Kathmandu, April 4

The Commission for the Investigation of Abuse of Authority (CIAA) has filed a case against 32 individuals, including former minister for tourism, culture and civil aviation Jeevan Bahadur Shahi and Sugat Ratna Kansakar, then managing director of Nepal Airline Corporation (NAC), for their alleged corruption in the procurement of two Airbus A30-200 back in July 2018.

The CIAA filed the case at the Special Court today seeking Rs 1.47 billion in compensation.

According to the CIAA, consortium partners from the supplier side including AAR International INC, German Aviation Capital, and Hi Fly Transporte Aereos SA (Hi Fly Airlines) had selected Hi Fly X Ireland Ltd as a special purpose company (SPC). As the SPC had taken the procurement amount for the two aircraft from NAC, representatives of the foreign companies in collusion with NAC office bearers had caused the corporation to incur loss amounting to $13 million or Rs 1.47 billion.

As per the press release published by the CIAA, then-tourism minister Shahi is accused of his involvement in the procurement scandal causing intentional damages to NAC through his decisions which led to the procurement of two aircraft with reduced minimum takeoff weight (MTOW) specifications of 230 tonnes instead of 242 tonnes at a pricier cost and referring NAC officers to be provided dollar exchange services for the commitment fee without any bank guarantee.

Along with Shahi and Kanskar, the CIAA has also accused Shankar Prasad Adhikari, then secretary at the MoCTCA, and chairman of the NAC's executive board of approving the document of AAR Corp with price escalation conditions which goes against the request for proposal documents. Also, a charge sheet has been filed against seven executive members of NAC, including Sishir Kumar Dhungana, Buddhi Sagar Lamichhane, Teknath Acharya, Nima Nuru Sherpa, Muktiram Pandey, Jeevan Prakash Sitaula, and Achyutraj Pahadi.

The authority has also accused then NAC director Ramhari Sharma Sedai, Janak Raj Kalakheti and then deputy director Prabhash Kumar Karmacharya, Ganesh Bahadur Chand, Karna Bahadur Thapa, and acting director and senior captain Subash Rizal.

Likewise, the CIAA has charged representatives from the supplier company including John M Holmes, president and CEO of AAR International INC, Ana Topa, managing director of German Aviation Capital GMBH, Paulo Mirpuri, president of Hi Fly Transporte Aereos, Gerald Thorton and Christian Nuehlen of Hi Fly X Ireland Ltd, and Markus Radbruch, head of aviation and Ralf Springer, senior consultant of Norton Rose Fulbright LLP, for their involvement in the case, among others.

Around mid-January of 2016, a sub-committee formed by NAC under the leadership of Kansakar had introduced plans to procure new planes followed by the government's decision to provide a guarantee for their purchase in September of that same year.

A few days later, the NAC published a 45-day notice for the purchase of two Airbus A300-200 with Rolls-Royce Trent 772B engines with less than 1,000 hours of flight time.

The first wide-body Airbus A330-200 aircraft was added to NAC's fleet on June 28, while the corporation acquired the second long-haul aircraft on July 26, 2018.

A probe carried out by the Public Accounts Committee (PAC) of the Legislature-Parliament had found irregularities in NAC deal to purchase the two Airbus A300-200 series wide-body aircraft. The committee had found that the NAC board did not properly follow the Public Procurement Act and bought planes that did not match the weight specified in the initial request for proposal.

Moreover, the PAC report stated that corruption worth billions had taken place while purchasing these aircraft for NAC and had recommended the CIAA to carry out further investigation into the issue.

The Office of the Auditor General (OAG) had also stated earlier that NAC had exploited loopholes in the Public Procurement Act and the corporation's bylaws while acquiring wide-body aircraft.