ApEx Explainer: Everything you need to know about Lalita Niwas scam

The Central Investigation Bureau (CIB) of Nepal Police on Sunday arrested three more people in connection with the Lalita Niwas land grab case, taking the number of arrestees to seven. The case has caught a lot of public attention, as several high profile individuals, including former prime ministers, are said to be involved in it. Here is an overview of the key details you need to know in order to understand the scandal.

What is Lalita Niwas?

During the 1920s, Bhim Shumsher, a Rana prime minister, acquired around 300 ropanis of land situated a few kilometers north of the center of Kathmandu, near the present-day location of Baluwatar. He constructed the Subarna Mahal on this land, which was named after his grandson, Subarna Shumsher. There are reports indicating that Bhim Shumsher forcibly seized farmland from numerous individuals to set up the palace compound. This area later came to be known as Lalita Niwas. Although the exact origin of the name remains unclear, some believe that the property was named after Subarna Shumsher’s mother, Lalita.

Who owns—or owned—Lalita Niwas?

Subarna Shumsher, who was a member of the Nepali Congress, served as the finance minister of the interim government formed in 1951 following the end of the dictatorial Rana regime. Despite being a member of the Rana family, Subarna Shumsher had joined the Nepali Congress, which later formed a government in May 1959 after securing a majority in the country’s first general election. 

However, in 1960, the then King Mahendra Shah staged a coup against the democratically elected government, banned all political parties, and established a partyless Panchayat rule that lasted for another 30 years. It was during this period that the royal palace seized 14 ropanis of land from Lalita Niwas. The remaining 284 ropanis of the land from Lalita Niwas were acquired according to the Land Acquisition Act of 1961, with compensation being paid to Subarna Shumsher’s family. 

However, Subarna Shumsher’s childrens have argued that the entire land was seized by the government without any compensation. But, a government committee that investigated the case discovered that the government had issued a notice requesting them to claim compensation for the land.

Furthermore, the government’s probe committee found evidence that Subarna Shumsher’s eldest son, Kanak Shumsher, who was serving in the royal army in 1965, acknowledged in a letter to the government that the 284 ropani of land had indeed been legally acquired by the authorities.

Official records indicate that the Panchayat government sold eight ropani of land from Lalita Niwas. The remaining 292 ropani of land, however, remained under government ownership until 1990.

What happened post-Panchayat?

Following the reinstatement of democracy in 1990, the Cabinet led by Prime Minister Krishna Prasad Bhattarai made the decision to return the land to the rightful owners that had been seized by the Panchayat regime. However, the Cabinet clarified that a significant portion of Lalita Niwas would not be transferred, as the government had already designated different sections of Lalita Niwas for Nepal Rastra Bank, the residences of the prime minister, chief justice, and speaker of parliament. 

According to the Cabinet decision, only the 14 ropani of land that had been seized by King Mahendra at that time should have been returned to Subarna Shumsher’s family. But in 1991, Rukma Shumsher, the grandson of Subarna Shumsher, submitted an application to the Land Revenue Office, requesting the return of an additional 112 ropani of land. The Land Revenue Office, without informing the government and other stakeholders, transferred the 112 ropani of land to Sunita Rana, Shailaja Rana, and Rukma Shumsher Rana as inheritors of Subarna Shumsher’s property.

However, the transfer process faced complications when the tenants (Mohi) who had been working on the land for years claimed their share. In 1997, they filed a case at the Patan Appellate Court. The court ruled in favor of the tenants in 2000.

Where did the scam happen?

Subsequent investigations revealed that the tenants involved in the case were fraudulent and had colluded with the Rana family in a scheme to occupy all the land of Lalita Niwas, which was later sold to the ‘land mafia’.

The issue remained relatively unnoticed for a considerable period of time. However, the controversy resurfaced when Advocate Yubaraj Koirala presented documents related to Lalita Niwas that had gone missing from the Land Revenue Office. 

According to Advocate Koirala, as a practicing lawyer in 2000, he came across the documents pertaining to Lalita Niwas during court proceedings. Sensing something suspicious, he initiated an investigation and began gathering evidence and relevant documents related to Lalita Niwas. He released the documents a couple of years later after he started finding evidence of the scam.

By that time, officials from the Land Registration Office, who were also involved, had already destroyed the original copy of the document in an attempt to get rid of the evidence.

Mukunda Prasad Acharya, director general of the Department of Land Revenue, was the main person to facilitate the scammers with forged documents and stamps. It is believed the Lalita Niwas scam as we know today started in 1991. The Nepal Police discovered that land revenue official Dharma Prasad Gautam had prepared all the necessary documents to facilitate the transfer of ownership. It has been found that the Rana family had bribed the officials with some portion of land of Lalita Niwas as ‘gifts’.

Formation of probe panel

Advocate Koirala researched the case for around a decade and constantly pressured the concerned parties to take action. As he had revealed the names of ‘high profile’, he says that he is still receiving death threats. 

