Nepalis in tax havens, Swiss banks, cash laundering

Nepalis in tax havens, Swiss banks, cash laundering





In February 2015 The International Consortium of Investigative reporters (ICIJ) revealed that Nepalis held Rs5 billion in secret Swiss bank accounts. Most people thought the cash need to have been parked there by Nepal’s corrupt politicians.

But after the Centre for Investigative Journalism Nepal (CIJ Nepal) went via 3,000 pages of documents from Swiss Leaks, Offshore Leaks, the Panama and Paradise Papers, the names were of Nepal’s top commercial enterprise people. Even foreigners had deposited money in the banks the usage of Nepali addresses and files.


Savings of Nepalis inside the banks have now crossed Rs50 billion, email correspondence between CIJ Nepal and Swiss banks display.

The data additionally monitor that Nepalis commenced to deposit money in Swiss banks the year after the Maoist insurgency started out in Nepal in 1996.

Nepalis had Rs1.25 billion in the Swiss National Bank in 1996, but that determine doubled to Rs4.1 billion by means of 2006, while the war ended. Nepalis deposits inside the two years after the conflict declined to Rs3.9 billion. Records show that Nepali have withdrawn Rs 15.6 billion from Swiss banks thus far.

The largest Nepali depositers in a Swiss bank are Minu Shah Chhibber, and her two sons who live within the UK. They had Rs2.6 billion in Swiss banks in 2006-7. Even a few foreigners are discovered to have used Nepali documents to deposit their money in Swiss banks, such as an Israeli national the use of a Nepali passport to open an account with ‘Kathmandu’ as his cope with. Other account holders who've Nepal connections are Indians.


Despite it banking secrecy legal guidelines, an agreement between the Swiss authorities and the European Union in 2015 after the Swiss Leaks ends the specific confidentiality, and the Swiss conform to offer account information if demanded. The ICIJ says Swiss banks have profited from dictators, corrupt politicians, enterprise persons who avoid taxes and companies that make money via the illegal transaction of guns and drugs by means of letting them deposit their income.

The u . S . A . With the largest Foreign Direct Investment (FDI) in Nepal isn't China, India or the US as one may presume, however the tax haven nation of the British Virgin Islands. Of the full Rs137.Sixty seven billion acquired as FDI within the remaining two many years, the share of the British Virgin Islands (BVI) bills for forty five%. They obtained approval from the Nepal government to put money into and establish industries really worth Rs8 billion.

In 2017, the Panama Papers found out that seven Nepalis consisting of Upendra Mahato, the founder of Non-resident Nepalis Association, had invested in tax haven states. The ICIJ and CIJ Nepal collaborated in digging greater into these investments, and determined that Nepali companies have used tax havens to steer clear of taxes in Nepal or to transfer the illegally earned money to launder it. The cash changed into then repatriated to Nepal under foreign direct investment (FDI).

Investigations display that Birendra Mahato, a former lawmaker and relevant committee member of Federal Socialist Forum birthday party, his elder brother Upendra Mahato, Niraj Govinda Shrestha, a non-resident Nepali and Ajeya Raj Sumargi, a businessman, are worried in this problematic cash laundering scheme. They used the sale of the telecom organisation Ncell to avoid paying capital gains tax in Nepal.

After a G-7 Summit set up the Financial Action Task Force on Money Laundering (FATF) to combat money laundering and terrorist financing the Paris-based agency has been blacklisting international locations. The FATF blacklists nations not cooperating in anti-cash laundering financing. Nepal dedicated to abide by way of the standards drawn up by the FATF and its Asia-Pacific Group in 2012 and surpassed the Money Laundering-associated Act.  However, given these revelations, there's nonetheless a opportunity that Nepal may be blacklisted in destiny.
“While Nepal avoided the scrutiny and tracking standards of the global community in 2014 due to legislation and institutional reforms, there has not been effective implementation of the legal guidelines,” states Finance Minister Yuba Raj Khatiwada’s white paper on the economy final March.

Nepali agencies have additionally dealt with Mossack Fonseca, the intermediary law firm in BVI that helps groups to want to launder their cash by means of finding them felony loopholes in tax haven international locations. In 2015, the ICIJ posted information of the company in the Panama Papers, and then it closed down.

Panama Papers emails show that in 2008 Nepal’s Milap Group approached Mossack Fonseca to bid for a tender from the Nepal Supreme Court calling for an international representative for Judicial Mapping and Judicial Assessment for a venture on legal and judicial reforms. Milap Group emailed to Mossack Fonseca providing to together apply for the gentle, which a Mossack Fonseca respectable declined, saying the 2 should collaborate in future. Milap Group has been involved with foreign organizations printing excise stickers for Inland Revenue Department, bank notes for Nepal Rastra Bank and passport printing and supply of Ministry of Foreign Affairs.


