Govt swings into action against Unity

KATHMANDU, May 17: Bowing to tremendous pressure from all corners, the government on Monday launched sweeping action against Unity Life International, an illicit network marketing operator, and detained at least two of its eight declared directors.



At the time of going to press, Metropolitan Police Range Lalitpur had arrested Bhim Bahadur Gurung, finance director of the company, and Netra Rajbanshi, travel director, and was searching for the remaining six director-cum-promoters. [break]



Both Gurung and Rajbanshi were detained from their office at Unity Tower on Monday afternoon. Police have sealed off the Unity head office at Jawalakhel in order to secure financial and other important documents from possible destruction, said Jaya Mukunda Khanal, spokesperson of the Home Ministry.



The government also froze the accounts and property of the company, which is estimated at over Rs 6 billion collected from 400,000 domestic clients and an additional US$ 5 million from foreign clients. It also imposed travel restrictions on all the promoters, barring them from leaving the country.



“We are also searching for Kashi Ram (Prasad) Gurung, chairman of the company, and Bishnu Bahadur Chhetri, managing director, among others” said Ratna Raj Pandey, chief district officer of Lalitpur.



Likewise, issuing separate instructions, the Ministry of Finance (MoF) has asked the Department of Immigration not to allow promoters of the dubious network marketing company to leave the country.



“We have also asked Nepal Rastra Bank (NRB) and the Department of Cooperatives (DoC) to freeze all accounts held by the company and its promoters at various financial institutions, including cooperatives where they might have savings,” said a source.




Responding to this, NRB froze the accounts of the company at all commercial banks. DoC also froze an account comprising deposits of Rs 75 million at Fina World Saving and Credit Cooperatives, the only official account that investigators have traced so far. "We suspect that almost all the savings have been kept in personal accounts of the directors," said the source.



MoF also issued instructions to the Department of Land Reforms and Management and Department of Transportation to restrict ownership transfers and transactions of fixed property like land, housing, hospitals and hotels, and of mobile assets like vehicles.



These measures marked the first-ever coordinated action by the government against the biggest marketing scam in the country so far. They have brought Unity´s operations to a standstill.



Following the action, hundreds of clients of Unity (whom it calls its members) thronged the office demanding refund of their deposits and fees, which stand in a range of Rs 15,000 to Rs 15,750. They tried to vandalize the office, hurling stones. However, police instantly intervened and took the situation under control.



On Sunday, the Home Ministry had ordered the chiefs of District Administration Offices of all 75 districts to study ULI businesses and arrest the promoters.



Such action was taken after investigations by a joint committee of the Department of Revenue Investigation, the Insurance Board and NRB and a separate study by the Home Ministry established once again that Unity was operating a dubious network marketing business, luring people with financially unviable returns.



The company´s accounts and property were frozen after the committee reported massive withdrawal of cash from its accounts in recent days.



“Freezing the accounts and property and restricting travel are preventive measures. The main action brought against the promoters will be for embezzlement and flouting of all financial laws,” said the source.



He further disclosed that the government was also monitoring things and trying to dig out whether the company managed to fly capital out of the country.



The committee´s investigation also unearthed cases of promoters massively embezzling cash collected from the clients, to whom the company has promised free lifelong health treatment, assurance cover in case of death and cash refund with 10 percent annual interest after five years in case of survival.



“It was found distributing commissions so generously, it seemed it was never bothered about sustaining its capacity to deliver the services it promised over the longer term,” said the source.



So much so, the joint committee even unearthed the case of Unity´s Chairman Gurung taking a commission of Rs 4.2 million through just one single check. There were numerous instances of his enjoying such handsome commissions.



Resistance Against Action High



The events that followed news reports by Republica on Unity have shown that action against Unity has come amid strong resistance from political leaders as well as officials in the regulatory authorities.



In one striking case, resistance to action came from senior NRB officials themselves. In the given case, MoF had instructed NRB, the central bank that turned a blind eye to the whole Unity saga, to freeze the company´s accounts as soon as the joint committee issued a preliminary report two weeks ago.



However, the central bank threw the instructions out the window. “It was unfortunate. But we hope it has not caused much damage,” said a source.



On Monday, Minister of Finance Surendra Pandey also faced heat from leaders of his party, CPN-UML, to not take action against the company. Action by the Home Ministry likewise had not come willingly. “There was resistance from all quarters, including the bureaucracy and political parties,” said a government official.



Despite the delay, the ministries concerned did take steps to enforce the rule of law, but the Ministry of Commerce and Supplies (MoCS) and the Department of Commerce (DoC), which is entrusted with protecting consumer rights, have yet continued to maintain silence over the case.



Also on Monday, myrepublica.com caught up with Shatrughan Prasad Dev, a member of the Central Consumer Rights Monitoring Committee at DoC, knocking the doors of top officials at MoCS and seeking an immediate meeting to bring action against Unity. However, his call continued to land on deaf ears among the minister and officials there.



Unity´s Promoters



Kashi Ram (Prasad) Gurung

Bishnu Bahadur Chhetri

Krishna Bahadur Chhetri

Mahendra KC

Netra Rajbanshi

Indra Bahadur Bishwakarma

Bhim Bhadaur Gurung

Bishwanath Gautam

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