KATHMANDU: Amid criticisms for its engagement in profit-making ventures, the Nepali Army (NA) — manipulated to “secure hefty commissions” — is reportedly making preparations to procure weapons worth Rs 6 billion from China, and that too without competitive bidding.

NA sources have allegedly disclosed that the NA’s plan to acquire Chinese weaponry from a Chinese company Norinko through Nepali agent Lokendra Karki has been exposed following the appointment of Purna Bahadur Khadka as the Defense Minister.

Sources suggest that the NA intends to replace its former local agent and purchase arms from China in bulk, with the help of Karki, the brother of Nepali Congress (NC) leader and former minister Gyanendra Bahadur Karki.

Allegedly, the NA plans to procure 26 APCs and 72 tactical vehicles without a competitive bidding process.

According to the source, the procurement of weapons from China is taking place through the Chinese Embassy in Kathmandu, without following a transparent process.

Allegedly, the price of each APC has been set at Rs 77.7 million, which is significantly higher than the market value.

NA Spokesperson, Brigadier General Krishna Prasad Bhandari, stated that he had no knowledge regarding the procurement of weapons by the Nepali Army. In a conversation with Khabarhub, Bhandari said, “As of now, I have not been informed about the Nepali Army’s plan to purchase arms from China.”

The Ministry of Defense, too, denied any knowledge of the alleged procurement of weapons. Talking to Khabarhub, Defense Ministry Spokesperson, Joint Secretary Prakash Paudel said, “I have not been informed about the Nepali Army’s plan to purchase weapons.”

The source also suggests that, under the influence of Lokendra Karki, the NA is attempting to replace the Korean-made weapons that have proven ineffective with newly procured arms.

Lokendra Karki, the Nepal-based representative who reportedly handles matters related to Chinese companies for the procurement of weapons, too, denied any knowledge of the alleged arms purchase.

Talking to Khabarhub, Karki stated, “I am not aware of this matter. Although my name has come up due to my previous engagement with the Nepali Army, I have no involvement in the current weapons acquisition.”

Karki said he has business in Singapore and Nepal and spend most of his time there refuting allegations of his involvement with the NA.

Suspicion of large-scale fraud in arms procurement

Taking advantage of the fluid political situation and transition, there are suspicions of possible manipulation and large-scale fraud in the procurement of weapons, allegedly being perpetrated by some high-ranking officers of the Nepali Army.

In the past, the NA had procured four APCs from Indian company Mahindra at Rs 39.8 million, as a means of maintaining geopolitical balance.

NA sources claimed that the Nepali Army is considering procuring APCs from China instead of India, allegedly due to the higher commission offered by China.

The source further claimed that the desire for hefty commissions is influencing even the highest levels of political leadership, leading to potential disruptions in the procurement process.

The source also suggests that, under the influence of Lokendra Karki, the NA is attempting to replace the Korean-made weapons that have proven ineffective with newly procured arms.

Suryanath Upadhyay, former Chief Commissioner at the Commission for Investigation of Abuse of Authority (CIAA), and former Secretary believes that arms procurement should be conducted confidentially, given its importance to national security.

He argued that the procurement should be carried out promptly, without the involvement of commissions or corruption.

Upadhyay emphasized the sensitivity of arms procurement and noted that even the Nepali Army does not conduct open competition.

However, he stressed that the internal process should be transparent, and commission-based activities should be avoided.

Reports suggest that Lokendra Karki has established a company called Global Holding Network Pvt Ltd in Singapore, without government permission, which is allegedly being used to arrange for commissions, inflate purchase prices, and embezzle large sums of money by making payments in Nepal through his own foreign company.

Upadhyay said that arms procurement is not a matter of competition, and countries do not purchase arms through tenders or papers.

The process is carried out confidentially from all sides. He also noted that the Prime Minister should keep an eye on the matter and investigate any complaints.

However, he emphasized that national security should not be a subject of discussion arguing that while the purchase of weapons is a matter of national security, the Nepali Army should not prioritize commissions and corruption.

