Local governments: Hotspots for corruption

Separate studies conducted by Nepal’s anti-corruption agencies reveal that local governments have become hotspots for corruption. Reports by the Commission for the Investigation of Abuse of Authority (CIAA) and the Office of the Auditor General (OAG) show that corruption at the local level is on the rise, yet no serious efforts have been made to address it.

Nepal’s 2015 Constitution granted local governments greater rights and resources, with the goal of bringing services closer to the people. However, corruption has reached alarming levels. In its 34th annual report (2023/24) submitted to President Ram Chandra Poudel, the CIAA painted a grim picture, showing widespread corruption across state mechanisms, with local governments accounting for a significant portion.

Over the past year, 38.91 percent of the complaints received by the CIAA from the public were related to local governments, followed by 15.79 percent involving the education sector. The Auditor General’s 2022/23 report also highlighted local governments as the most corrupt. Audits covering Rs 1.13575trn across 746 local governments uncovered discrepancies totaling Rs 35.67bn. The data shows a consistent increase in complaints related to local and educational institutions. Currently, there are 753 local governments in Nepal.

After investigating complaints, the CIAA files cases with the Special Court. However, the Special Court often acquits defendants in corruption cases. According to CIAA spokesperson Nara Hari Ghimire, the CIAA has succeeded in 68.81 percent of the cases it filed. In the past year, the CIAA has appealed 92 Special Court decisions to the Supreme Court.

In terms of corruption cases filed in 2023/24, government officials lead the list with 520 cases involving civil servants, followed by 106 cases against elected representatives, 148 against nominated officials, and 32 against political appointees. Additionally, 739 cases have been filed against other individuals, such as accountants, intermediaries, and organizational staff. The hierarchy of cases includes six secretaries, 30 joint secretaries, 82 undersecretaries, 202 section officers, and 200 assistant-level officials.

Most cases involve the illegal acquisition of benefits, with 58 such cases filed last year. Other cases include 48 for bribery, 34 for fake educational certificates, 33 for the loss of public property, 13 for revenue leakage, 11 for illegal wealth acquisition, and four miscellaneous cases.

The OAG report also outlines common issues in local governments, including excessive and unauthorized spending on travel, fuel, mobile phones, vehicles, and hospitality, as well as hiring advisors. Local officials reportedly spent over Rs 185.32m on such expenses in 2022/23. Furthermore, 171 local units spent Rs 91.5m on the salaries and facilities of personal secretaries, while 424 units spent Rs 6.92bn on contract staff.

A key mechanism used by local governments is consumer committees. Rule 97 of the Public Procurement Regulations, 2007, states that these committees should handle only labor-intensive work that does not require machinery, tools, or equipment. Despite this, 302 local bodies spent Rs 2.99bn through consumer committees for 3,314 construction projects involving machinery. Rule 97(10) also prohibits consumer committees from engaging construction companies, yet 122 local units approved cost estimates for 1,173 projects to be carried out by consumer committees, paying Rs 700.9m in total.

According to Section 20 of the Audit Act, 2018, the accounts of local units must be audited by the Office of the Auditor General. However, the OAG report found that many local bodies have failed to conduct audits. Despite multiple reports and studies, corruption continues to rise, suggesting that anti-corruption agencies are failing to effectively monitor activities at the local level.

Four years ago, the CIAA conducted a 15-district survey to assess public perception of corruption. Of the 3,000 respondents, 67.6 percent reported that corruption had increased at the local level, and 14.9 percent admitted to paying bribes to officials. Respondents noted that corruption worsened after the formation of local units in 2017.