Many of the victims of loan sharks who have been demonstrating in Kathmandu for the past months took high-interest loans that multiplied their debt. But among them are also families who are being forced by fraudsters with forged documents to repay money never borrowed. Here are some of them: Rajaram Sahani&nbsp; Rajaram Sahani lives by the highway in Rauthat district. Property prices have soared because of the proposed Nijgad airport, and land grabbers are targeting innocent farmers. One hot afternoon six years ago, he was handed a legal notice from the District Court that he had not paid back interest and capital on a loan for Rs637,000 from his neighbour, Trailokya Chandra Sahani. “He had lodged a complaint in the court saying I had not paid back a loan I never took, and he was demanding my land as compensation,” Rajaram says. Read also: <a href="https://www.nepalitimes.com/editorial/institutionalised-inequality">Institutionalised inequality</a>, Editorial  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230721050732_2dd1169402bcf3353cf99d618e7c7c71e7aa711f1423f5bba39e33932d897e58.jpg" data-media-id="editor_1" data-image-id="20230721050732_2dd1169402bcf3353cf99d618e7c7c71e7aa711f1423f5bba39e33932d897e58" data-rendition-name="original" width="2250" height="1500" loading="lazy" alt="Rajaram and family"> <figcaption> </figcaption> </figure>  He then took the rubber print and his live fingerprint to a forensic lab in Lalitpur where technician Mukul Pradhan confirmed that although the two prints looked alike, one of them was not a real thumb. With this proof, Rajaram returned to the District Police in Rautahat and showed it to Superintendent Siddhi B Shah. But because the process of investigation would take more than the 24 days that the fake print maker Trailokya Sahani could be legally detained, he was not arrested. &nbsp; Rajaram then submitted a complaint to the court which sent the prints back to the forensic lab to again determine if they were rubber prints. A 3-member investigation team that included the same Mukul Pradhan, police DSP Udaya Jung Rana and Biswa Raj Poudel determined that the lab did not have the necessary equipment to confirm the authenticity of the rubber print -- even though two of its members had earlier said it was fake. Read also: <a href="https://www.nepalitimes.com/news/till-debt-do-us-part">Till debt do us part</a>, Ramesh Kumar  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230721050736_2035fdcd81be4e0236fc0977548645722d35ba5d898b0fbc96dedd493f3a2a9e.jpg" data-media-id="editor_3" data-image-id="20230721050736_2035fdcd81be4e0236fc0977548645722d35ba5d898b0fbc96dedd493f3a2a9e" data-rendition-name="original" width="780" height="1040" loading="lazy" alt="Rajaram loan"> <figcaption>Loan document with fake fingerprints of Rajaram Sahani.</figcaption> </figure>  The District Court judge Keshav Kumar Pandey ruled that Rajaram was guilty, and ordered he pay back the interest and capital on a loan he never took that now had grown to Rs4.83 million.&nbsp; Rajaram’s appeal is sub judice at the Birganj High Court, and he has nothing left to lose and is at the sit-in in the capital against loan sharks.&nbsp; Ram Ishwor Sahani The life of Sarlahi fishmonger Ram Ishwor Sahani and his family was &nbsp;irrevocably changed when Naresh Kumar Sahani of Gaur filed a case against his 60-year-old mother Malbhogia Kumari for failing to pay off a loan of Rs2 million.&nbsp; The plaintiff requested the court to seize Malbhogia’s property if she failed to pay the 10% interest on her loan within the next 45 days. Not only had Malbhogia never borrowed any money from Naresh, neither she nor her family had ever met or heard of the loan shark. Her son suspected that her mother’s fingerprints might have been misused. Read also: <a href="https://www.nepalitimes.com/?p=21822&amp;preview=true" target="_blank">Some are more equal than others</a>, Anil Chitrakar  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230721050740_c5f4b1cadeb323565450a0359db648daa07d861dc5ba5edc6de7248df904f7a3.jpg" data-media-id="editor_5" data-image-id="20230721050740_c5f4b1cadeb323565450a0359db648daa07d861dc5ba5edc6de7248df904f7a3" data-rendition-name="original" width="1000" height="750" loading="lazy" alt="Rajaram and Ram ishwor"> <figcaption>Ram Ishwor Sahani (left) and Rajaram Sahani.</figcaption> </figure>  The court ordered a lab analysis of the fingerprint on the loan document against Malbhogia’s own thumb prints, and they did not match. But as soon as the results came out, Naresh successfully filed a petition to withdraw the case without facing any consequences. Ram Ishwor’s mother is elated, but her son has not found any comfort. The court case had dragged on for two years, and he had had to place his land on collateral during that time. &nbsp; “I feared that we would be made homeless,” he explains. He is now planning to file a forgery case against Naresh Kumar Sahani, and is in Kathmandu demanding justice. Baiju Saha Kanu Baiju Saha Kanu of Rautahat was vindicated in a similar case involving fake fingerprints, after which he filed a forgery case against his neighbour Ram Binaya Shah, who had taken Baiju to court.&nbsp; But Ram Binaya was let off with a Rs30,000 fine, a mere slap on the wrist, and his brother took revenge by filing another fraudulent case against Baiju’s son, dragging the family to court once again.&nbsp; “Had he been sent to prison the first time around, neither he nor his family would have had the courage to commit a similar crime,” says Baiju Shah. Read also: <a href="https://www.nepalitimes.com/here-now/nepal-s-tax-system-widens-rich-poor-gap">Nepal’s tax system widens rich-poor gap</a>, Ramesh Kumar  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230721050740_882b93bb910ad96445934e317ab3bc57f07948bc25ea7c150a2b54b74c656a2a.jpg" data-media-id="editor_7" data-image-id="20230721050740_882b93bb910ad96445934e317ab3bc57f07948bc25ea7c150a2b54b74c656a2a" data-rendition-name="original" width="831" height="1170" loading="lazy" alt="Baiju"> <figcaption>Loan document with fake fingerprints of Baiju Saha Kanu.</figcaption> </figure>  Dilli Kumari Karki Dilli Kumari Karki from Milan Chok in Rautahat lost her 11-year-old daughter Akrita Basnet who committed suicide last year. She believes it was because of the mental torture the family had to endure from loan sharks who were blackmailing them.&nbsp; Seven years ago, Karki borrowed Rs60,000 from Rural Development Bank to open a clothing store. To expand the shop, they also borrowed Rs100,000 from a neighbour, Namrata Lama, a local tailor.&nbsp; Three months later, Karki’s husband Sukram Basnet decided to become a cosmetic dealer and borrowed an additional Rs350,000 from Lama which the couple managed to return eventually after four months. Later, Lama asked Karki for a blank cheque in her name “just for recordkeeping”.&nbsp; Innocently, Karki gave her the signed cheque, and Lama told to her make another one because she “signed it incorrectly” the first time. Soon, Lama started demanding Rs1.5 million which she added herself on the blank cheque. Karki refused saying she had already repaid her loans, but Lama threatened to bounce the cheque.&nbsp; Read also:<a href="https://www.nepalitimes.com/editorial/nepals-political-economy/"> Nepal’s political economy</a>, Editorial  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230721050744_d01cb7e3378fde3fe41a2f8a26ab8c803810063b40eb6c871e1090722d999ac3.jpg" data-media-id="editor_9" data-image-id="20230721050744_d01cb7e3378fde3fe41a2f8a26ab8c803810063b40eb6c871e1090722d999ac3" data-rendition-name="original" width="1500" height="920" loading="lazy" alt="Dilli NT"> </figure>  Fearing prosecution, Karki started borrowing money from other lenders to pay Lama. But after paying Rs1.5 million, Lama said that was just the “interest” and that Karki still owed the “principle” which amounted to Rs450,000. When Karki refused, she brought the other blank cheque to threaten her. So she kept on paying “interest” which has now added up to Rs4.5 million. When Karki tried to sell the family property to pay for the cancer treatment of her mother-in-law they found that Lama had forged land ownership documents, forcing them to reach a settlement by paying off another Rs250,000.&nbsp; Karki then tried to sell her own land to get out of the mess. But the middle men tried to threaten and blackmail the family in front of the children. After one such altercation, Karki left for Kathmandu and heard three days later that her daughter had hung herself in her room. Lama used to call Karki on multiple numbers but when this reporter tried them, she was never available. Read also: <a href="https://www.nepalitimes.com/news/first-the-good-news-sgm1d4u4">First, the good news</a>, Ramesh Kumar Post-script: Section 249 ‘A’ of Nepal’s Civil Code was amended through an ordinance in May to make unfair transactions punishable by seven years imprisonment and a fine of up to Rs70,000. A replacement bill was passed by parliament in June. But loan shark lobbies close to the JSP have demanded that the bill be repealed, staging counter-protests at Maitighar. In Rautahat alone, there have been 1,811 loan cases in the last fiscal year, 90% of which involve forgery and misuse of fingerprints. In May, the government formed an inquiry commission to address victims of loan sharks under former Special Court Chair Gauri Bahadur Karki, and 24,000 complaints were submitted, most of them from Madhes Province. Indeed, loan sharks have formed a syndicate in Madhes Province specialising in obtaining fingerprints from official documents and making rubber impressions, forging loan documents, bribing court and forensic officials and obtaining customised lab reports from the National Forensic Science Laboratory in Lalitpur. Read also: <a href="https://www.nepalitimes.com/here-now/crime-and-or-punishment-in-nepal">Crime and/or Punishment in Nepal</a>, Sonia Awale Reporting by: Centre for Investigative Journalism-Nepal, Man Bahadur Basnet, Sagar Chand, and Archana Darji

