See More on Facebook

Current affairs

Myriad factors Nepalese hamper probe into offshore investment, money laundering

Businessmen exploiting legal loopholes while channelising illicit cash into the country.


Written by

Updated: January 22, 2019

A damning report by the Centre for Investigative Journalism-Nepal (CIJ-Nepal), released on Wednesday, said around two-thirds of the foreign direct investment was coming into Nepal from tax haven countries and that around 55 Nepalis and non-Nepali residents had invested in offshore companies, setting off alarm bells in the country.

Government agencies were quick to respond, saying they will launch a probe.

But investigation into a similar case—the Panama Papers released in April 2016 that said as many as 19 Nepalis and non-residents Nepalis had invested in offshore companies—has barely made any progress. Officials blame various factors, including ineffective agencies and lack of information and legal loopholes, for slow progress in investigation into such cases.

Finance Minister Yubaraj Khatiwada admits that the Department of Money Laundering Investigation (DMLI) largely failed to carry out its work in an effective manner when it was under the Ministry of Finance. “It has been 10 years since the department was established, but it has failed to take up the cases in the desired numbers,” says Khatiwada. The DMLI is now under the Prime Minister’s Office.

“We have been looking into [money laundering] cases since the Panama Papers. We are investigating whether those who have parked their money in foreign countries have taken the central bank approval or not. We have to make sure whether those named in the leaks are Nepalis or not. We also need to find where they are currently settled,” says Khatiwada, hinting that there is a myriad issues that need to be dealt with while investigating into cases related to offshore investments and money laundering in the name of the FDI.

Khatiwada, however, did point out that some businessmen were exploiting legal loopholes. As per the Non-resident Nepali Act, anyone staying in a foreign country continuously for 182 days gets the status of non-resident Nepali and that person’s earning during that time is counted as a non-resident’s earnings. “When this money comes into Nepal, its status is foreign investment; and the person concerned can take the capital, interest and profit out of the country. This Act was brought with good intentions,” he said. “While we want to make our laws stricter, we have also left legal loopholes.”

But that aside, many say nexus between unscrupulous businessmen and politicians is the biggest bane of good governance and transparency in Nepal and that a web of factors is helping some powerful people turn their black money into white.

The DMLI has lost its teeth largely due to political interference, said former finance secretary Shanta Raja Subedi.

“Frequent leadership change at the behest of politicians always makes an institution weak. And at times chiefs of the agency have their own personal interest,” he said. “The DMLI should be developed as a constitutional body to prevent political influence so that it can take on the powerful people.”

The DMLI has seen 10 directors general in the last nine years.

Another highly placed government source agrees that most of those indicted in the leaks enjoy political protection. “One of the reasons why many of those indicted in such leaks have not been brought to book is: they have strong political connections,” the source said. “As soon as the names are in the public domain, such individuals start lobbying, and the case fails to take off.”

But a DMLI official told the post that investigation into those who were indicted in the Panama Papers is still on and that the agency was still gathering proof.

“We don’t have solid proof against them,” Binod Lamichhane, information officer at the DMLI, told the Post. As per him, none of the 19 persons named in the Panama Papers face any cases as of now “for the lack of proof”.

In the aftermath of the Panama Papers leak, world’s most powerful were spooked while many high profile politicians, including the prime ministers of Pakistan and Iceland had fallen from grace. But Nepal’s biggest leak last week seems to have minimal effect.

Lack of information exchange is one reason for slow investigation in Nepal, says Khatiwada. Nepal also has not signed Mutual Legal Assistance Treaty with many of those countries which are known as tax havens. “We need to work on this. Firstly, we need to sign Mutual Legal Assistance Treaty with the countries [from where money is said to have entered Nepal]. When information exchange is difficult, it affects the investigation process,” he said.

 



Enjoyed this story? Share it.


