Submit your Article

Nepal Leaks 2019 is the outcome of a year-long investigation conducted by a Centre for Investigative Journalism (CIJ) Nepal team in collaboration with the International Consortium of Investigative Journalists (ICIJ).

This probe shows that 55 Nepalis have invested in several foreign countries. Nepal’s law bars Nepalis from investing abroad. Our study found that nearly a dozen business groups are involved in channeling their illegal wealth abroad and bringing the money back into the country in the name of foreign direct investment (FDI).

We have revealed with evidence how ill-gotten wealth is taken abroad, how it is returned to the country under FDI and who are involved in this financial crime within Nepal and outside by building access to powerful people in a way to degrade governance and democracy. This revelation explains their modus operandi and how it affects the country.

The CIJ team took nearly a year to sift through some 3,000 documents. For these reports, we interviewed nearly 70individuals including office staff, their helpers, relatives and stakeholders directly linked with the issue. We pored over documents made available by the ICIJ, investigative journalists from six countries, offices of the company registrar and court orders. We conducted a digital investigation of the evidence thus gathered while preparing these five investigative stories.

First, Nepal’s law bars its citizens from investing abroad. Moreover, we carried out investigations into Nepalis who deposited their money in dubious banks subjected to international scrutiny. In the first story, we have exposed people who have deposited their wealth in Swiss banks.

The Nepalis Who Deposited Their Suspicious Wealth in Swiss Banks

Second, Nepalis were found to have invested their illegally amassed wealth in tax havens countries. Another news report concerns foreign direct investment (FDI) sourced from such countries.

Nepali companies are bringing suspicious Foreign Direct Investment from tax haven countries

Third, emerging business people in Nepal were found to have brought in investment from the companies registered in tax havens in their names and other ventures. The second and third stories are based on this.

How Illegal Funds Are Channeled Into Nepal In the Name Of Foreign Direct Investment

Fourth, a Nepali citizen cannot invest in a foreign country without permission from the government of Nepal. Non-Resident Nepalis (NRN) are allowed to do this. However, Nepali citizens, and NRNs somehow legally, were found to have evaded Nepal’s taxes, invested money in countries where taxes are not strictly enforced, and repatriated the investment. Our fourth story uncovers this phenomenon.

How Nepali Companies Have Used FDI To Whitewash Dirty Money

Major cases of tax evasion in Nepal are also linked to this. Our investigation does not include the investments made by Non-Resident Nepalis in countries having transparent financial systems.

The fifth story is about investments made by 55 Nepalis in foreign countries. This story shines light on Nepalis who have defied the Act Restricting Investment Abroad (1964) to channel their money abroad.

How 55 Nepali Business Elites, Defying Their Country’s Laws, Invested In Offshore Companies

All these stories were translated into English from the five originally prepared in Nepali.

The Act Restricting Investment Abroad, 1964 bars Nepalis from investing in a foreign country. The details made available by the International Consortium of Investigative Journalists (ICIJ) and further investigation done by the Centre for Investigative Journalism (CIJ) Nepal have found that 55 Nepalis have invested in foreign countries.

Among those who have invested in a foreign country are renowned traders/entrepreneurs as well as individuals unheard of. The addresses of some of them have not been traced. Those recognized as Non-Resident Nepalis (NRN) but doing businesses in Nepal were found to have invested in tax havens. The law does not bar NRNs from investing abroad, but questions have been raised about the source of their investment since they have opened offshore companies. 

Former lawmaker Birendra Mahato 

Former lawmaker Birendra Mahato, who is currently a central member of the SanghiyaSamajbadi Forum-Nepal, has invested in the ‘OJSC Amkodor Holding Limited Company’ in Belarus. The other investors in the company are Non-resident Nepali Niraj Govinda Shrestha, Birendra’s brother UprendraMahato, a former chairman of the Non-Resident Nepali Association (NRNA), and foreign partner Romeo Abdo. Abdo is also linked to the largest tax evasion scam in Nepal at Ncell.

He represented the TeliaSonera in Ncell in whose ownership transfer of nearly Rs 61 billion was evaded in tax (the amount has reached Rs 72 billion now). Abdo was the chairman of TeliaSonera while it invested in the Ncell company of Nepal. Documents show that Abdo, of Lebanese origin, has been doing business in Belarus since 1997.

Birendra Mahato admitted to have invested seven years ago. “I had investments nearly seven years ago but not anymore,” he said. “I have no knowledge about the other investors from Nepal.” He said he had been living in Nepal after returning from Belarus. “I used to be a Non-resident Nepali. Not anymore,” Mahato said adding that he did not know Romeo Abdo.

Niraj, Samata and Upendra

The 2015 Panama Papers leaks of the ICIJ showed that companies were registered in tax havens in Upendra Mahato’s name. Documents available with us show several companies owned by Upendra, his wife Samata Prasad and Niraj in different countries. In their names, investments are seen in British Virgin Islands, Cyprus, Belarus, England and India. Among them, the companies Spartley Ventures, Pankur Finance, Tipologia, Moneystar, Amkodor, BNK, Yagyadeep, Yumi Nepal Earthquake Appeal,Nostal Business Corp and Mabel Apparelare owned by two or all three of them. Mahato did not want to comment on this.                                                                                                                   

Ajeya Raj Sumargi and Arjun Sharma

Businessman Ajeya Raj Sumargi also has investments abroad. Stelios Orphanides, the Cypriot investigative journalist affiliated with the ICIJ, provided the CIJ Nepal with the details from the ‘Department of Registrar of Companies and Official Receiver’. According to the documents, Sumargi is found to have invested in Airbell Services Limited Company of Cyprus. Located at Magnum House in Cyprus, the company incorporated in 2008 is active till now.

Certificate of company registration by businessman Ajeya Raj Sumargi in Cyprus. The CIJ-Nepal obtained the document from the company registrar’s office there.

The Airbell, registered by the law firm ‘Magnumserve Secretary Limited’, has investors: Ajeya Raj Sumargi, Arjun Sharma [who works at Sumargi’s Nepali company Muktishree Private Limited], Zhodar InvestmentsPvt Ltd [based in the BVI], and 12 foreigners. The given address of Sumargi is Hetauda-5, Makawanpur, Nepal. Sharma has given Kamaladi Kathmandu-2 as his address.

“While registering the company in Cyprus, Sumargi has not only violated Nepali laws,  but it’s against the Cypriot laws as well. The citizens of a country that bars investments abroad can’t invest in Cyprus, too. It was essential for the Magnumserve Law firm to know about the legal prohibition for Nepalis to invest abroad,” said investigative journalism Stelios.

Sumargi and Sharma have clearly violated the laws by investing abroad. What’s more, they brought in money from their own foreign company in the name of foreign investment without seeking permission from the Nepal government authorities. According to the details made public earlier, they brought money into Nepal from their own company Airbell Services Limited in the name of foreign investment without getting permission from the Nepali authorities. According to the preliminary report prepared by the Department of Money Laundering Investigation last year, Sumargi is seen to have brought 63,185,533 US dollars into Nepal from Airbell in nine transactions between 2008 and 2013. Besides this, Sumargi has brought nearly 60 million dollars into Nepal from several other foreign companies.

Sumargi said he did not have investments in Airbell. “How am I supposed to have invested in the Cypriot Airbell company? Go ahead if you have that information in the document you’ve obtained,” he said. He claimed that he had brought in all the money from abroad formally through the government. “The owner of my telephone company is Airbell. Airbell is owned by TeliaSonera,” Sumargi said. On the partnership between Upendra Mahato and TeliaSonera, Sumargi said, “I don’t know. Ask Upendra Mahato about it.”

Sharma, the worker at Sumargi’s company, hung up the phone the moment he was asked about his own investment in the Cypriot Airbell company. On the second instance, he picked the phone, but did not speak. The third time, he did not take the call. On the fourth attempt, he switched off the phone.

Family in foreign investment

Four members of the Chaudhary family are found to have invested abroad. The Ursine Limited Company has been registered in the British Virgin Islands in the name of Arun Kumar Chaudhary and his wife Shila and their sons Karan and Suryans. According to the ICIJ, the Nepal address of the company registered in 2004 is Saraswati Sadan, Thamel. Two foreign companies registered in the tax haven island Guernsey –Tenby Nominees Limited and Brock Nominees Limited–are partners with the Ursine Limited. It has not been revealed who are the shareholders in the Tenby and Brock companies.

Chaudhary maintains that the company does not exist anymore. “When my child was little, my friends in Britain had advised that it would be easy for me to send him to a school there if I opened a company in England. I did not open the company. I don’t know how the news reached the ICIJ. It put me in a serious trouble.”

Rajendra Kumar Kabra and his wife RekhaKabra are two other little known investors. They have invested in the same company. They have registered the Fragrance Town Limited company in the British Virgin Islands in 2009 mentioning Shukrapath, Kathmandu, as their address. According to the Company Registrar’s Office Tripureshwor, RajendraKabra is one of the investors of the Bhrikuti Paper Industry. The Kabra Group had no comments in the question of their foreign investment. Rekha said only her husband knew everything.

Little known investors

Even Nepalis not known in the field of entrepreneurship are known to have invested abroad. Nawang Dolma is an example. Dolma with the stated address of Jorpati-2 registered the Fix Union Holdings Limited and Golden Cymbal International Limited Company in 2012 in the British Virgin Islands. Another investor is Uma Devi Singhania, who has the Silver Retreat Limited Company registered in her name in 1998 in the British Virgin Islands.

Another little known name is Reenuka Pradhan. Stating Chundevi-4, Kathmandu as her address, Pradhan registered the Rest Park Capital Inc in the British Virgin Islands in 2006. This company has two other Nepalis—Punam Pradhan and Ajay Prasad Pradhan–as investors. According to the ICIJ details, they have stated only Singapore as their address, without mentioning their address in Nepal.

Another name unheard of in the Nepali business world is Bimal Kazi Tamrakar. He has invested in two companies called Himalayan Investment Group and World Distribution Nepal Pvt Ltd in the British Virgin Islands. According to the ICIJ, he registered the companies in 2002 and 2003. Alongside Bimal Kazi, Bishwa Barsingh Thapa, Nabindra Joshi and Bishwadhar Tuladhar have invested in the Himalayan Investment Group.

Other Nepalis have also invested in the World Distribution Nepal company of Tamrakar, whose address is stated as Siddhibhawan, Kantipath. According to the ICIJ, Nepali citizens Bijendra Joshi, Arun Shrestha, Tuladhar and Nabindra have stakes in this company. The World Distribution Nepal is found to have been registered in Nepal too. The company registered in Nepal in 1995 has same shareholders. In the ‘Offshore Leaks’ shared by the ICIJ in April 2013, the nationality of the two investors Arun Shrestha and Nabindra Joshi was stated to be ‘Not Identified’. They are confirmed to be Nepali, as they are among the shareholders of the company registered by the same name in the Company Registrar’s Office of Nepal.

Arun’s wife Kalina confirmed the fact. “Ours is an IT-related company. My husband knows whether or not the company has been registered in the British Virgin Islands,” she said. “I’ll ask my husband to call you up after relaying your information.” However, Arun did not come in contact.

