Next phase in SEBON chair selection, unresolved by Oli and Prachanda

Kathmandu, November 15 — The government has called for interviews with three candidates for the position of Chair of the Securities Board of Nepal (SEBON) on November 24. These interviews were initially scheduled for October 4, but had to be postponed after Dr. Shiva Raj Adhikari, the convenor of the recommendation committee, fell ill.

The selection process for the SEBON chair is not limited to just these interviews. On February 28, the Ministry of Finance called for applications for the chairperson's position. Out of 19 applicants, five candidates were shortlisted by the government in March 2024. However, some of the shortlisted candidates raised objections at the time.

Among the shortlisted candidates, Santosh Narayan Shrestha and Mukti Shrestha had already presented their action plans on June 16. Meanwhile, Krishna Bahadur Karki, Chiranjibi Chapagain, and Dr. Naba Raj Adhikari were absent and have now been called for a third round of presentations.

Under the Securities Act, 2007, the recommendation committee for the SEBON chair must submit at least three names to the Council of Ministers. However, after only two candidates from the shortlist presented their plans, the committee was unable to make a recommendation to the Cabinet.

Following the failure to make a recommendation, the government formed a new recommendation committee. However, Santosh Narayan Shrestha, one of the shortlisted candidates, filed a petition in the Supreme Court challenging the legality of starting a new process. The Court issued an interim order preventing the government from initiating a new process and scheduled a hearing for February 13, 2025.

As a result, the government has reverted to the original process and recommendation committee to appoint the SEBON chair. Sources in the Ministry of Finance indicated that at that time, the government led by Prime Minister Pushpakamal Dahal 'Prachanda' was almost certain to appoint Shrestha, with the agreement of the CPN-UML led by KP Sharma Oli. However, after Shrestha appeared to be the likely candidate, the other three candidates did not attend the interviews, which disrupted the process.

Interest of big business houses

The Securities Board has been without a chair since January 5. Although the shortlist of candidates was published in March 2024, the process stalled for two months. At the time the shortlist was released, then-Finance Minister Barshaman Pun appointed Narendrakumar Rana, the joint secretary at the Ministry of Finance, as acting chair. However, Minister Pun did not push forward with the appointment process, and the issue became more politically complex.

The significance of the SEBON chair is evident when considering the appointment of former chair Ramesh Kumar Hamal. In February 2022, under the leadership of Prime Minister Sher Bahadur Deuba, the government appointed Hamal after altering the recommendation committee members, canceling the initial round of applications, and changing the committee's procedures.

The SEBON chair not only regulates the securities market but also has the authority to approve share issuances and grant permissions for the sale of shares at premium prices. In the past, the board has faced controversy for allowing loss-making companies to issue shares at premium prices, particularly among private-sector companies. This has turned the chair's appointment into a politically sensitive issue, with business interests increasingly involved.

An official from the Ministry of Finance said that business lobbies and political influence have made the appointment process more complicated. "Businesspeople want a person who is aligned with their interests at the Securities Board, which has intensified lobbying. As powerful business figures push their agendas, political leadership seems to be confused," the official stated.

Some have even speculated that the ongoing selection process could lead to a change in the government itself. Mukti Shrestha, one of the candidates, wrote on X (formerly Twitter) after the change in the UML-Maoist coalition government, saying, "The position of SEBON chair is so powerful that its impact even led to a government change. This was also the reason for the previous government’s change."

According to sources from the Ministry of Finance, influential businessmen such as Chandra Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), former President of the Non-Resident Nepali Association (NRNA) Jeeva Lamichhane, and Upendra Mahato, are part of a group lobbying for their preferred candidate.

Another group, including former FNCCI President Shekhar Golcha, Pashupati Murarka, and Bhawani Rana, is also advocating for its candidate. Additionally, Ramshwor Thapa, Chairman of Annapurna Media Network, is lobbying separately. These individuals have met repeatedly with the Prime Minister, senior ruling party leaders, and the Finance Minister to push for their preferred choices.

Sources from the Ministry of Finance have noted that with the interview notice now issued, lobbying has intensified once again. "It will soon be clear which group emerges victorious," they added.