Govt allowing Nepal’s ultra-rich to turn their black money into white through FDI

KATHMANDU: Discussions and debate has started after the Nepali Congress (NC)-Maoist coalition government made arrangements to bring in black money (undisclosed funds) in the name of big projects.

Though it is illegal bring in such undisclosed fund to Nepal as investment, Finance Minister Janardan Sharma, through the Replacement Bill on budget ordinance, has allowed entry of such fund to Nepal in the name of investment in big projects.

The Replacement Bill states that the government will not seek sources of income of investment made till April 12, 2024 across hydropower projects of national importance, international airports, underground roads/tunnels, land routes, railways, agro-based industries, tourism-related industries and employment-generating industries employing more than 300 workers and using more than 50 percent internal raw materials.

As per various international treaties on money laundering, such undisclosed funds cannot be invested in any sector, as per experts. However, minister Sharma, speaking at the post-budget discussion program, said that investment from sectors like corruption, drugs and human trafficking is illegal but sources of investment brought from other sectors will not be sought. He was of the view that if it creates employment and boosts industrialization, money that has been undergrounded should be encouraged to be brought as an investment.

Nepal Rastra Bank (NRB) governor Maha Prasad Adhikari, on the other hand, said that it is against Nepal’s international treaty on money laundering to allow investment whose source is undisclosed. “Detailed discussions should be held with various agencies in this regard,” he said.

Stakeholders have been questioning the intention of the government to allow black money to flow openly as an investment.

Dharmaraj Sapkota, former head of the financial information unit under Nepal Rastra Bank, says that the Department of Money Laundering has not been effective due to political interference. “The tendency to acquire wealth in the wrong way has increased in Nepal while the department is not active enough to control this,” he said.

As per him, the NRB has carried an investigation on black money which are being from various tax heaven nations and firms in the name of investing in Nepal. “Looks like the Replacement Bill gave chance to legalize around Rs 500 billion black money,” he said.

Since the formation of the money laundering department, there have been reports of money laundering being carried out on people close to some business/corporate houses and political leaders. The amount deposited in the Swiss Bank account is increasing every year from Nepalis. Last year, the Center for Investigative Journalism, in collaboration with the International Association of Investigative Journalists, published a news series saying that the number of illegal earnings being smuggled into Nepal by taking them to a country or bank where the source is not found has increased.

Former acting governor of NRB Krishna Bahadur Manandhar said that there is no accountability in the investigation related to money laundering and corruption in Nepal.