Nepal Notebook: When corruption is part of the culture…

An inconvenient truth: Nepal has the dubious distinction of being one of the most corrupt countries in the world.

By Surendra Phuyal

That question is asked by all in the Himalayan nation — everyone from international visitors, who have to deal with bribe-taking officials right at Kathmandu’s international airport, to the hapless citizens of this country of approximately 30 million.

In July 2009, Nepal’s anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA), came up with a smart idea to discourage staff at Kathmandu’s international airport from taking bribes. CIAA suggested top officials at the Civil Aviation Authority of Nepal (CAAN) make “pocketless” pants mandatory for all staff.

The suggestion came after widespread reports and complaints by airline passengers about petty corruption, such as bribery and theft, by staff of CAAN, various airlines, customs and immigration, and even by security personnel posted at the airport. CIAA’s pitch made international headlines, but it seems the plan served only to make a mockery of Nepal’s corrupt officialdom. The suggestion even prompted CAAN officials to discuss the idea, but they failed to come up with a concrete plan of action.

The result: The “pocketless” pants are nowhere to be seen, complaints from airline passengers haven’t stopped and bribery continues at the Kathmandu airport, if reports in local media are accurate.

Pervasive Corruption

Nepal has the dubious distinction of being one of the most corrupt countries in the world. Corruption — from petty to grand — is endemic here. In recent years, Nepal has fared terribly in global indexes of transparency, accountability and corruption. For instance, in Transparency International’s (TI) 2008 Corruption Perceptions Index, Nepal scored 2.5 out of 10 (down from 2.7 the previous year).

Like the Kathmandu airport, customs, immigration, land-revenue, transportation management and police departments across the country continue to have a bad reputation. They are considered hotbeds of often petty — and at times heavy — corruption.

TI’s 2008 index ranked Nepal as the country with the fourth highest level of corruption among the eight members of the South Asian Association for Regional Cooperation (SAARC). Overall, Nepal ranked 124th out of 180 countries included in the report.

Bribery and corruption have been thriving for years in key offices responsible for Nepal’s public service. And that culture is showing no signs of changing for the better, despite the ground-breaking “revolution” and political changes that have swept Nepal in recent years.

After rebel Maoists joined the 2006 peace process, a 601-member Constituent Assembly (CA) was elected in May 2008. The CA, which doubles as parliament, abolished the centuries-old monarchy: The kingdom was gone and the Federal Democratic Republic was born. The CA is currently working to prepare the new constitution of “New Nepal.”

Transitional lethargy

Many experts following Nepal’s on-again-off-again anti-corruption drive think the country’s transitional issues and never-ending political instability have sidelined the drive against corruption. In the words of Aashis Thapa, executive director at TI Nepal, “The messy transition has put the drive to fight corruption on the back burner. It’s a classic example of transitional lethargy.”

That’s the main reason why, many experts agree, Nepal has neither improved its corrupt image nor prospered on other socioeconomic development and transformation fronts in recent times. “As far as an anti-corruption drive is concerned,” says Kedar Khadka, director of the Good Governance Project at Pro-Public, a Kathmandu-based nongovernmental organization, “political will is lacking and the progress made so far is very discouraging.”

Other pundits point out that politicians, including CA members, have shown “absolute insensitivity” to the drive against corruption, and haven’t even talked about signing the United Nation’s Anti-Corruption Convention.

Some Action

CIAA officials say things are improving when it comes to fighting petty corruption in government offices and to investigating irregularities in major construction projects. Bed Prakash Siwakoti, a commissioner, says that since the CIAA has warned everyone against corruption, things are gradually changing.

“People think twice before taking bribes these days,” he boasts, giving examples of ongoing investigations into several suspected cases of financial irregularities or lack of accountability in government offices.

This year alone, CIAA says it has initiated legal action against 1,000 civil servants as well as senior Nepal army and police officials who failed to submit their personal property details by the stipulated deadline. CIAA adds that it has also exposed several cases of irregularities in a number of ongoing infrastructure development and construction projects.

