But the painfully lackadaisical nature of the investigations and extensive use of political and bureaucratic clout by ULI raise serious questions about whether the government will build a case strong enough to put the promoters of this fraudulent company behind bars and return the money of unsuspecting Nepalis who have invested in ULI.[break]
Republica has come across a number of incidents where politicians, bureaucrats and regulatory officials have tried to mislead or obstruct the investigations and weaken the case against ULI when the government finally takes it to court. Consider the following six incidents:
Incident 1: Based on the preliminary study and recommendations of a joint investigation team of the Department of Revenue Investigation (DRI), Nepal Rastra Bank (NRB) and the Insurance Board (IB), the Ministry of Finance (MoF) three weeks ago issued instructions to NRB to freeze all accounts of Unity and its promoters.
But no action was taken as the instructions could not get beyond the desk of Deputy Governor Bir Bikram Rayamajhi. “Rayamajhi sat on the instructions, arguing that such action against Unity was not warranted,” said a central bank source, adding “This gave ample time for Unity promoters to maneuver their accounts.”
NRB did freeze the accounts last Wednesday but only after the Finance Ministry had issued yet another stern instruction to take prompt action.
Interestingly, Ramayajhi is the same person who had resisted mentioning Unity’s name when the four top regulators of the country -- NRB, IB, Securities Board of Nepal and Company Registrar’s Office -- issued a public notice about two years ago terming unauthorized sale of services as illegal and network marketing as forgery.
Incident 2: When the Home Ministry initiated action against Unity’s bosses and issued arrest warrants against them last Tuesday an incumbent minister and a government secretary called the home secretary the next day and requested him to soften the action against Unity.
Incident 3: The report on Unity prepared by an investigating team formed by the Finance Ministry is so weak that it does not even mention which specific laws it has violated and how the networking based on the pyramid model was nothing but a scam. The report does not even include the balance sheet of ULI that would have provided ample evidence how the company’s current assets and long-term liabilities do not match.
Finance Secretary Rameshwor Khanal was so angry with the team that prepared the report that he chided them for deliberately preparing such a weak report and asked them to rewrite the report and submit it to the ministry by Sunday.
Incident 4: Senior police officials have told Republica that “higher authorities” have instructed police not to touch second-tier leaders of the fraudulent company. “If we nab and interrogate the second-tier leadership, we can get crucial information related to the case, including the whereabouts of Unity board members,” said a source.
But because of the ministry’s instructions, he said police have not intensified the manhunt for six absconding Unity board directors and there has been no success so far in apprehending them. This shows the intention of the Home Ministry to slow down the investigation and avoid arresting the board members.
Incident 5: Ministry of Commerce and Supplies and the Department of Commerce (DoC), despite Unity’s violation of its own business rules and the Consumer Rights Protection Act, have not yet moved to take action against the company.
Following instructions from the prime minister last Wednesday, Commerce and Supplies Minister Rajendra Mahato had told Republica that he had already instructed Secretary Purushottam Ojha to take necessary action.
But sources said that the ministry has done nothing more than issue a statement that Unity’s operations are illegal. While Ojha on Friday suggested NRB, IB and the Home Ministry take action against Unity’s violation of all major financial laws and its forgery, the ministry has not yet initiated any action to uphold its own rules and the Consumer Rights Protection Act.
A MoCS official, requesting anonymity, said that some ministry officials have gone so far as to mobilize a group of unscrupulous consumer rights activists and legal experts to weaken the case against Unity.
REGULATORS NOT PLAYING PROACTIVE ROLE
The regulators, that should have taken or recommended action against Unity long ago, are not playing a proactive role even now.
As a result the Home Ministry is sending a letter to the Finance Ministry requesting proactive support from Nepal Rastra Bank and the Insurance Board to build a strong case against Unity.
“If Nepal Rastra Bank and the Insurance Board send us a letter categorically mentioning which specific laws relating to banking and insurance operations Unity has violated it will bolster the case against Unity,” said a senior official at the Home Ministry, adding, “They should have already done that by now”.
The official said DoC too must rise to the occasion and forward details on Unity’s unauthorized business and how it flouted the Consumer Rights Protection Act. And RID must exhibit swiftness in upholding crucial financial laws of the country like the Money Laundering Act and tax laws.
“Since there are too many competing interests, Unity is a test case for the government. And our success or failure in this case will set a strong precedent for the future,” the official said.
Related story
FM Rana urges NRNs for unity