Another name not in public knowledge is Binu Shrestha. According to the ICIJ, she registered a company called Belwood Acres Limited in 2005 in the British Virgin Islands. The name of Nepali citizen Kishor Rana was included in the Paradise Papers revealed by the ICIJ in 2017.Rana, stating his address as Ichangu, Kathmandu, has invested in the Celestial Investments Company in the tax haven Malta. He owns all shares of the company. Nirmal Shrestha of Kathmandu-3 is found to have invested in the KRB Group of Companies in Malta in 2009.

Shyam Milan Shrestha, not a well-known name in the Nepali field of entrepreneurship, has invested in two companies in the British Virgin Islands. The companies are Sonnet Worldwide Limited and Ilinkage International Limited. Sonnet Worldwide has seven investors. Two other Nepali name holders Ashish Rauniyar and ChinpalRauniyar, their addresses unknown, have also invested in Sonnet. The company Ilinkage also has anotherNeplali investorKhusbu Sarkar Shrestha, according to the ICIJ details.

In a telephone conversation, Shyam Milan Shrestha told us that he knows Khusbu Sarkar. “We opened a ‘zero account’ company in Hong Kong 14/15 years ago. It’s not in existence now,” said Shrestha. “We had opened it believing that it would be of some use.”

Later we scanned the Corporate Registries details on Hong Kong. No company by the name Sonnet International was found to be listed in Hong Kong. According to the documents with Corporate Registries, the Ilinkage International Limited has been registered there but its investors are two Malaysian citizens, not Shyam Milan.

Khusbu Sarkar said the registration in 2001 was for a start-up. “It was registered in Hong Kong. My friends in Hong Kong are known to have kept it in British Virgin Islands for tax purpose,” Sarkar said. “The company had no use. It shut in three months.” He stated that Shyam Milan Shrestha, Ashish Rauniyar and Chinpal Rauniyar, whose names had connections with him, were investors. On the question of the foreign investment bar for Nepalis, he said “In 2001, we did not know that we could not register companies in a foreign country.”

There are more Nepalis who have invested in the British Virgin Islands. Nepalis are seen to have invested also in Amkodor Earthmoving Equipment India Pvt Ltd and Maheshwar Softtech Pvt Ltd. Yogesh Lal Shrestha and Menuka Shrestha of Maharajgunj, Kathmandu, have invested in these companies. Yogesh Lal and another Nepali Rajan Lal Shrestha have set up the company called Maheshwar Suppliers Private Limited. The Paradise Papers leaked by the ICIJ in 2017 also revealed the name of Vikas Sinha. Born in Nepal, Sinha has used his Nepali passport to open the company in the foreign land. He is found to have invested in the United Spirits Limited based in the British Virgin Islands. He is seen to have brought investment in Nepal’s famous liquor company United Spirits through the tax haven. Aided by Lokman Singh Karki, the then controversial chief of the Commission for Investigation of Abuse of Authority (CIAA), the company has exited Nepal.

Doctor and professor

A doctor and a professor have also been involved in illegal investments. Doctor Shyam Bahadur Karmacharya and Professor Shatendra Gupta are found to have invested in the tax haven. Biomedical equipment expert Karmacharya, as a resident of Lalitpur Metropolitan City-2, registered the Surgi Electro Medicacompany in the British Virgin Islands in 2008. Also registered in Nepal, the Surgi Electro Medica company is operational in Pokhara and Kathmandu. The company imports biomedical and surgical equipment and deliversto both public and private hospital across the country.

Company representative Anil Bhurtel confirmed that Karmacharya had invested in the Surgi Electro Medica companies in Kathmandu and Pokhara. “He’s the first biomedical industrialist of Nepal. He’s also the owner of Kathmandu Hospital, Nepal’s first corporate hospital,” Bhurtel said. “His son Raju Karmacharya looks after the pharmaceutical company in Nawalparasi.”

As shown in the ICIJ details, Gupta registered the Wonca International Inc in the British Virgin Islands in 2004. Twelve doctors and professors from Europe, Australia, Africa and South America have invested in the company. According to details, the group of Gupta and 12 foreigners involved in the medical field have opened another organization by the name Wonca headquartered in Bangkok, Thailand.

Nepali citizen Gupta has been the Middle East and South Asian regional vice-chairman of Wonca, the international network of family doctors, physicians and medicine professionals. Born in Kanchanpur, the Wonca states, Gupta studied MBBS in government quota in 1977 and went on to become the chief of the General Practice and Emergency Medicine department at the Tribhuvan University Teaching Hospital. According to a report published in December 2001, Gupta is also a founder of the General Practitioners’ Association of Nepal (GPAN).

Sugar in tax haven

Shashikant Agrawal is the name of one trader who can lobby with government agencies for agenda favouring him. The man, who switches between surnames Khetan and Agrawal, has also invested in a foreign company. According to the ICIJ details, Shashikant and his brother Sumit registered the Multi Link Trading Limitedcompany in 2003 in the British Virgin Islands.

Agrawal said they had only proposed opening the company. “There’s a sugar factory in Mahottari and the Reliance Spinning Mills in Itahari. I have no investment anywhere abroad,” said Agrawal. “[My] name appeared in newspapers then but there’s no investment [abroad]. There was talk about opening a company; it didn’t happen.”

The government imposed import quota on sugar on September 16, 2018 at the behest of Shashikant, who chairs the Nepal Sugar Mills Association. This was not the first time that the government favored the industrial sector he is involved in. In the name of protecting the domestic sugar industry, the government increased sugar import duty by 15 per cent, taking it to 30 per cent. The result is: consumers are paying higher price for the sweetener.

As revealed by the CIJ earlier, he got tax rebate also from the controversial Tax Settlement Commission. His Reliance Industry had to pay the government Rs 11,227,773 under various headings. The commission decided to write off his whole debt.

Misuse of Nepali citizenship

According to the details provided by the ICIJ, foreign citizens use Nepali citizenship to park money abroad. This is evident from the details of investment in a foreign country by Harish Kumar Todi Agrawal, BijeshTodi and BinduTodi. In 2007, they registered a company called Woodstock Universal Limited in the British Virgin Islands. Stating Biratnagar-9, Morang as their address, Bijesh and Harish had submitted their Nepali passport for the purpose. BinduTodi, the other investor in the company, has Haryana, India, as her address.

Harish and Bijesh are not renowned entrepreneurs in Nepal. Investigation showed that they have investments in India too. While finding out facts about the company in which Bindu has invested, Harish and Bijeshwere also learnt to be Indians. They have established the JadeKnitsPvt Ltd in India. The T10 Sports that trades in sports goods is registered in India in their names. As mentioned in its website, the company supplies jerseys to the national cricket team of Nepal.

We called him up on his Indian number. Todi ruled out his investments in both the T10 Sports and Woodstock companies. On the question of using the Nepali citizenship, however, he said: “Whichever country I may be from, I’m free to go and roam anywhere.”

Tourism businessman Bajgain

Details show that Nepali Congress central committee member Rajendra Bajgain, who lost the provincial assembly election, has also invested abroad. According to the Companies House, the British company registrar’s office, Bajgain set up the Gurkha Encounters Limited in 2004 and the FNB Publishing Limited in 2010 in London.

The certificate of registration of the company owned by Rajendra Bajgain in the UK.

The Gurkha Encounters was later renamed ‘The Himalayan Adventure Limited’. Investors in the renamed company include London resident Lekhnath Pandy, British citizen Maggie Magwaya and Nepali citizen Bagjain as shareholders. Pandey is a Non-Resident Nepali while Bagjain is a tourism businessman in Nepal.

In Nepal, Bajagain’s Gurkha Encounters is a tourism company. According to details obtained by the CIJ, the firm was registered in Nepal 20 years ago. The company by the same was registered in London five years later in 2004.

Bajgain has also brought investment from tax haven into Nepal. According to the list of foreign direct investment made available by the Department of Industry, Bajgain has brought in foreign money by opening different companies in three countries in partnership with the Silver Heritage Group of Australia. Rs 3.78 billion came into the country in such arrangement in three instalments for operating hotels and casino. The investment is related to three companies based in Hong Kong, British Virgin Islands and Britain. Named ‘Silver Heritage Limited’ in all the countries, the company in Hong Kong is under the IRP Asia Limited. Besides, in partnership with Bajgain, London resident David Frank has invested Rs 22.5 million.

Bajgain admitted that he owned a company in the UK. “I’m also involved in the 1 pound gifted company in Britain. That’s not my own investment,” he said. “We’ve not taken money from here to that company.” In relation to the money brought in from the British Virgin Islands, Bajgain said, “I don’t know that the country is on the black list for tax evasion. The [Nepal] government has granted permission for the investment. I have no comments about it.”

Mangesh and Sanjib

According to the details of the California company registrar’s office provided by the ICIJ, Mangesh Lal Shrestha of Kathmandu is another Nepali having invested in a foreign country. Mangesh is found to have registered the Incessant Rain company to work on ‘film and animation’ in California in 2015. Two Nepalis and one non-resident Nepali are found to have invested in it. Besides Mangesh Lal, Sanjib Rajbhandari, chief executive officer of the IT company Mercantile Office Systems, and Kiran Bhakta Joshi, a Californian resident, are the other two investors. The address of the two has been stated to be Bansbari, Kathmandu.

A company by the same name Incessant Rain Animation Studio is operational in Nepal. According to the Company Registrar’s Office, the firm is listed in Nepal as Incessant Rain Animation Studio Pvt Ltd. Its investors are the Californian Incessant Rain Pvt Ltd, Sanjib Rajbhandari, Kiran Bhakta and Suprabha Rajbhandari. Mangesh chairs the Nepal Youth Entrepreneurs’ Forum and is a member of the Federation of the Nepalis Chambers and Industries.

Mangesh Lal denied that he had stakes in a foreign country. “The company in California is of Kiran Dai [brother] and Sanjib Uncle. I’m not involved in it,” said Mangesh. “CAS Trading House is our family business. My father is Yogeshwor Lal Shrestha. I had tried to be involved in that company but didn’t.”

In an email response Sanjib Rajbhandari said “If my name is listed by the company, then it has done so without my consent or knowledge.”

Chandra Prasad Dhakal of IME Group

The certificate of company registration by Chandra Prasad Dhakal in the UK. (Below) The letter written by Dhakal to the registrar ‘Companies House’.

According to the details related to the British registrar Companies House, entrepreneur Chandra Prasad Dhakal is found to have purchased the Sunbird Computer Consultants Limited on August 9, 2002. According to the documents received by the CIJ Nepal with help from the ICIJ, he had rechristened the company as International Money Express (IME) UK Limited. The company has Dhakal, his brother Hemraj, two British citizens and two non-resident Nepalis as investors. The NRNs are the London-based Anil Kumar Lamichhane and Kamal Poudel. In his letter to the British Company Registrar’s Office dated 21 August, 2002, Dhakal said, “Dear Sir, I confirm that we care limited companies in both Nepal and Malaysia using the name International Money Express (IME) Limited.” (See letter)

Another British company established by Hemraj Dhakal is IME Holdings Limited. According to the Company’s House, Maharajgunj-4, Kathmandu is the Nepal address of Chandra Prasad Dhakal while that in England is Pentax House, South Harrow Middlesex. The address for Hemraj is Pentax House, South Harrow Middlesex, England.

