister has a major conflict of interest because of his involvement in private energy sector, and is pressuring parliamentary committees and regulatory bodies to amend the law to allow the sale of 50% of the shares of hydropower projects during the so-called 'lock-in period', which prevents the sale of promoter shares.

Now, lobbyists have set their sights on the Nepal Rastra Bank (NRB). Maha Prasad Adhikari’s tenure ends in April, and the same groups behind the appointment of the chiefs of regulatory bodies like SEBON and Nepal Insurance Authority are going door to door of governing coalition leaders to have their candidate appointed. 

The book Why Nations Fail by Daron Acemoglu and James A. Robinson—co-winners of last year’s Nobel Prize for Economics with economist Simon Johnson—describes how public institutions are misused, weakened, and pushed toward failure by those with access to power.

Regulatory bodies are crucial to maintaining fair competition and ethical market practices. They exist to serve Nepal’s public. However, they are being deliberately undermined by special interest groups paying off authorities for plum positions that will enrich them and their political patrons.  

The government ordered the Department of Money Laundering to ‘wait’ as the body sought permission to take action against Ajeya Sumargi for illicit dealing.

It was thus unsurprising that the Financial Action Task Force (FATF) placed Nepal on its grey list in February for failing to take effective and result-oriented action to prevent money laundering.

Read also: Black, white and grey, Ramesh Kumar

The international community has raised a red flag against malgovernance, political interference, conflicts of interest, and impunity. The world is watching, but Nepal’s politico-corporate interests are too deep in greed to care.

Ramesh Kumar