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Matter of life and debt

<figure></figure>										<img width="1698" height="1176" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109151112/636bb58f9c7e80680e07bc0djpeg.jpg" alt=""/><figcaption>Illustration: CIJ NEPAL</figcaption>												Top secret documents prepared by the US government’s Financial Crimes Enforcement Network (FinCEN) and leaked to the media have revealed $2 trillion in suspicious money transfers, and include files that involve some of Nepal’s top banks.The information is contained in ‘Suspicious Activity Reports’ (SARs) sent by banks to the American financial watchdog between 1999 to 2017, and most involve transactions with countries on which the US has imposed sanctions, like Russia, North Korea, Iran and Cuba, or Chinese companies which Washington has blacklisted. Some of these SARs involve transfers through Kathmandu-based banks, and by Nepali firms a few of which appear to be front or fake companies, or ones that are defunct. Banks report transactions when they suspect that money laundering or criminal activity is suspected, but they do not necessarily mean that the companies or individuals named have broken the law.The Nepal files contain transactions made through nine banks, 10 companies and other individuals between 2006-2017 and include some of the big names in banking. However, the companies are less well known, and some of the individual names appear to be security guards or Nepali overseas workers sending money home. Even so, some of the Nepal-based companies named appear to have been involved in smuggling gold, antiquities, or trading in asphalt and telecommunication equipment. The transactions flagged in the FinCEN leaks in Nepal were through Standard Chartered Bank, Prime Commercial Bank, Bank of Kathmandu, Nepal Investment Bank, Everest Bank, Mega Bank, Himalayan Bank, Apex Development Bank of Kaski, and Nepal Bangladesh Bank.The leaked documents contain the names of 10 little known Nepal-based companies including Rauniyar Brothers &amp; Co of Birganj, Subha Samriddhi Traders Pvt Ltd of Kathmandu, Shasta Trading Company, Setidevi Export Import Pvt Ltd, L D International Pvt Ltd, Felt and Yarn Pvt Ltd, Woman’s Paper Crafts, Acme Money Transfer Service, and Sunny Enterprises. Some these were never registered, others appear to be front companies, and some are closed. Of the nearly $300 million worth of transactions through Nepal that were flagged in the FinCEN documents, $177.6 million were bank transfers of which $103 million were transferred out of Nepal and $74.6 million were remitted into the country. There were also $48.2 million worth of possibly illegal transactions in various countries with Nepal links, and another $75 million transactions not in Nepal, but involving Nepali-sounding surnames and addresses. Most of the transactions in the FinCEN leaks that raised red flags, including those by Rauniyar Brothers and Shubha Shambridhi Traders, involved over $70 million in Letters of Credit through Standard Chartered Bank in Nepal and its branches abroad. The Rauniyar transactions went through the Dubai-based Kite International FZE, and involved import and export of petroleum products. They were sourced from Bandar Abbas port in Iran in contravention of US-sanctions, and the shipment documents were reportedly forged to look like they came through Dubai.When asked to respond, Pranu Singh of Standard Chartered Bank Nepal said the bank was bound by client confidentiality and did not comment on specific cases. ‘The reality is that there will always be attempts to launder money and evade sanctions,’ she wrote in an email reply. ‘We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programs.’  The other companies involved appear to have been involved in using banking channels to fund gold smuggling operations via jewellery companies in Hong Kong and Dubai between 2009-2011. Some banking transactions appear to have been listed in the SARs because they involved Chinese telecommunication company ZTE that is on a US blacklist, while others were  transfers from Nepal to known tax havens like the British Virgin Islands, Seychelles and Luxembourg.  The leaked files also include transfers of amounts as small as $120-500 to Nepali companies and from Nepali workers in Iraq and other countries that for some reason were in the suspicious activity reports sent by corresponding banks as long as ten years ago. However, some of the companies listed, like Woman’s Paper Crafts, are not even officially registered in Nepal.Two separate reports in the FinCEN leaks concern possible payments for smuggled Nepali religious artifacts. Standard Chartered Bank New York flagged American Nancy Wiener Gallery and several other dealers suspected to be involved in the illegal trade of antiquities. Some of them were linked to Subhash Kapoor, an Indian national and the Art of the Past Gallery owner in New York, who used to facilitate artifacts smuggling from India to the United States. He was arrested by Interpol in 2011 at Frankfurt airport.Nancy Wiener Gallery was cited in the FinCEN leaked files for suspicious transactions worth $27 million between 2010-2017. This is the same gallery that sold a stolen 16th-century bronze from Nepal in 2010 and transferred the payment to Pantheon Worldwide in Hong Kong. The bank that filed the suspicious activity report said: ‘The transactions appear to be related to antiquities that were potentially purchased and sold illegally.’Nepal’s Money Laundering Prevention Act requires banks and financial institutions to report suspicious transactions to the Nepal Rastra Bank’s Financial Information Unit (FIU). The Act bars clients from making transactions under anonymous or fictitious names. Financial institutions also need to keep a separate record of transactions of high-ranking officials in the political, administrative, and judicial spheres. Although some of the suspicious transactions in the FinCEN report are dated, there appears to be a gap in the way Nepal’s banking sector monitors international transfers. This poses a serious challenge, and could push Nepal towards an international blacklist of high-risk countries.Nepal Rastra Bank Governor Maha Prasad Adhikari says Nepal has enacted laws against money laundering and has set up a Financial Information Unit (FIU) at the central bank. “However, having legal provisions doesn’t mean that money laundering will not happen. We don’t claim that we are good at implementing laws, but it’s getting better as time passes,” Adhikari added. “We have fined six banks and financial institutions for mishandling Know Your Customers forms and failing to monitor and report money laundering. Nepal Rastra Bank is committed to preventing money laundering. There won’t be any ifs or buts.”The latest ‘<a href="https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks" target="_blank" rel="noopener noreferrer">FinCEN Files</a>’ contain top secret financial records obtained by BuzzFeed News and shared with the <a href="https://www.icij.org/investigations/fincen-files/" target="_blank" rel="noopener noreferrer">International Consortium of Investigative Journalists (ICIJ)</a> and other news organisations. In Kathmandu, follow up investigations were conducted by the <a href="https://cijnepal.org.np/fincen-files-nepal-nexus/" target="_blank" rel="noopener noreferrer">Centre for Investigative Journalism Nepal (CIJ-N)</a>.Krishna Acharya, Ramu Sapkota and Shiva Gaunle. Arun Karki and Pramod Acharya also contributed to this report.Centre for Investigative Journalism Nepal