Satish Lal Acharya and Bhawana Singh Shrestha

According to the documents obtained, Satish Lal Acharya, a Nepali businessman residing in Singapore, has registered four companies in the British Virgin Islands between 2000 and 2007. The companies are Pasa Holding Limited, Square Star Inc, Lacell Holding Incorporated and Leading Faith Incorporated. Lydenberg Group Limited also has a stake in Lacell. Satish’s wife Bhawana Singh Shrestha has also invested abroad. She registered the Sunivera Capital Venture Private Limited in 2015. Bhawana has a company in Nepal by the same name. Sunivera has a 20 percent stake in Ncell, the telecom operator that has been embroiled in a huge tax scam in Nepal.

Satish’s ventures are in a number of countries including Cambodia. As reported by the Cambodian Phnom Penh Post investigative journalist Jack Davies on April 21, 2016, Satish opened the telecom company Applifone in Cambodia in 2006 and appointed Raj Bahadur Singh, the son-in-law of ex-king Gyanendra Shah, as its chairman. Applifone has a stake in Nepal’s Smart Telecom. Satish and his family are other investors in Smart Telecom. His Singapore-based Bitmap Private Limited is engaged in telecom  business in Asia and Africa. Bitmap was set up in 2002 with nearly Rs 1 billion worth of capital and property.

Satish has invested also in the Lal Sahu Distribution company in Singapore. According to the details provided by the Singaporean authority Registries of Companies and Businesses, Lal Sahu Distribution deals in bulk goods. This company has an 80 per cent stake in Nepal’s Smart Telecom. According to the Nepal Telecommunication Authority, Smart Telecom has taxes due to be paid to the government amounting to Rs 1.375 billion. As revealed by the ICIJ in its Offshore Leaks, the Singaporean citizen Neo Lay Hiang Pamela has invested in both of these companies. Hiang has stakes in 29 companies in the British Virgin Islands. According to the Commerce Ministry of Cambodia, RajBahadur Singh is the owner of the Lacell Private company. Satish and Bhawana could not be contacted.

Rama Malla of Malla Hotel

Rama Malla, the daughter of Rana Prime Minister Padma Shumsher, is found to have invested in a company in Britain. According to the details received from the Companies House, her investment partner is John Morrison Atwater, an American living in London. According to the details provided by the ICIJ in connection with the Swiss Leaks, Atwater’s name was on the list of those depositing their money in Swiss banks. Owned by Malla and Atwater, the Sixteen Upper Brook Street Limited is operational in England. Having been in existence for 34 years, Malla invested in the company in 2004. Rama Malla is the chairperson of Malla Hotel in Thamel, Kathmandu. A public notice was issued in Nepal one year ago, about her tax dues.

Seeking Malla’s response, we called up Malla Hotel a number of times. The person who answered the phone identified himself as Surendra, Malla’s personal secretary, and said: “I’ll convey your message. You’ll receive a call tomorrow.” We waited for the next four days for the response but did not hear anything from them.

Minu Shah/Chhibber

In course of searching additional details about Rama Malla’s business partner Atwater, the name of Nepali citizen Minu Shah/Chhibber came up. Minu Shah is among the Nepalis parking money in Swiss banks. Atwater and Minu invested in tax havens since 2003 until 2016. As detailed in the Panama Papers of the ICIJ in 2016, the controversial company in the British Virgin Islands Mossack Fonseca has registered the Rooney Holdings Company in the name of Minu Chhiber. Minu’s name has been mentioned as the beneficiary of investment in the bank account of the company registered in Jersey, Channel Islands lying between England and France. The company listed in the supposed tax haven is found to be operational until 2016 since its registration in 2000.

According to a 2010 document, the shareholders of the company before Minu invested in it are British. Minu is found to have entered the tax haven through the British nationals. Minu Shah/Chhibber is also linked to the Dubai-based Pearl Global Finance Limited. Minu’s sons Mahesh and Parvesh are the shareholders of this company. John Morrison Atwater, the American living in London, is also related to the company. The company documents mention Atwater as clients-related individual and legal institutions. Minu, Mahesh and Parvesh have all mentioned Atwater as the ‘Individuals / Legal Entities In Relation With Profile’ of their property.

Minu’s eldest son Parvesh has stakes in Adwani Hotel and Resort of India and more than a dozen companies in Britain. Her youngest son Mahesh, who lives in Burlington Arcade, London, has invested in half a dozen companies in the British capital. Minu of Kupondole, Lalitpur, was married to Indian citizen Sirvatera  Prakash Chhibber. The 1993 and 1996 journals of the Britain Nepal Society list Minu as the Society’s member.

According to Ganesh Prasad Adhikari, an administrative officer at the Passport Department of the Ministry of Foreign Affairs, Minu Chhibber obtained the machine readable passport from the British Embassy on September 17, 2013.

The legal provision

According to the Act Restricting Investment Abroad, 1964, Nepalis investing abroad may even be jailed. The Act applies to “all citizens of Nepal whether they reside within or outside Nepal and to corporate bodies established within Nepal”. Clause 2 of the Act says investment means any other kind of cash or in-kind investment whatsoever made abroad except that as specified by the Government of Nepal by a notification in the Nepal Gazette. According to the law, Nepalis cannot invest in foreign securities, partnership of a foreign firm, foreign bank account, real estate situated abroad, or any other type of cash or kind. The Act stipulates: “If any person does any act in violation of this Act or any notice, order or direction issued under this Act, the person shall be liable to the punishment of fine equal to the amount in question or imprisonment for a term not exceeding six months or both.”

The Panama Papers investigation: The findings emerge from millions of secret files obtained by the International Consortium of Investigative Journalists, the German newspaper SüddeutscheZeitung and other media partners. More than 11 million documents — emails, cash transfers and company incorporation details from 1977 to December 2015 — show the inner workings of the Panamanian law firm Mossack Fonseca, one of the largest shell-company registration agents in the offshore world.

In 2017, the International Consortium of Investigative Journalists (ICIJ) published Panama Papers, which revealed that seven Nepalis including Upendra Mahato, the founder of Non Resident Nepalis Association (NRNA), had invested in countries known as “tax haven”. Following the revelations, we requested to the ICIJ to provide us details of Nepalis named in the report. It led to a formal collaboration between the ICIJ and Centre for Investigative Journalism, Nepal (CIJ).

A few interesting details have emerged after we examined documents from Nepal’s government offices, the materials provided by investigative journalists associated with the ICIJ and their investigations. It was found that in order to evade tax in Nepal or to transfer the illegally earned money, the business people laundered money to tax haven countries that offer minimal tax liability to foreign individuals and businesses. Then, the money was 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, had been involved in it. These businessmen used Ncell, one of Nepal’s largest telecom companies, in the biggest tax scam in Nepal, according to the findings.

TeliaSonera:  Roots of Airbell and Zhodar

When Ncell was sold for the 12^th times, the country’s legislature, government and judiciary were drawn into the tax evasion scandal linked with the telecom company. The controversy escalated after authorities exempted the company from paying capital gains tax. All three organs of the state– the government, the parliament and the judiciary (some openly while others secretly) favored tax exemption for Ncell. Founded on September 23, 2001, the company has been sold 12 times. Now known as Ncell, the company has evaded capital gains tax worth 61 billion rupees (now 73 billion rupees).

The collusion paved the way for TeliaSonera, which had 80 percent shares on Ncell, to sell it to another company without paying the tax. Though TeliaSonera left Nepal, business people associated with it conduct business in the country. They include Upendra Mahato, his business partner Niraj Govinda Shrestha, Ajeya Raj Sumargi and Arjun Sharma, a director of Muktishree Pvt Ltd, a company owned by Sumargi. These businessmen have set up offshore companies. They have used those companies to launder money under FDI to Nepal. Then, they repatriate the money under profit to foreign countries and again launder money from another company back to Nepal. What’s more, these companies also have close ties with TeliaSonera, which had left Nepal after massive tax evasion.

Such proximity has also raised doubts on whether these people were involved in evading taxes owed by Ncell. The details gathered by the ICIJ and our investigations in Nepal lend credence to it. In order to reach the conclusion, we went extra miles to investigate the concerned companies and their relations among one another.

First, we examined the documents obtained from Stelios Orphanides, a Cypriot investigative journalist who worked in Panama Papers investigation. He provided 82 verified files of corporate registries at the Department of Registrar of Companies and Official Receiver, a government regulator of Cyprus. In Greek language, the report included name of shareholders, their addresses and details of buying and selling of their shares. Orphanides translated the document into English. It showed that Ajeya Raj Sumargi and Arjun Sharma are investors of Airbell Services Limited in Cyprus.

The company, whose address is Magnum House in Cyprus, was founded in the country in 2008. It is still active. Zhodar Investments Limited, a company registered in the British Virgin Islands, had purchased the share of Airbell Services Limited. Magnumserve Limited, an intermediary law firm, had facilitated to incorporate Airbell in Cyprus. Sumargi and his employee Sharma including 11 other foreign nationals are the investors of Airbell.

Mohamed Amersi is one of the 11 investors of the company. He enjoys a long association with Sumargi’s companies including Mero Mobile, which since March 2009 has been known as Ncell. While we could not establish the rest of investors’ link to Nepal, a separate report detailing links of Zhodar is below. Amersi was a senior adviser of TeliaSonera Group and board member (from July 2002 to March 30, 2005) of Spice Nepal Private Limited, the investor of Mero Mobile. British national Amersi, who is based in Dubai, is the owner of Ruralshores and Inclusive Ventures Limited Company in India, according to Orphanides, the Cyprus-based investigative journalist. This was the same company that Muktishree Group had announced partnership with, in 2014.

Sumargi’s company has spread its tentacles far and wide. According to information provided by Orphanides, who obtained it from the Office of Company Registrar in Cyprus, on September 12, 2013, TeliaSonera Norway Nepal Holdings bought 20 units of share worth 15.2 million Euros (around 2 billion rupees) from Sumargi’s company Airbell. Six days later, TeliaSonera Norway Nepal Holdings bought another 40 units of share worth 29 million Euros (3.98 billion rupees) from Airbell. At the time, TeliaSonera Norway Nepal Holdings had invested in Ncell through holding companies.

Like Airbell, Sumargi has close ties with Ncell and Zhodar Investments. On May 12, 2010, Trident Trust, an intermediary law firm, had registered Zhodar Investments in the British Virgin Islands, according to ICIJ. Arjun Sharma, a director of Sumargi’s company Muktishree Pvt Ltd, is one of the investors. According to a memorandum of understanding signed between Zhodar and Sumargi’s Nepal Satellite Telecom Private Limited on May 23, 2011, Sharma is also a director of Zhodar Investments. Sharma also serves as a director of Muktishree Pvt Ltd. Sumargi had transferred a total of $ 48,372,222 (483,722,210 rupees) in 23 installments to Nepal without getting approval for FDI. In 2011 and 2012, Zhodar Investments had sold 510 and 1000 units of share to TeliaSonera Asia Holding BV, which evaded taxes in Nepal while operating Ncell.

On November 22, 2013, Zhodar Investments transferred 1060 units of its share to World Wide Incredible, a company registered in British Virgin Islands. On the same day, the company joined Sumargi’s company Airbell Services as partner. It means Sumargi is linked to these companies as well. TeliaSonera, which was linked to these companies through cross holdings, invested in Ncell in Nepal and sold it to another company after 8 years of operations.

