KATHMANDU: Former ministers and high-ranking officials linked to the construction of Pokhara International Airport, flagged as one of Nepal’s most significant corruption scandals, face scrutiny.

The Auditor General’s report spotlighted multiple irregularities throughout the airport’s construction, now operational.

The Commission for the Investigation of Authority Abuse of Authority (CIAA) is probing alleged corruption during the airport’s construction.

CIAA sources reveal numerous Civil Aviation Authority of Nepal (CAAN) employees are providing insights into the construction process.

However, suspicions of political involvement in corruption have steered the focus of the investigation towards employees.

Key decision-makers implicated

Evidence suggests pervasive corruption from design to implementation and payment processes, implicating high-ranking officials at political echelons.

Under the tenure of former CAAN Director General Ram Prasad Neupane, along with Deputy Director General Suman Kumar Shrestha, managers Murari Bhandari, Baburam Poudel, Sanjeev Singh Kathayat, and Director Mahendra Singh Rawal, the cost estimate for Pokhara International Airport was prepared.

This estimate gained approval during a CAAN board meeting chaired by then Minister of Culture, Tourism, and Civil Aviation, Sharad Singh Bhandari, on September 22, 2010.

During that period, the Customs Department’s then Director General Navaraj Bhandari, Joint Secretary Lok Bahadur Khatri, Member Karna Bahadur Bhandari, Nepal Air Service Corporation’s (NAC) Chairman Sugaratna Kansakar, and Members Binodananda Chaudhary and Binod Singh Basnyat, along with CAAN’s then Director General Ram Prasad Neupane, formed the board.

Subsequently, Minister Lokendra Bista, succeeding Bhandari, revised the approved cost estimate and design.

A CAAN meeting on December 16, 2011, chaired by Minister Bista, resolved to amend the plans.

The CAAN board, during this juncture, comprised Director General Ram Prasad Neupane, Joint Secretaries Lok Bahadur Khatri and Ranjan Krishna Aryal, along with members Jyoti Adhikari, Manoj Karki, and Phurba Chhiring Sherpa.

After China CMAC secured the airport construction responsibility, the Ministry of Finance’s Joint Secretary (now Chief Secretary) Baikuntha Aryal entered into a concessional loan agreement with the Chinese Exim Bank on April 10, 2016.

The revised cost estimate and contract document gained approval during the CAAN board meeting on February 11, 2012, under the directorship of Triratna Manandhar.

In response to the prepared tender documents, CAN invited international tenders for the airport construction in March 2012.

Subsequently, a 6-member committee, including law officer Dwarika Prasad Bhattarai, evaluated the contract proposals.

Post Bahadur Bogati, from the Maoist party, took over as the Minister of Tourism.

Under Minister Bogati’s leadership, the CAAN Board formed a sub-committee to review the evaluation committee’s report on July 30, 2012.

Unfortunately, Minister Bogti passed away on September 15, 2014.

On September 14, 2013, a CAN meeting chaired by Tourism Minister Ram Krishna Shrestha decided to appoint a consultant team for the airport’s construction.

Ratish Chandralal Suman served as the Director General of CAAN during that time.

Following this, a CAAN meeting chaired by Tourism Minister and UML Vice Chairman Bhim Prasad Acharya approved the contract evaluation report on April 7, 2014.

According to information obtained by Khabarhub, after approving the evaluation report, the CAAN meeting on the same day also greenlit China CMAC Engineering Company Limited’s bid to construct the airport.

Despite CAAN’s prepared cost estimate, the agreement was made with China CMAC Engineering Company Limited, which offered the lowest bid, on May 22, 2014.

The contract, involving 14 individuals, including 3 from the Chinese company, was overseen by then Deputy Director General of CAAN, Suman Kumar Shrestha.

Furthermore, the Auditor Auditor’s report indicates the absence of a helicopter parking lot, inadequate bus station, space for equipment storage, aircraft repair center, and ship storage at the airport.

After China CMAC secured the airport construction responsibility, the Ministry of Finance’s Joint Secretary (now Chief Secretary) Baikuntha Aryal entered into a concessional loan agreement with the Chinese Exim Bank on April 10, 2016.

Simultaneously, then Finance Minister and current UML Vice Chairman Bishnu Paudel finalized a separate agreement with the Chinese government on loan terms.

Following the initial loan agreement, it was amended on June 12, 2021, signed by Baikuntha Aryal, then Joint Secretary of the Ministry of Finance, and Zhang Tianqin of the Chinese Exim Bank.

Likewise, the then Joint Secretary of the Ministry of Finance, Kewal Prasad Bhandari, the then Director General of CAAN, Sanjeev Gautam, and DDG Gao Ning of Exim Bank China signed bilateral agreements to implement the loan only on February 25, 2018.

Corruption from contract amounts to construction processes and tax exemptions

The audit report from the General Accountant has unveiled significant malpractice in the construction process of Pokhara International Airport, including contract awards surpassing prepared cost estimates and customs and VAT exemptions exceeding 2 billion.

From the outset of the contract process, which seemed to diminish the airport’s long-term capacity, to the completion of construction and payments, suspicions of corruption involving political leadership, high-level staff, and intermediaries loomed large.

The 60th report of the Auditor General highlighted customs and value-added tax exemptions, not outlined in the contract agreement, inserted into the ‘master list’.

Despite lacking provisions in the agreement, the project was included in the master list, granting a discount of Rs.

Upon acceptance of the bid by businessmen, it was discovered that neither the contract nor any provision permitted such fee exemptions.

Yet, customs and duty exemptions were listed in the project’s master list.

Similarly, the Chief Accountant omitted the use of stone and clay during the runway construction, necessitating a 10-meter pier height reduction.

Despite a provision of $9 million set aside from the $3,170,000 according to the contract, an additional consultant was hired, and the US dollar price exceeded the agreement’s terms.

Furthermore, the Auditor Auditor’s report indicates the absence of a helicopter parking lot, inadequate bus station, space for equipment storage, aircraft repair center, and ship storage at the airport.

The CIAA urged the Director General of CAAN to furnish documents and details on 17 points on March 25, 2024.

According to CIAA sources, the Director General of CAAN personally attended and provided statements on the Pokhara Airport construction.

Additionally, the authority is investigating after seizing numerous documents from CAAN.