Nepal finance minister faces moral question after top court rules against move to suspend central bank governorWith an interlocutory order to the government not to enforce its April 7 decision, Adhikari is set to resume office.
An interlocutory injunction by the Supreme Court has paved the way for suspended central bank Governor Maha Prasad Adhikari to resume office, while raising a moral question over Finance Minister Janardan Sharma.
Responding to a petition filed by Adhikari, a single bench of Justice Hari Phuyal issued an interlocutory injunction on Tuesday. An interlocutory injunction is a provisional order given during the course of a legal action, pending another order.
The bench has called both the parties—the government and the petitioner—on April 26 to discuss whether or not to issue an interim order.
Adhikari faced an automatic suspension on April 8 following the government decision, or Finance Minister Janardan Sharma’s decision for that matter, to set up a panel to probe Governor Adhikari. Adhikari was charged with leaking sensitive information about government decisions and not fulfilling his responsibilities effectively.
“The court has issued an interlocutory order against the government’s decision, paving the way for the governor to continue his job until another order,” Devendra Dhakal, an information officer at the Supreme Court, told the Post. The court has also directed the government to furnish its arguments in writing on why not to issue an interim order as demanded by the petitioner within 15 days.
Adhikari moved the Supreme Court on Sunday, demanding that the decision to form the probe committee be scrapped because there was no basis for setting up such a committee. In his petition, Adhikari also demanded that the court issue an interim order against the government and stop the ongoing probe.
The government had formed an investigation team led by Purushottam Bhandari, a former justice at the Supreme Court with Chandra Kanta Poudel and Surya Bahadur Thapa as members.
An order by Bhandari’s bench in 2017 in a case involving election dispute had landed in controversy with complaints that it favoured Renu Dahal, then mayoral candidate from the CPN (Maoist Centre) in Bharatpur, Chitwan. During the vote count, cadres of the Maoist Centre had torn the ballot papers from Bharatpur Metropolis-19. Bhandari’s bench had ordered a re-election which ensured Dahal’s victory.
Poudel is a member of the Finance and Planning Department of the Maoist Centre while Thapa, a professor, is associated with the teacher’s union affiliated to the Maoist Centre.
In his petition, Governor Adhikari had also questioned the impartiality of the probe committee.
Adhikari was appointed Nepal Rastra Bank governor on April 6, 2020.
The decision to investigate Adhikari had drawn strong criticism from various quarters with economists and former central bank governors and officials calling it a misplaced action at a time when the country’s economy was facing a crisis.
The action against Adhikari had its genesis in a tussle between him and Finance Minister Sharma who has been facing criticism for failing to address the country’s economic woes and attempting to release suspicious funds [withheld by the central bank] transferred from abroad by one Prithvi Bahadur Shah.
Finance Minister Sharma is a leader of the CPN (Maoist Centre), which is a key coalition partner in the Sher Bahadur Deuba-led government. Singha Durbar sources had told the Post that Deuba, in the run-up to the formation of the investigation panel, had also acquiesced to the Maoist Centre’s insistence that action must be taken against Adhikari.
Former finance ministers and experts said that even though the court has issued only an interlocutory injunction pending an interim order, Sharma now faces a moral question.
“The Supreme Court’s order has proved that it was a wrong decision to suspend Governor Adhikari,” said former finance minister Prakash Chandra Lohani. “It has been proved that the finance minister made a wrong decision. Now, the finance minister himself should be probed over the allegations that he had instructed the central bank to release
Rs400 million whose source is under investigation.”
Nepal’s Department of Money Laundering Investigation is probing the money brought by Shah from the United States as per the request from the Financial Information Unit of the Nepal Rastra Bank. But even as the probe is under way, Finance Minister Sharma had instructed the Nepal Rastra Bank to release the money, which experts say is tantamount to breaching the jurisdiction of the central bank.
Sharma, however, had defended his move publicly, claiming that he was “helping a victim” and “facilitating foreign investment.”
Former governor Chiranjeevi Nepal said the court seems to have clearly understood the importance of the central bank’s autonomy and has issued the order accordingly.
“After the court passed an order against the government decision to remove Tilak Rawal as governor in 2000, the then finance minister Mahesh Acharya had resigned on moral grounds,” Nepal told the Post. “It is up to Finance Minister Sharma now whether to shoulder the moral responsibility of undermining the autonomy of the central bank.”
If Sharma decides to continue despite the court order, complications could arise as both the central bank and the Finance Ministry need to work in tandem to keep the economy on track.
“The question now is how Finance Minister Sharma and Governor Adhikari would coordinate with each other to rescue the country’s economy which is in crisis,” said Nepal.
Nepal has over the years taken several measures to strengthen the autonomy of the central bank, which is responsible for conducting monetary policy, regulating banks and providing financial services. It is also considered “the lender of last resort”, meaning it is responsible for pumping funds into the nation’s economy when commercial banks fail to tide over the shortages.
The government took the decision to suspend Adhikari when several economic indicators are negative. The abrupt decision came when Finance Minister Sharma himself was in question for his failure to take steps to fix the economy.
The court in order Tuesday has taken the country’s economic situation also into consideration.
“As the issues raised by the petitioner are linked with the Nepal Rastra Bank, monetary policy and the entire economy, it is necessary to summon both the parties to hold a discussion before deciding whether an interim order is required,” reads the order. “Until the decision on the interim order is taken, do not implement the April 7 decision of the government [to investigate Adhikari and suspend him] and allow the petitioner to perform his responsibilities.”
Talking to the Post after the court order, Adhikari said he is happy that the court has done justice.
“I am yet to receive the court order though,” he said. “I will resume office once I receive it.”
(Anil Giri and Prithvi Man Shrestha contributed reporting.)