TeliaSonera is a prime example of how controversial business people cultivate ties with politicians and power centres to whitewash their illicit earning. The company used all three government organs—government, legislature and judiciary—to serve its interest. It was found to have sent a thank you letter to Prime Minister K.P. Sharma Oli (in his previous term). “We will carry on with our talks with Nepal’s authorized agencies to settle the issue of repatriation of our profit. We are grateful for your support and cooperation,” the letter noted.

TeliaSonera had the support of former Prime Ministers Pushpa Kamal Dahal and Sher Bahadur Deuba. In early 2016, Prime Minister Dahal shared at a cabinet meeting his intention to tax TeliaSonera for purchase of Ncell and exempt tax to the latter. However, the attempt failed after three government secretaries—Officiating Secretary Ram Prasad Acharya, Finance Secretary Shanta Raj Subedi and Revenue Secretary Rajan Khanal—opposed the proposal. Prime Minister Deuba neither favored tax exemption of Ncell nor did he take initiatives to recover tax dues.

How Mahato and Shrestha forged ties with Ncell

The letter written by TeliaSonera before it exited Nepal to then-prime minister KP Sharma Oli.

Sumargi has longstanding relations with TeliaSonera. But Upendra Mahato has only recently established relations with the company. In order to know about his links, one has to examine the company called Tipologia. Upendra Mahato and 11 other foreigners have invested in the company, which was registered on May 25, 2007. Romeo Abdo is one of 11 foreign investors of the company. Abdo, a Lebanese origin businessman in Belarus since 1997, was the chairman of Ncell when TeliaSonera had invested in it.

We searched for details of Abdo’s businesses to find out how relations between Mahato and TeliaSonera evolved over the years. We discovered Abdo and Mahato had joint ventures such as Spartly Ventures, Belarusian-Nepalese-Kazakhstan Group (BNK Group) Limited in Belarus. Between June 6, 2006 and March 29, 2012, when Abdo served as chairman of Ncell, Mahato had invested 20 percent shares in Ncell. First, he invested in Ncell through Synergy Nepal Private Limited. Later, he sold the 20 percent share in Ncell to himself. On March 29, 2012, he sold his 20 percent share in Ncell to Niraj Govinda Shrestha, his partner in offshore company. A total of 3 billion rupees of tax was evaded when Synergy sold the share to Upendra Mahato, who in turn sold it to Niraj Govinda Shrestha, according to a report provided to the Supreme Court by the Large Taxpayers’ Office.

Niraj Govinda Shrestha is another Nepali involved in massive tax evasion scam surrounding the sale of Ncell. Shrestha is also an investor in Belarusian-Nepalese-Kazakhstan Group (BNK Group) Limited in Belarus. When TeliaSonera sold Ncell, he had 20 percent share in the company. TeliaSonera sold its 80 percent share in Ncell to Malaysian company Axiata. Shrestha sold his 20 percent share to Nepali citizen Bhawana Singh Shrestha. The Large Taxpayers’ Office has ruled that that tax worth 11 billion rupees was evaded in the transaction. Shrestha challenged it at the country’s Supreme Court. The court issued an interim order to not extract tax from the company, which has stalled the payment process.

Niraj Govinda Shrestha has invested in more than a dozen companies in foreign countries. As a non-resident Nepali, he is allowed to invest in foreign countries. But, since he has invested in tax haven countries, questions about the source of his investment have been raised. According to a 2018 investigation by a Belarusian investigative journalist, Shrestha has invested in several tax haven countries. Together with Abdo’s younger brother Michel Abdo, Shrestha has registered a company called Nostal Business Corp in the British Virgin Islands.

Through ICIJ, we reached out to Stas Ivashkevich, a Belarusian investigative journalist, to gather details on Abdo. The Abdo family, according to Ivashkevich, is an influential business family in Belarus. Abdo’s wife Maria owns an art gallery. Maria had deposited money in Sumargi’s company under FDI (details below).

Shrestha: from tax haven to India and Nepal

Nostal Business Corp, which has investments from non-resident Nepali businessman Niraj Govinda Shrestha, had attracted FDI in Setko International, a company in Belarus. Setco International has won a contract to construct a building in a plot that was liquidated after a company failed to comply with building codes, according to the Belarusian investigative journalist.

Niraj Govinda Shrestha, Upendra Mahato, and his younger brother Birendra Mahato and Romeo Abdo are board members of Amkodor Holding Company in Belarus. Shrestha along with Indian nationals Amit Jha, Hiranya Prakash Dhar and Belarusian Igor Subbot in have registered Amkodor India JV Private Limited in India. Nepali citizens have also registered a company in India under similar name. Yogesh Lal Shrestha and Menuka Shrestha of Maharajgunj, Kathmandu, have invested in Amkodor Earth Moving Equipment India Private Limited. We couldn’t establish whether Niraj is related with the two. One of the two companies supplies equipment to Amkodor Company in Belarus. Niraj Govinda Shrestha has also registered a company in London called ‘Yumi Nepal Earthquake Appeal’. We couldn’t contact Shrestha for his comments.

Mahato: managing ‘businesses’ from Belarus

The ICIJ had revealed that Upendra Mahato had invested in tax haven countries. ICIJ had provided CIJ Nepal additional details about it. Mossack Fonseca, a Panamanian intermediary law firm, had registered Pankur Finance Limited, Spartley Ventures Limited and New Found Strategies in British Virgin Islands. Upendra Mahato is the investor of these companies.

Pankur Finance and Spartley Ventures were registered on July 16, 2008.Formia and Primi Limited are other two companies that have invested in these two. Both companies are registered in tax haven country Seychelles, which is home to 90,000 people. We couldn’t find additional details about these companies registered in Seychelles. Amit Kumar Shah is associated with Pankur, but we couldn’t identify whether he is an Indian or Nepali citizen. Mahato, based in the tax haven country Belarus, used to be Nepal’s honorary consul for Belarus. Sumargi is Nepal’s current honorary consul for the country.

Sumargi’s shadow business

Ajeya Raj Sumargi has used offshore companies set up by himself and his close partners including Upendra Mahato, Arjun Sharma, Niraj Govinda Shrestha to channel money to his companies in Nepal under FDI. To dig deeper, we collaborated with Maxime Vaudano, a French investigative journalist who worked on Panama Papers Leaks. We asked him to find details about Zhodar Investments, set up by Sumargi’s partner Arjun Sharma. With Vaudano’s help, we sent an information request form to the Financial Services Commission, a regulatory agency in the British Virgin Islands. According to the agency, Trident Trust Company, an intermediary law firm, had helped incorporate Zhodar Investments in the tax haven country. We could confirm Sharma was its director, but couldn’t find details about other share-holders. Zhodar Investments has funneled a total of $ 48,372,222 (4,837,222,210 rupees) under FDI to various Nepal-based companies owned by Sumargi.

Sumargi’s company has also attracted FDI from Cyprus-based Tipologia. Upendra Mahato, Romeo Abdo and 10 other foreign nationals have invested in the company. Tipologia appears to be associated with many offshore companies in the British Virgin Islands. Sumargi has laundered money from Airbell, Zhodar and Tipologia under FDI. Between 2008 and 2013, he transferred a total of $63,185,533 (6,318,553,355 rupees) in 9 installments from Airbell to his companies in Nepal under FDI. Tipologia company has already invested $1671091 (188,000,000 rupees) under FDI in Nepal.

Sumargi has laundered money from Shrestha’s company in the British Virgin Islands and Michel Abdo’s company to Nepal under FDI. Their company called Nostal Business Corp is registered in the British Virgin Islands. The company sent $1,899,888 (210,887,568 rupees) to Muktishree Cement Industries, which belongs to Sumargi. The money was deposited in his account at Nepal Investment Bank (account no: 00101010299596).

There is yet another instance of Sumargi laundering money into Nepal without government approval. It came from a person linked to Mahato and Shrestha. Maria Abdo is the wife of Romeo Abdo, the Belarusian partner of the two businessmen. In 2011, Maria deposited $249,968 (27,746,448 rupees) in Muktishree’s Nabil Bank account no 0201017501150.

Sumargi and his employee Sharma not only violated Nepali laws by investing in foreign countries, they also laundered money from Airbell to Nepal without government approval. A Nepali is not allowed to set up companies in foreign countries and to transfer illegally earned money to Nepal. Despite being illegal, a group of businessmen have set up companies in foreign countries and repatriated the money to Nepal through their offshore companies under foreign direct investment (FDI).

We contacted Mahato, but he didn’t want to comment on it. After he was asked about his affiliation with companies such as Zhodar, Airbell and TeliaSonera, with Sumargi bringing in money via those companies, he said: “I have no information about it. I don’t have any comment.”

Sumargi has so far repatriated $120 million to Nepal. The Department of Money Laundering Investigations has termed the money ‘illegal’. It has said the investigation is ongoing. In January 2018, a single bench of Justice Tej Bahadur KC issued a stay order to allow Sumargi to withdraw money, whose source, according to Nepal Rastra Bank, wasn’t clear. In December 2018, Justice Deepak Raj Joshee issued yet another stay order in relation to Muktishree Industries, which allowed the company to withdraw the money frozen by the central bank. According to the 54^th report of Office of Auditor General of Nepal, Sumargi had evaded tax on two occasions: first was amounting to 955 million rupees and the second 453.8 million rupees. According to the report, he has evaded tax worth 1,408,800,000 rupees while selling shares of his companies in Nepal and abroad.

“In preliminary reports, we hadn’t named the company. That company belongs to businessman Ajeya Raj Sumargi,” said Sukadev Khatri, a former auditor general who prepared the report. “They under-valued their shares in Nepal and abroad and evaded taxes,” he said.

While many think foreign direct investment into the country is a positive matter. But according to Dharma Raj Sapkota, who worked for five years as the head of Financial Information Unit at Nepal Rastra Bank, such investments should be viewed with skepticism. “I compare this with the adulteration of milk. It’s not that bad to mix water with milk, but if you mix diesel with milk, it becomes inedible,” said Sapkota, a former director at NRB and an expert on money laundering issues. “If illegally earned money is channeled to the country’s economy, it empowers people involved in illegally making money. The state becomes helpless,” he said.  

What is Mossack Fonseca?

Mossack Fonseca is an intermediary law firm that helps businesses register offshore companies in tax haven countries. According to ICIJ, the firm serves as a broker for people who want to turn their black money into white. It helps them by finding out legal loopholes. The firm’s headquarters is in the British Virgin Islands, with offices in five countries. Its branch offices spread out in countries with low taxation or no taxation at all: Bahamas, British Anguilla, Panama, American Samoa, and Seychelles. It has representatives and contact offices in more than two dozen countries in Europe, Latin America and Asia. It is among 131 firms based in British Virgin Islands that help register offshore companies to ‘park money.’

In 2015, the ICIJ published details of the firm as Panama Papers. After the leaks, the company found itself at the center of a global scandal. “The Panamanian law firm at the center of the Panama Papers scandal has announced it is shutting down,” The Guardian has reported. According to the report, the directors of the company shut it down after the leaks incurred reputational damage to the firm.

