Secretary among nine charged in payment gateway scandal

The charges were a result of causing losses of Rs 232.75 million to the national treasury by the purchase of the payment gateway software, which has remained unused.

Prithvi Man Shrestha

Prithvi Man Shrestha

The Kathmandu Post


File photo of Secretary Madhu Kumar Marasini. PHOTO: THE KATHMANDU POST

October 3, 2023

KATHMANDU – The Commission for Investigation of Abuse of Authority (CIAA), on Monday, filed a corruption case at the Special Court against nine individuals, including sitting government secretary Madhu Kumar Marasini over alleged corruption in the procurement of the National Payment Gateway system.

Marasini is currently secretary at the Ministry of Industry, Commerce and Supplies.

As per the Corruption Prevention Act-2002, any public official charged with corruption is automatically suspended from the post following their prosecution by the anti-graft body.

The CIAA said in a press statement that they were chargesheeted for corruption and causing losses totalling Rs232.75 million to the national treasury by their purchase of the software of National Payment Gateway in 2018 without following due process and with poor preparation. The system, as a result, remains unused to this day.

Besides Marasini, the anti-graft body has also filed corruption cases against the then secretary of the Ministry of Science and Technology and the chair of the National Information Technology Centre Sanjay Sharma; the then executive director at the centre Pranita Upadhyay; the then deputy director/executive director and currently Managing Director of Nepal Telecom Sunil Paudel; the current deputy director of the centre Safal Shrestha; and the then assistant director at the centre, Ramesh Prasad Pokharel.

Likewise, the then accounts officers Nim Bahadur Oli and Ram Bahadur Budha, and computer engineer Ram Sharan Gayak have also been made defendants in the case.

The commission filed corruption cases against Marasini, Sharma, Upadhyay, Paudel, Budha, Pokharel and Gayak for causing a total loss of Rs230 million to the national treasury. Oli has been accused of causing a loss of Rs8.97 million and Shrestha Rs1.7 million.

Marasini is the third sitting government secretary to face corruption charges in the past six months after the then secretary at Vice-president’s Office Tek Narayan Pandey and then secretary of Information Technology Ministry Krishna Bahadur Raut.

Implicated in the fake Bhutanese refugee scam, Pandey is in judicial custody while Raut, who was in custody on charges of corruption in the Lalita Niwas land grab scam, was released after a Supreme Court order in July.

The centre had started the process to procure the National Payment Gateway System in order to digitise all domestic and international financial transactions.

Officials at the centre had said that they planned to implement the system starting with government’s receivables and gradually incorporate government’s payments, followed by private sector transactions, including digital wallets and cards.

On July 3, 2018, the centre had signed a procurement agreement with a supplier for the National Payment Gateway System at the cost of $1.98 million, of which $1.86 million had already been paid by the end of the fiscal year 2021-2022, according to the 60th annual report of the Office of Auditor General report.

“Even though 93.86 percent of the payment has already been made [to the supplier], the system has not come into operation even after five years,” the auditing body said in its annual report released in April.

According to the report, banks have not been able to use the system in the absence of necessary legislation. “Since the equipment purchased for the purpose remain unused, it is necessary to bring the system into operation by formulating necessary laws,” the auditing body said.

Bhola Dahal, the CIAA spokesman, said not only was the law breached in the procurement process, the system too has remained unused for years, resulting in huge losses to the national treasury.

“That’s why, the corruption cases were filed against those involved in the procurement of the payment gateway system,” said Dahal.

According to the CIAA, Marasini, who was the chief of the budget division at the Ministry of Finance at the time, allocated Rs250 million to the centre to buy the system, even though the centre had not sought any money for the purpose.

The anti-graft body said that the budget was allocated without following the due process—government bodies are supposed to submit details of projects/programmes and required budgets using the Line Ministry Budget Information System (LMBIS), a software system used for selecting programmes and fixing budgetary allocations.

According to the CIAA, several procedures mandated by the Public Procurement Act-2007 were also violated while purchasing the payment gateway system. Tasks such as preparing the procurement plan and getting it approved by the chief of the public entity concerned were not accomplished before buying the system.

The international request for proposals (RFPs) was issued by making false claims that the cost estimate for the procurement had already been approved. As per the existing laws, there are several prerequisites that must be fulfilled before making such a procurement. They include a preliminary study before procurement, approval of the cost estimate, preparation of a master plan, preparation of legal framework, and establishing the necessary infrastructure to link with the National Payment Gateway core and coordination with the banks and financial institutions. But these essential tasks were not completed before procuring the payment system.

The system was received at the end of fiscal year 2017-2018 through a short procurement process, but it has not become operational to date. Due to the ill intent and carelessness of the seven defendants, the government assets worth Rs232.75 million were lost, according to the CIAA.

In the case of accounts officer Oli, the anti-graft body said that he paid Rs1.79 million for fictitious training, purportedly conducted by consultants and Rs7.17 million for stakeholder customisation and integration, even though no such activities were carried out.

Likewise, Safal Shrestha has been accused of fabricating reports about the training conducted by the consultant and issuing payment orders totalling Rs1.79 million.

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