Pokhara International Airport corruption scandal deepens « Khabarhub

KATHMANDU: Former ministers and senior officials involved in the construction of Pokhara International Airport, highlighted as one of Nepal’s top corruption scandals, are under scrutiny.

The Auditor General’s report revealed several irregularities during the construction of the airport, which is now operational.

The Commission to Investigate Abuse of Authority (CIAA) is investigating alleged corruption during the airport’s construction.

CIAA sources reveal that numerous employees of the Civil Aviation Authority of Nepal (CAAN) are providing insights into the construction process.

However, suspicions of political involvement in corruption have turned the focus of the investigation to employees.

Key decision makers involved

There is evidence of widespread corruption, from design to implementation and payment processes, involving senior officials at political echelons.

Under the tenure of former CAAN Director General Ram Prasad Neupane, along with Deputy Director General Suman Kumar Shrestha, managers Murari Bhandari, Baburam Poudel, Sanjeev Singh Kathayat and Director Mahendra Singh Rawal, the cost estimate for Pokhara International Airport was prepared.

This estimate was approved at a CAAN board meeting chaired by the then Minister of Culture, Tourism and Civil Aviation, Sharad Singh Bhandari, on September 22, 2010.

During that period, the then Director General of Customs Navaraj Bhandari, Joint Secretary Lok Bahadur Khatri, Member Karna Bahadur Bhandari, Nepal Air Service Corporation (NAC) Chairman Sugaratna Kansakar, Members Binodananda Chaudhary and Binod Singh Basnyat, along with the then Director General of CAAN Ram Prasad Neupane formed the board.

Subsequently, Minister Lokendra Bista, succeeding Bhandari, revised the approved cost estimate and design.

During a CAAN meeting on December 16, 2011, chaired by Minister Bista, it was decided to change the plans.

The CAAN board at this time consisted of Director General Ram Prasad Neupane, Joint Secretaries Lok Bahadur Khatri and Ranjan Krishna Aryal, along with members Jyoti Adhikari, Manoj Karki and Phurba Chhiring Sherpa.

After China CMAC secured responsibility for the airport construction, Joint Secretary of the Ministry of Finance (now Chief Secretary) Baikuntha Aryal entered into a concessional loan agreement with China’s Exim Bank on April 10, 2016.

The revised cost estimate and contract document were approved at the CAAN board meeting on February 11, 2012, chaired by Triratna Manandhar.

In response to the tender documents drawn up, CAN issued international tenders for the construction of the airport in March 2012.

A six-member committee, including lawyer Dwarika Prasad Bhattarai, then assessed the contract proposals.

Post Bahadur Bogati, from the Maoist party, took over as Tourism Minister.

Under the leadership of Minister Bogati, the CAAN board formed a subcommittee on July 30, 2012 to review the evaluation committee’s report.

Unfortunately, Minister Bogti passed away on September 15, 2014.

On September 14, 2013, a CAN meeting chaired by Tourism Minister Ram Krishna Shrestha decided to appoint an advisory team for the construction of the airport.

Ratish Chandralal Suman was Director General of CAAN during that time.

Following this, a CAAN meeting chaired by Tourism Minister and UML Vice Chairman Bhim Prasad Acharya approved the contract evaluation report on April 7, 2014.

According to information obtained by Khabarhub, the CAAN meeting on the same day, after approving the evaluation report, also gave the green light to China CMAC Engineering Company Limited’s bid to build the airport.

Despite the cost estimate prepared by CAAN, the agreement was concluded on May 22, 2014 with China CMAC Engineering Company Limited, which submitted the lowest bid.

The contract, which involved 14 people, including 3 from the Chinese company, was supervised by the then Deputy Director General of CAAN, Suman Kumar Shrestha.

In addition, the Auditor’s report points to the lack of helicopter parking, an inadequate bus terminal, equipment storage space, an aircraft repair center and ship storage at the airport.

After China CMAC secured responsibility for the airport construction, Joint Secretary of the Ministry of Finance (now Chief Secretary) Baikuntha Aryal entered into a concessional loan agreement with China’s Exim Bank on April 10, 2016.

At the same time, then-Finance Minister and current UML Vice Chairman Bishnu Paudel finalized a separate agreement with the Chinese government on loan terms.

After the original loan agreement, it was amended on June 12, 2021, signed by Baikuntha Aryal, then Joint Secretary of the Ministry of Finance, and Zhang Tianqin of China’s Exim Bank.

Similarly, the then Joint Secretary, Ministry of Finance, Kewal Prasad Bhandari, the then Director General of CAAN, Sanjeev Gautam and DDG Gao Ning of Exim Bank China signed bilateral agreements to implement the loan only on February 25, 2018.

Corruption through contracts leads to construction lawsuits and tax exemptions

The General Accountant’s audit report has revealed significant malpractices in the construction process of Pokhara International Airport, including contract awards exceeding established cost estimates and customs and VAT exemptions of more than €2 billion.

From the start of the contracting process, which appeared to reduce the airport’s long-term capacity, until the completion of construction and payments, suspicions of corruption involving political leadership, high-ranking personnel and middlemen loomed large.

The Auditor General’s 60th report highlighted exemptions from customs duties and value added tax, which were not included in the contract agreement and included in the ‘master list’.

Despite the absence of provisions in the agreement, the project was included in the master schedule, granting a discount of Rs.

When businessmen accepted the offer, it was discovered that neither the contract nor any provision allowed for such fee waivers.

Yet customs and excise exemptions were listed in the project’s master list.

Similarly, the chief accountant omitted the use of stone and clay during the construction of the runway, necessitating a pier height reduction of 10 meters.

Despite a $9 million provision set aside out of the $3,170,000 under the contract, an additional consultant was hired and the US dollar price exceeded the terms of the agreement.

In addition, the Auditor’s report points to the lack of helicopter parking, an inadequate bus terminal, equipment storage space, an aircraft repair center and ship storage at the airport.

The CIAA urged the Director General of CAAN to provide documents and details on 17 points by March 25, 2024.

According to CIAA sources, the Director General of CAAN was personally present and gave statements on the construction of Pokhara airport.

Moreover, the authority is investigating after seizing numerous documents from CAAN.