Mossack’s Nepal connections

Nepali companies have also dealt with Mossack Fonseca. One Nepali company had even reached out to the court. On July 23, 2008, Nepal’s Supreme Court called for an International Consultant for obtaining Judicial Mapping and Judicial Assessment in relation to IDF Legal and Judicial Reforms to Strengthen Creditor Rights Project. Nepal’s Milap Group had emailed to Mossack Fonseca proposing to jointly apply for the tender. “We write to bring to your attention the following Bid Packages for Legal Consultancy Services invited by Supreme Court of Nepal. We are interested to associate with your Organization as the Lead Firm for this requirement under a mutually acceptable arrangement,” reads an email from Milap to Mossack Fonseca. Manuela Fogarty, the Mossack Fonseca official who replied to the email, wasn’t interested in the proposal, according to documents obtained by the ICIJ. The official had replied saying the two could collaborate if needed in future. Milap Group, which in its website, says it works as business strategic consultant. The documents on its website show it has worked in sensitive and big projects in Nepal. The company appears to have worked as an intermediary for foreign companies to bid in government tenders. It was found that the company had facilitated for three foreign companies in projects including excise stickers for Inland Revenue Department, bank notes of Nepal Rastra Bank and passport printing and supply of Ministry of Foreign Affairs.

Another company linked to Mossack Fonseca is Nepal Ventures, which is registered in the British Virgin Islands. Mossack Fonseca had it registered in the British Virgin Islands. It wasn’t clear who was listed as the owner of this company, but a company with similar name has been registered at Office of Company Registrar in Nepal. Juli Kumari Mahato, a lawmaker from Dhanusha district, is the main investor of the company. Other investors include Ram Pratap Panjiar and Indu Karki of Dhanusha and Bishal Agrawal, Ajuj Agrawal, Rajesh Kumar Agrawal, Govinda Lal Sanghai and Suresh Kumar Agrawal from Kathmandu. The company has 20 percent share capital investment in United Telecom Limited.

Juli Kumari Mahato is the wife of Raghubir Mahaseth, Minister of Physical Infrastructure and Transport. Mahato is sister of Upendra Mahato and Birendra Mahato. Though we couldn’t confirm whether the company registered in the British Virgin Islands was the same, similarities between the companies and Mossack Fonseca’s involvement in it has raised questions about possible investment of Juli Kumari Mahato in the company. Mahato termed the existence of the company with similar name in the British Virgin Islands a “mere coincidence”. She said: “I haven’t registered Nepal Venture Company in British Virgin Islands. But I have invested in the company with same name in Nepal. I don’t have any investment in foreign countries.”

The British Virgin Islands, which many Nepalis may have hardly heard about, ranks third after India and China in terms of the Foreign Direct Investment (FDI) volume in Nepal. Of the total Rs. 137.67 billion received as FDI in the last two decades, the share of British Virgin Islands (BVI)–a country of islands in the Caribbean–accounts for 45 percent. With a small population of about 31,000, equal to the population of Tilathi Rural Municipality in Nepal’s Saptari district, its GDP (Rs 114 billion) is 96 percent smaller than Nepal’s.

According to the Department of Industry (DoI), several investors within the BVI have obtained approval from the Nepal government to invest in and establish industries worth Rs 8 billion, which is 7 percent of the BVI’s total GDP. The total area of this country is 153 square kilometers, barely as big as Ilam’s Sandakpur Rural Municipality.

The British Virgin Islands Financial Services Commission, which regulates the BVI companies, says a total of 950,000 companies have been registered there. Establishing sizeable companies in a tiny country like BVI raises eyebrows.

“In a country where central bank authority is not doing its job, where regulations of wealth and its sources is non-existent… If the money has been brought from such a country, then it’s an investment from an illegal source,” said Dharma Raj Sapkota, who worked for 5 years as the head of the Financial Information Unit at Nepal Rastra Bank. “Investment such as this weakens the country. As a result, the country’s economy is like a cocktail of Mobil and milk,” he said. “A country like Nepal should bring investment from countries which are reputed and have a robust system in place. Or else, illegal wealth will lead to weakening of the state. This will make those who illegally amass fortunes stronger, slow the country’s growth and cause suffering to the people,” he said. Concurring with Sapkota, there’s a reason behind the rise of country like BVI, which has been a source of huge foreign direct investment in Nepal. According to EU List of Non-Cooperative Jurisdictions for Tax Purposes, the first-ever list of European Union in its fight against tax evasion, the country has been designated a tax haven and blacklisted due to its record on tax evasions.  

Two-thirds FDI from tax haven

A country dubbed as a ‘tax haven’ provides citizens of any country with opportunities for avoiding tax, and for depositing any amount of money in the banks without disclosing the source. This means that any amount of illicit money can be deposited in the banks of BVI from any part of the world, including Nepal. This helps establish an offshore company, or sometimes virtual, to channel the money back to Nepal as FDI. Hence, the BVI has been one of the largest foreign investors in Nepal.

The FDI channeled from the BVI has been a rabble-rouser lately since this ‘parked’ money coming from this laissez-faire country has captured the two-thirds share of FDI in Nepal. The Survey Report on Foreign Direct Investment in Nepal published by the Nepal Rastra Bank (NRB) in June 2018 said: “FDI totaling Rs. 173,678,400,000 has been endowed to the industries currently operating in Nepal.”

This indicates that more than 60 percent of the FDI share amounting to Rs. 82,655,700,000 in Nepal comes from ‘tax haven’ countries. The British Virgin Islands and the nearby countries alone have an investment totaling Rs. 62,779,700,000 in Nepal.

The Department of Industries (DoI), however, holds a bit different statistics. Unfortunately, the government lacks the exact record of whether the companies boasting FDI are functional, have ceased to function or have been simply registered. According to the DoI, the regulatory authority has given approval for FDI equivalent to Rs. 282.91billion. Out of this, a total ofRs. 66.9 billion has been sourced from tax haven countries. A total of 689 companies from 17 tax haven countries have been registered at DoI seeking FDI.

According to a Nepal Rastra Bank report on FDI, the investment flow from countries that have obtained approval from the Government of Nepal has been unexpectedly high. The NRB has not disclosed the number of countries and the volume of investment they have made in Nepal.

Investment surpasses approval

The Investment Board Nepal (IBN), chaired by the prime minister, approves investments worth more than Rs. 10 billion. The Industrial Promotion Board, chaired by the minister for industry, is responsible for approving medium-tier investment below Rs 10 billion. The Department of Industry (DoI) led by a joint-secretary can approve small-scale investments up to Rs 20 million. The central bank facilitates the foreign exchange transfer on the basis of the go-ahead from the three bodies to deposit the FDI in Nepal’s banks. The regulator can give approval to deposit the money in Nepali banks only after confirming that the company has got the approval from one of the three authorities.

However, there have been alarming disparities in the amount approved and the sum brought in. FDI from the Cayman Islands and Brunei, both dubbed as tax haven countries, is one such example. Despite the fact that investors from these countries have not obtained the approval from the Nepali authorities, the Cayman Islands have invested a total of Rs. 160 million in Nepal, according to a Nepal Rastra Bank report. Investment from Brunei in Nepal amounts to Rs 30 million. The NRB, however, did not reveal the details of these companies.

The government of Nepal has given FDI approval to 17 ‘tax haven’ countries. The permitted investment amount totals Rs. 66,901,843,284. On the contrary, evidence shows there has been a total investment of Rs. 82.657billion from these countries, which exceeds the approved amount by Rs. 15,755,156,716. A question arises: What caused this difference?

An official at the NRB says, “Either the investment has not been approved, or the profit on the initial investment has been re-invested here.” The official adds, “Bringing in investment surpassing the approved amount cannot be possible without consensus between the officials of Nepal Rastra Bank and the concerned banks.” The Department of Money Laundering Investigation has to look into the matter, according to the official.

Initial investment in 1973

Even as the history of FDI in Nepal dates back to 1973, tax haven countries started investing in the country from 1979. The Netherlands–also dubbed tax haven by the European Union–was the first country to invest in Nepal when three Dutch invested Rs. 8,990,000 in the Lalitpur-based Summit Hotel. According to a government record, Gyani Bede was the local partner then. The foreigners sold this hotel, now a four-star entity under the banner Summit Group of Hotels and Resort, to Nepali investors in 2012.

Golchha Organization is the first Nepali company to bring in foreign investment from the British Virgin Islands (BVI). Records show that this organization brought foreign investment from the Flat Wood Limited Company for its Nawalparasi-based Nepal Boards Company Limited. In 1993, Golchha Organization had received permission to bring Rs. 28,868,780 under FDI to produce wooden decorative materials in Nepal.

Three companies, having the largest FDI in Nepal, are from the British Virgin Islands. One of them is Revan Business Limited that obtained the approval of Rs. 2,008,443,500 through Upendra Mahato, a Non-Resident Nepali (NRN), on February 11, 2015. The Nepal Rastra Bank had imposed restriction on the company’s investment after a conflict surfaced between Mahato and the promoters of Grande Hospital.

The second largest company that brought the huge investment in Nepal is associated with Saurabh Group of companies. Bishnu Prasad Neupane and his group got the approval to bring in FDI to operate hotels in Bhaktapur. The ‘Global Technology and Trademark Ltd’ got the permission to bring in FDI worth Rs. 1.94 billion. The 17-storied building of Radhe Radhe being constructed by the company in Thimi of Bhaktapur was dragged into a controversy when it defied the approval to construct a five-storey building. Madhyapur Thimi Municipality has barred the company to continue the construction work.

Trailing behind is Silver Heritage Group, a Hong Kong-based company that has channeled FDI from the BVI. This company has brought in Rs 1.755 billion through Rajendra Bajgain, a tourism businessman.

Darla Holding AG, a Swiss company, has brought in the fourth largest FDI into Nepal. This company has obtained FDI approval for bringing in Rs 1.2billion to build a 15-megawatt hydropower plant in Rasuwa. Responses from Mahato, Neupane and Bajgain are included in the accompanying stories.

“If the state couldn’t control investments like these, then our leaders will be like actors in a film, who follow directors’ instructions. These business people will play the director’s role,” said Sapkota, an expert on money laundering issues. “I don’t think that the leaders of big political parties have such a will power (to control the illicit money flowing into the country).”

United Spirits’ Mallya connection

The popular United Spirits also brought FDI from tax haven countries. According to the documents obtained from the International Consortium of Investigative Journalists (ICIJ), the Indian United Spirits Company was established as USL Holdings in the British Virgin Islands in 2007. The company established the United Spirits Company as its subsidiary company in Nepal.

McDowell India, a company under the United Spirit Limited of India, was able to bring in FDI by establishing the Nepal Liquors Pvt Ltd, which produced liquor in Biratnagar. According to the ICIJ, the deal to establish USL Holdings Limited in the British Virgin Islands was mediated by Mossack Fonseca. India’s popular, yet controversial business tycoon Vijay Mallya, who has been accused of tax evasion and misappropriation, too, had an investment in this company. On December 10, 2018, a court in Britain gave its verdict to deport Mallya to India.

Meanwhile, the Nepal Liquors Pvt Ltd was able to leave Nepal with support from Lokman Singh Karki, former chief of the Commission for the Investigation of Abuse of Authority (CIAA). The CIAA had, during Karki’s tenure, gone beyond its jurisdiction and intervened in the transfer and sale of the company’s shares. Nepali investors including Rajesh Bir Singh Tuladhar and his relatives Rita Singh, J L Manandhar and Laxmi Singh have purchased around 85 percent share of the Indian company. This was possible with help from the CIAA.