Nepal figures in leaked money laundering report

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636bae749c7e80680e077ff4jpeg.jpg" alt="" width="1600" height="900"/>Last September, contractor Sujan Poudel filed a complaint at the Commission for the Investigation for the Abuse of Authority (CIAA) against police deputy superintendent Shyam Kumar Rai, accusing him of soliciting a bribe. The CIAA decided to catch Rai red-handed in a sting operation.A month later, Poudel went to Rai’s office and surreptitiously planted Rs140,000 in cash in the police officer’s drawer. Immediately after, officials from the CIAA who were hiding outside barged into the office and arrested Rai.The media ran the news: ‘DSP Rai arrested with Rs140,000 bribe money’. The CIAA took Rai under custody and filed a corruption case at the Special Court. In his statement, Rai accused Poudel of framing him because he had taken action against the contractor for illegal sand mining and quarrying.As evidence, the CIAA had submitted a video footage of the cash in Rai’s drawer. But when police examined the video, they found that the CIAA team seemed to know exactly where to look for the cash. “Take out money from the drawer,” a member of the CIAA team is overheard saying.The Special Court analysed the video, and ruled that Rai had indeed been framed by Poudel. The justices said in their judgement: “It seems the CIAA has worked at the behest of special interest groups unhappy with a strict ban on illegal sand extraction,” said one of the judges of the fast-track court established to deal with corruption cases.Pralhad Dhital, an assistant forest officer of the Kavre District Forest Office, was attending a training organised in Kathmandu last month when Jagatlal Tamang, an entrepreneur of Kavre, repeatedly telephoned him asking for a meeting. Tamang came to Kathmandu and the two went out to a cafe. At the table, Tamang abruptly put Rs20,000 in Dhital’s hand, and suddenly CIAA officials lurking nearby pounced on Dhital.The media reported: ‘Kavre Forest Official Caught Red-handed accepting Bribe’.Tamang later confessed that he had indeed decided to frame Dhital after he refused permission to fell 56 pine trees in a private property. He added that CIAA officials helped him write his application and showed him how to carry out the sting operation. As with many other cases, Tamang framed Dhital with the active collusion of the agency mandated to fight corruption. Dhital was suspended from his job.Not only does this show that media headlines about corruption may be misleading, it has also exposed questionable practices at the CIAA. Records show that the anti-corruption agency is regularly using sting techniques in petty offences to catch small-time criminals. Last November the agency arrested traffic policeman Nabin Kumar Jha of Dhanusha, while receiving a Rs1,000 bribe. Jha was arrested shortly after receiving ‘bribe’ planted on him by a CIAA driver.In Kaski the CIAA’s Pokhara Regional Office acting on a complaint, planned a sting operation against land revenue officer Dipak Subedi by getting an official posing as someone needing a job done. Subedi was caught while accepting a Rs3,000 bribe from an undercover CIAA official, and agency filed a case against him.The CIAA has even conducted a sting operation to arrest a messenger at the Land Reform Office in Itahari. In a clear case of entrapment, it offered Arjun Mandal Rs2,000 for a service, which he accepted. He was arrested and charged.Instead of going after officials and politicians who embezzle billions with impunity, critics say, the CIAA is targetting corruption. They say the agency is carrying out these operations so it can boast about the number of corruption cases it has cracked. Indeed, the CIAA’s annual report for 2018-2019 cites ‘a record number of corruption cases’.At a press conference in January, CIAA spokesperson Pradeep Kumar Koirala patted himself on the back by saying that the agency had performed “a great achievement” by busting so many corruption cases. Out of 351 graft cases filed by the CIAA last year, 147 were bribery and of these in 40% the accused was apprehended using sting tactics. This year, the number of sting operations has shot up to 181 cases – of which half were cases involving less than Rs25,000 in bribes. Of the total 277 arrested 69 were junior civil servants and 16 were messengers and peons.“Previously, cases of fake academic credential used to top other corruption cases,” said Gauri Bahadur Karki, former chair of the Special Court, ‘these days, they have been replaced by sting operations.”Details of the CIAA’s own annual report reveal that the powerful constitutional body that is entrusted with controlling graft and malfeasance in government and ensure good governance is busy with petty bribes, and arresting junior-most government employees.The CIAA is obviously taking the easy way out to fulfil its case quota, while trying not to ruffle any feathers. It is not going after powerful officials involved in tax evasion, investigating ill-gotten wealth, or following the money trail in corruption involving senior officials. It is enticing low-level officials who put their hands in the honey pot.“CIAA has not followed the instructions of parliamentary committees to go after big fish in high-profile cases like the Airbus deal, Ncell tax and Yeti Holdings. None of those scams were investigated, but it is targeting petty corruption just to show that it is meeting targets,” said Karki.The sting operation has raised ethical issues of whether entrapment is an acceptable way to nab public officials. Should the CIAA even be tempting junior bureaucrats by using a bribe as a trap. Is it even legal?As per Article 239 of the Constitution the CIAA can investigate wrongdoings of any public position holder and file corruption case against them if charges are established. Section 30 of the regulation states that the CIAA can provide money to informers if any public position holder seeks bribe. But there is no provision of legal action against bribe receivers and providers.The CIAA has been using this Section to conduct sting operations whereas Section 3 of Corruption Prevention Act-2002 clearly states that both bribe receivers and providers should be punished for bribery. Ironically, this may actually make the CIAA also liable for corruption.“CIAA can file corruption case if someone is caught taking a bribe,” said constitutional expert Bhimarjun Acharya, “but a constitutionally empowered body’s involvement in using cash to trap someone is not really acceptable matter in any civilised society, and it goes against the rule of law.”Another advocate Bishnu Prasad Ghimire argues that the CIAA’s sting operation is guided with the intent of improving its success rate in controlling corruption by trapping citizens.  “State agencies should not be involved in such activity, and the use of state coffers to entrap citizens is not acceptable,” said Ghimire.Ghimire says sting operations by a state agency is actually illegal and objectionable. As per Nepal’s criminal law, only Parliament can determine which act is a crime and which is not.Acharya recalls that sting operations have been used in the United States and India, but the courts there have set a precedent by annulling the provision of providing money to trap criminals. He says as democracy with the rule of law, Nepal should follow that practice.The US Supreme Court in <a href="https://supreme.justia.com/cases/federal/us/503/540/" data-saferedirecturl="https://www.google.com/url?q=https://supreme.justia.com/cases/federal/us/503/540/&amp;source=gmail&amp;ust=1595658441786000&amp;usg=AFQjCNH07kw3Z3XtVIHIDEfMKSIkPMbtAg">an order issued on April 1992 states</a>: ‘In their zeal to enforce the law, government agents may not originate a criminal design, implant in an innocent person's mind the disposition to commit a criminal act, and then induce commission of the crime so that the government may prosecute.’In a ruling, India’s Supreme Court has also raised moral questions about sting operations with the <a href="https://indiankanoon.org/doc/120178732/" data-saferedirecturl="https://www.google.com/url?q=https://indiankanoon.org/doc/120178732/&amp;source=gmail&amp;ust=1595658441787000&amp;usg=AFQjCNFD_9ZxQf78QImt73MtvIr34R_USg">order</a>: ‘Being essentially a deceptive operation, though designed to nab a criminal, a sting operation raises certain moral and ethical questions. The victim, who is otherwise innocent, is lured into committing a crime on the assurance of absolute secrecy and confidentiality of the circumstances raising the potential question as to how such a victim can be held responsible for the crime which he would not have committed but for the enticement.’ ,” states theIn Nepal, too, a case has been filed in the Supreme Court challenging the CIAA’s use of stings. However, Pradeep Koirala at the CIAA defends the practice saying the agency provides money to victims of corruption to break the chain of bribery. “We facilitate it only when service seekers do not have the money for the bribe and approach us with an application,” he added.Even former police chief Hemanta Malla who has worked at the CIAA says the agency’s use of stings goes against the basic principle of ‘secret action’. He admits that sting operations can be used to expose serious crimes like match fixing, human trafficking and drug trafficking, but says the use of sting operations against petty crime is ‘overkill’.“The target of secret action should be to break organised crime networks, but the CIAA’s operation seems just focused on arresting junior-ranking officials. This should be stopped because the sting tool can be misused,” Malla added.Advocate Bhimarjun Acharya is clear about how to complain about corruption in Nepal: “There are so many ways citizens can lodge complaints against bribery, but entrapping someone as part of an investigation is not the way in a civilised society.”<a href="https://cijnepal.org.np/" data-saferedirecturl="https://www.google.com/url?q=https://cijnepal.org.np/&amp;source=gmail&amp;ust=1595658441787000&amp;usg=AFQjCNFNx-tiTfqcQt1OnemJShWk6Bp_yQ">Center for Investigative Journalism-Nepal</a>