The case caught the attention of the media and public which compelled the KP Oli-led government to form a special probe committee under former secretary Sharada Prasad Trital on 28 May 2018. In its report, the committee highlighted that the Cabinet led by Prime Minister Krishna Prasad Bhattarai had specifically directed that only the land seized during the Panchayat era should be returned to the rightful owners. However, officials at the land revenue office acted in violation of the Cabinet’s decision and unlawfully transferred ownership of legitimately acquired land to individuals in exchange for bribes.

According to the findings of the committee, Subarna Shumsher’s family had illegally occupied 112 ropani of land, which the government had already acquired and compensated for. The committee also concluded that the ‘land mafia’ and those in possession of the land successfully seized it through controversial Cabinet decisions in 1990, 1992, 2005, 2010, and 2012.

Furthermore, the probe committee’s report revealed that it was not only Lalita Niwas land that was misappropriated. A total of 1,859 ropanis, 14 aanas, 3 paisas, and 3 daams (approximately 95 hectares) of land, valued in billions, which had been legally acquired by the Panchayat regime, was unlawfully seized by the ‘land mafia’ in collaboration with political leaders and government officials.

Involvement of ‘high profile’ people

Madhav Kumar Nepal, Former prime minister

During the Madhav Kumar Nepal government, Bijay Kumar Gachhadar of the Nepali Congress served as a Minister of Physical Infrastructure and Deep Basnyat was the secretary at the ministry. It was during their tenure that they decided to fraudulently register plots of land in the names of numerous individuals and fake tenants.

The Nepal Cabinet had made a decision to expand the prime minister’s residence and construct a road within Lalita Niwas by compensating individuals who had illegally occupied the land. This agenda was brought by Gachhadar in the Cabinet. It has been found that the Nepal Cabinet made three different decisions in three separate meetings, providing an opportunity for the accused parties to engage in the scam. 

All of the decisions were against the law. Several members in the Nepal Cabinet have stated that Lalita Niwas-related matters were never discussed during meetings, indicating the potential direct involvement of former prime minister Nepal.

The probe committee identifies Shova Kanta Dhakal and Ram Kumar Subedi as key individuals involved in the scam, labeling them as ‘land mafias’. From the early stages of the scam, these individuals have been implicated, as they still hold over 15 ropanis of Lalita Niwas land in their names, even after selling 30 ropanis of land to others.

The proprietor of Bhatbhateni Supermarket, Min Bahadur Gurung, and his family are owners of more than 29 ropanis of Lalita Niwas land. They acquired the land from Dhakal and Subedi. Furthermore, the duo also sold approximately five ropanis of land to former election commissioner Sudhir Kumar Shah.

Bishnu Paudel, Former finance minister

Nabin Paudel, son of CPN-UML Vice-chairperson and former finance minister Bishnu Paudel, along with sitting Supreme Court Justice Kumar Regmi, purchased land within the Lalita Niwas premises from Dhakal and Subedi in early 2005.

It is learnt that Paudel and Dhakal have close relations as they had been into financial connection earlier also. Justice Regmi has stated that he acquired the land as a legal consultation fee during his time working as an advocate.

There are speculations that Bishnu Paudel, as a close hand of former prime minister Madhav Kumar Nepal, had potential involvement in requesting favorable Cabinet decisions for the scammers.

Baburam Bhattarai, Former prime minister

When Bhattarai was prime minister, his Cabinet decided to transfer around three ropanis of land of Nepal government to ‘Pashupati Tinkinchha Guthi’ but the Trital-led committee had been unable to find about this Guthi. Neither the ministry officials nor the Guthi stakeholders know about the existence of this Guthi, raising suspicion against Bhattarai in the land grab case. 

CIAA’s charge sheet

The government in 2019, asked the Commission for the Investigation of Abuse of Authority (CIAA) and CIB of Nepal Police to promptly investigate the case of Lalita Niwas after the Trital committee summoned their report to the then prime minister, KP Sharma Oli. 

After a year-long investigation, the CIAA filed a charge-sheet against 175 individuals at the Special Court in Feb 2020, accusing them of participating in the illegal registration of Lalita Niwas land under various individuals. 

Former deputy prime minister Gachchhadar, former ministers Chandra Dev Joshi, Chhabi Raj Pant, and Dambar Shrestha, former secretary Dinesh Hari Adhikari, and former CIAA chief Basnyat were among those charged.

Notably, the anti-graft body did not file corruption cases against former prime ministers Madhav Kumar Nepal and Baburam Bhattarai, despite the fact that Cabinet-level decisions to legitimize the transfer of government land to individuals were made during their terms. The CIAA has said that as Cabinet decisions do not fall within its jurisdiction, it cannot charge the former prime ministers.

Nabin Paudel and Kumar Regmi were also not included in the charge-sheet, as the CIAA said, they had expressed willingness to return the land. To distance themselves from the scam, Paudel and Regmi quietly returned the land they owned within Lalita Niwas to the government.

The case is currently pending in court. It seems like the Special Court has not taken this case seriously as there has been minimal progress.

