Breaking News

#PandoraPapers: 16 Nepalese involved in offshore dealings

A global investigation by the International Consortium of Investigative Journalists (ICIJ) has revealed that well-known political and business figures are using tax havens for money laundering. Among the names in the latest leaks is that of Nepal’s richest man, as well as other prominent businessmen in the country.

The names are contained in the ‘Pandora Papers’ leaks, a sequel to the ‘Panama Papers’ that had already exposed thousands of people around the world as well as revealed their secret email correspondence with banks and investment partners to illicitly move money around.

The Washington DC-based ICIJ provided to the Centre for Investigative Journalism Nepal (CIJ) documents pertaining to Nepal that involve the Chaudhary Group, Golchha Organisation, and other notable Nepalis with political connections.

The ICIJ and 600 collaborating journalists in 117 countries pored through a trove of 11.5 million leaked documents to reveal the findings. The ‘data tsunami’ in the Pandora Papers reveals shady offshore dealings of people like the leaders of Ukraine and the Czech Republic, the King of Jordan, former British Prime Minister Tony Blair, and people from Imran Khan’s inner circle.

From the leaked documents ICIJ provided CIJ, the secret correspondence and others seem to show that Nepal’s top businessmen violated the laws of the land by having investments abroad, buying and selling shares, and setting up shell companies in tax havens like the British Virgin Islands, Cyprus, Mauritius, Singapore, and other financial centers.

Nepali investigative journalists Krishna Gyawali and Ramu Sapkota led a team that analyzed the Pandora Papers and found that the Nepali companies had front companies registered in the British Virgin Islands (BVI) in the names of family members and associates through which they moved money through a series of shell companies to launder money without detection.

Prominent among the names in the leaked papers is that of Binod Chaudhary, Nepal’s only known dollar billionaire who was ranked the 2,141st richest man in the world by Forbes in 2018. The Pandora Papers reveal that he has companies in the BVI in the names of his wife and three sons, Nirvana, Varun, and Rahul.

The leaks provided to CIJ show that the Chaudhary family has registered the companies Cinnovation Incorporated, CG Hotels and Resorts Limited, Sensei Capital Partners Inc. in BVI, and CG Hospitality Holdings Global Pte Ltd in Singapore. Officials at Nepal Rastra Bank told CIJ that Chaudhary did not have permission to hold these investments abroad.  

Chaudhary has argued that his foreign investments were all legitimate, but he has admitted that he has used a loophole in Nepal’s Income Tax Act that allows Nepali citizens living abroad for more than 183 days a year to be treated as non-resident Nepalis who are allowed to invest around the world.

Chaudhary says in his biography published in 2013: ‘I took advantage of this (loophole) and decided to stay abroad for more than 183 days a year and become a temporary citizen of my own country. Today, my two sons Rahul and Varun are doing business abroad as non-resident Nepalis.’

In a response to CIJ’s query, Binod Chaudhary’s son Rahul said his group had not violated any Nepali or international laws, including those on foreign investment. 

“CG and its group of companies are in partnership with some of the most respected, reputed, and leading multinationals globally, information of which is readily available in the public domain,” he added. “We do not wish to comment on allegations against our business partners.”

When CIJ showed him the leaked documents, Nepal’s former Finance Secretary Rameshore Khanal said that Chaudhary had clearly misused the system because the law does not allow a Nepali citizen to take money out of the country as Chaudhary appears to have done. 

The Pandora Papers has minute details of company correspondence, share and money transfers, and other transactions between Chaudhary family members and partners. Some of the names mentioned are Pakistani, Singaporean, Sri Lankan, and Bangladeshi. 

One of those involved in Cinnovation in Chaudhary’s company registered in BVI is US national of Bangladeshi descent, Abdul Awal Mintoo who was investigated in 2018 by the Anti-corruption Commission in Dhaka over money laundering and loan extortion allegations.

In releasing the Pandora Papers leaks, ICIJ says that there is a vast underworld of global money transfers that work through layers and layers of offshore shell companies that are difficult to trace.

“There is a shadow economy, a shadow world out there that we are not aware of, and that this is a world that is enriching the people who are already rich. Shell companies are essentially the getaway vehicles for crime in the offshore world,” ICIJ director Gerard Ryle told Australia’s ABC tv in an interview ahead of the release of the Pandora Papers. 

She added: “The offshore world exacerbates poverty. It leads to inequality. When countries are robbed over their riches, it leads to all sorts of things like the refugee crisis.” 

Although Nepal’s businessmen have been nominated to Parliament by parties, there has not been any direct involvement of politicians in money laundering through offshore companies.