Since 2002 and 2003, CIAA has brought about 600 cases against corrupt politicians, officials and businessmen, Commissioner Siwakoti says. Those charged in recent times include former Prime Minister Girija Prasad Koirala, who, CIAA claims, had a role in a notorious airplane leasing deal for the state-run airlines. The deal was hammered out almost a decade ago and two years ago, a special court acquitted him.

Many big shots, or so-called “tall figures,” in Nepalese politics, including Vice President Paramanda Jha, a former judge, have faced corruption charges in the past. But few have received legal punishment.

CIAA officials claim they have succeeded in about 85 percent of the corruption charges filed in the special anti-corruption court. But Pro-Public’s Khadka challenges the claims, saying that CIAA has succeeded in a much lower number of cases. “In most cases, CIAA has lost; it’s a pathetic situation,” he says.

Waning faith

Experts and officials watching the country’s anti-corruption drive blame the culture of impunity and widespread politicization as the major factors weakening Nepal’s fight against corruption.

“In a country where corruption is culture, corrupt people are never frowned upon or boycotted by society. What can you expect?” asks Bikash Thapa, a journalist covering development and infrastructure.

That Nepal’s politicians and rulers have ignored the anti-corruption drive becomes clear from the state of the CIAA, which has remained without a chief commissioner for a long time. That attitude, experts think, is one reason why CIAA has faced so many humiliating losses in the special court. “The situation has gotten so bad that few people have faith in CIAA or its anti-corruption drive today,” says Pro-Public’s Khadka.

Nepal’s drive against corruption took an interesting turn recently. On July 31, 2009, Prakash Tibrewala, considered one of the biggest defaulters on the country’s foreign-exchange laws, was arrested in a village near Kathmandu. Three years ago the District Court found him guilty of misappropriating US$600,000 while procuring medical equipment from abroad, but he fled and hadn’t been punished.

Given corruption in virtually every sector of Nepal society, that’s an unusual case, experts say, but they add that the government needs to do much more to crack down on corruption. As TI’s latest study points out, the dealings of most of the political parties in Nepal are not transparent.

Even the former rebel CPN-Maoist party, the largest party in the CA, has failed to maintain a clean image when it comes to financial discipline, transparency and accountability. The party faces accusations of using dozens of cars and SUVs allegedly stolen by thieves in neighboring India.

Maoist leaders deny the charges. But several Indian media reports suggest that hundreds of cars stolen in India were, and still are, being sent to Nepal using various covert roadways.

The worst news, perhaps, is this: The CA — which is drafting the country’s new Constitution — is trying to rid the CIAA of its constitutional status and to reduce it to a mere department, requiring it to be accountable and answerable to the Auditor General before bringing any case against anyone in the special anti-corruption court.

Dismayed by that development, a former CIAA commissioner, Surya Nath Upadhyay, wrote in a recent issue of theRepublica newspaper, “The forerunners of the anti-corruption movement were hoping that some improvements would be made in the new Constitution, but their hopes have been completely dashed. If the CA members want to reduce the CIAA to an investigative department of the police … better do away with it. Now you can have a free ride. Congratulations.”

Surendra Phuyal is a Kathmandu based reporter who contributes daily news and analyses to international news organizations, including columns for The Kathmandu Post newspaper in Nepal. He was an Alfred Friendly Press Fellow in 2003 and a Spring Jefferson Fellow in 2007.

