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Government agencies say probe into Sumargi funds continues

- PRITHVI MAN SHRESTHA, Kathmandu

Jan 22, 2019-

The Department of Money Laundering Investigation says it has sought details through Nepal’s financial intelligence unit on transactions of controversial businessman Ajeya Raj Sumargi in foreign countries.

Sumargi’s transactions have come into question on several occasions in the past, and the Centre for Investigative Journalism-Nepal (CIJ-Nepal) report published on Wednesday shows he had used tax haven countries to turn his black money white in the name of foreign direct investment.

A highly placed source at the department told the Post that investigation into Sumargi’s transactions was launched long before the CIJ-Nepal indicted him in its report.

The department had written to the Financial Information Unit (FIU) of Nepal Rastra Bank (NRB) a few months ago, asking the latter to gather information on the transactions of Sumargi and his companies in foreign countries through the Egmont Group, an informal network of 159 financial intelligence units (FIUs), of which Nepal is a member.

The group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing.

Read: How businessmen used Ncell to launder black money to Nepal

The department’s initial probe had found last year that Sumargi and firms affiliated to him had brought around Rs9 billion illegally to Nepal through “suspicious companies” based in tax havens, signalling his involvement in shady business deals.

“We have asked our FIU to seek details from the countries from where he brought money to Nepal as FDI or loans,” said the department source. 

Sumargi had allegedly brought money to Nepal from offshore companies established by him and his close associates in the British Virgin Islands, Cyprus, Egypt and Belarus—all tax haven countries and territories. 

The FIUs of all these countries are members of Egmond Group. 

The department, however, has not got any details from abroad as Nepal’s FIU has not been able to gather information on Sumargi’s transactions. 

“We had sought details about him from foreign countries as asked by the country’s anti-money laundering agency, but we are yet to receive information from group members,” said a source at the FIU, who did not wish to be named because of the sensitivity of the matter. “It may also be because Sumargi’s transactions are not under the scanner in the concerned countries,” the source added. 

The FIU uses information received from the Egmont Group for financial analysis. 

“But such information cannot be used as proof in the court of law,” the FIU official said. “Only the information received through mutual legal assistance process can be produced as proof in the court.” 

Despite introducing the law on Mutual Legal Assistance in 2014, Nepal has not signed such agreement with any country. 

Department officials say lack of mutual legal assistance agreement is hindering the  process of collecting evidence to file case against Sumargi despite his suspicious transactions. 

“Strong investigation with evidence is necessary to make the case stronger,” said the department official.

Jiwan Prakash Sitaula, director general of the department, told the Post that the anti-money laundering agency has been continuously following Sumargi’s case. “What we need is evidence and we are working to generate strong evidence,” he said.

Asked how long it might take to conclude the investigation, department officials would not give any deadline.

Due to delayed investigation, Sumargi has been able to access almost all funds transferred to Nepal in the name of different companies owned by him from the offshore companies abroad.

Some of his funds brought from abroad were frozen by the NRB a few years ago after he failed to produce the source.

In February 2018, however, a single bench of Supreme Justice Tej Bahadur KC issued a stay order allowing Sumargi to withdraw $21.38 million—frozen by the central bank—from the Nepal Investment Bank Limited (NIBL).

In December 2018, Supreme Court Justice Deepak Raj Joshee issued another interim order in relation to Muktishree Industries, owned by Sumargi, allowing the company to withdraw the money worth $6.99 million frozen by the central bank at the NIBL.

In a bizarre turn of events, a division bench of Chief Justice Cholendra Shumsher Rana and Justice Ananda Mohan Bhattarai on January 8 quashed the earlier interim order issued by Justice Joshee, asking the NIBL to “maintain the balance as it was before the interim order”.

After the latest order of the court, the central bank has told NIBL to recover the amount. “We have known that the amount has been debited in another account and we have told the NIBL to recover the amount in a similar way,” said Narayan Poudel, spokesperson for the NRB. 

In total, Sumargi has already brought around Rs12 billion from abroad to Nepal, according to NepaLeaks 2019, the damning report of the CIJ-Nepal, which has listed 55 Nepalis and non-resident Nepalis as having invested in offshore companies and bringing their illicit money to Nepal in the name of FDI .

In an interview with the Kantipur Daily, the Post’s sister paper, Finance Minister Yubaraj Khatiwada said the NRB had already been told to freeze [Sumargi’s] money—withdrawn from the NIBL after the January 8 court order—in whichever bank it has been transferred to. 

But Poudel, the NRB spokesperson, said the central bank was yet to issue any instruction to other banks to freeze Sumargi’s money. “We have to implement the court order.”

Published: 22-01-2019 07:31

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