What is a tax haven?

Countries having a Harmful Tax Regime are called ‘tax haven’. According to a report published by The Guardian in 2011, the term is a bit of a misnomer, for these places don’t just offer an escape from tax. They offer secrecy, in various forms, combined with varying degrees of refusal to co-operate with other jurisdictions in exchanging information. Another common marker for tax havens is very low or zero taxes. They attract money by letting people escape being taxed, legally or illegally. Secrecy jurisdictions routinely ring-fence their own economies from the facilities they offer. Offshore is fundamentally about being an elsewhere zone of escape–and offshore services are provided for non-residents.

An example of this is the British Virgin Islands, a British Overseas Territory in the Caribbean.

Such countries set up shell companies for the purpose of attracting foreign direct investment (FDI). Such companies have no corporate offices or physical presence. Nor do they have their authentic business. They also lack assets, staff and liabilities. They are registered in the company registrars’ offices in tax haven countries by following due legal procedure for the sake of legitimacy.

Shell companies are opened to manage illegally amassed wealth or to do another business without paying the legal taxes. Individuals engaged in terrorist activities, human trafficking or tax evasion open such companies in tax haven countries for non-transparent dealings. More than a dozen countries and territories including West Indies, the British Virgin Islands, Cyprus and Panama are tax haven countries, which allow offshore companies to operate.

International vigilance

An international effort has been initiated to prevent money laundering – money earned by means of terrorism, human trafficking or tax evasion–within the tax frame. The European Union including other regional associations such as the Financial Action Taskforce (FATF) established in 1989, and the Asia Pacific Region Group (APG) have been taking the lead.

Tax experts from the EU maintain a list of tax haven countries. Countries that neglect to formulate and institutionalize laws related to money laundering prevention, that fail to effectively implement tax laws, or fail to cooperate in sharing tax details, and to maintain transparency are black-listed. These countries are not allowed to participate in discussions criteria set by the EU. The EU maintains two lists–Black List and Grey List (Under observation).

Blacklisted countries expressing commitment to make corrections are gradually placed on the Grey List. Commitment from high-level political leadership or the finance minister can seek more time to correct themselves. “Bringing investment from a black-listed country will be disastrous for sustainable development,” the EU has said in its “List of Non-Cooperative Jurisdiction for Tax Purposes” while naming the non-cooperative countries. Foreign investments from 24 of the countries put on the Grey List and five categorized by the EU under the Black List have poured into Nepal.

Risk factors of black-listed countries

A summit of the G-7 established the Financial Action Task Force on Money Laundering (FATF) to combat money laundering and terrorist financing by developing and promoting policies in different countries. The FATF, headquartered in Paris, blacklists countries with regard to money laundering.

The FATF prepares blacklists based on the criteria for identifying countries and territories non-cooperative in anti-money laundering and terrorist financing. The Asia-Pacific Group, which has 41 countries as its members in the Asia-Pacific region, has also the same role as the FATF. Nepal is a member of this category.

In 2012, the FATF and the APG instructed the countries to fulfill the criteria. Nepal had committed to abiding by the criteria. Nepal was not put on the black list, after it established the Money Laundering-related Act and institutionalized it. However, the probability of Nepal being blacklisted in the next assessment cannot be ruled out. The government’s documents indicate this.

“While Nepal avoided the scrutiny and monitoring criteria [blacklist] of the global community in 2014 due to legislation and institutional reforms, there has not been effective implementation of the laws,” the white paper issued by Finance Minister Yuba Raj Khatiwada on the country’s economy March 30, 2018 stated. “Since the efforts made by Nepal against money laundering will be evaluated in 2020-21, works need to be done cautiously before that.”

“Unless efforts are made to curb financial investments in money laundering and terrorist financing, there will be negative impact in the international arena on Nepal’s image, stability of the financial system, expansion of global trade and the climate for investment,” the white paper warned.

“The moment Nepal falls on the black list of the FATF, there will be no foreign banking transaction with Nepal,” said Sapkota, the former director at the Nepal Rastra Bank. “If food grains were not produced here to meet our requirement and there were an end to import-export, we would face a situation more adverse than the blockade after promulgation of the constitution. That’s unimaginable.”

“Nepal failed to act”: US Department of State

Third countries have pointed their fingers at Nepal for failing to work and act according to the criteria of international organizations. The United States Department of State Publication Bureau of Counterterrorism and Countering Violent Extremism released on June 2, 2016 stated that Nepal has failed to work against or check to fund in terrorist activities. “Nepal belongs to the Asia Pacific Group (APG) on Money Laundering, additional work is required to develop expertise in financial crimes investigations, case management, interagency and departmental coordination, and border control,” the report said.

The report concluded that earning through illegal activities has ballooned the informal economy. The report talks about the lack of sufficient security controls along the Nepal-Indo border as well as the lack of travel document security and ultraviolet lights to examine documents at the Tribhuvan International Airport (TIA). The report says security lapses at the TIA have emboldened terrorist groups to use Nepal as a safe transit and shelter. Moreover, the use of unlicensed hundi and hawala system (sending money illegally abroad) has helped to bloat the country’s informal economy. Money sent through hundi could be used for terrorist activities, the report warns.

The International Consortium of Investigative Journalists (ICIJ) leaked the Panama Papers in 2017, exposing how a vast amount of dirty money hidden by offshore companies in tax haven countries is finding its way to various countries as Foreign Direct Investment (FDI).

After the biggest ever leak of secret financial documents, the Centre for Investigative Journalism (CIJ) Nepal began investigating whether Nepal is also receiving suspicious FDI from tax haven countries. Our investigation has revealed how suspicious FDI is being channeled into Nepal’s cement, betel nut and tobacco industries and hospitality sector from tax haven countries.

Our investigation shows two of the 12 companies where Saurabh Group has brought suspicious FDI from tax haven countries like the British Virgin Islands, the UAE and Hong Kong.

A tale of empty tower

Saurabh Group, chaired by Bishnu Prasad Neupane, had brought FDI from the British Virgin Islands to build a hotel in Bhaktapur, but his project has been in limbo due to a prohibitory order issued by Madhyapur Thimi Municipality.

A high-rise, incomplete and crumbling building that has now become a landmark of the Radhe Radhe neighborhood near Bhaktapur Durbar Square was built by Neupane to open a luxury hotel.

Saurabh Group was granted permission to build a five-storey building in Radhe Radhe, but it ended up constructing a 17-storey structure in violation of the building design approved by Madhyapur Thimi Municipality. So, its construction was halted by the municipality administration.

As per the documents obtained from the Department of Industry (DoI), Saurabh Group had a plan to build this hotel with investments from Global Technology and Trademark Company based in the British Virgin Islands. The DoI had approved the Group’s proposal for Rs 1.94 billion in FDI from the Company, which received permission on 14 April 2013 to build GT&T hotel in Katunje of Bhaktapur. 

But the Group began constructing the hotel building in Radhe Radhe, not in Katunje. According to the Industrial Enterprises Act of 2016, an industrial plant must be built exactly where it is allowed, and if the proposed plant needs to be shifted elsewhere, a new permission must be sought. Neupane, Chair of Saurabh Group, has been publicly slamming the municipality for not co-operating with him. Interestingly, he had started constructing the hotel construction two years before he was granted permission.

Madan Sundar Shrestha, the Mayor of Madhyapur Thimi, said, “A 17-storey structure was added to the originally-approved five-storey building, but they do not have permission for its construction. They have not followed building standards. They have not left the required open space around the building.” 

Mayor Shrestha says the Municipality was mulling over resolving the issue by asking Saurabh Group to follow the standards. But when Shrestha was on a visit to China in September 2015, Neupane secured permission of planning in the area occupied by the 17-storey building from the Kathmandu Valley Development Authority (KVDA). Shrestha says: “A planning permission is given for the areas where there is no structure. How can he get such permission in the area where there is already a building?”

According to the Local Government Operation Act 2017, a fine of Rs 100,000 to Rs 500,000 can be slapped for building a structure in violation of the building design. Mayor Shrestha is now under tremendous pressure from leaders of the ruling Nepal Communist Party to pass the building design of the 17-storey building. But he says: “Come what may, I will not give in to pressure.”

We contacted Neupane several times for his comment on the investment he brought in and the hotel he tried to open. Since the second instance, the person who answered the phone said he was not Bishnu Prasad but his brother. We were told that Bishnu Prasad had gone to Bhairahawa after leaving his mobile phone. Since the second day, our number was ‘blocked’ in his mobile. He did not respond to our text messages, either.

Flouting laws, evading taxes                              

Saurabh Group is involved in tax evasion and trade of betel nuts. According to the Department of Industry, the purpose of the Group is to produce soaps and betel nuts. Our investigation shows the Group has brought FDI from the United Arab Emirates (UAE), a tax haven country, for the same purpose.

Sulav Agrawal is director of four companies under the Group. He is also a partner of a company registered for the purpose of producing soap and betel nuts. This company has brought Rs 300 million in FDI from a UAE-based company to manufacture soaps and betel nuts in Birgunj, one of Nepal’s busiest trade links with India. Agrawal is also vice-chairman of Shankar Group, another corporate house in Nepal. When we called on his mobile, he did not want to talk. His assistant Ritesh Pradhan said, “Sir is busy. [He] can’t talk.”

Interestingly, the UAE-based company that is investing in soap and betel nuts has the same name as the one based in the British Virgin Islands: Global Technology and Trademark.

The British Virgin Islands-based Global Technology and Trademark company which brought FDI for the trade of pan masala, has been found controversial because of tax evasion charges.

After obtaining permission to seek FDI in 2011, Shree Meenakshi Product Nepal Pvt Ltd, with the purpose of producing pan masala, gutkha and sweet supari in Parsa district. The Rs 400 million company was charged with tax evasion, and local people have protested against it for polluting the environment.

The Birgunj customs office had raided Shree Meenakshi in 2013, and the company was found to have refused to pay taxes amounting to Rs 5,496,200. Shree Meenakshi was allowed to set up its factory in Ramgadh of Parsa, away from human settlements. But the company set up its factory in the middle of a village, violating the law and polluting the area.

The documents obtained by the CIJ Nepal show Shree Meenakshi had fought a legal case against the state government of Bihar at the Patna High Court in April 2014. The British Virgin Islands-based Global Technology Trademark Company has invested in the Indian tobacco industry through its 38 agent companies, according to the Indian Ministry of Corporate Affairs.

Jitendra S. Mandot had served as Manager of the British Virgin Islands-based Global Technology and Trademark Company since 2002. Mandot was also manager of Shree Meenakshi and the Nepal in-charge of that BVI Company. Shree Meenakshi is Nepal’s biggest exporter of betel nuts to India. Binod Khetan is director of Shree Meenakshi.

We contacted his company for comments from Mandot. He is found to have left Nepal three years ago. “Since the company started making losses, he has gone to Mumbai by leaving Nepal,” the receptionist at Mandot’s company who answered the phone said. “He’s an Indian citizen. He has a house in Mumbai.”

The British Virgin Islands is not the only tax haven country from where Saurabh Group has sourced FDI.  Krishna Holdings Ltd of Hong Kong, another tax haven country, has a 45 percent stake in Sarbottam Cement Pvt Ltd of Nawalparasi, also run by Saurabh Group. The remaining 55 percent shares are owned by Neupane and his relatives. Registered in Hong Kong on 12 May 2011, Krishna Holdings has invested Rs 630 million in Nepal.