Replacing agent for the sake of commission

According to an NA source, Lokendra Karki has allegedly involved his staff, Anupama Shakya, and another staffer with the surname Naidu, at a time when the deadline for Chinese company’s representatives in Nepal, Umesh Shrestha and Roshan Shrestha, still in place.

It is reported that the Chinese company plans to change its agent in Nepal due to pressure from the Defense Minister and the large-scale procurement of Chinese weapons.

Umesh Shrestha, the Nepali representative of Noringdo Company, has lodged a complaint at the military headquarters, Bhadrakali, claiming that he was forced to resign from his agency and demanded the commission for the purchase himself.

Under pressure from Defense Minister Purna Bahadur Khadka, an attempt was made to change the representative of the Chinese arms company in Nepal.

Sources claim that Lokendra Karki himself held a secret meeting with the Chief of Army Staff Prabhuram Sharma, Defense Minister Khadka and representatives of the Chinese arms company only a few weeks ago.

However, the claim of a secret meeting between Lokendra Karki, Chief of Army Staff Sharma, Defense Minister Khadka, and representatives of the Chinese arms company could not be independently verified.

However, if true, it would be a matter of concern as it could indicate a lack of transparency in the arms procurement process and the involvement of personal interests. It is essential for any procurement process to follow the proper channels and ensure transparency to prevent any fraudulent practices.

During field tests of these weapons purchased from Korea, issues such as barrel heating, cocking handle breakage, and misfiring of 6-7 bullets were observed, yet no investigation has been conducted to determine the cause of these problems, whether they are due to defects in the Korean weapons or poor quality.

If the information provided by the military officer is genuine, it suggests that Lokendra Karki may be involved in illegal activities such as money laundering.

Operating companies without government permission is a violation of Nepalese law, and if Karki is found guilty, he could face legal consequences.

Additionally, if Karki is using these companies to inflate the prices of imported goods, it could be harmful to the Nepalese economy and to the people of Nepal who may end up paying more for basic necessities.

Reports suggest that Lokendra Karki has established a company called Global Holding Network Pvt Ltd in Singapore, without government permission, which is allegedly being used to arrange for commissions, inflate purchase prices, and embezzle large sums of money by making payments in Nepal through his own foreign company.

The registered office number of the said company is 049705, located at 20 Cecil Street, 14-01 Equity Plaza, Singapore. The telephone number of the company is 6563201888.

With the completion of the first phase of procurement, the NA has promised to buy up to 50 APCs and other weapons from China.

Karki, who has a history of involvement in arms procurement deals, was also involved in the Nepali Army’s purchase of weapons from South Korea.

The South Korean companies S&T Motive had reportedly been trying to sell weapons to the NA for a long time, but they were unsuccessful in convincing military officials to give up to 50% commission if they bought weapons from their company and arranged payment from a middle country.

It is also alleged that Karki is secretly importing explosives from China, as India does not easily provide them.

The army has promised to buy up to 50 APCs and other weapons from China after completing the first phase of procurement.

South Korea, which had been attempting to sell weapons to the NA since the tenure of the former Chief of Army Staff Prajwal Shumsher Rana, was able to offer a significant commission during the tenure of Purna Chandra Thapa.

Lokendra Karki, the brother of NC leader Gyanendra Karki, faced an issue with the purchase of K2 weapons from South Korea without a competitive bidding process during the tenure of then Chief of Army Staff Thapa.

Karki, along with a person surnamed Rayamajhi, who is also a relative of the former NA chief, had brought the arms as an undeclared partner.

On June 22, 2019, Deputy Prime Minister and Defense Minister Ishwor Pokharel approved the proposal to be submitted for the approval of the Government of Nepal Council of Ministers, and the government subsequently approved the army’s proposal.

The NA had bought weapons worth one and a half billion from the Korean company Daewoo Precision Industries, including 30,000 K2, assault rifles at a rate of US$900.

This transaction took place during the tenure of Thapa as the Chief of Army Staff.

During the tenure of Purna Chandra Thapa, the NA deviated from its longstanding practice of only using tested weapons.

Without proper study and testing of the products, Thapa purchased weapons through Lokendra Karki’s setting.