CIAA traps small fish, lets big ones go

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22c09c7e80680e0417a6jpeg.jpg" alt="" width="800" height="542"/>In February 2015 The International Consortium of Investigative journalists (<a href="https://www.icij.org/">ICIJ</a>) revealed that Nepalis held Rs5 billion in secret Swiss bank accounts. Most people thought the money must have been parked there by Nepal’s corrupt politicians.But after the Centre for Investigative Journalism Nepal (<a href="http://cijnepal.org.np/category/english-posts/">CIJ Nepal</a>) went through 3,000 pages of documents from <a href="https://www.icij.org/investigations/swiss-leaks/">Swiss Leaks</a>, <a href="https://offshoreleaks.icij.org/">Offshore Leaks</a>, the <a href="https://www.icij.org/investigations/panama-papers/">Panama</a> and <a href="https://www.icij.org/investigations/paradise-papers/">Paradise Papers</a>, the names were of Nepal’s top business people. Even foreigners had deposited money in the banks using Nepali addresses and documents.Savings of Nepalis in the banks have now crossed Rs50 billion, email correspondence between CIJ Nepal and Swiss banks show.The records also reveal that Nepalis started to deposit money in Swiss banks the year after the Maoist insurgency began in Nepal in 1996.Nepalis had Rs1.25 billion in the Swiss National Bank in 1996, but that figure doubled to Rs4.1 billion by 2006, when the war ended. Nepalis deposits in the two years after the conflict declined to Rs3.9 billion. Records show that Nepali have withdrawn Rs 15.6 billion from Swiss banks so far.The biggest Nepali depositers in a Swiss bank are Minu Shah Chhibber, and her two sons who live in the UK. They had Rs2.6 billion in Swiss banks in 2006-7. Even some foreigners are found to have used Nepali documents to deposit their money in Swiss banks, including an Israeli national using a Nepali passport to open an account with ‘Kathmandu’ as his address. Other account holders who have Nepal connections are Indians.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22c39c7e80680e0417a7jpeg.jpg" alt="" width="1250" height="813">Despite it banking secrecy laws, an agreement between the Swiss government and the European Union in 2015 after the Swiss Leaks ends the exclusive confidentiality, and the Swiss agree to provide account details if demanded. The ICIJ says Swiss banks have profited from dictators, corrupt politicians, business persons who evade taxes and organisations that make money through the illegal transaction of weapons and drugs by allowing them to deposit their earnings.The country with the biggest Foreign Direct Investment (FDI) in Nepal is not China, India or the United States as one may presume, but the tax haven state of the British Virgin Islands. Of the total Rs137.67 billion received as FDI in the last two decades, the share of the British Virgin Islands (BVI) accounts for 45%. They obtained approval from the Nepal government to invest in and establish industries worth Rs8 billion.In 2017, the Panama Papers revealed that seven Nepalis including Upendra Mahato, the founder of Non-resident Nepalis Association, had invested in tax haven states. The ICIJ and CIJ Nepal collaborated in digging more into these investments, and found that Nepali businesses have used tax havens to evade taxes in Nepal or to transfer the illegally earned money to launder it. The money was then repatriated to Nepal under foreign direct investment (FDI).Investigations show that Birendra Mahato, a former lawmaker and central committee member of Federal Socialist Forum party, his elder brother Upendra Mahato, Niraj Govinda Shrestha, a non-resident Nepali and Ajeya Raj Sumargi, a businessman, are involved in this elaborate money laundering scheme. They used the sale of the telecom company Ncell to avoid paying capital gains tax in Nepal.After a G-7 Summit established the Financial Action Task Force on Money Laundering (FATF) to combat money laundering and terrorist financing the Paris-based organisation has been blacklisting countries. The FATF blacklists countries not cooperating in anti-money laundering financing. Nepal committed to abide by the criteria drawn up by the FATF and its Asia-Pacific Group in 2012 and passed the Money Laundering-related Act.  However, given these revelations, there is still a possibility that Nepal could be blacklisted in future.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22c69c7e80680e0417a8jpeg.jpg" alt="" width="1250" height="797">“While Nepal avoided the scrutiny and monitoring criteria of the global community in 2014 due to legislation and institutional reforms, there has not been effective implementation of the laws,” states Finance Minister Yuba Raj Khatiwada’s white paper on the economy last March.Nepali companies have also dealt with Mossack Fonseca, the intermediary law firm in BVI that helps businesses to want to launder their money by finding them legal loopholes in tax haven countries. In 2015, the ICIJ published details of the firm in the Panama Papers, after which it closed down.Panama Papers emails show that in 2008 Nepal’s Milap Group approached Mossack Fonseca to bid for a tender from the Nepal Supreme Court calling for an international consultant for Judicial Mapping and Judicial Assessment for a project on legal and judicial reforms. Milap Group emailed to Mossack Fonseca proposing to jointly apply for the tender, which a Mossack Fonseca official declined, saying the two could collaborate in future. Milap Group has been involved with foreign companies printing excise stickers for Inland Revenue Department, bank notes for Nepal Rastra Bank and passport printing and supply of Ministry of Foreign Affairs.Another company linked to Mossack Fonseca is Nepal Ventures registered in BVI. It is not clear from the Panama Papers who was listed as the owner, but a company with a similar name is registered at the Office of Company Registrar in Nepal with Dhanusha lawmaker Juli Kumari Mahato as main investor. The company has 20 percent share capital investment in United Telecom Limited. Mahato is the wife of Raghubir Mahaseth, Minister of Physical Infrastructure and Transport and sister of Upendra Mahato and Birendra Mahato. When asked, Juli Kumari Mahato denied having investments abroad, and said “it is a mere coincidence” that a company with similar name existed in the British Virgin Islands.The ICIJ and CIJ-Nepal investigations have also shown how money is laundered from tax havens into Nepal as Foreign Direct Investment (FDI). Records show that the Saurabh Group chaired by Bishnu Prasad Neupane, brought foreign investment from the BVI to build a hotel in Bhaktapur, but construction was stopped after Madhyapur Thimi Municipality found the 17-storey building only had permission for a five-floor structure.Saurabh Group brought the investment for the hotel from the BVI-based Global Technology and Trademark Company, and the Rs1.94 billion proposal was approved by the Department of Industry in 2013.Sulav Agrawal is the director of four companies under the Saurabh Group and brought Rs300 million in FDI from a UAE-based company to manufacture soap and betel nuts in Birganj. Agrawal is also vice-chairman of Shankar Group, but the UAE company has the same name as the one based in the BVI: Global Technology and Trademark which was also found to be evading taxes in its ventures in Parsa district.Krishna Holdings Ltd of Hong Kong has a 45% stake in Sarbottam Cement Pvt Ltd of Nawalparasi, also run by the Saurabh Group. The remaining 55% shares are owned by Neupane and his relatives. Just like how Global Technology and Trademark is operating out of not just the UAE but also the BVI, the Hong Kong-based Krishna Holdings is related to the UAE-based Krishna International.Krishna International Ltd has mentioned on its website that it has invested in as many as 22 countries including Nepal, Mauritius and Cyprus. Ramesh Kumar Sawarthia has brought Rs29.5 million from Hong Kong to build a commercial complex in Gyaneswor, Kathmandu in 2005.The British Virgin Islands-based Global Technology and Trademark has also invested Rs 240 million in the printing and lamination sector. This company has no Nepali partner, but Saurabh Group’s Jagadamba Synthetic and Quality Roto Packaging is also in the printing and lamination business.Four companies in which Saurabh Group’s Neupane has invested, have benefitted from Nepal’s controversial tax settlement policy which allowed them to get away with paying just 3.45% of the total taxes due to the state after a Commission formed by Finance Minister Ram Sharan Mahat in 2015 waived payments.The CIJ Nepal Nepal investigation based on the Paradise Papers leaks obtained by the German paper Süddeutsche Zeitungin 2017 also unearthed links between Nepal’s Laxmi Cement and tax havens in the BVI, the Isle of Man, Seychelles as well as two Indian investors. Shareholders of Laxmi Cement are also involved in KEPY Cement Udyog of Dhading and Ghorahi Cement of Dang.The Act Restricting Investment Abroad, 1964 bars Nepalis from investing in a foreign country, but the ICIJ and CIJ-Nepal investigation found that 55 Nepalis have invested in foreign countries which includes well-known captains of industry in Nepal and non-resident Nepalis. Although the law does not bar NRNs from investing abroad, but there are questions about their offshore companies.Former lawmaker Birendra Mahato, who is currently a central member of the Sanghiya Samajbadi Forum-Nepal, has invested in the ‘OJSC Amkodor Holding Limited Company’ in Belarus with his brother Upendra and another overseas Nepali Niraj Govinda Shrestha, and a foreign partner Romeo Abdo, who also happens to be linked to the Ncell tax-evasion case. Abdo, who is of Lebanese origin has been doing business in Belarus, represented the TeliaSonera in Ncell in whose ownership transfer of nearly Rs61 billion (the amount has reached Rs 72 billion now) was implicated in evading Nepal’s capital gains tax. Birendra Mahato admitted having the investment seven years ago, but not anymore, and denied knowing Abdo.For full five-part investigation go to <a href="http://cijnepal.org.np/category/english-posts/">CIJ Nepal</a>

