Although Nepal this year has fared better in Transparency International’s ratings and climbed up its list of least corrupt countries, the country remains in the red zone. By getting 34 out of 100 ranking points, Nepal is 113th among 180 countries. The TI categorizes countries with less than 43 marks as corrupt. The TI’s ‘Corruption Perception Index’ is considered a credible global rating, with foreign investors, consultants, and contractors closely tracking it. Clean companies choose less corrupt countries. Ailing and corrupt ones look for places where they can manipulate politicians and bureaucrats. Commission agents who have good contacts with such unscrupulous contractors and consultants come into play.
This corrupt nexus is the reason big projects involving foreign consultants and contractors suffer. Their budget keeps rising but works never get done on time. Contractors run away, work is sub-standard, and unscrupulous parties are spared punishment. But the TI ranking does not consider such contractors and consultants.
Be it Kaligandaki or Melamchi, Middle-Marsyangdi or Sikta, big projects face many crisis. The Kulekhani-3 hydro, which was to be ready within three years, took 11 years for completion. Upper Tamakoshi is already three years behind; it is 98 percent complete, the contractor’s wrongdoing stalls the rest of the work. The delay adds a daily cost of Rs 50 million on state coffers.
The initial cost estimate of the Middle-Marsyangdi hydropower was Rs 13.65 billion (174 million euro). The German government had pledged 128 million euros in grant and Nepal government had to pitch in only 46 million euros. Nepal was happy, and the project took off. But then, because of variation order, contractor claims, inflation, exchange rate changes, and added interests due to delays, the cost increased by Rs 14.4 billion. The grant amount did not change but Nepal’s share leaped from 46 million to 190 million euros.
On the other hand, the contractor of Melamchi ran away when the drinking water project was about to be completed. The contractor of Tanahu hydro followed suit.
Most projects meet with similar fate. But nobody seems to question the roles of the political actors and bureaucracy in them. Nobody seems to be concerned about the roles of foreign consultants and contractors. No one ever tries to figure out: “Why do contractors abandon projects in the middle?”
The government has announced ‘zero tolerance’ on corruption, which buttresses the slogan of ‘Prosperous Nepal and Happy Nepali’. But the government has to constantly grapple with multiplying project costs, perennial delays, and inability of state mechanism to spend capital money. Six months into the fiscal year, the government can make only 13 percent capital expenditure. Frequent transfers of project chiefs and accountants due to consultant-contractor ploys and political interest is one big reason.
Despite the government’s liberal policy, spending in productive sectors is declining. Factories are closing down. Investors complain of government red-tape, unsupportive attitude of officials, corruption, and bribery. They say they have to ‘buy’ even the rights enshrined in the law. This discourages investors.
Not only does corruption hinder economic development, it also creates unequal societies. Money gets piled up with a handful people, while the poor get poorer. But there is another consequence of it: The money earned through corruption travels abroad. It drains national capital. The trend of accumulating money and taking it abroad started from the time of Rana Prime Minister Bir Shumsher when the rulers used to transfer Nepal’s vast riches to India and Britain. The practice got institutionalized and it continues till date. Businessmen and their allies in high offices siphon off black money to foreign lands via hundi. Black money earned in Nepal is exchanged for money earned abroad by migrant workers, which they keep there.
In 2002, the CIAA started taking action against public officials who lived lavishly but were unable to show a credible source of income. That encouraged corrupt officials to keep properties in the names of family members or to ferry them abroad.
The Transparency International Index shows that the most corrupt countries are also the poorest. Controlling corruption is the first condition for economic prosperity. For corruption breeds underground and parallel economies. The fate of our development projects, industries, and government-owned enterprises is a good indicator of this.
Nepal suffers from both big and petty corruptions. Big-scale corruption is institutional, and associated with big infrastructure projects, aircraft purchase, project licensing, equipment purchase, leasing out government land, among others. To avoid investigation, these decisions are made by council of ministers. Petty-scale corruption is seen in police and administrative officials, as bribes are sought from service seekers at labor, land revenue, immigration, and transport offices.
This is not something we want. There will be good governance in the country only when it is corruption-free. And only then will Nepal prosper O
The author is the Editor-in-Chief of Annapurna Post and frequently writes on corruption