A month and a half since the Supreme Court asked the Nepal Investment Bank Limited to maintain the account of Ajeya Raj Sumargi “as it was”, the bank is struggling to retrieve the money the controversial businessman had withdrawn after an interim order of the court.

Sumargi had withdrawn almost all the money amounting to $6.99 million, which was frozen at the bank by the Nepal Rastra Bank, following the interim order issued on December 25 last year.

On January 8, however, a division bench of Chief Justice Cholendra Shumsher Rana and Justice Ananda Mohan Bhattarai quashed the interim order and asked the bank to maintain Sumargi’s account “as it was”, putting the Nepal Investment Bank Limited (NIBL) as well as the central bank into a quandary.

Sumargi had brought the money as foreign investment in Muktishree Cement Industries, one of his companies in Nepal. The central bank had frozen the money since 2013 saying that he had failed to show its sources.

It is part of around Rs9 billion that he had brought from suspicious companies based in tax haven countries like the British Virgin Islands, Cyprus, Egypt and Belarus.

The Department of Money Laundering Investigation has been probing the cash transfer suspecting shady business deals. The court order had stressed the need for investigation from the department, saying that the sender of the money appears to be Sumargi himself.

Following the latest court order, the central bank on January 22 asked three banks—Nepal Bangladesh Bank, Prime Bank and Mahalaxmi Development Bank to which Sumargi had transferred his NIBL money—to return the sum to the account of the businessman in question.

But none of the three banks has returned the money to the NIBL.

Senior officials of all three banks confirmed to the Post on Friday that they could not return the money transferred to their banks because “Sumargi had already used that amount for making a number of payments—bank loans, salary to his staff and taxes”.

The officials also said they had already notified the central bank about the status of Sumargi’s accounts in their banks.

With the central bank not specifying the modality of recovering the withdrawn money, all three banks have unanimously said they are helpless.

After the December 25 interim order, Sumargi had transferred around Rs200 million to his account at Prime Bank. Of that amount, Sumargi had paid around Rs100 million to service his loans.

The remaining amount also has been withdrawn, according to Narayan Das Manandhar, chief executive officer of Prime Bank. When asked about returning the money to NIBL, he asked back: “How can we bring back  the money that has already been withdrawn by ‘the client’?”

“Is there any law in the country to allow a bank to do so?” he questioned. “The authorities concerned should show us the legal basis and modality for retrieving the money withdrawn from our bank,” he told the Post.

Manandhar, however, confirmed to the Post that his bank had frozen Sumargi’s account. “But there is hardly any money in the account,” he said.

Nepal Bangladesh Bank, or NB Bank, echoed Manandhar.

According to NB bank officials, they had received the money from Muktishree Cement’s NIBL account but that was meant for repaying loans.

The officials said they released Sumargi’s collateral after he repaid the loan amount.

According to an NB Bank source, Sumargi had transferred around Rs250 million to the bank to repay the loan.

“Since the money came to us in the form of loan repayment, we cannot return it [to NIBL],” said Gyanendra Dhungana, chief executive officer of NB Bank. “We have frozen Sumargi’s account in our bank. No further transaction is allowed,” he told the Post.

Sumargi had transferred around Rs100 million from NIBL to Mahalaxmi Development Bank after the December 25 interim order. But before January 8 court ruling, he had already withdrawn almost all the money from Mahalaxmi Development Bank as well on different dates.

A senior official at Mahalaxmi Development Bank told the Post that Sumargi had used the amount to pay taxes and salaries of his staff.

Sumargi is one of the shareholders in Mahalaxmi Development Bank.

“After the central bank wrote to us, we notified Sumargi about it and asked him to deposit the money back,” the official said on condition of anonymity citing sensitivity of the matter. “We have not heard from Sumargi yet.”

With none of these three banks returning the money, NIBL said it was in a fix.

According to NIBL sources, Sumargi had loan liability at the bank also and that they had deducted around Rs200 million from Muktishree’s account as soon as the December 25 court order asked the bank to unfreeze the account.  

After the January 8 order, the bank sources said they transferred the same amount back to Muktishree’s account.

“We have already returned the money that we had deducted,” said Bijendra Suwal, deputy general manager of the bank.

He, however, refused to say whether other banks had returned Sumargi’s money to his bank, citing norms on secrecy about clients’ bank accounts.

Despite the delay in returning the money as per the court’s order, the central bank is yet to take a further step to ensure the return of Sumargi’s money.

Bankers said the central bank can take measures such as freezing all the bank accounts of Sumargi.

But Nepal Rastra Bank Spokesperson Narayan Poudel said besides writing to the banks, the regulator had also told the banks to ensure that Sumargi’s money is returned where it is supposed to as per the court order.

But the central bank has not taken any measures to freeze all of Sumargi’s bank accounts because the court has not specified how to ensure recovery of the money, he said. A former NRB senior official said there was something amiss in the court order, as it stopped short of saying how the money should be recovered.

A court order usually explains how the order should be executed, he said.