The business of politics undermines Nepal’s democracy

When Prime Minister KP Oli and NCP co-chair Prachanda had a luncheon meeting at the home of business tycoon Durga Prasai last year, a photo posted on social media (pictured below) went viral spawning memes and widespread ridicule. The word ‘marsi’ for the red rice they were seen eating entered the Nepali lexicon as a synonym for sleaze.

This was not the first time politicians have been wined and dined by captains of industry, nor were Oli and Dahal the only leaders to do so. Such politico-business nexus has been standard operating procedure no matter what form of government Nepal has had in its history. The only difference is that these days they do not even try to hide the collusion.

Private medical colleges are a glaring symbol of this symbiosis. Durga Prasai was accused of attempting to lobby for laws to open his B&C Medical College in Jhapa. In fact, medical colleges have become such a lucrative way to rake in money that political connections are essential for those investing in this medical-industrial complex.

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Red rice, Editorial

What's so funny?, Nepali Times

Businesses provide politicians with the funds they require at election time, the intention being that they will extract their pound of flesh when the politician comes to power. "This negative culture of paying politicians and influencing policy is growing in Nepal, and is at the centre of the corruption epidemic," says political scientist Krishna Khanal.

The death of Ang Tsering Sherpa of Yeti Airlines in a helicopter crash in February was a big blow to Prime Minister K P Oli, who had close personal dealings with him. Sherpa served as a fixer for Oli, and bagged coveted real estate and other deals for his conglomerate in return.

Sherpa allowed the UML and now NCP to work out of his Ring Road villa. Last month, Oli inaugurated a monastery (pictured below) in Sherpa’s memory in Lumbini, and appointed relative Dawa Futi Sherpa ambassador to Spain. Sherpa's company Thamserku has leased several hectares adjacent to Narayanhiti Palace, which the Attorney General's  report says cost the government Rs5 billion. The lease renewal gives Thamserku the upper hand.

NCP leaders now often meet at the house of businessman Capt Rameshwar Thapa, and that was where negotiations for the party’s unification took place last year. Construction contractor Sharada Prasad Adhikari is untouchable because of his proximity to Pushpa Kamal Dahal -- even though most of his projects are abandoned half-complete.

Dahal is also known to hobnob with businessman Ajeya Raj Sumargi, who often acts as a frontman for the politician’s business dealings. Sumargi's Nepal Satellite Telecom got a license for cheap and has refused to pay Rs740 million in taxes it owes to Nepal Telecom. There is political pressure on many organisations to legitimise Sumargi money transfers into the country without disclosing their source. But due to political pressure most investigations are stalled.

Nepal Communist Party co-chair Pushpa Kamal Dahal Prachanda with businessman Ajayraj Sumargi during an inauguration of Prasad Homes in Pashupati (left) , Kathmandu and at the factory of Himalaya's Spring Water in Rasuwa district (right). 

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There are many other examples of what critics call ‘crony communism’ which has  flourished especially after the NCP government took power. The impunity and corruption associated with this style of governance has made the neo-rich richer, and the Nepali middle class sink into poverty.

"When the distance between politicians and businesspersons is blurred, policies are made not in the favour of the general public, but specific interest groups," admits Yubaraj Gyawali, who himself is an NCP leader. "That is where the plunder of the country's resources for personal benefit begins."

After Nepal’s sugar barons convinced the government that imported sugar was harming domestic industry, politicians first raised the taxes on imported sugar, then completely banned it at the behest of business. The price of sugar soared immediately from Rs65 to Rs100 per kg. The new budget also protects domestic tea, coffee, dairy producers as well as the footwear and cement industries -- even when domestic cement is 30% more expensive than Indian cement, and double the cost of the same grade of Chinese cement.

