Recently at an investment conference on May 12, Prime Minister Pushpa Kamal Dahal vowed to improve the investment climate in Nepal. Odds are he was just paying lip service to the crowd he was addressing. Many decision makers—both elected and non-elected—made similar promises in the past, yet foreign direct investment remains very subdued. If let us say Dahal is serious this time, one of the ways he could help create an investment-friendly environment is by helping create a society where corruption is looked down upon. Globally, Nepal ranks very high in corruption. For foreign investors, corruption and the associated bribes constitute a hidden cost—a stealth tax—which pushes up project and/or operational costs.

Corruption can be defined in lots of different ways. While it does take place within private enterprises, corruption at the most basic level can be described as the abuse of public power for the benefit of self or related individuals. Corruption one way or the other has been ingrained in human society for ages. Nations at the lower rung of economic development are more prone to this, but the developed ones are not immune either. South Korean President Park Geun-hye was impeached on corruption charges and sentenced to 25 years in prison. French President Nicolas Sarkozy was sentenced to three years in prison for corruption and influence peddling. Several United States senators have been found guilty of accepting bribes.

In 2022, no country scored a perfect 100 in Transparency International’s corruption perceptions index, but countries like Denmark (90), Finland, and New Zealand, where public apathy toward corruption is deep-rooted, scored high. In the United States, paying bribes to foreign officials is a criminal act, and bribery is one of two crimes explicitly mentioned in the constitution that could lead to the impeachment of a president. In countries like Nepal (34) where corruption is pervasive, the cost of not paying bribes is lost contracts. In contract bidding, only the most efficient ones can afford to offer the highest bribe. This is a deterrent for most foreign capital, which will then go to countries where these costs are lower.

Step in right direction

It is because of these supply-demand dynamics that what is transpiring in Nepal as relates to the fake Bhutanese refugee case should be viewed as a step in the right direction. Nepalis apparently paid millions each in bribes to be settled abroad in the guise of Bhutanese refugees. This had the blessings of prominent government officials. Corruption at the highest echelons of government is nothing new in Nepal. What is new is the speed at which investigations are progressing and the way the accused have been put behind bars. Thus far, the police have nabbed 16, including former vice-president and energy minister Top Bahadur Rayamajhi, former home minister Bal Krishna Khand and former home secretary Tek Narayan Pandey.

It is possible the Dahal administration is acting with new-found enthusiasm because it involves foreign powers. Under the UNHCR programme, nearly 113,000 Bhutanese refugees of Nepali ethnicity were resettled in eight countries including the United States. Soon after news broke that the police were on the hunt for suspects including Rayamajhi, the leaders of the three main parties—Dahal, of the Communist Party of Nepal (Maoist Centre), KP Sharma Oli, of the Communist Party of Nepal (Unified Marxist-Leninist), and Sher Bahadur Deuba, of the Nepali Congress—met. Rayamajhi until his recent suspension was secretary of the CPN-UML and a Maoist before that, while Khand is a central working committee member of the Nepali Congress.

The widespread public perception was that the three hurriedly huddled together to try to sweep the crime under the carpet. Many corrupt acts have gone unpunished in the past. In 1990 when a multi-party system was restored, one of the oft-repeated slogans of the new parties was to get rid of corruption prevalent in the preceding one-party Panchayat system. More than three decades have gone by and it has only grown. Some major scandals surround Baluwatar and Lalita Niwas land, procurement of medical supplies, wide-body aircraft, and security printing press. The public learns about the corruption, only to discover that the authorities never followed through. In order not to investigate, the corruption breeds more corruption.

Writing on the wall

The current anti-corruption commitment shown by the government—not to mention the police—is an exception to this. Dahal, who leads a 10-party coalition government, of which the Nepali Congress leads with 89 seats won in last year’s general election versus Dahal’s 32, has said he will get to the bottom of this, no matter who is involved. Narayan Kaji Shrestha, the current home minister, is from his party and a man with no family, which probably suggests he is free from the shackles of nepotism—a la the late Krishna Prasad Bhattarai of the Nepali Congress. A whole lot is riding on how all this evolves. If this ends the way it began, a new chapter—a constructive one—will have been written in the annals of corruption.

It is very possible that Dahal, Deuba and Oli have seen the writing on the wall. The general public’s level of frustration over corruption is very high, and they are protesting where they most efficiently can—at the ballot. The journalist-turned-politician Rabi Lamichhane-led Rastriya Swatantra Party made waves in last year’s general election, winning 20 federal seats in the lower house. In last month’s by-elections, both Lamichhane and Swarnim Wagle, who left the Nepali Congress to join the Rastriya Swatantra Party, won—from Chitwan and Tanahun, respectively. They represent the new blood of leaders fully aware of the damage wrought by years of corrupt practices and of the need to say “enough is enough”.

If the three major parties mess this one up, this will be an open invitation to the likes of the Rastriya Swatantra Party to do very well in the next election cycle. At some point, the case likely reaches the Supreme Court, and it too will need to rise to the occasion; in the last two years, the apex court has done so at least three times—twice when Oli’s attempt to dissolve Parliament was deemed unconstitutional, and when finance minister Janardan Sharma suspended Nepal Rastra Bank governor Maha Prasad Adhikari and was rebuffed. The fight to end corruption cannot be won in just a few years. A strong foundation will have been laid once politicians start giving up a life of luxury, and laws are in place to protect/reward whistle-blowers.