KATHMANDU, Aug 12: The Central Investigation Bureau (CIB) of Nepal Police has completed its investigation into the Smart Cell, or Smart Telecom, scam and recommended prosecution of 22 people, along with a claim for Rs 96 billion in damages.
The CIB submitted its investigation report to the Kathmandu District Government Attorney’s Office on Tuesday. The bureau had begun investigating the alleged scam, involving Smart Telecom assets worth nearly Rs 35 billion, by taking suspects into custody one after another since April.
CIB spokesperson SSP Anupam Shamsher JBR confirmed that the report had been submitted to the government attorney’s office. After reviewing the report, the office will file a case against the accused at the Kathmandu District Court.
The CIB has recommended that 22 people be named as defendants. They include six former managing directors of Smart Telecom, three buyers, nine officials of Ncell, two officials of Nepal Investment Mega Bank, former Nepal Telecommunications Authority chairman Bhupendra Bhandari and another individual.
According to the CIB report, the NTA had taken control of Smart Telecom’s entire assets, telecommunications infrastructure, network system and other property under Rule 18 of the Telecommunications Service Providers’ Asset Management Regulations 2022. The investigation found that actions were taken dishonestly with the intention of depriving the government of its legal rights over the assets.
Meanwhile, the CIB has issued arrest warrants for nine Ncell officials, including chairman Satish Lal Acharya and CEO Miles Fowles. Former NTA chairman Bhandari was arrested on July 31 and remains in custody. The Kathmandu District Court has authorised the arrest of 16 people, including Bhandari.
Bhandari was arrested over allegations that he delayed the management of Smart Telecom’s assets, causing substantial financial losses to the state.
Acharya and Fowles left Nepal soon after the CIB began investigating the case. Other suspects are also believed to be absconding.
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The Nepal Rastra Bank has also frozen the personal bank accounts of Nepal Investment Mega Bank chairman Prithvi Bahadur Pandey and five other directors in connection with the case.
On July 30, the CIB wrote to Nepal Rastra Bank’s Baluwatar office asking it to freeze the accounts of people associated with Smart Telecom, companies owned by them, and companies in which Pandey and the five other bank directors hold personal or share investments.
Auction found to be unlawful
The investigation found that the auction of Smart Telecom’s assets itself violated the law.
Under the regulations, telecommunications service providers and their investors are not allowed to participate in such auctions. Despite this provision, Ncell was allowed to participate in the auction.
Ncell has meanwhile expressed concern that arrests and the threat of criminal cases against businesspeople and investors could undermine Nepal’s investment climate.
Ncell Chief Corporate and Regulatory Officer Dilli Ram Shrestha raised the issue during Finance Minister Swarnim Wagle’s meeting on Monday with representatives of 20 major multinational companies operating in Nepal.
Police said former NTA chairman Bhandari was arrested for a detailed investigation into the Smart Telecom scam, which allegedly involved senior officials of the regulatory body responsible for regulating, developing and promoting Nepal’s telecommunications sector.
The government appointed Bhandari as NTA chairman after then chairman Purushottam Khanal was removed from office following the Commission for Investigation of Abuse of Authority filing a corruption case against him at the Special Court in the Teramox case.
Following the February 21 election, the government led by Prime Minister Balendra Shah removed all political appointees made by the previous government in the third week of April. Bhandari was among those removed.
The CIB said Bhandari was arrested and kept in custody to investigate the alleged misuse of Smart Telecom assets that should have come under government ownership after the company lost its licence.
Smart Telecom’s licence was automatically revoked on April 16, 2023, after the company failed to pay around Rs 30 billion in licence renewal fees and royalties to the NTA.
Under the Telecommunications Service Providers’ Asset Management Regulations 2022, the state is entitled to take control of the entire infrastructure and assets of a company whose licence has been revoked.
However, Nepal Investment Mega Bank auctioned Smart Telecom’s assets to Ncell for Rs 4.6 billion in October last year, even though the assets had already come under government control.
The CIB began investigating Bhandari after finding his role as then NTA chairman suspicious in an auction process that allegedly deprived the state of its ownership rights.
Investigators found that Bhandari formed a valuation committee only after Smart Telecom’s assets had already been auctioned.
The NTA began corresponding with Ncell only after Ncell informed it in January that it had purchased the infrastructure. The CIB also investigated why the NTA, under Bhandari’s leadership, did not challenge the auction through legal means while the process was underway.
According to an official involved in the investigation, the NTA board had asked the CIB to conduct a detailed investigation into the auction of Smart Telecom’s assets and the alleged loss of the state’s ownership rights.
The CIB subsequently took Bhandari into custody.
As part of the same investigation, the CIB arrested Smart Telecom’s former chairman Sarvesh Joshi and Nepal Investment Mega Bank CEO Jyoti Prakash Pandey on April 22. Both have since been released.
Joshi was accused of giving the bank authorisation to auction assets that had already come under government control, allegedly with dishonest intent.
The CIB also arrested Palani Shrestha and Narendra Ulak in April for their alleged involvement in the auction process.
During the investigation, the CIB also summoned businessman and former president of the Non-Resident Nepali Association, Dr Upendra Mahato, for questioning.
