Addressing conflicts of interest in Nepal

Conflicts of Interest (CoI) pose significant challenges to governance in Nepal, as personal affiliations and political influences often undermine public decision-making. Notable cases such as Rabi Lamichhane’s alleged misuse of cooperative funds and Min Bahadur Gurung’s controversial land donation to the UML Party highlight how private interests can affect public service. Other scandals, including the Lalita Niwas (Baluwatar) case and the Bhutanese refugee scam, illustrate how systemic CoI and favoritism can lead to the misuse of public resources under seemingly legitimate policies. To effectively address CoI in Nepal, it is essential to go beyond legal solutions; we need to understand the cultural, social and ethical contexts that influence these issues. This article examines the impact of CoI on governance in Nepal, reviews existing legal frameworks and proposes a comprehensive action plan that encompasses both legal and cultural dimensions.

CoI in governance

CoI occurs when the personal interests of public officials interfere with their responsibilities, leading to a loss of public trust. CoI can be classified as real, where there is a direct personal gain, or perceived, where the appearance of bias is present. For example, if a business owner donates to a political party, it may create public suspicion of favoritism in future decisions. Transparency, fairness and public accountability are crucial for effective management of CoI as these factors prevent situations where personal interests overshadow the public good. Integrating global principles that prioritize the public interest over private gain, such as fiduciary duties and ethical standards, is crucial. Approaches like transparency requirements, mandatory disclosures, independent oversight and recusal protocols can strengthen public trust. The Organisation for Economic Co-operation and Development (OECD) guidelines and the United Nations Convention Against Corruption (UNCAC) emphasize the importance of CoI management in ensuring impartial governance, making these frameworks relevant for Nepal’s reform efforts.

Cultural fluency

The challenge of addressing CoI in Nepal is compounded by the need for cultural fluency. This means recognizing and respecting local customs, beliefs and practices when chalking out policies and regulations. A one-size-fits-all approach to governance may not be effective, as it fails to account for the unique socio-cultural context in Nepal. By adopting measures that reflect local values while aligning with international standards, policymakers can enhance the effectiveness of CoI management strategies. Understanding the demand and supply dynamics of ethical governance will facilitate a more tailored approach that addresses specific community needs and expectations.

Constitutional commitment

Nepal’s Constitution commits to transparency and accountability; however, the country struggles with poor rankings on Transparency International’s corruption indices, partly due to CoI. The inconsistent enforcement of constitutional commitments has weakened the framework for addressing CoI, highlighting the need for comprehensive reform. Although the Commission for the Investigation of Abuse of Authority (CIAA) and the National Vigilance Center are tasked with combating corruption, political interference often hampers their effectiveness. CoI management is essential for maintaining integrity and public accountability. The strong influence of ethnocentric values, where family and community ties can affect official duties, complicates the situation. A framework that respects these cultural dynamics while aligning with constitutional principles is essential for meaningful reform.

Current laws, such as the Civil Procedure Code 2017 and the Judicial Council Act 2016, contain provisions for managing CoI but lack cohesive definitions and effective enforcement mechanisms. Judges, for example, are required to recuse themselves in cases where their impartiality might be questioned; however, there is insufficient guidance on how to define and manage CoI effectively.

Lessons for Nepal

Nepal’s approach to CoI can benefit from aligning with best practices from frameworks like the OECD and UNCAC, which emphasize transparency, accountability and independent oversight. Countries such as the US, the UK and India provide valuable examples for effective CoI management. In the US, the Ethics in Government Act requires public officials to disclose potential conflicts to prevent personal interests from interfering with their duties. In the case of Caperton v Massey (2009), the US Supreme Court ruled that perceived CoI is sufficient to necessitate recusal, highlighting the need for effective management of both real and perceived conflicts.

The UK emphasizes integrity and transparency through the Seven Principles of Public Life—including selflessness, integrity and accountability. In Porter v Magill (2001), the House of Lords ruled that any reasonable suspicion of bias could invalidate decisions, reflecting a rigorous approach to CoI. Additionally, the Transparency Register mandates the disclosure of financial interests, ensuring accountability among public officials.

India employs the principle of ‘office of profit’, which restricts Members of Parliament from holding positions that could influence their official duties, as upheld in Jaya Bachchan v Union of India (2006). Despite these regulations, instances like Vijay Mallya’s case highlight enforcement gaps, underscoring the need for stronger adherence and oversight in India’s CoI policies.

In the absence of a robust CoI Act, Nepali judges have often faced challenges related to their perceived and actual biases, leading to the practice of recusal in cases where conflicts are evident. Judicial orders have called for the enactment of a CoI Act, indicating recognition of the need for structured regulations to manage these conflicts effectively. Implementing a cohesive and culturally adapted CoI framework could help Nepal meet international standards, promoting accountability and public trust

Judicial approach

Despite the existence of a separate CoI Act, Nepal’s judiciary has primarily addressed CoI through corruption cases. Landmark judgments have stressed the importance of impartiality and accountability, promoting principles of constitutional morality that prioritize public interest over personal gains. Strengthening CoI legislation and enhancing judicial independence would reinforce these values and foster a culture of accountability.

CoI management bill

The Nepal Law Commission has proposed a ‘Conflict of Interest Management Bill’ to define CoI as an offense and establish penalties. However, the bill lacks cultural sensitivity and does not adequately consider the strong influence of kinship and community obligations in Nepal. Limited public engagement reduces social buy-in; thus, the bill should incorporate a rights-based framework and undergo public consultations. Initiatives focused on social behavior change that emphasize ethical decision-making would enhance its effectiveness.

Multi-sectoral action plan

Addressing CoI in Nepal requires a multi-sectoral approach that integrates legal, ethical, cultural and structural solutions. Establishing a National Ethics Commission would allow for the investigation of CoI cases, enforcement of compliance, and publication of annual reports setting standards for CoI management at all government levels. Creating provincial and local ethics councils would help tackle regional CoI challenges, ensuring accountability at the local government level.

Strategies focused on social behavior change that promote ethical decision-making and reflect local norms can assist officials in navigating social dynamics without compromising integrity. Comprehensive disclosure requirements mandating public officials to disclose assets, business affiliations and consultative roles, along with regular lifestyle audits, would enhance transparency.

Public awareness campaigns aimed at educating citizens on the role of CoI management in fostering integrity can establish community-based reporting channels for potential conflicts. Additionally, a binding code of conduct for public officials, along with cooling-off periods for officials transitioning to the private sector would significantly reduce CoI risks. Collaboration across sectors through a working group with government and civil society representation would help standardize CoI practices, while participatory monitoring via Community Ethics Committees utilizing the Knowledge, Attitude and Practice (KAP) model could strengthen community oversight.

Finally, incorporating long-term ethics education into school curricula and professional initiatives focused on social behavior change will help promote a culture of integrity from a young age.

Conclusion

Nepal faces significant challenges regarding CoI that require an integrated approach encompassing legal, ethical and cultural reforms. The draft CoI Management Bill represents progress but requires refinement to align with Nepal’s values. Establishing a National Ethics Commission, local ethics councils and engaging the public will create a robust CoI framework rooted in fairness and accountability.

Addressing CoI is urgent for building a governance system that prioritizes transparency and ethical integrity. By implementing this multi-sectoral plan, which acknowledges the importance of cultural fluency and local contexts, Nepal can set a new standard for governance in the region, reaffirming its commitment to serving the public interest above private gain.