Nepalis in tax havens, Swiss banks, money laundering

<a href="https://nepalitimes.com/news/ball-in-balen-s-court">Nepal’s newly-installed Prime Minister Balendra Shah</a> unveiled his Council of Ministers after taking the oath of office on Friday in Kathmandu.&nbsp; Besides Nepal's pre-existing problems, his team will immediately have to deal with the fallout of the West Asia conflict to satisfy an electorate impatient for change. The Rastriya Swatantra Party (RSP) won a majority in the 5 March election and capped the Cabinet size at 15. Shah, a structural engineer and musician, himself has taken charge of the Defence and Industry Ministries. There has been an attempt to make the Cabinet inclusive with women in five of the new portfolios.&nbsp; After much negotiation, the powerful Home Ministry, a bone of contention between Shah and RSP Chair Rabi Lamichhane, has gone to Sudan Gurung, a hitherto little-known figure who <a href="https://nepalitimes.com/here-now/who-or-what-is-hami-nepal">rose to prominence after the September GenZ protest</a> and won the election from Gorkha-2.&nbsp; Gurung will be in charge of Nepal’s internal security apparatus and maintaining law and order. And with Gurung, a close ally of the Prime Minister, in charge, some note the Home Ministry will be a hook for Shah if Lamichhane, with his share of controversies, steps out line.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_c7725ea5fb9ffbf96df25a7b3122520b7ae3ee10548aed3f37781a7e5440e51a.jpg" data-media-id="editor_2" data-image-id="20260327090324_c7725ea5fb9ffbf96df25a7b3122520b7ae3ee10548aed3f37781a7e5440e51a" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>  Notable RSP leaders, including vice-chair DP Aryal, were said to have been vying for the portfolio.&nbsp; Gurung is the founder of the non-profit Hami Nepal, which worked primarily in earthquake relief in 2015, and emerged onto the national stage during negotiations to appoint Sushila Karki as interim PM after the unrest. He was also involved in key negotiations that cemented Balendra Shah and Rabi Lamichhane’s political partnership in the runup to the election.&nbsp; Most new Cabinet members are not just first-time ministers, but are also freshmen lawmakers. Many are experts in their fields. Finance Minister Swarnim Wagle is an <a href="https://nepalitimes.com/here-now/nepal-needs-to-rebrand-itself">economist </a>with degrees from the London School of Economics and Harvard, and was previously Chief Economic Advisor at the UNDP Regional Bureau for Asia and the Pacific, and also served in Nepal’s National Planning Commission.&nbsp; Previously a member of Nepali Congress, Wagle exited the party in 2023 following differences with top leadership, and joined the RSP. Wagle won a by-election from Tanahu-1 in 2023 and won again from the same constituency in this month’s election.&nbsp; Shishir Khanal, who heads RSP’s foreign affairs department, has been appointed Minister of Foreign Affairs. &nbsp;Khanal is co-founder of Teach For Nepal, was briefly Education Minister when the RSP was part of the the Pushpa Kamal Dahal-led coalition government in 2023.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_b1a670bac12e2bf4df955134f58c8de7718d48f6be4e1f2df7c7c52f82e36e42.jpg" data-media-id="editor_4" data-image-id="20260327090324_b1a670bac12e2bf4df955134f58c8de7718d48f6be4e1f2df7c7c52f82e36e42" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>  Law Minister Sobita Gurung is a lawyer by profession and worked in governance and public policy before she was elected as the youngest MP in the 2022 election.&nbsp; Health Minister Nisha Mehta is a nurse and became a lawmaker under the Proportional Representation system in this election which swept the RSP to power with a near two-third majority.&nbsp; Education Minister Sasmit Pokharel, a first-time MP elected from Kathmandu-5, served as an aide to Balendra Shah when he was mayor of Kathmandu and a was member of the KMC City Planning Commission.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_5ed794d7bf0cac2844277521810225c4355746b9c3f7369f70cacc878c94641f.jpg" data-media-id="editor_5" data-image-id="20260327090324_5ed794d7bf0cac2844277521810225c4355746b9c3f7369f70cacc878c94641f" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>  Biraj Bhakta Shrestha is Energy Minister, and also served as the Minister for Youth and Sports in the Dahal-led coalition government in 2024. Before joining RSP, Shrestha was elected to the Bagmati Provincial Assembly in the 2017 elections representing the r<a href="https://nepalitimes.com/here-now/rsp-s-activist-dna">eformist Bibeksheel Sajha Party</a>. He will immediately face the challenge of addressing the <a href="https://nepalitimes.com/news/rough-road-ahead-for-new-nepal-rulers">impact of the West Asia war,</a> including rising petroleum prices and a shortage of cooking gas. Sita Badi, who was elected through the PR system, is Minister for Women, Children and Senior Citizens. She was born and brought up in the underserved and marginalised Badi community in Surkhet and has been advocating for the rights and welfare of women, children, and minority communities. Other ministers include RSP spokesperson Pratibha Rawal as Minister for Federal Affairs and General Administration as well as Land Management, and Gita Chaudhary as Minister for Agriculture, Sunil Lamsal is Physical Infrastrucutre, Transport, and Urban Development Minister, Khadka Raj (Ganesh) Paudel as Tourism and Civil Aviation Minister. Dipak Sah is the Labour and Employment Minister, and Bikram Timilsina is Communication Minister.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_b67c2d199d4897031583a5b7ec7ce43e88771167696e6161665eeb5fca25d3ed.jpg" data-media-id="editor_8" data-image-id="20260327090324_b67c2d199d4897031583a5b7ec7ce43e88771167696e6161665eeb5fca25d3ed" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>  Meanwhile, RSP vice-chair DP Aryal, who many thought would be home minister because of his proximity with Rabi Lamichhane has been proposed as Speaker of the House.&nbsp; Aryal previously served two brief stints as the Minister of Labour when RSP was part of the RSP’s coalition governments in 2023 and 2024. As minister Aryal came <a href="https://nepalitimes.com/editorial/skeletons-in-the-cabinet-k5x6py1v">under scrutiny </a>for his involvement in an employment agency that was investigated for illegal acquisition of wealth in 2020. If appointed House Speaker, Aryal will be expected to play a neutral and non-partisan role in Parliamentary affairs. &nbsp; With the full Cabinet announced on Friday, Prime Minister Shah and his team now have their work cut out for them. &nbsp;The government’s first priority will be ensuring the safety and long-term security of the almost two million <a href="https://nepalitimes.com/here-now/migrant-workers-in-wartime">Nepalis living and working in the Gulf</a> amid the ongoing conflict in the region, and taking steps to cushion Nepal’s economy from the Israel-US war on Iran. The new leaders will also be tasked with implementing the findings of the Karki Commission report on the September violence that paved the way for the election and the rise of the RSP. &nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_69b36bc62737e44ade4080be36688f9c2f92201356e1df2072cef8ecc6a9be5d.jpg" data-media-id="editor_11" data-image-id="20260327090324_69b36bc62737e44ade4080be36688f9c2f92201356e1df2072cef8ecc6a9be5d" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> <figcaption>Snapshots from PM Balen Shah's swearing-in ceremony</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_69b36bc62737e44ade4080be36688f9c2f92201356e1df2072cef8ecc6a9be5d.jpg" data-media-id="editor_12" data-image-id="20260327090324_69b36bc62737e44ade4080be36688f9c2f92201356e1df2072cef8ecc6a9be5d" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_8646d490883154f696bcdc6e2375084419f2eefaaf0ef0c7e2710aa6e2d94a8a.jpg" data-media-id="editor_13" data-image-id="20260327090324_8646d490883154f696bcdc6e2375084419f2eefaaf0ef0c7e2710aa6e2d94a8a" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260327090324_89d17d6584593be1eb23eb1d4872c3b7c600e1620f3aca48dbff4838364a1e3c.jpg" data-media-id="editor_14" data-image-id="20260327090324_89d17d6584593be1eb23eb1d4872c3b7c600e1620f3aca48dbff4838364a1e3c" data-rendition-name="original" width="1440" height="960" loading="lazy" alt="Balen Shah swearing in NT"> </figure>  &nbsp;Full list of ministers: Prime Minsiter: Balendra Shah Home Minister: Sudan Gurung Finance Minister: Swarnim Wagle Foreign Affairs Minister: Shishir Khanal Law, Justice and Parliamentary Affairs Ministry: Sobita Gautam Energy, Water and Irrigation Minister: Biraj Bhakta Shrestha Education Minister: Sasmit Pokharel Physical Infrastrucutre, Transport, and Urban Development Minister: Sunil Lamsal Communication and Information Ministry: Bikram Timilsina General Administration Minister: Pratibha Rawal Women, Children and Senior Citizens Minister: Sita Badi Health and Population Minister: Nisha Mehta Agriculture Minister: Gita Chaudhary Culture, Tourism and Civil Aviation Minister: Khadka Raj (Ganesh) Paudel&nbsp; Labour Minister: Dipak Sah

