The latest news that a US firm was fined over $55 million for bribing Nepali officials to secure a wide-body aircraft deal with the state-owned Nepal Airlines Corporation (NAC) has shown how politicians and bureaucrats are colluding in major corruption cases in Nepal. The AAR Corp., a US-based aviation services company, agreed to pay over $55 million to resolve potential violations of the U.S. Foreign Corrupt Practices Act (FCPA) in settlements with the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The company was implicated in bribery schemes involving government officials in Nepal and South Africa, aiming to secure business with state-owned airlines. The AAR admitted to conspiring to pay bribes between 2015 and 2020, resulting in nearly $24 million in illicit profits from the state-owned airlines in Nepal and South Africa. The company accepted the Offer of Settlement and issued a cease-and-desist order after self-reporting the violations to the DOJ and SEC in 2019 and cooperating with both agencies in a multi-year investigation. As the DOJ and SEC reports suggest that AAR Corp’s Nepal agent was involved in bribing bureaucrats and politicians to secure the deal, it is time for the relevant government agencies in Nepal to seek details from the US government agencies and launch a fresh investigation into the case and book all those, including the politicians, who were directly involved in the multi-million dollar corruption case.
The DOJ and SEC reports reveal that Deepak Sharma, a UK citizen of Nepali origin residing in the UK, was the mastermind behind bribing Nepali officials and politicians to secure the aircraft deal for the AAR Corp. Sharma, who resigned from the company in September 2019, was the lead executive responsible for the NAC transaction. During the period, Sharma played a key role in securing the NAC contract, suggesting to the AAR Corp that he could help win the opportunity. In connection with the Nepal Airlines scheme, Sharma in August 2024 pleaded guilty to a one-count criminal information filed in the US, charging him with conspiracy to violate the anti-bribery provisions of the FCPA, which prevents US companies from bribing foreign government officials to secure any kind of business advantage. His internal communication to the AAR Corp suggests that he was in contact not only with bureaucrats but also with politicians to secure the deal. And, interestingly, all three major political parties – Nepali Congress, CPN-UML and CPN (Maoist Center) – are found involved in the controversial procurement deal of two wide-body aircraft.
NAC to buy two widebody jets
It was during the K.P. Oli-led government that the NAC Board of Directors on November 2, 2015 made the decision to purchase two wide-body aircraft. This decision was made under the leadership of the same person—Sugat Ratna Kansakar—who had previously been imprisoned on corruption charges in the purchase of two narrow-body aircraft from Airbus. On August 3, 2016, the Oli-led government was overthrown, and a new government comprising NC was formed under the leadership of Maoist Center Chairman Pushpa Kamal Dahal. The Dahal-led government decided to uphold the decision made by the NAC Board of Directors two years ago to purchase wide-body aircraft. The Commission for the Investigation of Abuse of Authority (CIAA) has accused NC Minister Jeevan Bahadur Shahi, who held the portfolio of tourism and civil aviation minister in the Dahal-led cabinet, of being involved in decisions to alter the aircraft's specifications, including reducing the weight capacity, which limited the aircraft's range and potential for long-haul flights. The Dahal-led government, through a cabinet meeting on April 20, 2017, decided to take a loan from the Employees Provident Fund and the Citizens Investment Fund to provide NAC with Rs 24 billion, paving the way for the planes to finally land in Kathmandu in July 2018, when Oli-led government was in power again.
The CIAA in April filed a corruption case against 30 individuals and two firms at the Special Court in connection with the 2017 purchase of two wide-body aircraft. The anti-graft body has accused former minister Shahi, former aviation secretaries Sishir Kumar Dhungana and Shankar Prasad Adhikari, and former managing director of Nepal Airlines Corporation Sugat Ratna Kansakar of being involved in the embezzlement of around Rs 1.478 billion during the procurement of two Airbus A330s. According to the SEC’s file, Sharma has revealed through his internal communications to AAR personnel that the NAC’s request for proposal (“RFP”) would be drafted to favor AAR. In a country like ours, one can hardly imagine that such a major procurement deal involving corruption of hundreds of millions of rupees is made without the involvement of politicians in power. The AAR Corps has provided all the details of its violation of business ethics while accepting the Offer of Settlement with the DOJ and SEC in the US. These details may provide important clues to reach the root of this corruption scandal. As the CIAA appears to have failed to investigate the case thoroughly, this case must be further investigated based on those details, and the top politicians found involved in the corruption must also be held accountable. The multi-million dollar corruption case is not limited to financial loss to the state but also the country’s credibility on the international stage.
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