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Anti-graft body resumes probe into 2017 Airbus deal
An official source said that investigators have been struggling to summon the plane suppliers to record their statements in connection with the $209.6-million deal, the biggest in Nepal’s aviation history.Sangam Prasain
Nepal’s apex anti-graft body has issued summons to the representatives of five different international agencies involved in the 2017 purchase of two Airbus A330s.
In a notice issued on Thursday, the Commission for the Investigation of Abuse of Authority (CIAA) has summoned Deepak Sharma, president of International Supply Chain, AAR Corp, United States; Christian Nuehlen, who is a representative of German Aviation Capital GmbH Germany, German Aviation Capital Singapore, and also the director of Hi Fly X Ireland Limited; and Oleg Calistru, finance director of German Aviation Capital GmbH Germany.
“This is to notify that the following individuals are required to appear at the CIAA’s Tangal Office in person with a passport and a recent photograph in Room No. 108 within 15 days of this notice for the investigation purpose of alleged corruption in the purchase of A330-200 aircraft by Nepal Airlines Corporation.
Disregarding this notice will result in further legal action as per the prevailing laws of Nepal,” reads the notice.
The notice issued on Thursday, however, is not the first one.
In the first week of December last year, the anti-graft body had issued summons to the same persons. Before that, in March 2019, and then in April.
“It’s a part of the regular investigation process,” said CIAA spokesman Narahari Ghimire.
When asked why the summons are issued repeatedly, Ghimire did not elaborate.
An official source said that the investigation team has been struggling to summon the officials to record their statements in connection with the $209.6-million Airbus purchase deal, the largest ever in Nepal’s aviation history.
It’s been five years since the first summons were issued and the CIAA still has been issuing them, although the notice allows only 15 days for the officials to be present and record their statements.
A retired investigator at the CIAA told the Post that the statement recording process has become lengthy due to various issues.
“In 2019, when we asked Airbus, the aircraft manufacturer, to provide us with the details regarding the actual cost of the two aircraft, the company suggested we communicate through a diplomatic channel. And accordingly, we wrote to the French embassy in Kathmandu.”
“We didn't receive an answer from the embassy. I am retired now.”
He said that without knowing the cost, the investigation will get nowhere.
“The cost details will provide a clue on how much money Nepal Airlines paid to its supplier and what was the cost that the supplier paid to the manufacturer. We should know the cost gap to know whether there is any irregularity, since the specifications of the planes which were found to be different from what was ordered.”
According to officials, during the Covid period, the Supreme Court decided to close its non-urgent court proceedings, including activities in other government agencies and the CIAA, which stopped the investigation from proceeding ahead.
The CIAA could have restarted the investigation now, the retired CIAA official surmised.
Former officials at the CIAA said that the recording of statements of all those involved in the deal in Nepal has been completed.
In January 2019, the parliamentary Public Accounts Committee had concluded that the procurement of the two wide-body aircraft by Nepal Airlines had caused a loss of Rs4.35 billion to the government.
Following the allegations, on March 27, 2019, the apex constitutional body for corruption control issued a first public notice asking the firms—Hi Fly X Ireland Limited, Dublin; AAR International Inc, USA; German Aviation Capital GMBM, Frankfurt; Hi Fly-Transporte Aereos [Hi Fly Airlines], Lisbon, Portugal; and Norton Rose Fulbright, Munich, Germany—to appear before the authority’s office in Tangal within 15 days.
The parliamentary committee had questioned the motive of the Nepal Airlines Corporation and Hi Fly Portugal for forming a special purpose vehicle—Hi Fly X Ireland—to specifically handle the procurement process.
The committee has termed Hi Fly X a “fictitious” company and has suspected “massive financial irregularities” in the deal.
Stating that Ireland is the biggest tax haven in the world used by multinationals to shelter profits, the lawmakers suspected Nepal Airlines Corporation might have reached the deal with the company “to evade taxes”.
While advance payment was released to the Portugal-based Hi Fly Transporte Aereos, the rest of the payment was released to the Ireland-based company, the committee report had said.
The national flag carrier had initially signed a $209.6-million contract for two jets with the consortium of the United States-based AAR Corp and German Aviation Capital in April 2017.
The corporation had deposited $79 million into the escrow account held by Norton Rose Fulbright as an advance payment for the two jets.
Pointing out irregularities worth Rs4.35 billion in the aircraft purchase deal, the parliamentary committee had implicated then tourism minister, Rabindra Adhikari, Nepal Airlines Corporation Managing Director Sugat Ratna Kansakar and some other government officials.
Adhikari died in a helicopter crash on February 27, 2019.
The government also had formed its panel in January to probe into the irregularities in the jet purchase deal, but its term ended before it could initiate any work.
The 55th annual report of the Office of Auditor General has questioned the procedure adopted by Nepal Airlines and the pricing of the aircraft.
The report said that the corporation had prepared a request for proposal to select the company which could supply a new wide-body aircraft.
However, the national flag carrier later changed the procedure to procure an old aircraft while issuing the request for proposal to select the supplier.
The audit report said that Nepal Airlines was required to invite proposals only from the aircraft manufacturers to purchase brand-new aircraft as per Clause 236 (1) of its financial bylaw.
However, it went with Clause 236 (2) of the bylaw which allows Nepal Airlines to procure an old plane.
As per Clause 236 (2), the carrier could get a supply of aircraft from a leasing agency, banker or airline operator besides manufacturers.