NRB responds to DRI queries

KATHMANDU, Feb 26: Nepal Rastra Bank (NRB) has forwarded its formal response to a set of queries that Department of Revenue Investigation (DRI), the principal agency looking into the multi-million dollar capital flight scam, had placed before it on Thursday.

• Over Rs 8bn capital flight to Hong Kong


• Probe traces firms involved in capital flight


• Siphoning of US$ 58m to seven HK banks confirmed


• Arrest in capital flight scam

A central bank officer said that the bank on Friday responded all questions that DRI had sent. The questions were mainly focused on existing monitoring and supervision mechanism to control outflows of foreign currency, said an NRB official. [break]



According to the official, DRI is in need of the answers to prepare charge sheets against proprietors of two firms that were found engaged in misusing a huge amount of money under the pretext of importing varieties of goods from Tibet.



A finance ministry officer told myrepublica.com that DRI has asked the central bank the purpose of raising the limit of foreign currency exchange facility under credit trade from $ 30,000 to $50,000. NRB had raised the limit in May last year.



We are interested in knowing the rationales behind the decision to raise the limit, said the official.



Apart from that, DRI had also asked the central bank to explain the existing mechanism to control outflows of foreign currency. We will also try to investigate how the existing NRB´s mechanism failed to trace such a huge misuse of foreign currency, a source at DRI said.



Credit trading was a special facility applicable in Nepal-Tibet border trade that allows Nepali importers to pay after receiving goods from Tibet. However, it requires them to submit cash guarantees equivalent to 10 percent of import value before the imports are made and to produce proof of entry of the goods into country before paying the exporters via the banks.



The investigation officers will also try to crackdown why the central bank remained unaware of unnatural rise in demand of foreign currency under credit trading.



Earlier, initial investigation over the multi-million dollar capital flight scam through the use of fake import documents had confirmed the siphoning off of around $60 million to seven Hong Kong-based banks. The agencies are investigating several firms that could have played important roles in transferring up to $176 million to those banks.



The DRI also arrested Narayan Paudel, who was closely associated with New Dahal Business Enterprises, one of the several suspected firms engaged in siphoning off huge amount of foreign currency, while it has also issued arrest warrant against Lal Bahadur Gurung, proprietor of New Tina Enterprises, another firm that has been confirmed to be misusing the foreign currency.



The central bank as per the request of DRI, the leading investigating agency, has also frozen bank accounts of both the firms.

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