KATHMANDU, Feb 25: The Department of Money Laundering Investigation (DMLI) has started an investigation into the process started by Silver Heritage Group to sell its Nepal's Tiger Palace Resort, an operation that has courted controversy for building its property in 'illegal land'.

Writing a letter to the Nepal Rastra Bank (NRB) on Monday, the DMLI has also asked the central bank to take 'necessary action' against a complaint that it has received about the 'process of sale in an illegal way'.

The move of the principal entity to conduct investigation of money laundering (ML) and terrorism financing comes in the wake of the plan of the Australia-listed company Silver Heritage to sell its Tiger Palace Resort. While the District Court Rupandehi has issued an interim order restricting the sale or building anything on the encroached plot, Silver Heritage has announced the sale of its Nepal operation.

Letter sent to the Nepal Rastra Bank by Department of Money Laundering Investigation. 

Earlier in September last year, Silver Heritage Group Ltd had even said that it has received an offer from Indra Bahadur Thapa, a little known non-resident Nepali, to purchase its Nepal operation. However, the deal failed to materialize as Thapa did not pay the deposit of US$ 3 million within the deadline set by the company. Thapa had even consulted with government officials who are believed to have given thumbs down to the deal.

The controversy surrounding over the Tiger Palace Resort is said to have discouraged many investors from acquiring the operation. The resort is now fighting a court case over the public land encroachment at the district court, but it was also accused of illegal hiring of foreign workers. The company's long tussle with its local partner Rajendra Bajgain had later ended in a settlement on 'undisclosed terms'.

Amid lukewarm response over the 'conditional offer' of the Nepal operation due to the land encroachment allegation and other controversies, Silver Heritage, the Hong Kong-based company is reportedly pursuing an offshore transaction from the British Virgin Island to make sure that it does not need to change the ownership of the resort in Nepal where it is entangled in the legal battle over the land encroachment.

According to a source at the DMLI, the department has started the investigation into the case over the possible 'illegal deal' that could be also aimed at tax avoidance in Nepal like in the case of Ncell.

The NRB is also reportedly worried about the exposure of some banks in Tiger Palace Resort. Such offshore deal is also likely to put over a billion rupees of loans of Nepali banks into risk, according to NRB sources.

Worried about the possibility of loans turning bad, the NRB had sought details of loan exposure of Prime Commercial Bank Ltd-led consortium to Tiger Palace Resort in November. The consortium has provided Rs 1.1 billion in loans to Tiger Palace Resort.

A NRB official told Republica that the central bank will look into the probe request of the DMLI.

Update:

Republica has learned that Delta Corp Ltd, led by Chairman Jaydev Mody, has placed a bid of 37 million USD plus to purchase Silver Heritage Limited (SHL).

Delta Corp Limited, previously known as Arrow Webtex Ltd., is an Indian gaming and hospitality corporation that owns and operates casinos and hotels under several brands. It currently runs Deltin Casino International at Kathmandu’s Marriott Hotel.

Similarly, Nepal’s Chaudhary Group, led by Rahul Chaudhary, has also placed a bid of USD 37 million  to purchase SHL. Discussions are underway to carry out the transaction outside of Nepal to avoid paying taxes here.

 
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