UWB note: This article is part of a Global Integrity Report on Nepal. Read peer reviews of the article here






13 responses to “Nepal Notebook: When corruption is part of the culture…”

  1. LGV Avatar

    Very intersting post ! Corruption is a common virus for countries who are not yet in a democratic process. Nepal is one the way to change, that’s good ! But even in democratic countries there is corruption but only for the rich ! In fact the one who loose are the poor who can’t get small things from corruption anymore. But the rich still built houses with the country money…

  2. Pant,Dibakar,MN Avatar

    How could corruption be controlled out of appointing parties cadres chief of CIAA and other commissioners.The major roote cause of corruption is political parties and its leads government through which country is going down,so out of parties cadres as a chief and its members for investigation of corruption could bring down corruption in Nepal.Its unfortunate to have all these dirty practices to pick up party cadres to lead constitutional body rather than sending clean,competent,fair and non-political individuals for the pupose.Currently,Nepal is under the guidance of very corrrupt,dirty and visionless leaders.Most beautiful Himalayan nation,Nepal,is looking for statesman to overcome from dirty politics but there is no indication to have the same immediately.Jay Nepal !

  3. zulu Avatar

    well I am very pessimistic on this topic. It is not the small thiefs that are worst.
    Banks with their bonusses, governments sending us to war, idiot politicians…though the idiotic ( again) theatres of power games are not at bad in comparison to World Economy keeping certain countries poor. Really appalling is the lack of balance in food destribution. Maybe lack of respect is the problem . I suppose in China they give death penalty when you steal incense.
    But I like the shows they put off how ‘by my contacts’people get cups of tea in airport. Russia must be like that. Question is where we wanna go from here ha ha. Hollywood or Stalingrad?
    I go to the movies.

  4. Dirgha Raj Prasai Avatar

    DEar editor,

    I read the analitical article by Surendra Phuyal-‘ Corruption is part of the culture.’ I support his opinion which presents the reality of Nepal. Due to the wrong leadership, the nation has failed to become economically independent. After the rise of democracy in 1950, corruption and foreign intervention did not stop. In the name of democracy, the penniless became rich. Except the former prime minister, leader of Nepali Congress BP Koirala and the independent former prime minister Dr. K I Singh- everyone who came to power gulped down the property of this state. Wolf eats cows, ox and other animals by penetrating into their intestines; the money-minded persons enter through sycophancy and become ploughshare from a needle and pillage after reaching in power. National politics is like preaching a religious fable to a bear, those who beg without any pride and character. The power-hunger traitors became democrats by playing the name of martyr and sucking the same martyr’s blood.Pancha leader Surya Bahadur Thapa is responsible for drowning the Panchayat into undemocratic system and corruption and the Congress leader Girija Prasad Koirala drowned the multiparty system with maximum corruptions. Surya Bahadur and his relatives earned too much money during Panchayat era.

    From the very beginning, it is my demand to punish such corrupts atlest twenty thousands. The consequence of using the state governance for self-interest will not be positive. Ranas have ruled Nepal, similarly Panchas and Nepali Congress that ripped the national treasury. Nepal witnessed many agitations due to corruption and ill-practices. The major problem faced by the nation is corruption and foreign intervention. The rulers have always overlooked this. India wants to create a rift between the Hills and Tarai people to disintegrate the nation. The Indian Congress (I) could not ambush late King Birendra and Gyanendra into their strategy. So it pressed Nepali Congress, UML and Maoist creating various obstacles for three years and made the corrupt leaders sign the 12-point pact in 2005 for a struggle. The agitation was stalled after the reinstatement of the parliament in a staged drama of reaching an agreement with the King. They scrapped the King’s powers and made the Prime Minister who had taken oath from the King as head of state. The national army was put inside the barrack with assistance from the United Nation. Federalism was declared on the basis of secular state, republic and on ethnic lines. Then Madhesi agents were forwarded and a traitor and corrupt vice-president clad in Indian attire took oath in Hindi. They are committed to end the identity of the nation. The prevailing silence from United Nation and America, a democratic nation, over the naked Indian intervention on Nepal, is a matter of grief.

