Corruption at the local level pose serious challenge to good governance

KATHMANDU, June 9: Local governments have become the most corruption-prone entities among the three tiers of government. Reports from the Auditor General and the Commission for the Investigation of Abuse of Authority (CIAA) indicate that local governments are increasingly evolving into hotbeds of corruption.

According to the Auditor General's report, in the fiscal year 2022/23, audits were completed for Rs 1.1375 trillion across 746 local governments, revealing discrepancies amounting to Rs 35.67 billion.

Out of Rs 4.83 billion settled, Rs 30.83 billion in discrepancies remain to be resolved. Of this, Rs 4.09 billion needs to be recovered, Rs 23.93 billion needs to be regularized, and Rs 2.81 billion represents overdue advances.

Similarly, the audit reports for FY 2020/21 and 2021/22 for two local levels revealed discrepancies amounting to Rs 179.8 million out of a total audited amount of Rs 2.1495 billion.

The CIAA has highlighted that in recent years, most corruption has occurred at the local level. Employees working at the local level have become increasingly corrupt. The CIAA also accuses these employees of corrupting local representatives.

The CIAA conducted a survey a few years ago regarding corruption at the local level. The survey report, which included 15 districts from all seven provinces, revealed that local government employees and representatives were the most corrupt.

As about 34 percent of the complaints registered with the authority are related to local-level employees and public representatives, 61 points of instruction were also given to minimize them. But the local public representatives and employees have not followed it. After the instructions were not followed, the CIAA investigated the complaints and registered the case in the Special Court.

So far in the current fiscal year, 4,524 complaints have been filed with the CIAA. There were 8,200 complaints carried over from the previous fiscal year. In total, the CIAA has 12,724 complaints, with more than 4,300 of them related to local governments.

Just a few days ago, the CIAA filed corruption charges against the employees of Lalitpur's Godavari Municipality, including the mayor. Allegations of corruption, including revenue embezzlement in the landfill managed by Godavari Municipality, have been filed against officials, including Mayor Gajendra Maharjan and Deputy Mayor Muna Adhikari, as well as other officials who have been involved in the administration of the municipality for the past five years. After the charges were filed, the mayor, deputy mayor, and employees were suspended, and the search for a senior vice-chairperson to act as the mayor began.

The allegation against them involves underreporting income and depositing less than the government rate for sand and river materials. It's claimed that from the fiscal year 2018/19 to 2022/23, various contracts resulted in revenue embezzlement.

The CIAA filed separate charge sheets every fiscal year, alleging irregularities. They demand double the amount of the embezzled funds as a fine and imprisonment for the accused.

The mayor, deputy mayor, and chief administrative officers of Godavari Municipality have been accused of violating the constitution, federal laws, Bagmati Province laws, and Local Government Operation Act, and misusing the authority by exempting royalties determined by the Bagmati Province Finance Act, by taking only Rs 2.75 instead of Rs 9 per cubic foot as the royalty fee for extracting and processing minerals.

Prabin Koirala, Birendra Dev Bharti, Krishna Prasad Jaishi, and Bishwo Raj Marasini are among the chief administrative officers prosecuted by the CIAA for revenue embezzlement cases in the gravel industry. Their past also has controversy. The CIAA claims that Bharti was involved in the embezzlement of more than Rs 200 million in the fiscal year 20721/22. He was in Godavari Municipality then and is currently the Chief Administrative Officer in Bharatpur Metropolitan City. He was automatically suspended after the case.

During the fiscal year 2018/19, Bishwo Raj Marasini served as the chief administrative officer when revenue embezzlement amounting to Rs 177.9 million occurred. He faced corruption allegations related to the construction contract of Machhapokhari when he was the chief administrative officer of Simraungadh Municipality. Marasini has been sentenced to six months in prison and fined Rs 461,250 for corruption charges. Even before completing the six-month imprisonment for corruption, another corruption case has been filed against Marasini.

He was acquitted in the case of purchasing software worth Rs 200,000 in Simraungadh. Marasini has been accused of irregularities in providing funds to the consumer committee in installments for the construction of the Janata Secondary School building in Simraungadh-8, Kachorwa. Another corruption case has been filed against Marasini for this allegation.

Recently, the case filed against him by the CIAA is the fourth one. He has served as the Chief Administrative Officer in Budhanilkantha Municipality of Dhading, Godawari Municipality of Lalitpur, Thimi Municipality of Bhaktapur, Dhulikhel Municipality of Kavrepalanchowk, and Simraungadh Municipality of Bara. Additionally, he has also held the position of Chief District Officer of Achham.

During the fiscal year 2020/21, Krishna Prasad Jaishi was the Chief Administrative Officer when a revenue embezzlement of Rs 186.3 million occurred. The CIAA has also filed a case against him. On July 20, 2020, while serving as the Chief Administrative Officer of Godavari Municipality, he was arrested on charges of taking a bribe of Rs 50,000 from a consumer. Similarly, Chief Administrative Officer Prabin Koirala has been accused by the CIAA of embezzling Rs 266.3 million in revenue during the fiscal year 2022/23.