The Kathmandu Post
About the Author: The Kathmandu Post was Nepal’s first privately owned English broadsheet daily and is currently the country's leading English-language newspaper.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Current affairs

Tokyo Olympic committee announces detailed schedule for 2020 Games

Tokyo will welcome positive news after earlier scandals surrounding the Olympic committee. The Tokyo Organizing Committee of the Olympic and Paralympic Games has announced a detailed schedule for all competitions of the 2020 Games, which will start on July 24, 2020. Finals for around 20 events will be held on many days, and finals for 30 events, including baseball, will be held on Aug. 8, which will be the largest number in a single day during the Olympics period. The opening ceremony will begin at 8 p.m. on July 24. Gymnastics and wrestling matches are among competitions in which Japanese players are expected to turn in good performances. The men’s gymnastics team final will be held on July 27, with the Japanese team aiming to win their second consecutive Olympic title. The women’s wrestling 57-kilogram final will be held on Aug. 6. If Kaori Icho earns


By The Japan News
April 18, 2019

Current affairs

Nepalese air crash was under an inexperienced co-pilot’s command

Authorities at the regulatory body said the pilot may have allowed the co-pilot to take off because there were no passengers on board. A relatively inexperienced co-pilot was at the controls when a Summit Air plane started to skid during its attempt to take off at Lukla airport, causing it to lose control and run into an exterior fence colliding with two parked helicopters, three officials familiar with the preliminary probe told the Post. Two policemen and the co-pilot, Sujit Dhungana, were killed when the 19-seater aircraft crashed on Sunday morning. The incident is the first recorded accident in Nepal’s civil aviation history in which an aircraft killed personnel on the ground. Aviation authorities investigating into the crash told the Post that the co-pilot who was comm


By The Kathmandu Post
April 15, 2019

Current affairs

Nepal bans popular online game

Police has said it will arrest anyone who is found playing the game after the district court allowed to implement a ban on Wednesday. Nepal Telecommunication Authority on Thursday directed all the internet service providers and mobile service providers to ban PlayerUnknown’s Battleground, commonly known PUBG, a popular multiplayer internet game. The Metropolitan Crime Division had filed a Public Interest Litigation at the Kathmandu District Court on Wednesday, seeking permission to ban PUBG. In its litigation, the division said that the game was having a negative effect on the behaviour and study of children and youths. The district court gave permission to ban PUBG the same day. “We received a number of complaints from parents, schools and school associations regarding the effect of the game on children,” Senio


By The Kathmandu Post
April 12, 2019

Current affairs

Constitutional Court orders revision of abortion ban by end of 2020

South Korea repeals a longstanding ban on abortion. The Constitutional Court ruled Thursday that the country’s decades-old abortion ban runs counter to the Constitution, paving the way for a revision of the criminal code 66 years after it was established. In a landmark decision that overturned its 2012 ruling, the court ruled 7-2 that criminalizing all abortions — even in the early stages of pregnancy — restricts pregnant women’s rights to self-determination by forcing them to maintain the pregnancies. The court saw that a fetus is considered as close to be a human being after 22 weeks of pregnancy. Before that period, women’s ri


By The Korea Herald
April 12, 2019

Current affairs

Philippines will not send overseas workers to Libya

Ban on labor deployment to Libya up as civil war erupts. The government has banned the deployment of Filipino workers to Libya as civil war has erupted again in the north African country. The Department of Foreign Affairs (DFA) declared Alert Level 3 on Monday night and urged some 1,000 Filipinos working in and around the Libyan capital, Tripoli, to consider getting themselves repatriated as soon as possible to avoid getting caught in the middle of the fighting in Libya. Most of the Filipino workers are in the health care and construction sectors. Under Alert Level 3, an automatic deployment ban is imposed by the Philippine Overseas Employment Administration (POEA) on both new hires and returning overseas Filipino workers (OFWs). Kidnapping incidents The Department of Labor and Employment has yet to officially declare the ban, barely three months after it partially


By Cod Satrusayang
April 10, 2019

Current affairs

Debate rages on in Malaysia over U-turn from signing Rome Statute

The Southeast Asian nation had chosen to withdraw from the ICC statute. As debate rages on over Malaysia’s decision not to accede to the founding treaty of the International Criminal Court (ICC), a small group demonstrated outside the Malaysian parliament on Monday (April 8) to demand the removal of Foreign Minister Saifuddin Abdullah and Attorney-General Tommy Thomas. This comes as four local academics were reported to have presented a ‘secret’ paper to the Conference of Rulers this month to convince them to reject the Rome Statute, warning that the international treaty could cause the Malaysian King to lose his immunity to the international court. The debate over the Rome Statute heated up after Prime Minister Mahathir Mohamad said last Friday (April 5) that hi


By The Straits Times
April 9, 2019