Just like how Global Technology and Trademark is operating out of not just the UAE but also the British Virginia Islands, the Hong Kong-based Krishna Holdings is related to the UAE-based Krishna International. According to an email response by the Hong Kong Company Registries, the UAE-based Krishna International Ltd is the parent company of the Hong Kong-based Krishna Holdings. Ramesh Kumar Sawarthia and Aruna Devi Sawarthia have invested in the company. 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 Rs 29.5 million from Hong Kong to build a commercial complex in Gyaneshwor, 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.

A beneficiary of tax waiver

Four companies, where Saurabh Group’s President Neupane has invested, have benefitted from Nepal’s controversial tax settlement policy. These four companies had to pay a collective due of Rs 87,198,243 in taxes. But the three-member Tax Settlement Commission formed by Finance Minister Ram Sharan Mahat in 2015 waived a huge tax amount (Rs 83,188,243). They got a tax clearance certificate by paying just Rs4,010,000, which is just 3.45 percent of the total due amount.

Saurabh Photo International, owned by Saurabh Group, was asked to pay just Rs 10,000 of the total due of Rs 44,668,531. Jagadamba Wire got a clean-chit by paying just Rs 900,000 of the total due Rs 13,246,644. Laxmi Steels admitted the tax of only Rs 2,000,000 of the total due Rs 7,517,328. Subha Shree Jagadamba Cement got a waiver of Rs 100,000 out of Rs 13,731,270.

The documents and statistics collected during this investigation show how Saurabh Group is bringing suspicious FDI from tax haven countries, evading taxes and using political connections to get tax waivers. All the three members of the Tax Settlement Commission – Lumba Dhwaj Mahat, Umesh Dhakal and Inland Revenue Department’s former Director General Chudamani Sharma – are now facing corruption charges pending at the Special Court for arbitrarily providing tax waivers for big companies.

The India connections

A CIJ Nepal investigation based on the ICIJ’s Paradise Papers leak in 2017, has unearthed links between Nepal’s Laxmi Cement Pvt Ltd and tax haven countries like the British Virgin Islands, the Isle of Man, Seychelles as well as two India investors. A thorough examination of the documents obtained from the Office of Company Registrar shows Manav Acharya of Rupandehi and Ananta International Limited, a company registered in Seychelles, as investors of Laxmi Cement Pvt Ltd.

Anil Gupta of New Delhi and his son Archit Gupta are representatives of the Seychelles-based Ananta International. Anil Gupta has been mentioned in the ICIJ investigation of the Panama papers as well. The ICIJ investigation shows how Gupta failed to take an offshore route to Nepal. In October 2012, he tried to open two offshore companies –- Kathmandu Managers and Pokhara Controllers — in the Isle of Mann.

Gupta approached Appleby, an offshore legal form, to register his secret companies. He told Appleby that his family will have 70% shares in these companies, and the remaining 30% will be covered by Vinod Poddar, another Indian national. Appleby initially agreed to help Gupta register offshore companies and deposit money at the Royal Bank of Scotland. The ICIJ has disclosed email exchanges between Appleby, the Royal Bank of Scotland and investors of Laxmi Cement.

But Gupta’s plot failed after Appleby and the Royal Bank of Scotland sought details about investors. Appleby’s emails, disclosed by the ICIJ, read: “I have been advised by the Bank that before they can open a bank account for the Company they will need additional details on the source of funds for the loan monies from the BVI. I appreciate that you have already advised us that the investors in this company have not yet been identified but unfortunately until we receive this information we will not be able to open an account.”

The emails read further: “Different funding options require different shareholding structures in Nepal. For instance, a Nepalese bank requires that there should be a minimum 20% local shareholding in any Nepalese entity.”

The emails add: “Seems that lime mining/concrete making in a country like Nepal might include all sorts of bribery issues.”

The Indian news media has often written about Anil Gupta’s Nepal connections. In a 2014 interview with Business Sphere, an Indian newspaper mainly covering business and economy, Gupta said he owns Nepal’s KEPY Cement, and that he was planning to set up another cement factory in Nepal.

The Gupta episode shows Saurabh Group is not the only company that is in the race to channel black money stashed away in tax haven countries into Nepal. Eight months after Appleby refused to open offshore firms for Gupta in the Isle of Man, Ananta International was registered in Seychelles, another tax haven. Ananta International has got permission from the Department of Industry (DoI) to invest an FDI of Rs 684 million in Laxmi Cement. According to Nepal Rastra Bank’s data, Ananta International, the only company to bring FDI from Seychelles to Nepal, has already brought Rs 7.4 million.

Investment in cement industry

The offshore investment brought by Gupta from tax haven countries is not just in Laxmi Cement. Shareholders of Laxmi Cement are also involved in KEPY Cement Udhyog of Naubise, Dhading and Ghorahi Cement of Dang. To understand this complex story, one needs to unravel interrelations between Gupta, Manav Acharya of Laxmi Cement and their families.

Records obtained from the Office of Company Registrar (OCR) show Manav Acharya, who frequently visits foreign countries, and his mother Sumitra Devi Acharya as two of the 22 shareholders of KEPY Cement. Anil Gupta’s daughter-in-law Sarina Bhushal, Archit Gupta’s wife, is also an investor in KEPY Cement. The share certificate mentions Bhusal’s address as Bhadrapur, Jhapa.

We contacted KEPY Cement director Kshitiz Bhusal for information. Kshitiz and Sarina are known to be siblings. “I used to have a stake in Laxmi Cement. Now I’m with KEPY Cement,” said Kshitiz. “Sarina Bhusal is my sister. She’s married to Archit Gupta of India. Since she’s in India now, she can’t be contacted.” Kshitiz also said he was familiar with Manav Acharya. When we asked him for Acharya’s contact number, he said: “He’s in America. I don’t have his number.”

Among the other investors are some politicians, including ex-minister Biraj Bahadur Bista. Bista was Assistant Minister of Federal Affairs and Local Development during KP Oli’s first tenure as Prime Minister. His father, Keshar Bahadur Bista, is a senior leader of Rashtriya Prajatantra Party (Democratic). Bista admitted that he had a stake in KEPY Cement. “I’m a shareholder. I’ve been involved in the company for the past 8 to 10 years.”

KEPY Cement has connections with Ghorahi Cement of Dang as well. Suresh Kumar Agrawal and his family members, who have invested in KEPY Cement, are among the shareholders of Ghorahi Cement. In June 2013, Ghorahi Cement had received Rs 80 million in FDI from the British Virgin Islands. Purushottam Lal Sanghai, President of Ghorahi Cement Company, has received an FDI from the British Virgin Islands-based Emerging Market Development.

The Paradise Papers investigation was based on 13.4 million leaked files from a combination of offshore service providers and the company registries of some of the world’s most secretive countries. The files were obtained by the German newspaper Süddeutsche Zeitung.

A sensational headline on 10 Feb, 2015 grabbed attention of people across Nepal: Nepalis have 5.5 billion rupees in Swiss banks.

The International Consortium of Investigative journalists (ICIJ), a global network of investigative journalists, had revealed the amount without disclosing the names of the account holders.

Curiosity over the issue was natural. People thought the money must have been parked in Swiss banks by Nepal’s corrupt politicians.

We went through 3,000 pages related to Nepal from around 28,000,000 pages of documents of Swiss Leaks, Offshore Leaks, Panama Papers and Paradise Papers provided by ICIJ.

We analyzed the information directly acquired by ICIJ, carried out further investigations on that; we examined details obtained from company registrars’ offices of several countries, data provided by investigative journalists of several countries and information gathered through email exchanges. The information and documents available on the websites helped us connect the dots and bolstered our investigation.

The Swiss Leaks offered wider information on several Nepali nationals who had their accounts in Swiss banks. Even foreigners were found to have deposited money in the banks using Nepali address and documents. Our months-long investigations shine light on wealthy and well-connected business people who siphoned billions of rupees from the country.

Communist insurgency led to capital flight?

In 2015, ICIJ disclosed the details of accounts in Swiss banks pertaining to the years 2006 and 2007. But in the period following that, the amount of money deposited by Nepalis in Swiss banks has seen a steady rise. According to the information drawn from Swiss banks in 2017, savings of Nepalis in the banks have now crossed well over 50 billion rupees.

After the Swiss banks disclosed the details of the savings of Nepalis on their website in 2017, CIJ emailed to the bank. “The details disclosed by you in your website are a bit confusing. We would like to be clear on the savings of Nepalis,” we said in the email. We sent several follow-up emails to the bank in order to draw a clearer picture.

Dimitri Lenzin, a statistics economist of Swiss National Bank in Switzerland, told us the amount of Nepalis account holders could be found under ‘Amounts due in respect of customer deposits.’ Link “It does mean “separately” by year and it is not an “up to” amount,” he said in an email on 20 July, 2018.

Our investigation revealed that Nepalis had saved 460,821,000 Swiss francs (Rs 520,727,74000 as per the current exchange rate) in Swiss banks. The Nepali account holders have already received their interest worth 6,974,000 Swiss francs (Rs. 774,114,000). In our attempt to unearth more details, we sent him our last email asking how many Nepali had their accounts in the bank.“We do not publish the number of customers,” he said.

Nepalis appears to have started to shelter their fortunes in Swiss banks in the year the Maoist insurgency began in Nepal. Starting 1996, when the conflict hit the nation, Nepalis began transferring their money to the banks. According to details released in 2017 by Swiss National Bank, Nepalis deposited 11,042,000 Swiss francs (Rs. 1,247,746,000) in Swiss banks in 1996. Over the period of 10 years, the total saving amount of Nepalis rose to a whopping 240,272,000 Swiss francs (Rs. 2,715,736,000).

Remarkably, after the end of the conflict, the amount deposited by Nepalis for the next two years saw a dramatic decline. In 2006 alone, Nepalis deposited 36,727,000 Swiss francs  (Rs. 4,150,151,000) in Swiss banks.

In 2007, the savings fell to 34,500,010 Swiss francs (Rs. 3,899,630,000).

From the total saving amount, 138,937,000 Swiss francs (Rs. 15,586,881,000) is shown as the amount that has been withdrawn so far. Even now, Nepalis have Rs 35.84 billion in the Swiss banks.

The Nepal government had formed the Department of Money Laundering Investigation (DMLI) 12 years ago. But this has not stopped Nepalis from taking their money to the Swiss banks. In the last decade alone, Nepalis have deposited 220,549,000 Swiss francs (Rs. 2,490,237,000) in Swiss banks. Today, DMLI is under the domain of the Prime Minister’s Office (PMO). And the agency seems least bothered about such a grave financial matter.

Binod Lamichhane, spokesperson for the department, says there are legal hurdles to collecting information involving more than one country. “Information gathering is not like astrology. In order to get information from another country, the Nepal government has to reach agreements on mutual information exchange. We face problems in investigating such cases because we don’t have such agreements yet.”

“The department should not have been placed under the PMO or the Ministry of Finance,” said Dharma Sapkota, who served for five years as the head of Finance Unit at the Nepal Rastra Bank. “We tried to set up the Department of Money Laundering Investigation as an independent and separate agency, but we couldn’t succeed in it. This is the result of that [failure].”