During field tests of these weapons purchased from Korea, issues such as barrel heating, cocking handle breakage, and misfiring of 6-7 bullets were observed, yet no investigation has been conducted to determine the cause of these problems, whether they are due to defects in the Korean weapons or poor quality.

Reality of K2 series of weapons

The K2 series weapons are believed to bear similarities to the M16 rifle manufactured in the United States, but they have not been widely adopted by professional armies, except in countries known for their high levels of corruption.

For instance, the K2 weapons have been used by the armies of Fiji, Nigeria, Cambodia, Peru, Senegal, and Iraq. However, the NA infantry is also reported to be using the K2 weapons.

According to the source, the NA had classified the G36 produced in Germany, the M6 produced in America, and the Galil produced in Israel as good weapons during the procurement process.

However, during the time of Thapa, inferior weapons were purchased due to the involvement of commission agents, despite the fact that better options were available.

During the tenure of the former Chief of Army Staff Gaurav Shumsher Rana, there was an effort to initiate the procurement process for modernizing the Nepali Army by selecting a country between the United States, Germany, and Israel.

However, as the delivery of the American weapons was delayed, the G-36 weapon from Germany was sent only for use by the Bhairabnath Battalion.

Even in the military report at that time, it was concluded that the tests and experience with Korean weapons would not be sufficient.

Subsequently, Rajendra Chhetri, who became the Chief of Army Staff after Gaurav Shumsher, moved forward with the procurement process for American M16 weapons.

However, agents from the Korean company insisted on the purchase of their weapons, but their quality was deemed unsatisfactory and rejected.

It has also been reported that Lokendra Karki, and the former NA chief Thapa, abruptly reversed an agreement to install a plant of a NATO-quality Turkish company that can make bullets for weapons used by US and Nepali forces.

The NA’s procurement process, under the leadership of the then Chief of Army Staff Purna Chandra Thapa, aimed to acquire quality weapons and companies without categorizing them by country, for the sake of cost-effectiveness and uniformity.

Despite initial plans to purchase American weapons, Thapa also considered buying from Korea due to their competitive pricing.

He wrote to the Ministry of Defense for approval, and even lobbied Korean Embassy officials to support his decision.

The Ministry of Defense hastily decided according to the intention of the NA Headquarters.

On June 22, 2019, Deputy Prime Minister and Defense Minister Ishwor Pokharel approved the proposal to be submitted for the approval of the Government of Nepal Council of Ministers, and the government subsequently approved the army’s proposal.

Secondhand and useless ammunition plant purchased by Karki

The Nepali Army had set up an ammunition plant in Sundarijal with the aim of producing 5.56 mm and 7.67 mm bullets for automatic rifles.

This project was initiated by Lokendra Karki in collaboration with the then Chief of Army Staff and the political leadership. However, the plant has not yet become operational.

It has also been reported that there were significant financial irregularities in the procurement of goods facilitated by Karki, however, there has been no investigation conducted to date.

According to NA sources, Rajan Rayamajhi, who was an army officer at the time, was also allegedly involved in these cases.

It has been said that the plant to produce bullets of 5.56 and 7.67 mm size for automatic rifles, which was brought to Sundarijal by Karki in collusion with the then CoAS Thapa and his relative Rayamajhi, was second-hand and purchased from a Korean company.

There are suspicions of financial irregularities in this transaction, but no investigation has been carried out yet.

Preparations are being made to purchase new ammunition plant from China

Meanwhile, Defense Minister Khadka is making arrangements to acquire a new ammunition plant from the Chinese company Norinko, with a budget of billions.

It has been learned that the company’s Business Manager, Yao Qiushi, visited Nepal recently for the same deal.

This comes after the previous plant was shut down and a new procurement process has been initiated from China due to the current economic crisis.

It has also been reported that Lokendra Karki, and the former NA chief Thapa, abruptly reversed an agreement to install a plant of a NATO-quality Turkish company that can make bullets for weapons used by US and Nepali forces.

Instead, he brought second-hand machines from a Korean company, reportedly for a large commission.

The price of the Turkish bullet production machine was less than two and a half billion, but Karki chose to take a U-turn in the end.