Passport Department Director General Arrested Amid E-Passport Irregularities
Kathmandu. On Tuesday, Director General of the Department of Passports, Tirtharaj Aryal, was arrested. He was arrested by a team from the Commission for Investigation of Abuse of Authority on suspicion of involvement in irregularities in the printing of electronic passports (e-passports), tax evasion, and capital flight in the name of commission.
The Commission's team arrested Director General Aryal from room number 301 of the Department of Passports in Tripureshwor. An official of the Commission informed that he was taken into custody for investigation into irregularities in passport printing and the suspicious financial transactions involved.
Ratopati had previously published evidence showing that a single group was awarded the contract for passport printing in Nepal, and capital flight occurred through this means. After Ratopati published news about the suspicious nexus between a French company, a Singaporean agent, and a Nepali sub-contractor, the Commission, under pressure, arrested Director General Aryal for further investigation into this matter.
The Special Court has granted the Commission for Investigation of Abuse of Authority permission to detain Tirtharaj Aryal, Director General of the Department of Passports, and Sunil Kumar KC, Director, for 4 days.
The bench of Special Court Chairman Sudarshan Dev Bhatta and members Umesh Koirala and Bidur Koirala granted permission for their detention.
Spokesperson of the Special Court, Krishnasharan Lamichhane, informed that the court granted 4 days, effective from Monday, out of the 20 days requested by the Commission for Investigation of Abuse of Authority for detention.
Lamichhane stated that permission was granted to investigate them for corruption offenses in passport printing.
How was tax evasion done in the passport contract?
The electronic passport (e-passport) printing project, which is related to Nepal's national identity, citizens' personal data, and highly sensitive security, was not just a normal procurement process. However, middlemen and high-level administrators turned it into a cash cow. A triangular nexus of three companies was primarily established to evade taxes.
The names of France's IDEMIA, Singapore's Capital Biz Solution, and Nepal's Delta Core Pvt. Ltd. are linked to the operation of the passport contract. IDEMIA is a multinational company headquartered in France, which received the main contract for e-passport printing from the Department of Passports.
According to international procurement laws and Nepal's Public Procurement Act, foreign companies working in Nepal must transparently disclose their local agents and the commission amounts paid to them. Such commissions must come through Nepal's banking system, and the Nepali government is entitled to collect taxes accordingly.
However, to evade taxes, the French company IDEMIA appointed Capital Biz Solution, a company registered in Singapore, as its agent without having an official agent in Nepal. This company is not even registered in Nepal. The commission for work in Nepal was paid in Singapore.
On the other hand, IDEMIA appointed Delta Core Private Limited, a company registered with the Company Registrar's Office in Nepal, as its sub-contractor, ostensibly for maintenance and technical support of the e-passport project.
The real game behind this was different. According to sources, the Nepali company Delta Core showed very low income, paid nominal taxes in Nepal, and the main portion of the commission was received abroad through Capital Biz Solution in Singapore. In this way, income generated in Nepal was deliberately moved abroad through foreign structures to avoid tax liability, causing billions in revenue loss to the state.
One Owner, Two Companies
The most significant and suspicious fact in this triangular relationship was revealed by Ratopati. A meticulous study of the obtained documents and details clearly shows how a single gang has been plundering the state treasury by establishing companies on both sides.
Ratopati found a surprising fact by comparing documents obtained from the Accounting and Corporate Regulatory Authority (ACRA), Singapore's regulatory body, and the Office of the Company Registrar in Nepal. The directors of Capital Biz Solution, the agent company registered in Singapore, and Delta Core Pvt. Ltd., which was working as a sub-contractor in Nepal, were the same individuals.
It appears that five Nepali citizens have equal 20% share ownership in both companies. These include Siddharth Pandey, Bipin Bassi, Sharad Gurung, Arjun Gurung, and Vijayraj Pant. This confirms that the sole purpose of making a foreign company with 100% Nepali directors an agent for a Nepali contract was tax evasion and foreign exchange malversation. They received substantial commissions for work done in Nepal by receiving them in Singapore, in blatant violation of Nepal's Income Tax Act.
Unusual Commission of 12.25% and Foreign Exchange Malversation
In any large-scale international government procurement, the commission received by an agent is typically only between 2% and 5%. However, the rate of commission in the e-passport contract was unusually high.
According to transaction orders and evidence obtained by Ratopati, IDEMIA paid a 12.25% commission to the broker for the supply of 2.5 million MRP/e-passport booklets to the Department of Passports under the Ministry of Foreign Affairs. This amounts to billions of rupees flowing out of the state treasury.
There is ample evidence of foreign exchange malversation and money laundering in this case. According to the regulations of the Nepal Rastra Bank and the Foreign Exchange (Regulation) Act, no Nepali citizen can open a company abroad, operate a bank account, or conduct foreign exchange transactions without prior approval from the Nepal Rastra Bank.
However, here, the same five Nepali citizens are operating a company in Singapore and receiving commissions in a hawala-like manner. Information has also reached investigative agencies that the funds accumulated in Singapore are being transferred elsewhere through another suspicious entity in Hong Kong.
Setting and Irregularities Occurred in the Contract Process Itself
The main reason for the arrest of Director General Tirtharaj Aryal is not just the technical aspect of tax evasion, but also the extreme manipulation in the initial contract process and the abuse of authority.
According to legal provisions, any international company must submit a tax clearance certificate when submitting a bid in Nepal. However, the French company IDEMIA was given special exemption in collusion with the high administrative leadership of the Department of Passports. According to sources, the company had not submitted a complete tax clearance certificate in Nepal even at the time of bidding.
Legally, the bid of a company without tax clearance should have been technically rejected at the outset. However, based on the collusion of high-ranking officials of the department, the company was deemed eligible and awarded the contract. Furthermore, the specifications for the contract were drafted in such a way that no company other than IDEMIA could compete, effectively locking out other bidders.
This means that before the bidding process even began, a 'deal' for commission had already been struck between the French company, the Singaporean intermediary company, and high-ranking officials of the Department of Passports. According to that deal, the contract was awarded, creating a liability of billions for the state, and the commission was sent abroad.
The Same Gang Controls Other Controversial Contracts Too
This intermediary group, which operates a commission network by establishing parallel companies in Singapore and Nepal, is not limited to the passport project. Sources claim that this group has a syndicate in most of the large, technical, and controversial contracts in Nepal.
This group is also linked to the contract for embossed number plates, which has been controversial for a long time and is worth billions. It is claimed that a large commission from the amount collected from consumers for each number plate was sent to Singapore through Capital Biz Solution there as well.
Similarly, this group is also involved in awarding the contract for smart driving licenses and their system management to an organization called 'Self' under mysterious circumstances, making it the sole contender. Not only in information technology, but this group has also been working as a local agent for large electrical transmission line projects in Nepal associated with multinational companies like Tata and Siemens.
Experts in public procurement state that it is not just ordinary corruption but a serious threat to national security when the same group captures projects related to the state's highly sensitive data and hides the commission abroad.
Stakeholders claim this case to be one of the biggest scams in history. They say that the current action by the Commission is merely the tip of the iceberg of this scandal.
This specific news has been automatically translated by AI. As a result, there may be some inaccuracies or language errors.
