The Commission for the Investigation of Abuse of Authority (CIAA) has formally launched an investigation into the decision of the Civil Aviation Authority of Nepal (Caan) to distribute bonus to its employees from money collected from passengers to develop airport infrastructure.

“We have seized necessary documents from the Tourism Ministry on Monday over the decision to distribute bonus to Caan employees,” said Jib Raj Koirala, spokesperson of the CIAA, the anti-graft body. “We will begin investigation on the matter.”

Although the tourism ministry officials had recommended that distribution of bonus from money collected from taxpayers for development of airport infrastructure was not appropriate, the outgoing tourism minister Jeeban Bahadur Shahi had approved the decision to dole out bonuses. The Tourism Minister also chairs the Caan board.

The Caan had decided to distribute Rs530 million as bonus to its employees from profits earned during fiscal years 2011-12 to 2014-15.

Although the Bonus Act 1974 paves the way for organisations like the Caan to distribute bonus from their profit, the Bonus Regulation 1983 forbids not-for-profit government-owned entities established to promote administrative, industrial, agriculture and other sectors from extending bonuses. The Caan has been set up with the objective of ensuring safety, security and efficiency in the aviation sector. It should also embrace measures that are environmentally sustainable.

The decision to extend bonus comes at a time when the efficiency of Nepal’s aviation sector, including its human resources, has been widely questioned at national and international forums for lack of investment and training facilities. Nepal has been put in the bad books for the worst record of air safety oversight since 2009 by the UN aviation watchdog. The European Commission has also included Nepal in its air safety list for poor safety record in 2013.

“Caan’s regulation also forbids bonus distribution if safety is compromised,” said an official of the Tourism Ministry. “Can government service provider award bonuses from the money that has been collected from travellers to develop infrastructure?” questioned the official. Moreover, the Caan is in the process of being split into two separate units-service provider and regulator-which will require additional funding. The Caan has also been upgrading Tribhuvan International Airport (TIA) by acquiring a loan of $70 million from the Asian Development Bank, despite collecting millions of rupees from passengers to develop airport infrastructure.

“The Caan established with the objective of serving the public and delivering services cannot distribute bonuses from taxes raised from people,” the official said. 

The Caan currently collects taxes in two separate baskets. The government has authorised the Caan to raise Rs1,000 per passenger in airport development tax, which comes to Rs1.70 billion annually.

In April 2013, the Caan board authorised collection of development tax from travellers departing from TIA to raise funds to repay its loans and finance ongoing improvement projects for a period of five years. The Caan is authorised to spend this amount solely on development of airport infrastructure. In addition, the Caan collects another Rs1,130 as passenger service charge from each international traveller which amounts to Rs1.80 billion a year.