Nepal swears in new Cabinet

Next to my home in Bhainsepati stood a dead Uttis tree next to a public tap. A nearby water tank built a year earlier had killed its roots.
If the tree collapsed, people living nearby and those queuing up to fetch water at the tap would be hurt. With the storm season approaching, the risk was obvious. The tree could also fall on my own house, so I volunteered to find a way to remove this threat.
Little did I know how difficult it would be. A forest officer acquaintance told me there is a special procedure for cutting risky trees. I contacted the Lalitpur District Forest Office (DFO).&nbsp;
He said a technical report from a field officer was needed, and passed on her number. When I called, she asked for the location, photos, and a video. I send them all.
The ward office also suggested I use Lalitpur Metropolitan City’s mobile app, Lalitpur Alert, to report the problem. I uploaded photos, and submitted the complaint. This seemed to be very easy and efficient.
Indeed, the next day the municipality called me back and I explained the situation. They said they could not act without permission from the DFO. I asked why the app existed if the city could not act on such complaints. The officer said he did not know. My happiness was short-lived.
A couple of days later, the app notified me that my problem had been solved, and the complaint was removed. But the dead tree still stood there defiantly.&nbsp;
A week later, two forest technicians arrived on a scooter to inspect the tree. They looked up at the tree and asked if I had a measuring tape so they could measure its diameter.
“You are the technicians,” I told them. “You came to inspect the tree, and you came without a measuring tape?”
I rummaged at home and found a tape measure. They got the diameter and said they would prepare a technical report, but I would have to obtain a recommendation letter from the ward office and submit it to the DFO.
“This tree is dead,” I told them. “It is on public land. You have seen it with your own eyes. You know it's dangerous, so write a report and arrange for it to be cut. Why do I have to run from office to office to apply for recommendation letters?”
Their answer was simple, yet expected: “Those are the rules.”
They left, and I gave up. Two technicians spent half a day visiting the site. The metropolis runs a complaint system with a mobile app funded with public money. The ward office has staff to solve problems. Yet none of these institutions took the responsibility to remove a dangerous tree.
Everyone is busy citing rules and regulations and passing the buck. Weeks passed. Everyone reacted to the problem, but no one took any responsibility to resolving it.
Then, one bright December morning under a deep blue sky, a few neighbourhood boys were swinging their axes on the trunk. They had no proper equipment, no safety gear, and no professional experience.
I gave the boys some money and so did a neighbour. It took an hour or so for the tree to come crashing down safely. We had paid to have the tree cut illegally, and the matter ended there.
Multiple government offices, technicians, procedures, and mobile apps could not remove a dangerous tree, and we had to break the law to cut it. The tree is gone now, but the real problem remains: an inefficient bureaucracy.&nbsp;
It is perhaps symbolic that the tree is the election sign of the Nepali Congress, which was part of Nepal's governance and bureaucracy for decades and did not perform well in this month's election.&nbsp;
That is the bureaucracy that the new RSP government now has to get to work. But it will not be easy.
I posted on Facebook: ‘When people feel leaders have grown arrogant or corrupt with power, they change their minds and their votes. If those who replace them follow the same path, voters will again change their minds and votes.’
I continued: ‘The strength of democracy lies in this simple principle: the more citizens act as independent voters, the stronger democracy becomes. The more they behave as party loyalists, the weaker it grows. If we want a better system, we must demand deep reform of the state bureaucracy and hold institutions accountable.’&nbsp;
The first responses came from two senior government officials. They told me privately that they agreed by 200% but could not say so publicly.
It is quite normal for a Nepali to get the run around in government offices, it is almost a given to be asked for a bribe. As an environmental reporter and citizen, I have numerous such examples.
It is not just one sector that has been suffering. It is everywhere, and this is just an example of how complicated our bureaucracy is. As a 40 something person, I am old enough to remember the 1990 pro-democracy movement, &nbsp;the Maoist insurgency. Many promises made then by the politicians were broken.
We fought for rights, we fought for regime change. The country has changed political systems several times, from monarchy to multiparty democracy and finally a republic.
Yet one thing that remains largely untouched or reformed is our inefficient and corrupt bureaucracy. The new government, to be led by the youngest prime minister in our history must start this reform if it wants to deliver.&nbsp;
Otherwise, we may have to keep changing governments every few years, and still find ourselves unable to legally cut down even one dead tree.