Read also: Crony communism, Editorial

All this is, of course, nothing new. UML Finance Minister Bharat Mohan Adhikari was criticised in the 1990s for serving the interests of businesses. Adhikari’s Finance Secretary Rameshwor Khanal resigned then during a budget formulation process, accusing industrialist Binod Chaudhary of exerting undue pressure on state policy. Chaudhari is now Nepal’s only dollar billionaire, #1349 on the Forbes List of the world’s wealthiest men, and has just wangled a license for CG Telecom.

Real estate broker Shobhakanta Dhakal is also in the news for transferring a part of public property in Baluwatar to NCP general secretary Bishnu Poudel. Khanal is influential enough to gain a berth in the UML’s list of proportional representation candidates in the 2017 election. Poudel claims to have bought the land, but critics claim it was transferred to his name for free in return for unspecified favours.

Nepal may have gone from monarchy to republic and seen many changes in governments, but that does not seem to affect Deepak Malhotra and his businesses. He accompanied PM Oli on visits to China, Cambodia, and Vietnam. Even while he was being investigated for involvement in the gold smuggling racket, Malhotra was leased airport real estate to build a commercial complex. (see box).

"If a country's democracy is well developed, then a politician's career plummets if he or she is seen to have unethical dealings with business," says former Finance Secretary Rameshwor Khanal. “That is not the case in Nepal.”

Businessmen like Suraj Vaidya of the Vaidya Group, Chamber of Commerce President Rajeshkaji Shrestha, former NRN president Upendra Mahato, and construction magnate Madan Adhikari all have multifarious political connections. Some freely admit that being close to power is the only way to do business in Nepal.

Even opposition leaders like the NC’s Sher Bahadur Deuba have close links in the business community, although he is not with them much these days because he is out of power. Deuba was embroiled in controversy for trying to rush a contract for the Kathmandu-Tarai highway to the Indian company IL & FS, and was also accused of pressurising bankers to waive almost Rs2 billion in loans taken by hotelier Piyush Amatya.

Nepal’s tycoons are now not satisfied with just influencing politicians, some are becoming politicians themselves. Rajyalaxmi Golchha became a member of parliament through then UML’s PR quota, and publicly admitted she paid Rs70 million to the party for the honour. Many other businessmen in Parliament today have also paid their way into the legislature.

Punarjan Acharya a former political adviser to the NC is aghast. "This growing unhealthy nexus between businesspersons and politicians does not just hurt the economy, it puts democracy itself in danger," he says.

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Nepal's only international airport hostage to business interests

Sharad Ojha

In December 2018, PM KP Oli declared that Tribhuvan International Airport would be made a "boutique airport." However, a 5-storey building in front of the airport, built not just against 'boutique' aesthetics but also against regulations, makes a mockery of his declaration.

The building is constructed by 'Rasuwa KD Joint Venture' company, owned by controversial businessman Deepak Malhotra, alleged gold smuggler Bimal Poddar, and MP from Rasuwa, Mohan Acharya. The company was supposed to construct a parking lot, a modern park, a waiting area, a playpen for children, and other infrastructure. But except for a tall building and a parking lot that is highly inconvenient to arriving passengers, nothing else has been constructed.

After much protest from airport officials themselves, an investigation committee was formed under the airport's Deputy Director, Jagannath Niraula. The committee submitted its report in April 2019. The report concluded that the building had been constructed against agreements and should be demolished if needed, and that its impacts on airport security should be investigated.

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But more than a month later, the recommendations have not been implemented. "We know the building goes against regulations, but what can we do if the person we are supposed to investigate hobnobs with the Prime Minister?" says an engineer who did not want to be a part of the investigation committee. He was referring to Malhotra, who is seen accompanying PM KP Oli on many international visits.

Malhotra's company had started enjoying impunity after Lokman Singh Karki became the head of Commission for the Investigation of Abuse of in April 2013. Anyone who dared question his company was called for questioning by the CIAA instead. But even two and a half years after Karki was deposed, Malhotra's influence continues to grow stronger through his associations with even higher political connections. He evades investigation despite being accused of VAT corruption and gold smuggling.

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