CIAA’s directive

Some local governments have been found to write expenditures irregularly without getting the budget approved by the assembly and spending outside the approved budget headings. They have also been seen transferring amounts from capital headings to current expenditures and transferring more amounts than the set limit. According to Article 59, Section (3) of the Constitution of Nepal, Section 71 of the Local Government Operation Act, 2074 BS, and Section 21 and Section 27 of the Intergovernmental Fiscal Management Act, 2074 BS, annual budgets should be approved by the assembly before expenditure. In the case of fund transfers, it should be done in accordance with Section 79 of the Local Government Operation Act, 2074 BS.

It has been observed that large sums of money have been distributed from local government funds to individuals or organizations close to officials, in violation of the law, under the guise of financial assistance. Therefore, the use and mobilization of local funds should be based on standards that address the basic needs of the people and prioritize programs according to the spirit of the Constitution of Nepal and the Local Government Operation Act, 2074 BS.

Some local governments have been found imposing taxes beyond their jurisdiction. Therefore, local governments should impose taxes only within the scope of their authority as stipulated in Article 228 of the Constitution of Nepal and Chapter 9 of the Local Government Operation Act, 2074 BS. Taxes should be imposed solely within the jurisdiction outlined in Schedule 8 of the Constitution of Nepal. Additionally, for areas of common jurisdiction mentioned in Schedule 8, local governments must obtain approval from the Government of Nepal before collecting taxes.

Local government officials have been found making decisions beyond their legally granted authority. For instance, ward members exercise the authority of ward chairpersons, deputy chiefs/vice chairpersons exercise the authority of chiefs/chairpersons, and chiefs or chairpersons exercising the authority of the executive body.

It has been observed that people's representatives are executing tasks that are supposed to be carried out through the employee mechanism, and they are often operating based on verbal orders without creating proper laws. Therefore, according to the spirit of the Constitution of Nepal and the Local Government Operation Act, 2017, necessary laws should be formulated and operations should be conducted accordingly.

According to Section 24 of the Local Government Operation Act, 2017, plans, budget allocation, and implementation at the local level should be conducted with the participation of genuine stakeholders, local intellectuals, experts, and marginalized groups. However, it has been observed that individuals with political and administrative influence select their own plans and occupy positions in consumer committees. Budgets have also been allocated to politically motivated organizations. Therefore, in accordance with the Constitution of Nepal, the Local Government Operation Act, 2017, the Intergovernmental Fiscal Management Act, 2017, and Budget Formulation Guidelines 2016, the process should involve the participation of genuine stakeholders, local intellectuals, experts, marginalized groups, and all other relevant sections of the community.

Without considering the relevance, objectives, and long-term strategies, various targeted programs have seen budget allocation and approval. Additionally, there is a trend of including programs that benefit party workers, driven by vested interest. To avoid reflecting such self-interests, budget allocation, approval, and implementation should adhere to the priorities of long-term development plan of the concerned local level, ensuring maximum return on expenditure and the expected quality of work within the framework of the Constitution and the law.

It has been found that when implementing development projects, the same task is shown twice in the bill and description is created to claim payment twice. Such practices are corrupt and to ensure that programs are not duplicated and to strengthen the planning, implementation, and expenditure system, it is necessary to ensure that the selection of programs, implementation, and expenditure systems are well-organized and that internal control mechanisms are strengthened. Double payment should not be allowed according to budget allocation guidelines and the Local Government Operations Act.

When organizing events to be conducted by local authorities, it is essential to establish consumer committees to prevent the vested interests of actual consumers from being overlooked. Directives or initiatives from elected officials should prioritize the formation of committees, which should include active teachers and representatives of the public, to ensure the evaluation and monitoring of plans. Additionally, it is necessary to implement a system where public officials and employees of public bodies do not hold positions as officers of consumer committees.

As per Section 97 (12) of the Public Procurement Rules, 2064 BS, completed projects, including maintenance and oversight responsibilities, should be transferred to consumer committees for operation, maintenance, and ownership transfer, as specified in agreements. The consumer committees should be registered as separate legal entities with uninterrupted succession rights.

Local authorities should immediately halt such activities if it is observed that consumer committee officials and employees collude to bypass the legally mandated procedures for project implementation, including appointing unqualified individuals, executing work without proper authorization, submitting false completion reports or invoices for payment, and mismanaging projects where work remains incomplete despite receiving payment. In such cases, local governments must strictly adhere to the provisions outlined in the Local Government Operation Act, 2074 BS, and the existing Public Procurement Act and Rules. Furthermore, they should promptly initiate legal action against consumer committees and contractors who fail to complete projects on time after receiving substantial advances, or alternatively, terminate contracts and complete the projects through other viable options.

In cases where local infrastructure construction is carried out through consumer committees and there is evidence of illegal use of heavy equipment contrary to the law, competitive bidding should be conducted, and contracts should be awarded through competitive tendering. If instances are found where work is being awarded to consumer committees without competitive bidding, and payments are being made based on recommendations from the committee without proper evaluation and monitoring, such practices must be completely prohibited and brought into compliance with Section 97 (11.13) (a) and (12) of the Public Procurement Regulations, 2064 BS.