A dead tree tests Nepal's bureaucracy

The RSP and its prime minister are being sworn in this week after gaining an unprecedented election victory. This is a welcome change for many Nepalis who see it as a remedy to decades of coalition instability.&nbsp; Yet Nepal’s political history suggests otherwise. No majority government has ever completed its full term. This reveals a deeper structural problem: weakly institutionalised parties dominated by personalities rather than ideas. 1951: Dissatisfaction with the oppressive Rana regime among the educated elite led to the creation of political parties like the Nepali Congress (NC), Praja Parishad (later merged into the Nepali Congress), Gorkha Parishad, and the Nepal Communist Party.&nbsp; They emerged secretly, mainly in India during the height of that country’s independence. They organised a successful armed uprising against the Rana rule.&nbsp; 1959: The NC won a two-thirds supermajority in the first general election. Within a year, King Mahendra staged a coup and established the partyless absolute monarchy called the Panchayat system.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260322130332_a416ab5703287898f0566dc6d2a6b95d797ce2f4ed55bffcfae2e8edc7737c5e.jpg" data-media-id="editor_0" data-image-id="20260322130332_a416ab5703287898f0566dc6d2a6b95d797ce2f4ed55bffcfae2e8edc7737c5e" data-rendition-name="original" width="675" height="849" loading="lazy" alt="Mahendra and BP"> </figure>  1991: After the People’s Movement, the ban on parties was lifted and Nepal became a constitutional monarchy. Elections were held under a new Constitution and the NC won 110 out of 205 seats, joining the United Leftist Front which functioned as a loose coalition.&nbsp; Prime Minister Girija Prasad Koirala’s first term ended with his resignation due to infighting, particularly with Ganesh Man Singh, who accused him of <a href="https://doi.org/10.2307/2645025" target="_blank">“emerging as a dictator, downgrading democratic norms and values, and even selling out national interests.”</a> Parliament was dissolved and the NC ended up losing the ensuing elections. 1994: Following the NC’s defeat, a <a href="https://doi.org/10.2307/2645025" target="_blank">hung parliament emerged</a> with the UML forming a minority government that lasted only nine months before collapsing after a no-confidence vote, allowing a NC-led coalition to return to power.&nbsp; 1999: Voters gave the NC a second chance and the party won 111 out of 205 seats. The party was divided between supporters of Koirala and Krishna Prasad Bhattarai, who became prime minister. &nbsp;The internal NC power struggle intensified and Koirala became prime minister again only to face bribery scandals, the Maoist insurgency, and the royal massacre.&nbsp; In 2001, under growing pressure from both the public and the party, <a href="https://www.nytimes.com/2001/07/20/world/nepal-premier-resigns-caught-in-chaos-after-royal-blood-bath.html" target="_blank">Koirala was forced to resign</a> to be replaced by Sher Bahadur Deuba. The party eventually split into Koirala’s NC and Deuba’s NC (Democratic). &nbsp;In this chaos, king Gyanendra dissolved the parliament and assumed executive powers.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260322130332_e107b95de5641044f72a13fd20f417d16b9a2d1ecbae3492126ee5fd4244bd84.jpg" data-media-id="editor_4" data-image-id="20260322130332_e107b95de5641044f72a13fd20f417d16b9a2d1ecbae3492126ee5fd4244bd84" data-rendition-name="original" width="1250" height="753" loading="lazy" alt="Deuba and Girija"> </figure>  2017: This was the first election under the federal constitution. The UML and Maoists created a surprise pre-electoral alliance, breaking the Maoist coalition with the NC. The left alliance won a massive victory with the UML winning 121 seats and the Maoists 53 seats. Prime Minister K P Oli fell out with Pushpa Kamal Dahal of the Maoists. The House was dissolved, with the UML itself breaking into factions. What followed was seven shaky coalition governments in eight years.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260322130352_8b09b374d7fcb811e0a652c7f60b30eea4b9052a19ed3d768ba8ca9aaeb4dec7.jpg" data-media-id="editor_5" data-image-id="20260322130352_8b09b374d7fcb811e0a652c7f60b30eea4b9052a19ed3d768ba8ca9aaeb4dec7" data-rendition-name="original" width="667" height="1000" loading="lazy" alt="Oli and Prachanda"> </figure>  2022: The RSP was formed only four months prior to elections, but managed to become the fourth-largest party. In this month’s &nbsp;election, the RSP won a commanding parliamentary majority by presenting itself to the electorate as different from the discredited old parties.&nbsp; The RSP leadership structure is largely personality-driven and opaque. Party leader Rabi Lamichhane joined the governing coalition with the Maoists and UML securing four ministerial positions. Lamichhane became Home Minister and Deputy Prime Minister, using his swing vote to be the kingmaker party in the coalition. Lamichhane was embroiled in various scandals which he blamed on political vendetta. There was internal dissent within the party and among supporters who felt the coalition betrayed RSP’s founding ideals.&nbsp; Lamichhane <a href="https://thediplomat.com/2023/02/key-ally-quits-government-in-nepal/" target="_blank">reportedly</a> bypassed the party’s internal mechanisms, unilaterally deciding to pull out of the government without broad consultation.&nbsp; The youth-led September protests gave the RSP an opportunity to represent GenZ aspirations, and its popularity was cemented after Balendra Shah joined the party as a prime ministerial candidate.&nbsp; With its dramatic election victory, there is a question whether the &nbsp;party can separate itself from its two leaders, and have internal democracy. Or will it just be a vessel for new political elites to continue staying in power?&nbsp; ‘BALEN PARTY’ The RSP has increasingly relied on the same tactics that the NC once used in its heyday. Backed by Balendra Shah’s meteoric rise to fame, the RSP is called ‘The Balen Party’. <a href="https://nepalitimes.com/opinion/cyberia/rsp-s-pr-list-is-not-good-pr" target="_blank">RSP’s PR list</a> includes celebrities, actors, singers, pageant winners, business personalities, and athletes to maximise visibility and public appeal. Many of these soon-to-be MPs have little to no experience working in government, or together as a team. Which is perhaps why they needed a two-day orientation last week. In today’s attention economy, political currency depends on visibility. This is why the RSP’s strategy to harness Shah’s popularity was necessary to secure victory, while Shah needed a political platform for the election.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260322130348_abd1522a1f4f8ad4a0861c3916d86bd9688deafc7c44081b976378405d2b8e39.jpg" data-media-id="editor_8" data-image-id="20260322130348_abd1522a1f4f8ad4a0861c3916d86bd9688deafc7c44081b976378405d2b8e39" data-rendition-name="original" width="900" height="900" loading="lazy" alt="Balen and Rabi"> </figure>  Political parties are essential for a democracy, but when they &nbsp;revolve around one dominant leader, internal institutions become weak, and decision-making becomes centralised in the leader rather than in party committees, rules, or ideological platforms.&nbsp; This is exactly what led to the downfall of the NC and the UML. Both over the years were ridden with inter- and intra-party strife and failed the electorate. RSP must take a lesson from this and unite to institutionalise beyond its two personalities. Or it will suffer the same fate as the legacy parties. Since its inception, RSP has espoused a populist and anti-establishment agenda. The ‘new’ RSP with the Balendra brand gained massive support by being a clear ‘other’.&nbsp; The RSP can fall into the same trap as the NC and the UML by defining itself by what it is not, rather than what it is for. Beyond the external enemies they oppose, these parties often struggle to articulate what they actually stand for.&nbsp; RSP positions itself as an alternative to established parties — a pragmatic, results-oriented political force rather than one driven by traditional ideologies. However,<a href="https://www.cambridge.org/core/books/abs/theorizing-in-comparative-politics/parties-and-ideology/8386083191B53EC86A239B8852D4A6A6" target="_blank"> ideology gives a party identity and direction.</a> Without ideological grounding, RSP risks becoming a hollow vessel for power-chasing politicians who oppose each other’s every move, a story that is all too familiar.&nbsp; RSP can no longer define itself as being anti-establishment. It is now the establishment.&nbsp; While RSP might look like Congress 2.0 to many who have seen Nepal’s democratic trajectory, RSP does differ from past majority parties in both positive and negative ways.&nbsp; Times have also changed. Nepal is no longer a monarchy, literacy rates are much higher, social media has made information more accessible, and Nepalis are less forgiving, as seen by the events that transpired on 8-9 September 2025.&nbsp; The RSP has fielded more qualified candidates, and they could steer the country in the right direction. Many are experts in their fields and have had years of experience prior to joining politics. Having experts from such different backgrounds is a huge asset.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260322130352_426011e8c377bffcef6fcb4371325b36fb940eb5a8ab66d3c76ff5cf6f1943c7.jpg" data-media-id="editor_10" data-image-id="20260322130352_426011e8c377bffcef6fcb4371325b36fb940eb5a8ab66d3c76ff5cf6f1943c7" data-rendition-name="original" width="1600" height="1066" loading="lazy" alt="RSP new MPs"> </figure>  Moreover, having MPs from various other parties/fields can also prevent a cult following of hardcore loyalists within the party.&nbsp; There are members loyal to certain RSP leaders in the party, but there are also those who will not hesitate to go against their leaders if need be. The RSP has little opposition in Parliament, so its own members may have to take on a check-and-balance role. Nepal is in a much better spot institutionally compared to what it was like back in the early days of its democracy. There is a Constitution, there is no active conflict, the monarchy is no longer an existential threat to democracy, and the local and provincial governmental bodies have had the time to settle.&nbsp; This means the RSP is in a better position to work without the basic institutional hurdles that previous governments faced, but it will not be able to hide behind institutional issues if it fails to deliver.&nbsp; In the past, majority parties could easily pin the blame on an authoritarian monarchy, a Maoist conflict, a lack of consensus during the constitution-building process, or a newly implemented federal system.&nbsp; Most of these were just excuses for incompetency. Governments were formed and fell based on self-serving negotiations, but they managed to keep the parties afloat, and the citizenry was willing to give them a second, third, or even fourth chance.&nbsp; The RSP will not have this privilege. Nepal has many problems, but its governmental bodies are better institutionalised than when the NC last had a majority. A challenge for RSP now would be fixing broken institutions, not building new ones. A recurring issue during Balendra Shah’s tenure as Kathmandu’s mayor were his <a href="https://kathmandupost.com/politics/2026/01/28/can-nepal-s-viral-mayor-run-the-country" target="_blank">disputes with the bureaucracy</a> that resulted in months of unpaid salary for KMC staff, a lack of collaboration between him and Deputy Mayor Sunita Dangol, and rarely any public appearances.&nbsp; The RSP is inheriting a bureaucracy tainted by deep-seated patronage networks. Sustaining a government requires institutional collaboration and a willingness to work together, not disruption and division.&nbsp; While Nepal has seen the rise of many populist figures in its democratic history, the RSP’s victory based on Balendra Shah’s fame is new. Populism is usually harmful for a democracy because it punishes dissent, turns criticism into betrayal, and fuels hyper-nationalism, authoritarianism, and polarisation. A trend of punishing criticism is already visible on online spaces. Without an effective parliamentary opposition, the responsibility for democratic accountability will fall on the media and civil society. If the trend of intolerance to criticism deepens, Nepal risks sliding toward a majoritarian politics where popularity replaces accountability. Time and again, the Nepali people have given opportunities to parties that promise change, only to face disappointment. Nepal’s political history shows that majority governments fail not because they lack seats, but because they lack institutions.&nbsp; The electoral earthquake Nepal just witnessed could bring sweeping reforms or drown the country’s fragile democracy. If RSP hopes to succeed where others failed, it must build a party that outlives its founders. Suvexa Pradhan Tuladhar is an Early Career Policy Research Fellow at the Nepal Institute for Policy Research (NIPoRe).