Meet Minu who holds the largest amount in Swiss banks

A Nepali national, Minu Shah, and her two sons have been living in London for long. Minu frequently visits Nepal. They possess the biggest amount deposited in the Swiss banks by Nepalis. Our investigation has revealed that Minu Shah, after her marriage, added Chhibber to her surname. While opening account in the Swiss banks, ‘Minu Shah’ had shown her home address at Gangadevi area of Baneshwor.  Later, Kupondole of Lalitpur was mentioned as her second address. When we approached her residence at Kupondole, an assistant said she had been to London and would be back in Chaitra (mid-March to mid-April). “Maharani (queen) Minu has gone toBelayat (UK). She will come back in Chaitra,” he told us. Follow-up conversations revealed that she frequently visits London.

Details of Minu Shah on the document containing her personal information as an account holder in Swiss banks.

Minu is married to Sirvatera Prakash (SP) Chhibber, an Indian national. When we went through documents related to a court case in India, it was found that Chhibber has a second wife. Minu is his second wife. Minu and Chhibber have two sons, Pravesh and Mahesh. The documents also state that SP is no longer alive. He died in 2003.

Both of the couple’s sons hold Nepali passport. Records show that Minu and her sons deposited 23,552,973 US dollars (Rs. 2,614,380,000) in the bank in 2006/07. The eldest son Pravesh has shares in Adwani Hotel and Resort in India and half a dozen hotels in the UK. Similarly, his brother Mahesh, who has been staying at Burlington Arcade in London, is also found to have invested in four different companies in London.

We asked Pravesh Chhibber, Minu’s eldest son who is doing business in England, about the Swiss deposits. “I have no information about it. Please talk to my mother,” he said. Our efforts to establish contact with Minu were not successful.

Financial transactions of Minu and her sons look quite suspicious. The Chhibber family has been facing several court cases in India. We had taken help of an Indian journalist to get the details. After he was shown the documents obtained from the ICIJ, the journalist helped us reach Delhi High Court and get some relevant papers of a case filed in 2012. We found that the court had raised questions on the two sons’ links to Nepal. They had used Nepal’s address in one of the property-related cases.

According to the Swiss bank details, Mahesh obtained Nepali passport on the recommendation of the Nepalese Embassy in London on February 10, 1997. Pravesh also obtained Nepali passport on November 23, 1999. Two memoirs published by The Britain Nepal Society in 1993 and 1996 disclose that Minu is a member of the society. This sheds more light on her Nepal connections.

We contacted the Ministry of Foreign Affairs of Nepal seeking information on Minu Shah Chhibber. According to Ganesh Prasad Adhikari, section officer of administration at the Department of Passport, Nepalese Embassy in the UK on September 17, 2013 issued a Machine Readable Passport no 06702536 to her. According to the passport, her permanent address is Bagdol, Lalitpur. She has mentioned her nephew Amod Pratap Rana as her closest relative.  

A web of bonding

The Chhibber family’s link extends further. Minu’s two sons, Mahesh and Pravesh are investors of Pearl Global Finance Limited, Dubai. An American national based in London, John Morrison Atwater also has connections with the two brothers and the company. The names of the three–Atwater, Minu and Pravesh–have been mentioned as the company’s nominees. According to the Swiss banks documents, the mother and the sons and Atwater are partners in one or more businesses.

Our investigation found that Minu has not just deposited money in Swiss banks. She has connections with other tax haven countries. Banking in those countries is considered the best choice of the people wanting to shelter their money safely without facing interrogation on their wealth and tax returns.

According to details revealed in Panama Papers in 2015, Mossack Fonseca, a controversial Panamanian law firm, has registered a company called Rooney Holdings in British Virgin Islands (BVI) under Minu’s name.

Minu’s name has been mentioned as a beneficiary in the document of the company registered in Channel Islands (the Island of Jersey) in 2000. The island is considered a popular tax haven and the company looks active from the registration date till 2016. Documents of the Rooney Holdings dated 2010 show shareholders were all British nationals until Minu invested in it. She appears to have entered tax haven countries through the British nationals.

Atwater, who has links with Pearl Global, also has his savings in the Swiss banks. He has money in two different accounts. The balance in the first account is 907,077 US dollars (Rs. 96.3 million). In yet another account, he has saved 56,516,979 US dollars (around Rs. 9 billion).

Atwater currently lives in the UK. Details of the Swiss banks reveal he has made investments in five different companies in the UK.

And, this is where his and the Chhibber family’s links with Nepal can be traced. We found that Atwater had links even with the Rana families. He had ties with Rama Malla, the daughter of Padma Shamsher Rana, a Nepali Prime Minister between 1945 and 1948. In Nepal, the two were business partners. They have made mutual investment in Sixteen Upper Brook Street Limited, which is still in operation. While the company has been in existence for the last 34 years, Malla started investing in it only in 2004. Malla is the chairperson of Malla Hotel in Thamel, Kathmandu. A year ago, tax office in Nepal had published a public notice to warn Malla. She had Rs. 81 million unpaid taxes. We repeatedly called her at her Hotel Malla but failed to have a word with her.

Foreigners misuse Nepali documents

Some foreigners are found to have used Nepali documents to deposit their money in the Swiss banks. As per the details provided by ICIJ, an Israeli national Liver Zohar Yehuda, 53, has used Nepali passport to keep his money in the bank. Yehuda has mentioned ‘Kathmandu’ as his address in his bank documents.

Yehuda, who is thought to have an import export business of chemicals, has deposited 497,246 US dollars (Rs. 53,573,284) in the banks. 

Three other foreigners have mentioned their address resembling Nepal’s and sheltered their money in Swiss banks. According to details provided by the ICIJ in 2006/07, an Indian national named Sujal Prakash Shah, whose real address is the UAE, deposited 3,32,740US dollars (Rs. 3,58,49,407) in Swiss banks.

Another Indian national Arun Kumar Ram Niklal Mehta has deposited 40,400,000 US dollars (Rs. 4,844,415,973). The document containing ‘personal details’ of Swiss bank accountholders states Mehta’s address as ‘Patan’ and diamond  company as his business in Mumbai. We investigated further to find out more about Mehta who was unheard of in Nepal. The CIJ conducted digital probe into the names and details of seven individuals related to his personal ‘profile’ in the documents obtained. The study showed that Arun Kumar is an Indian citizen and the seven persons were his family members. The address ‘Patan’ mentioned in the documents is a place in the Indian state of Gujarat, where Mehta was born.

According to the Registrar of Companies, India, Mehta has invested in seven companies in India. According to a news report published in the Indian economic daily The Economic Times in March 2018, his Rosy Blue Private Limited in Mumbai is one of the largest companies trading in diamond in India. A case was filed in the Bombay High Court after another report published in the newspaper in April 2016 named Mehta and six other members of his family as “beneficial owner” of the White Cedar Investments Limited linked to a Swiss bank.

The case was quashed when the court failed to find which person linked with the trust called the White Cedar Investments Limited had deposited 44 million dollars in Swiss banks. The Bombay High Court stated: Details about the source of deposits to HSEB Geneva will be known only if the bank shares information on the account related to the trust. According to the personal details of Mehta shared by the ICIJ with the CIJ, the White Cedar Investments Limited is among the entities related to the depositors’ profile. US $44,861,171 is found to have been deposited in the company’s accounts in Swiss banks.

Arun Kumar Ram Niklal Mehta is also related to Indian’s billionaire industrialist Mukesh Ambani. As reported by The Economic Times, arrangements have been made for Mehta’s granddaughter Shloka Mehta to marry Ambani’s son Akash.

Govindabhai Laljhibhai Kakadia has also saved 2,186 US dollars (Rs. 235,519) in the Swiss bank account. All of them have mentioned their address as Patan, Kathmandu. On the basis of the same address, the bank seems to have listed their details under Nepalis.

However, Kakadia, born in Patan of Gujarat, is a renowned trader of gold and diamond. According to the Registrar of Companies, India, he has invested in five companies trading in gold and diamond. His company Sheetal Manufacturing Pvt Ltd is the frontrunner in India in cutting, processing and producing diamond.

According to a news report published by the Indian Express in February, 2015, the Sheetal Group involving Kakadia had US $9,100 deposited in a Swiss bank in 2006-07. Beneficial owners of the account are Kakadia and and his three brothers. According to the documents provided by the ICIJ under Nepal, however, his Swiss bank deposits in 2006-07 amounted to 2,186 dollars.

Inside secretive Swiss banks

The Swiss banks have branches in 50 countries. It was established in Switzerland as ‘Swiss Banks Corporation’. The bank claims highest confidentiality and minimum financial risks. Since it does not bother about the source of income and also promises to keep the details of account holders very confidential, the banks are sought-after by people who want to shelter their illegal incomes. According to swissinfo.ch, a Swiss news outlet, Swiss banks are considered safe to approach in cases like divorce, bankruptcy of banks, and serious criminal activities. Wealth amassed ‘illegally’ is thought to be safe when deposited in Swiss banks.

Nationals of over 200 countries have deposited money in the Swiss banks. The bank does not provide details of account holders to any department for any purpose. However, as per the agreement between the Swiss government and the European Union in 2015, ‘ending the exclusive confidentiality, details of the account holders of Switzerland and other European nations should be provided or exchanged if demanded.’

The agreement was signed in 2015 following Swiss Leaks, the biggest leak in the banking history. The investigative report of ICIJ had exposed how Swiss banks were letting wealthy people across the world evade taxes and criminals deposited money earned through serious criminal activities. This dealt a blow to the image of the Swiss banks.

The agreement with EU does force Swiss banks to provide details of account holders from other countries. Despite the agreement, people siphon millions of dollars out of their countries and shelter in Swiss banks.

The ICIJ claims the Swiss banks have profited from dictators, corrupt politicians, business persons who evade taxes and organizations that make money through the illegal transaction of weapons and drugs by allowing them to deposit their earnings. ‘Thus Swiss banks are making high profits,’ the ICIJ asserts.

After the Swiss Leaks, the banks came under strong criticism. So much so that political career of leaders from Iceland and Pakistan nearly ended, thanks to their connections with the bank.

The EU then tried to bring the banks under regulations. However, even now, Swiss banks are not interested in transparency. They do not show willingness to reveal the details of its account holders. A report prepared by Swiss Bankers Association in 2015 states the property of Swiss Banks worth 6.5 trillion dollars (65 billion US dollars). According to the report, 51 percent of the money came from its non-Swiss clients.

Following the Swiss Leaks, a court in Switzerland sentenced Herve Falciani to five years in jail ‘for leaking the information. ’In April, 2018, Falciani was arrested from the city of Barcelona in Spain, where he served two months in jail. However, a court in Spain refused to extradite him to Switzerland citing Spanish laws. He has since been released. He is accused of providing details of account holders of Swiss banks to several countries under the EU. He allegedly leaked details of 130,000 account holders.

The Swiss Leaks investigation was based on files of HSBC Private Bank (Switzerland) obtained by the International Consortium of Investigative Journalists and Le Monde. The Swiss Leaks project is based on a trove of almost 60,000 leaked files that provide details on over 100,000 HSBC clients and their bank accounts. Most client & account data from 1988-2007; amounts from 2006-07.There are legitimate uses for Swiss bank accounts and trusts.