    India annexed Sikkim on 10 April in 1975 by staging a dramatic statute assembly election by keeping the Sikkim King separate from sovereignty. Similarly, India is committed to capture Nepal after declaring it republic through the 601-member Constituent Assembly. Nepal is in a precarious juncture. Indian from the very beginning wants Nepalese industries to be closed. It desires to fail the state. Girija Prasad Koirala during his premiership sold the Chinese industries in cheaper rates for commissions worth billions. Koirala made partnership with the Indian mafia and staged the Lauda and Dhamija scams which led to the plummeting of Nepali air service RNAC. It shattered the administrative system. There could be no bigger traitor than Girija. There are hundreds of such traitors and criminals within the Madhesi party, RPP, UML and Nepali Congress like Girija who needs to be severely punished. Many Madhesi have been running under foreign support. The traitors from civic and intellectual society are receiving financial support from Indian, American intelligence agencies and INGOs. These intellectuals are committed to slaughter the identity of Nepal. What could be sad than this? The causes of the crisis, anrchism and corruptions are the result of the traitors who enjoyed the regime.
    The 2005 uprising has derailed into a negative path. The parties were concentrated on abolishing the royal institution under Indian orders. What has the nation gained by abolishing the monarchy? The royal institution is the representing institution of the people of the nation. Corrections can be made in the defects and weaknesses seen in the institution. But Nepal cannot survive by disregarding the institution and depending on the traitors. The Kings of Nepal never worked to sell the nation. May India, America, UN including other foreigners accept this truth! There is no alternative force to nationalist force and national army to save the nation in current pretext. Now national army, security sources and nationalist in and outside the political parties must work together to save Nepal’s nationality and democracy with the constitutional monarch.
    That is all. I hope your and the readers comment.

    Thank you.
    Dirgha Raj Prasai

  5. Manoj Bhattarai Avatar

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  6. Manoj Bhattarai Avatar

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  7. id2011rakesh Avatar

    CNN Producer Note Follow Up
    iReport —
    The biggest fiscal or ‘white’ crime in Nepal’s history is just the tip of the iceberg and exposes the massive level of corruption and greed in all sectors of Nepal. Just a few of the details that have emerged are as follows :
    VAT Fraud :
    A number of well known Nepalese Corporates have emerged as front runners in this Multi Billion Nrs. Scam. While well known Groups such as Chaudhary Group, Golccha Organization, Shanker Group, Vishal Group, Bhat Bhateni Supermarket, Chameliya Hydropower have figured in previous reports. Other Group such as Sharda Group (Reported Fraud of Nrs. 700 million), Triveni Group (Reported to have large amounts of fake VAT Bills) etc have briefly been exposed in the press then been swiftly suppressed.
    Moreover sources share that corporate houses including Murarka Group, KL Dugar Group, TM Dugar Group, ICTC Group, Maliram Shivkumar Group, Chainwala Group, Panchakanya Group, Hama Steel etc. are also involved in various levels and forms, but have managed to keep their names out of the media. Almost all Automobile Importing companies, including MAW (Morang Auto Works), Jyoti Group etc. are involved in various scales in this scam.
    Sources share that about 400+ companies have already been found to be using fake VAT Bills, and those represent potentially 80% of the Country’s Business Houses (if one considers each Group as a whole).
    Currently the investigation has centered around Kathmandu. However mid sized corporates / industries operating even in the other industrial towns of Biratnagar, Bigunj, Bhairwaha etc are also involved in a large scale in this issue.
    Moreover, sources confirm that even Government Corporations such as NEA, NOC, NTC etc. have figured when examining records of companies involved in this VAT Scam. It is clear that this scam reaches into all sectors of the economy. (Details of these Groups can be found by searching on the internet).
    Industrial Fraud
    Many (if not most) industries in Nepal are engaged in various forms of illegal activity causing losses to the Government of Billions of Rupees annually. Some examples are; the Woven Sack Industries who import raw materials under duty free guarantee for export – sell part of the finished product locally – and then generate fake export documents to rob the country of valuable Import Duty and VAT; Biscuit Manufacturers who buy most of the Raw Materials of the books, then sell product locally without paying any VAT to the Government; Cement Industries which declare lower prices for sale etc.
    These are just some examples, but most industries are involved in some manner of Revue Leakage. A few years ago, Khetan Group and Gorkha Brewery (subsidiary of Carlsberg) were in the news when their trucks of beer were caught without excise stickers, and estimated loss to the national exchequer of Billions of Rupees annually. This was again hushed up due to a well managed effort, with a small fine being paid for appearances sake.
    Banking Fraud :
    The latest to erupt is the Banking Fraud which threatens to derail Nepal’s entire economy and is wiping out the deposits of those small savers who can least afford it. Two institutions which have virtually gone Bankrupt in the last couple of months are, Gorkha Development Bank , and Nepal Share Market Finance Company, have each got large deposit bases (Approx 4-5 Billion Nrs) and have exposed a nexus of Directors who are using these institutions as their personal property, and rampantly abusing the system.
    Sources inside the Cental Bank share that as many as 20 to 30 Finance Companies and Development Banks are due to collapse imminently. The papers reported recently that the Central Bank had 8 Commercial Banks who are on the watch list. Again sources share that these banks are Machhapuchere, Kist, Kumari, Sunrise, NBB, Global, Mega and Civil. Some of the new banks (such as Mega Bank) were found to spend large sums of money even before opening in buying fancy vehicles and offices for their Directors.
    Another facet of Banking Fraud are rogue borrowers who manipulate their relationships and assets to build a huge pyramid of borrowing. The most recent case is of Rakesh Adukia. An Indian Citizen with businesses in Hong Kong, Rakesh built a massive (5 Billion Nrs+) asset base in Nepal of Shares and Properties, with primarily borrowed funds. The latest estimate is that his total borrowing is of Nrs. 3 Billion, and his assets are now worth about 1.5 Billion, leaving a large gaping hole of Nrs. 1.5 Billion.
    Other large frauds such as the fake Government Voucher scam which surfaced two years ago (estimated revenue loss over 20 Billion Nrs.) have just languished without being investigated. Efforts to bring in the Money Laundering act are stymied by resistance, especially as there is no system of wealth declaration in Nepal making it impossible to determine which funds are tax paid, and which are simply ancestral funds handed down. Further with many Ministers and Bureaucrats being virtual billionaires with no known sources of income, any wealth declaration initiative will never get off the ground.

