Nepal's biggest corruption scandal: Minister, bureaucrats indicted in Rs 435 crore Airbus deal

New Delhi, Delhi, IndiaUpdated: Jan 03, 2019, 08:44 PM IST

Despite being a small nation, Nepal was never colonised by any country. It has always been a sovereign nation and served as a buffer state between Imperial China and British India in the past. So, Nepal does not have an Independence Day. Photograph:(ANI)

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Nepal's Civil Aviation Minister Rabindra Adhikari and top-level bureaucrats have been accused by the Public Accounts Committee of Parliament of misappropriating at least Rs 435 crore.

Nepal's USD 209.6-million Airbus deal, the largest ever in the country's aviation history, is turning out to be one of the biggest corruption scandals in the country as a parliamentary committee indicted a top minister and some senior bureaucrats of graft in the deal.

Nepal's Civil Aviation Minister Rabindra Adhikari and top-level bureaucrats have been accused by the Public Accounts Committee of Parliament of misappropriating at least Rs 435 crore while procuring the two Airbus A-330 jets for national flag carrier Nepal Airlines Corporation.

The sub-committee led by Nepali Congress lawmaker Rajan KC submitted a 58-page probe report to Public Accounts Committee on Wednesday, implicating officials at the highest levels who were in charge at the Civil Aviation Ministry during the procurement process.

The report, prepared after a three-week long investigation, has charged Civil Aviation Minister Adhikari and former ministers -- Jivan Bahadur Shahi and Jitendra Dev -- with shying away with their responsibilities to stop the deal.

The report has categorically termed NAC Managing Director Sugat Ratna Kansakar as the main accused of the scandal and recommended for his immediate suspension along with two sitting secretaries, Prem Kumar Rai and Krishna Prasad Devkota and former secretary Shankar Prasad Adhikari who had acted as NAC chairman during their tenure as tourism secretary.

Shahi has been accused of sending the commitment fee to purchase the jet through a ministerial-level decision.

In his statement to the investigation panel, he had denied having direct involvement in the NAC jet procurement process.

Former minister Dev has been accused of making the first payment to HiFly X Ireland, the supplier of the jets, during his tenure.

Minister Adhikari has been charged with negligence as he was found to have sent the final instalment of a payment to Portuguese leasing company HiFly.

Contrary to his earlier promise of a detailed investigation into the case, he had carried out only a minor in-house investigation.

"The NAC has not given us the bill of sale of the two jets. We suspect that the 'irregularities' amount could go further up if the bill of sale is calculated," Rajan told the lawmakers.

"It needs a further investigation on the amount released to HiFly X by NAC and the amount paid by HiFly to the aircraft manufacturer Airbus.

"There were no details on the discount received by the NAC during the purchase of the jets, he said, adding, 'We have asked PAC to get the payment details from the Airbus through the Foreign Ministry.

"The sub-committee has questioned the motive of the NAC and HiFly Portugal for forming a special purpose vehicle--Hi Fly X Ireland--to specifically look into the procurement process.

The committee has termed Hi Fly X as a 'fictitious' company and has suspected 'massive financial irregularities' in the deal.

While advance payment was released to the Portugal-based HiFly Transporte Aeroes, rest of the payment was released to Ireland based company, the report said.

It has also pointed out the mismatch in manufacturer's serial numbers assigned to NAC jets.

Initially, the numbers '1840' and '1842' were issued to NAC.

Airbus later assigned '1845' and '1854' after receiving the commitment fee.

However, at the Airbus' manufacturing plant in Toulouse, France, the aircraft serial numbers were '1872' and '1878'.

The '1845' and '1854' that NAC had claimed to be its own actually belong to Tibet Airlines and Spain's Iberia Airline respectively, the report explained.

As per Clause 236(1) of NAC financial bylaw, the national carrier is required to invite proposals only from the aircraft manufacturers to purchase brand new aircraft.

However, it went with Clause 236 (2) of the bylaw which allows the NAC to procure an old plane from a leasing agency, banker or airline operator besides manufacturers.

The sub-committee report states that NAC had signed a USD 209.6-million contract for two A330-200 jets with the United States-based AAR Corp in April 2017, ignoring the rate suggested by its sub-committee.

The report said that the sub-committee had suggested that each jet would cost USD 93,047,434 (after adjusting 2.76 per cent of price escalation rate) based on the 2016 sales price list.

This ignorance has incurred USD 23.6 million losses in the deal involving two jets, it said.

Specifications like maximum takeoff weight was revised downward to 230 tonnes from proposed 242 tonnes as specified in the bid documents, the report pointed out.