Another corporation related to Mossack Fonseca is Nepal Ventures registered in BVI. It isn't clear from the Panama Papers who was indexed because the proprietor, however a organization with a comparable call is registered on the Office of Company Registrar in Nepal with Dhanusha lawmaker Juli Kumari Mahato as important investor. The agency has 20 percent proportion capital funding in United Telecom Limited. Mahato is the wife of Raghubir Mahaseth, Minister of Physical Infrastructure and Transport and sister of Upendra Mahato and Birendra Mahato. When requested, Juli Kumari Mahato denied having investments abroad, and said “it's far an insignificant coincidence” that a organization with similar name existed inside the British Virgin Islands.

The ICIJ and CIJ-Nepal investigations have also proven how money is laundered from tax havens into Nepal as Foreign Direct Investment (FDI). Records show that the Saurabh Group chaired via Bishnu Prasad Neupane, delivered foreign funding from the BVI to construct a hotel in Bhaktapur, but construction become stopped after Madhyapur Thimi Municipality observed the 17-storey constructing handiest had permission for a five-floor structure.

Saurabh Group brought the funding for the lodge from the BVI-based Global Technology and Trademark Company, and the Rs1.94 billion idea turned into authorised via the Department of Industry in 2013.

Sulav Agrawal is the director of 4 companies under the Saurabh Group and brought Rs300 million in FDI from a UAE-primarily based enterprise to fabricate soap and betel nuts in Birganj. Agrawal is also vice-chairman of Shankar Group, but the UAE organisation has the equal call as the one based totally in the BVI: Global Technology and Trademark which became also located to be evading taxes in its ventures in Parsa district.

Krishna Holdings Ltd of Hong Kong has a forty five% stake in Sarbottam Cement Pvt Ltd of Nawalparasi, additionally run with the aid of the Saurabh Group. The ultimate fifty five% shares are owned through Neupane and his relatives. Just like how Global Technology and Trademark is working out of now not simply the UAE but also the BVI, the Hong Kong-based totally Krishna Holdings is associated with the UAE-primarily based Krishna International.

Krishna International Ltd has referred to on its internet site that it has invested in as many as 22 countries including Nepal, Mauritius and Cyprus. Ramesh Kumar Sawarthia has delivered Rs29.5 million from Hong Kong to construct a industrial complex in Gyaneswor, Kathmandu in 2005.

The British Virgin Islands-based totally Global Technology and Trademark has additionally invested Rs 240 million within the printing and lamination region. This organisation has no Nepali partner, however Saurabh Group’s Jagadamba Synthetic and Quality Roto Packaging is likewise inside the printing and lamination business.

Four businesses wherein Saurabh Group’s Neupane has invested, have benefitted from Nepal’s arguable tax settlement policy which allowed them to escape with paying simply three.Forty five% of the entire taxes due to the kingdom after a Commission formed by means of Finance Minister Ram Sharan Mahat in 2015 waived bills.

The CIJ Nepal Nepal research based on the Paradise Papers leaks received by way of the German paper Süddeutsche Zeitungin 2017 also unearthed hyperlinks among Nepal’s Laxmi Cement and tax havens within the BVI, the Isle of Man, Seychelles as well as two Indian buyers. Shareholders of Laxmi Cement are also involved in KEPY Cement Udyog of Dhading and Ghorahi Cement of Dang.

The Act Restricting Investment Abroad, 1964 bars Nepalis from making an investment in a foreign country, however the ICIJ and CIJ-Nepal research determined that fifty five Nepalis have invested in overseas nations which incorporates famous captains of industry in Nepal and non-resident Nepalis. Although the law does no longer bar NRNs from making an investment abroad, however there are questions on their offshore companies.

Former lawmaker Birendra Mahato, who is currently a valuable member of the Sanghiya Samajbadi Forum-Nepal, has invested within the ‘OJSC Amkodor Holding Limited Company’ in Belarus together with his brother Upendra and another foreign places Nepali Niraj Govinda Shrestha, and a overseas companion Romeo Abdo, who also occurs to be connected to the Ncell tax-evasion case. Abdo, who's of Lebanese beginning has been doing commercial enterprise in Belarus, represented the TeliaSonera in Ncell in whose ownership switch of nearly Rs61 billion (the amount has reached Rs 72 billion now) turned into implicated in evading Nepal’s capital gains tax. Birendra Mahato admitted having the funding seven years ago, however not anymore, and denied understanding Abdo.

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