But the Centre for Investigative Journalism Nepal says politicians seem to be colluding with their business partners because there has been no investigation after its 2019 NepalLeaks investigation of the Panama Papers that revealed the names of dozens of Nepalis with unlawful offshore companies. 

‘The silence of the regulatory bodies appears to be encouraging the Nepalis’ investment in tax haven countries. Pandora Papers is an outcome of that surprising silence,’ CIJ says.

The other prominent Nepali business house implicated in the Pandora Papers is the Golchha Organisation. Leaked documents show it also has offshore companies in the British Virgin Islands (BVI) under the names of its patriarch Lokmanya Golchha, his brothers late Diwakar Golchha, late Mahendra Kumar Golchha, cousin Chandra Kumar Golchha and Diwakar’s son Hitesh Golchha.

Leaked documents examined by CIJ show that a Geneva-based law firm named Overseas Management opened an account at Barclays Bank in Switzerland in 2008 on behalf of Flatwood Limited operated by Golchha family members. The paper trail also shows that  Diwakar Golchha bought shares of Eastern Sugar Mills Limited in Nepal in 2008 through Flatwood Limited.

Golchha Organisation is one of the pioneer industrial houses in Nepal and its founders established the Biratnagar Jute Mill nearly 70 years ago. In fact, the 2019 NepalLeaks mentioned that Golchha Organisation was the first Nepali company to bring in foreign investment from the British Virgin Islands through Flatwood to operate companies in Nepal. 

Earlier CIJ investigations in 2017 showed that in a questionable deal, Golchha’s Eastern Sugar Mills was allowed by the Tax Settlement Commission to get away with paying only Rs400,000 when it owed the treasury Rs52 million in back taxes. Two members of the Commission and the director of the Inland Revenue Department are still facing corruption charges in the Special Court for granting allegedly illegal tax breaks to the Golchhas. 

Political links

Like Binod Chaudhary, Diwakar Golchha was also nominated by the Nepali Congress to the Constituent Assembly-Parliament in 2008, showing the political links of many of the businessmen named in the ICIJ documents. 

The other person with close links to Maoist Centre leaders is Ajeya Sumargi Parajuli, who was exposed in the CIJ NepalLeaks for allegedly transferring money from Nepal to tax havens the suspected ill-gotten wealth of politicians. And NepalLeaks papers also showed that Sumargi’s Zhodar Investments in BVI transferred $48,372,222 to his companies in Nepal in 2010. Zhodar’s co-owner is Cyprus national Sotirios Pittas, a lawyer and Sumargi business partner, the leaked documents show. 

According to Pandora Papers, Sumargi also invested in Worldwide Incredible Limited in the BVI in 2011, and several other companies based in the tax haven. Some of the monies from BVI have been transferred indirectly to Sumargi’s companies in Nepal, including Hetauda Lime Industry Pvt Ltd, Everest Mineral Products Pvt Ltd, Muktishree Pvt Ltd, according to the Pandora Papers. 

CIJ also found leaked documents that show Sumargi’s other company, The New Digitek getting permission to hold a 50% share in Nepali mobile companies, including Nepal Telecom Private Limited. 

Among the Pandora Papers is also a slew of email correspondence from BVI lawyers at Trident Trust Limited who warned that action would if  Sumargi did not provide mandatory details for Zhodar Investments. 

While poring through the Pandora Papers, CIJ’s investigative journalists Krishna Acharya and Ramu Sapkota also found that Sumargi’s business partner in Nepal, Arjun Prasad Sharma, also registered a company in BVI in 2019. 

In a convoluted money trail that involved several other shell companies, Sharma and Sumargi are seen to have worked in 2019 with the same Cypriot investment company, Sotioris Pittas & Co LLC. 

Other names

The other prominent people named in the Pandora Papers leaks are Radhe Shyam Saraf and his family, who own the Taragaon Regency Hotel and Yak & Yeti Hotel in Kathmandu. The documents that CIJ reviewed appear to show that the family has channeled money through companies in the British Virgin Islands to invest in Nepal. 

CIJ also found documents in the leaked papers showing that the Saraf family are involved in companies in Belize, Lichtenstein, and Mauritius and there appear to be questions regarding its investments in Hyatt International.

Saraf had already been embroiled in controversy in Nepal over the Taragaon property and has been investigated by the Office of the Auditor General, the anti-corruption agency, and the Ministry of Tourism.

The other Nepali businessmen mentioned in the Pandora Papers who have invested in suspected shell companies' offshore tax havens include Rajendra Shakya, Purushottam Poudyal, Sudhir Mittal, and others.

No comments