NVC claims that NTL has violated the Public Procurement Act, 2063 and Contract Act, 2056

Kathmandu

Corruption has only aggravated the years of chronic financial problems confronting the National Trading Limited (NTL), created by the government in 1962 to manage Nepal’s trade — both imports and exports.

Various government bodies — Ministry of Supply (MoS), National Vigilance Centre (NVC), Centre for Investigation of Abuse of Authority (CIAA) — have concluded that NTL is fraught with corruption.

In order to clear its debts, NTL planned to sell the land owned by the enterprise. This was when the government bodies started to study the status of NTL, and spotted, what they call, foul play.

Damaged commodities worth Rs 30 crores

In 2008, former prime minister Baburam Bhattarai-led government closed NTL’s duty-free shop at Tribhuvan International Airport (TIA). “That move led to a cumulative loss of Rs 30 crores to NTL as liquor and tobacco which were to be sold at the duty-free shop lay stored in the bonding house,” said NTL sources.

According to a CIAA report 2014, NTL has damaged commodities totalling Rs 30 crores lying in its warehouses at different locations in Kathmandu. However, NTL claimed that as of today, it only has commodities worth Rs 11 crores — liquor and tobacco are worth Rs 7.5 crores and machinery parts worth Rs 3.5 crores — in its stores. The NTL is currently under scrutiny of authorities now putting the pieces together with regard to the

missing goods worth 19 crores.

General Manager of NTL, Laba Raj Joshi informed that on January 3, the Board of Directors of NTL formed a committee to study the possibility of sale or auction of the commodities stored in its warehouses.

Spokesperson of CIAA, Jeevaraj Koirala said that CIAA has been investigating the complaints filed against NTL alleging corruption and unaccountability of crores of rupees. He said, “For now, I can only say that we have registered a case against NTL and is currently under investigation.”

There are 11 stores near the Tukucha River bridge opposite the NTL building at Ramshah Path. Four of the stores, containing alcoholic products, remain sealed since 2008 by the Department of Customs and the Inland Revenue Department.

Joshi said that, according to the report submitted by an NTL committee, alcoholic beverages like beer, and tobacco are unfit for consumption because they are past their expiry dates. The machinery parts have either rusted or been rendered non-functional. He said, “Among all the commodities in the warehouse, commodities worth Rs 60 lakhs only is good to be sold in the market today. That said, NTL, however, cannot sell these commodities due to the ongoing investigation.”

Wishy-washy contract deals

Data received from the National Vigilance Centre shows that NTL signed a contract with Ami Avi Store, located inside NTL premises, allowing the store to sell the alcoholic beverages stored in the warehouse for 12 years. The contract was drawn in 2013. As per the Public Procurement Act, 2063, NTL should have issued a public notice stating its activities with Ami Avi Store before signing the contract with the said store. The process requires announcing the tender through the committee and taking the final decision with consent from the Board of Directors. None of these procedures were followed while signing the contentious contract with Ami Avi. The NVC report also questions the grounds in which the then General Manager of NTL, Satya Narayan Meheta, allowed such violation of the Act and made the decision without involving the Board of Directors of NTL.

On May 30, 2010, NTL made an agreement with Infinity Infrastructure, a construction company, leasing out its 1,42,204 sq feet land at Ramshah Path. This contract stated that Infinity Infrastructure could build and run “a Land Mark Building” for a period of 33 years. Hardly had the ink dried when the Ministry of Home Affairs (MoH) and Ministry of Commerce and Supply (MoCS) stepped in to stop any construction of the said building citing security concerns in and around Singh Durbar.

In July 2010, the Public Account Committee (PAC) also ordered NTL to stop the construction until further decision was taken. The PAC had cited “tactical and legal problems” as reasons for its intervention.

On December 23, 2016, NVC prepared a report based on its inspection on NTL. The report showed that there was corruption at play in the contract process of the land under NTL at Ramshah path. It concluded that NTL is fraught with unaccountability; it also found the then GM Meheta and the corresponding bureaucracy guilty of mismanagement. For further investigation of the issue, NVC forwarded the report to CIAA on December 28, 2016.

