Wagle is the first senior politician ever to be convicted under the charges of illicit enrichment. Illicit enrichment implies “a significant increase in the asset of a public official that s/he cannot reasonably explain in relation to his/her lawful income.” Under the charges of illicit enrichment there is no need to prove the incidences of active or passive bribery or embezzlement of public fund. Any public officials can be charged of corruption crime if their style of living is found to be beyond reasonable. It is with the accused to prove their innocence – that goes by the name of reversal of burden of proof – a new concept, albeit, with a smack of controversy, is applied in corruption litigation.
Illicit enrichment or dubbed in Nepali as the case of akut sampati, has turned out to be a difficult nut to crack. Out of 40 cases of illicit enrichment, only in seven cases has the Special Court been able to establish crime whereas the remaining cases have been acquitted. As a matter of fact, a large number of high profile corruption charges brought about by CIAA fall under illicit enrichment. The recent verdict must have come as a refreshing change for CIAA which is running, in the absence of vacant leadership positions, like a headless horseman.
The case mentioned is particularly interesting for two counts. First, as corruption is commonly defined as the misuse of public authority for private gain, ie, the confluence of public and private spheres of activities or interests. Wagle, a public figure insists that the reason for an abrupt increase in his family’s wealth is a result of his son’s business earning (private party). Therefore, the investigations focused on junior Wagle’s tourism related business. Based on “the estimated” earnings, minister Wagle was charged of corruption. Out of a total of Rs 34.32 million, only Rs14.02 million is established to be from legitimate sources and remaining Rs 20.30 million charged of illicit enrichment. This is the amount Wagle is expected to have amassed, through the misuse of authority during his more than a decade long political career, which included, among others, the holding ministerial portfolios for the seventh time.
Second, this is the first case of high profile illicit enrichment; therefore, it has had a huge impact on other similar cases that are pending at the court of law the result of which people are eagerly waiting for. For some time, the Nepali media was washed with news on corruption and the verdict is also expected to have an impact on how the anti-corruption drive will go ahead in the days to come. Lately, the anti-corruption drive had come to a standstill situation. Moments before going to the jail, Wagle is reported to have complained about the “injustices” done to him and cautioned that he will be monitoring how other cases will be treated in the days to come.
In the verdict, a time synchronized property acquisition drive by Wagle’s family, along with his ministerial positions, would have better presented a picture on akut sampati rather than overly simplified estimation of junior Wagle’s business earnings.
Apart from Wagle’s personal grumblings, the verdict provides some important precedents in handling corruption cases in Nepal, most important of which will probably be the retroactive effect of anti-corruption law. This is expected to re-open the cases which have been buried under the piles of files in the court. The court has already summoned the parties to the similar cases. Even the judges are under the scanner this time. Therefore, Wagle’s 73- pages long court verdict is worth looking at in the Supreme Court website (www.supremecourt.gov.np).
Wagle’s effort to justify family wealth rests on his son’s business and on the payment of Voluntary Disclosure of Income Scheme (VDIS) tax which did not help to prove his innocence. Note, VDIS is a carefully designed tool to convert black money into a white by paying certain portion of the money as state taxes. It is interesting to note that most politicians subscribe to VDIS, whether it is Dr Ram Sharan Mahat from Nepali Congress or Dr Babu Ram Bhattari from the Maoists Party, both of whom, by the way, are subscribers to VDIS. This implies how corruption transcends ideological boundaries. Surprisingly, in the case mentioned, junior Wagle is freed of corruption charges in spite of the fact that he was at the centre of investigation.
His own admission that he kept “two sets of books of accounts” ostensibly to evade taxes; destroyed evidences after paying VDIS; and his travel and tourism business abruptly turning lucrative venture, definitely, sounds unconvincing. It is interesting that in a single month of January 2002, junior Wagle’s bank accounts soared up by Rs 8.05 million, clearly hinting that junior Wagle’s business is fraught with illegal earnings. Yet the question remains: How is it possible to charge a father of corruption by referring or inferring unaccounted business of the son?
The use of 10 percent as normal administrative expense deductions or the use of 33 percent normal profit margin to estimate business earnings definitely sounds like an awaked business and accounting standards to the students of business and management like this scribe. Let me cite an instance here: When Princess Diana died in an unfortunate car accident in Paris on August 31, 1997, it was reported in the media, the next day, that French judges enrolled themselves for a course on physics because they felt they had to learn about concepts like velocity, dynamics and impacts to pass the right judgement on the case. Do we have such patience, time and interest to learn business cash flows, time value of money, and actual concepts of accounting and methods of property valuation?
Definitely, akut sampati is a hard nut to crack, given the Nepali way of having an extended family system, inherited ancestral property, informal business operations and the absence of scientific property valuation methods. In Wagle’s case, he is lucky enough to have a lenient punishment due to lower valuation of land property. Simply resorting to historical, registered values, Wagle has his punishment reduced from Rs 11.95 million to Rs 6.78 million arising out of lower valuation of land. The wide difference in the valuation of land is an open secret in Nepal.
As mentioned in the verdict, Wagle’s family has acquired a series of plots of land in Kathmandu and Chitwan for eight occasions starting from November 23 1993 to August 3 2001. In the verdict, a time synchronized property acquisition drive by Wagle’s family, along with his ministerial positions, would have better presented a picture on akut sampati rather than overly simplified estimation of junior Wagle’s business earnings. From the array of property acquisitions, definitely, Wagle is not an honest person, yet the verdict casts lots of doubts on how property and earnings will be valuated and evaluated in the days to come.
What possible impacts can we infer from this verdict? I see couple of possibilities: (1) increase in artificial divorce or separation of family members to hide illicit enrichments, (2) the corrupted people start investing in land due to low valuation, and (3) the corrupted will hold fewer amounts in bank balances. The Supreme Court’s verdict on Wagle’s case has given some hope to the people in the country but the absence of timely implementation of methods to valuate property and earning could have a negative effect on the image of the judiciary system on our country.
Writer is a freelance writer
narayan.manandhar@gmail.com
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