Two separate cases have also been filed at the Supreme Court against former prime ministers Nepal and Bhattarai, but the court has kept both the cases on hold. There are speculations that the ruling parties at that time, Congress and the Maoists, initiated an impeachment motion against the then Chief Justice Cholendra Shumsher Rana after they became aware that he intended to investigate the land grab scam involving Nepal and Bhattarai..

CIB reopens the file

As the CIAA was investigating the Lalita Niwas scam focusing on corruption, the CIB of Nepal Police took a different approach. Starting in 2019, the CIB began investigating the case for forged documents and fake governmental stamps related to the scam.

In Jan 2022, the CIB concluded its investigation and submitted a report to the Public Prosecutors Office, urging further action against around 300 individuals involved in the scam. However, a week later, the government attorney returned the report, stating that additional investigation was necessary.

The CIB acknowledged the attorney’s directive and expressed its intention to conduct further investigation accordingly, but there were no updates until the CIB nabbed Bhatbhateni Supermarket owner Gurung along with six others on June 27. 

Present situation

The Nepal Police has issued arrest warrants against 406 individuals, including several high-profile officials, implicated in the Lalita Niwas scam. On June 28, the CIB obtained warrants from the Kathmandu District Court to arrest these individuals.

Currently, the CIB is holding 15 individuals in its custody. CIB chief Additional Inspector General Kiran Bajracharya has said that the accused individuals have committed organized crime in relation to the Lalita Niwas scam. 

“Given the nature of the crime, it appears that numerous individuals collaborated in an organized manner to carry out fraudulent activities. Therefore, we are working closely with the public prosecutor to establish whether this can be classified as an organized crime,” she said.

What next?

Under the provisions on Forged Documents (Fogery), if a person forges the seal of a government office or seal or signature of a government employee in the course of the government business, or any document with such seal or signature, the person shall be liable to the punishment of imprisonment for a term of seven years.

Under the provisions of the Organized Crime Act, those found guilty of organized crime may face imprisonment for up to five years or a fine of up to Rs 500,000. Since organized crime involves multiple interconnected criminal activities, the police believe that the Lalita Niwas land case falls under the purview of the Organized Crime Act. The severity of the punishment will be determined based on the level of involvement of each individual implicated.

Former Nepal Police DIG Hemanta Malla Thakuri has said that no matter how much the police try to nab the so-called big fishes, without the support of the government, it is going to be difficult. “Nepal Police is just a small unit of a large system of Nepal which is driven by politics, bad politics actually,” he said. “All the political parties and media should pressurize the government for a better probe.”

Though Paudel and Regmi are not under CIAA’s radar, Nepal Police spokesperson Deputy Inspector General Kuber Kadayat has said that the CIB is investigating the case for forged documents and fake governmental stamps, not solely relying on the CIAA’s corruption investigation. “We will nab everyone found involved in forgery.” 

What happened when?

• 1920: Bhim Shumsher acquired 300 ropanis of land and built Lalita Niwas for his grandson Subarna Shumsher 
• 1960: King Mahendra seized and acquired the land of Lalita Niwas
• 1990: Krishna Prasad Bhattarai-led Cabinet decided to return 14 ropanis of seized land of Lalita Niwas to rightful owners
• 1991: Land Revenue Office, without informing the government, transferred 112 ropanis of land to inheritors of Subarna Shumsher;  then director general of Land Revenue Department Mukunda Prasad Aryal played a key role
• 1997: Fake tenants (Mohi) filed a court case claiming their share in Lalita Niwas
• 2000: The court ruled in favor of tenants; however, advocate Yuvraj Koirala smelled something fishy and started investigating quietly
• 2005: Advocate Koirala started talking about the scam but didn’t get much limelight; by the time, ‘land mafias’ Shova Kanta Dhakaland Ram Kumar Subedi had made larger share of Lalita Niwas to their names and had sold it to others like UML vice-chair Bishnu Paudel, sitting SC justice Kumar Regmi and Bhatbhateni owner Min Bahadur Gurung
• 2010: The Madhav Kumar Nepal government, through its decisions, helped the scammers to continue their involvement; then Physical Infrastructure Minister Bijay Gachhadar and secretary Deep Basnyat played a key role 
• 2012:The Baburam Bhattarai government endorsed decisions that helped the scammers
• 2016: The Lalita Niwas land-grab scam started grabbing national headlines
• 2018: The KP Oli government, due to public pressure, formed a probe panel to investigate the case
• 2019: The probe committee submitted their report and the Oli government asked CIAA and CIB to investigate the case
• 2020: CIAA filed a case against 175 individuals including Nepali Congress leader Gacchadar at Special Court; the case is still awaiting final verdict
• 2022: CIB submitted its investigation report to Public Prosecutor’s Office, but was returned citing need for additional investigation
• 2023: CIB issued arrest warrant against 406 individuals and nabbed nine including Bhatbhateni promoter Gurung in connection with Lalita Niwas land-grab scam