Nepal | September 16, 2019

EDITORIAL: Launch enquiry

The Himalayan Times

The government must launch a thorough investigation to control financial crime and growth of informal economy

As many as 55 Nepalis have invested in foreign countries, mostly in tax haven countries, violating the domestic laws and Anti-Money Laundering Act, according to a year-long investigation conducted by the Centre for Investigative Journalism (CIJ), Nepal in collaboration with the International Consortium of Investigative Journalists (ICIJ). The report was made public on Wednesday. The report titled ‘Nepal Leaks 2019: Illegal Wealth Watch’ states that Nepalis have also stashed funds in Swiss banks. They started parking their wealth in Swiss banks beginning 1996 when the Maoist insurgency began. During the decade-long conflict, Nepalis had stashed a whopping 240.3 million Swiss francs in Swiss accounts, according to data released in 2017. Savings in Swiss banks hit 460.8 million Swiss francs (approximately Rs 52 billion). “Even now, Nepalis have Rs 35.8 billion in the banks there,” according to the report. However, the funds of Nepalis in Swiss banks declined dramatically once the conflict was over. It has also been found that some foreigners have used Nepali documents to deposit money in Swiss banks.

The CIJ report also explains that 55 Nepalis have invested in several countries, and nearly a dozen business groups, including others whose names do not figure in the report, are involved in channelling their ill-gotten wealth abroad. A general tendency is that these groups are also bringing the money back into the country in the name of Foreign Direct Investment (FDI), adds the report. Most of the money they brought as FDI came from tax haven like the British Virgin Islands, where it is not required to show the source of income. The ICJ report says a professor, a doctor, a former MP, businesspersons and politicians are among those who have invested abroad, disregarding the law of the land. An NRN can invest abroad and legally bring investment into the country by notifying the government. A foreigner, however, has to take the government’s permission before investing in Nepal.

The way Nepalis have parked wealth and invested abroad raises serious questions as to how they could have siphoned off such huge amounts of money out of the country. When money is siphoned out illegally, it could be used for funding terrorist activities and the informal economy could grow, causing stress on the national economy. The ever growing informal economy does not augur well for overall economic growth. The US Department of State Publication Bureau of Counterterrorism and Countering Violent Extremism released on June 2, 2016 stated that Nepal had “failed to work against or check to fund in terrorist activities”. It is high time the government launched a thorough investigation to control the ill-gotten wealth coming into the country and going out through illegal means. The US report had warned that international terrorist groups might use Nepal as a transit point or as a safe haven for hiding due to the open border between Nepal and India and the poor security situation at the Tribhuvan International Airport. The government must take effective measures to control illegal activities such as the “hundi” transaction. The hundi business has been helping expand the size of the informal economy. Tough measures are needed to control the ill practice.


Social security 

There was a time not too long ago, when the only news about Nepal that travelled abroad was about mountaineering. Initially, foreign mountaineers flocked to Nepal during the two climbing seasons, namely spring and autumn, which increased to three and then four. Many a foreign climber has made fame by climbing the Himalayas, mainly the Eight Thousanders. Still many more travel and trekking agencies have prospered by catering to foreign expeditions. But the Sherpas who help the climbers reach the summit of these mountains are lowly paid.

The Sherpas spend the prime years of their life on the mountains, but their contribution in the making of a successful expedition and to the nation’s economy has been largely ignored. Guiding is much riskier than climbing, and fixing ropes on Everest is said to be the trickiest. The safety of the Sherpas should be a major concern of all. The stakeholders, therefore, have the obligation to provide them social security in recognition of the immense contribution they have made in the tourism field. Failing to do so could see less number of Sherpa enthusiasts of the younger generation in the years ahead.

 


A version of this article appears in print on January 18, 2019 of The Himalayan Times.


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