    These are just some of the examples of what sources say is corruption on a historic scale. With no real Political Stability in place, everyone seems to be in a race to rob the country the most. Bureaucrats are using these scams to shy away from their own effectiveness. No one is talking of the big issues such as 18 hour power shortage in a country with certified Hydropower Potential of 100,000 MW (only 700 MW is currently being produced), or 18-21% interest rates, or no local employment opportunities leading to over 3 Million workers going overseas. Corruption in organizations such as NOC, NEA, NAC, NTC has reached historic highs, with an estimated 40% of all spending being estimated to be paid as kick backs. All of these corporations enjoy virtual monopolies and massive state support, but with the exception of NTC they are all on the verge of bankruptcies with huge losses on their books.
    What Nepal needs now is a sense of patriotism and respect for one’s country. Whether one is a Politician, Bureaucrat, Professional or a Businessman, a genuine nationalistic feeling is a must to rebuild Nepal. Quick decisions on core areas such as Hydropower are important. Sops being handed out to industries which have no core-competence in Nepal need to be stopped. Focus should be on the core areas, as well as improving lives of the people at the bottom of the Pyramid.
    However, given the past 5 decades, once more this report will be read, discussed and hotly debated, before the next political crisis or scam takes place. Meanwhile the ultimate loser will be those 25 million Nepalese who struggle to live a basic life of dignity and purpose, and whose only care is earning enough to survive.

  8. […] Maoists, from buying a luxury mansion by the Maoist party chief, to accusations of using dozens of stolen SUVs and cars from thieves in neighboring India, giving protection by party leadership to criminals and corrupt […]

  9. […] emerged from my reading was a jumbled pile of travel-writing cliches and doom-and-gloom stories of a deeply corrupt and troubled nation.  There were a few diamonds in the rough, of course, but looking back I realize that I did not […]

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