Will it be different this time in Nepal?

Sometimes, we need to take a step back to realise what a tectonic movement Nepali politics witnessed this month.
In a region and world ruled by elected authoritarians, Nepalis &nbsp;went to the ballot box freely to express a collective will for change.
These faces in this group photo of the RSP’s 180 freshly-minted MPs at the ballroom of the Royal Tulip Hotel on Wednesday is symbolic of what Nepal has come through.&nbsp;
The ship of state righted itself after the September Storm, installing an interim government that held an election within six months in which voters banished obsolete politicians and their parties into oblivion.
Nepalis, fed up with the inept kakistocracy of the past three decades, took the country into a post-ideological phase — replacing Marxists, Maoists and monarchists &nbsp;with a belief in a new governing culture that rewards delivery and accountability. And they have trusted the RSP to carry it through.
Nepal’s history has never been linear, it jerks ahead in lurches. The polity also tends to take one step forward and two steps back, so the public’s great expectations is tempered by a sense of cautious optimism and guarded pessimism.
This could be the great leap forward that Nepalis have waited for and deserve, but it could also be a Gramscian interregnum in which the old is dead and the new is not yet born. We will have to wait to see whether this transitional period will also see ‘morbid symptoms’.
As disruptor-in-chief, it was the Balendra Shah ‘wave’ or ‘craze’ that propelled the RSP to power. The former Kathmandu mayor needed a party platform, and the RSP’s tainted leader Rabi Lamichhane required a booster. Nepal's voters were looking for a saviour.
Personality-wise Shah and Lamichhane are poles apart: one is Type B and the other Type A. One is enigmatic, the other phlegmatic. But yin and yang do also tend to complement each other.&nbsp;
Kathmandu’s chattering class is already making self-fulfilling prophecies about the two falling out, and are fishing for hints that they already have. Shah’s absence from the RSP’s orientation this week was taken as a clue.&nbsp;
Closing the two-day tutorial on Wednesday, Lamichhane delivered a fiery 30-minute speech that laid out the RSP’s main agenda: to function differently from the old parties, serve the people, avoid middlemen, become true lawmakers without taking the law into their own hands.&nbsp;
“The old political parties contributed to history, we will build the future with a new political contract with citizens,” he said, trying to rise over past controversies and his abrasive rhetoric to sound statesmanlike.&nbsp;
GIVE AND TAKE
Lamichhane is said to be in touch with the reclusive Shah to announce a compact cabinet next week. Its composition will be an indication of how much give-and-take there was, and whether the criteria for selecting ministers is competence or loyalty.
Will RSP ministers behave like rulers or service providers? The new government will dive right into the economic fallout of the West Asia war with soaring fuel &nbsp;prices, inflation and uncertainty about remittance inflows.
On Thursday, Gagan Thapa resigned as NC chair, taking moral responsibility for the party’s election loss. The UML’s unrepentant K P Oli does not share the same sentiment about who is responsible for his own party’s historic downfall.&nbsp;
NCP chair Pushpa Kamal Dahal, who was luckier than his cross-party cohort, is now a comparative relic in a Parliament largely comprised of freshmen and sophomore lawmakers.
But the NC, UML and NCP still control provincial and most municipal governments. The old parties could try to make things difficult for the RSP at the centre, but it is also an opportunity for them to clean up their act ahead of local elections next year.&nbsp;
Another test for the RSP will be dealing with a heavily-politicised klepto-bureaucracy which has to frontend its policy decisions. &nbsp;

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