The NVC report further claimed that NTL ignored PAC’s order and instead sought bank guarantee for the construction of the proposed land mark building and further extended the deadline for the bank guarantee. Without following any legal procedures, NTL arranged Rs 7.90 crores of bank guarantee from Siddhartha Bank and Global IME, dated February 5, 2017  and 8 February 2017, respectively.  With further investigation by NVC, it came to notice that the same land was leased out to other parties too (aside from Infinity Infrastructure). The NTL had also drawn agreements with two other companies, Yogamber Auto Centre and Khaptad Suppliers, for construction of permanent buildings.

About 968.752 sq feet part of the same land was rented out to Yogamber Auto Centre on August 26, 2013 for five years by Meheta to operate a driving centre. However, Yogamber Auto Centre constructed a party palace on the land it had rented from NTL. Yet no action was taken by NTL against Yogamber Auto Centre for violating the contract.

Similarly, NTL leased 41,754 sq feet part of the total land and 53 store rooms to Khaptad Suppliers on November 21, 2014 for business purposes for five years under instructions from Meheta.

The NVC report shows that there were no clear procedures followed by NTL while leasing or renting out its properties. The NTL has been found to have violated the Contract Act, 2056 as well.

The Ministry of Supply is now planning to dismiss all the contracts signed by NTL with other parties. However, the contractors are contesting this. Joint Secretary of MoS, Mukunda Paudel said, “Infinity Infrastructure is not ready to dismiss the contract and has threatened to file a case at the Supreme Court against the government agencies involved. However, we are trying to dismiss the contract and punish the culprits at any cost.”

One of the members of PAC, Ramhari Khatiwada said that the committee is looking for the initial complaint filed against NTL to resolve the issue. The physical copy of the complaint filed has been misplaced. He said, “We are looking for the file. There are more than 260 files of complaints lodged.” According to Khatiwada, the issue is likely to come up during PAC’s upcoming meeting.

Loss-making government enterprise

Paudel claimed that the previous management boards of NTL were found responsible for the distraught financial condition of NTL. He said, “Irresponsible performance of high level people in the past led NTL to incur losses by the day. If the previous managements had run the enterprise responsibly, we wouldn’t have had to see this day.”

One of the many loss-making entities of the country, the government owned enterprise, NTL already owes more than Rs 1.5 billion to the government. Information Officer of NTL, Geeta Niraula told THT Perspectives that from 2008, the enterprise’s financial position started weakening after the government’s move to close the duty-free shops at TIA. She insisted that the government put a loan burden on NTL by mortgaging NTL’s lands to the Himalayan Bank in order to pay the previous due amounts incurred by NTL. She said, “The government has neglected this enterprise. Unlike other government entities, NTL has never been provided any grants or financial support to get up on its feet. Continuous negligence by the government has weakened the financial status of NTL.”

In December 2016, the MoS removed Meheta from the post of General Manager accusing him of failing to improve the financial condition of the public enterprise. Currently, NTL has outstanding dues totalling Rs 92 crores. Its average annual revenue stands at Rs 5 crores while its administrative costs amount to around Rs 10 crores.

Lab test for liquor at NtL warehouse

KATHMANDU: The meeting held on February 15 by the Board of Directors of NTL, had in attendance the representatives of MoS and Inland Revenue Department (IDR). It was decided the alcoholic beverages be sent for lab test to IDR laboratory to check its suitability for consumption. The under-general manager of IDR, Rajendra Poudal, said, “This case is related to Madira Act 2031, if the alcoholic beverages are found to be unfit for consumption, then NTL will dispose of them; if not, they will be auctioned.”

General Manager of NTL Laba Raj Joshi said that before undertaking the process of disposal or auction of these commodities, NTL will have to take permission from CIAA because of the ongoing investigation.