Nepal’s Central Investigation Bureau (CIB) has arrested four health-service operators, including Kailash Khadka, president of the Nepal Health Professionals Federation, accusing them of fraud in medical examinations required for migrant workers heading to Malaysia. Police also arrested Rabindra KC, Pravin Tiwari and Ram Pukar Tiwari.

The arrests, made on Wednesday evening in Kathmandu and Lalitpur, came as a dispute over Malaysia’s selection of recruitment agencies continues to strain labour ties between the two countries. 

According to a statement issued by Senior Superintendent of Police Anupam Shumsher Rana of the CIB, the operators were arrested on charges of fraud and offences under the Organised Crime Prevention Act, 2013. The investigation followed a letter from the Office of the Prime Minister and Council of Ministers and a complaint filed by Bikash Ranabhat and others.

The CIB alleges that the accused collected additional fees from workers under the name of a “biomedical service charge” through MacroTech Pvt Ltd, over and above the government-prescribed medical examination fee. The statement said the operators had collected money in an organised manner, causing financial losses to workers while making unlawful gains.

The Kathmandu District Court has granted permission to extend their detention for investigation, the CIB said.

However, labour ministry officials say a meeting of the joint technical committee between Nepal and Malaysia had authorised MacroTech to collect the biomedical service charge under the Malaysian recruitment system.

“After Malaysia’s system was introduced, the two countries agreed that workers could be sent to Malaysia after a service charge was collected in Nepal and the legally required revenue deposited,” a labour ministry official said. 

The arrests have raised questions about the government’s handling of a dispute that began after Malaysia selected a limited number of recruitment agencies. The Department of Foreign Employment has also issued arrest warrants for the operators of 25 manpower agencies selected by Malaysia.

Malaysia selected 25 manpower companies as principal agencies on August 22 and listed another 250 as supporting agencies under its Foreign Worker Centralised Management System (FWCMS). The arrangement prompted objections from Nepali recruitment businesses that were not included in the system.

Malaysia subsequently sent Nepal a diplomatic note stating that it would recruit foreign workers exclusively through agencies listed on the system from November 6.

Prime Minister Balendra Shah and his Malaysian counterpart, Anwar Ibrahim, spoke by telephone on September 22 and agreed to make foreign employment between the two countries more dignified, transparent and free from exploitation.

Two days later, Labour Minister Ramjee Yadav and his Malaysian counterpart, Ramanan Ramakrishnan, discussed the dispute but maintained their respective positions. Yadav requested that all recruitment agencies licensed in Nepal be allowed to register on the FWCMS. His Malaysian counterpart defended the new system as a measure to protect workers and prevent exploitation and abuse.

The government’s decision to take action against medical-service providers and recruitment agencies came despite the foreign ministry’s advice to resolve the dispute through diplomatic channels. “The labour and foreign ministers discussed the issue on Tuesday. At the meeting, the foreign ministry suggested resolving the problem through a meeting of the bilateral mechanism, as a diplomatic solution would be more appropriate,” a ministry official said.

Yadav, however, pressed for action against the businesses. On Wednesday, he summoned a police team led by Additional Inspector General Uma Prasad Chaturvedi to the ministry for discussions and urged the authorities to arrest the operators. The arrests began shortly after the meeting ended.

Kantipur repeatedly tried to contact Yadav for comment on Wednesday and Thursday but could not reach him. Labour Ministry spokesperson Mira Acharya said she was unaware of the arrests.

Dispute over medical examinations

Nepal and Malaysia signed a labour agreement on October 29, 2018, covering medical examinations for migrant workers. To implement it, the second meeting of the countries’ joint technical committee made it mandatory for 36 medical centres connected to the biometric medical system to conduct examinations in Nepal in line with Malaysia’s standard operating procedures.

Under the agreement, the cost of medical examinations in Nepal is to be borne by Malaysian employers under an employer-pays model, with the amount reimbursed through the worker’s first month’s salary. Workers are therefore supposed to receive the examinations without paying upfront.

In practice, employers recruiting workers under Malaysia’s zero-cost migration system have been paying medical fees in Nepal. The examinations have been conducted at the rate of Rs6,500 set by the labour ministry.

Labour ministry officials say the joint technical committee authorised MacroTech to collect the biomedical service charge as part of the system for sending workers to Malaysia. The CIB’s allegations, however, centre on the collection of additional fees beyond the government-prescribed medical examination charge.

The ministry also has a mechanism to compensate workers who are declared medically fit in Nepal but found unfit when examined in their destination country. A specialist committee led by an expert from the health ministry oversees the process, and health-service providers are required to cover the prescribed costs. However, no workers who returned after being declared medically unfit abroad have filed compensation claims with the Labour Ministry, according to officials.

Medical operators excluded from Malaysia’s selection process had previously filed writ petitions at both the High Court and the Supreme Court, alleging that the approved providers had been given a monopoly over medical examinations for Malaysian employment.

Both courts declined to grant their requests, ruling that the arrangement did not amount to a monopoly.

On January 29, 2020, a joint bench of High Court judges Lohit Chandra Shah and Rekha Thapa Pandey ruled against the operators’ demands. On February 7, 2023, a joint bench of Supreme Court justices Sapana Pradhan Malla and Nahakul Subedi also declined to issue the requested order.

The story has been udpated.