Prithvi Bahadur Shah, the central character in a row between former finance minister Janardan Sharma and Nepal Rastra Bank Governor Maha Prasad Adhikari early last year, was arrested along with five other associates on the charge of committing a number of frauds.

The Central Investigation Bureau (CIB) of Nepal Police said in a statement that six people including Shah were arrested on Friday as they were found to have duped foreign nationals of millions of dollars through unauthorised entry into their computer systems.

“They have been taken in the CIB’s custody for further investigation after taking remand from Kathmandu District Court on Friday,” the CIB said. Other arrested include Bijya Bikram Shah, Chakra Bahadur Khatri, Anup Khadka, Rukmangat Kafle and Rang Bahadur Saud.

According to the CIB, they received $4.64 million, 12,825 pound sterling, and Rs32.22 million, which converts into Rs649.5 million, through the swift system after the foreigners were duped through fraudulent activities.

“For example, this group lured Julia Hodages Rickeet, a US national, to click on an anti-virus software which enabled the group to hack the bank account of Rickeet,” said Superintendent of Police Kamal Thapa. “After the complaint was registered with the US police, the money was found to have arrived in Nepal and we also conducted an investigation on the matter.”

The group also received money from other foreign nationals by conducting many wire scams.

“Certain amount currently frozen by Nepal Rastra Bank is also a part of the total earnings made by Shah and his associates through fraudulent activities,” said Thapa, who is also the CIB spokesperson.

Former finance minister Sharma had allegedly asked the central bank to release the frozen amount of Shah which the central bank leadership refused, triggering a widely publicised dispute between Sharma and Maha Prasad Adhikari, governor of the Nepal Rastra Bank.

Shah and his group had made efforts to hide the source of income by transferring the money in the name of different individuals and institutions after getting the money from abroad, according to the CIB.

“Dozens of fake companies were established to hide the illegal earnings,” said SP Thapa of CIB. “They were established just to manage the illegally earned money.”

The police had initiated an investigation after getting a tip-off that dozens of companies including Hunting Reserves of Nepal Pvt Ltd were carrying out suspicious transactions.

During the investigation, these companies were found to have been running without getting the approval to start transactions and carried out activities beyond the objective of their establishment, the police said.

“Now that the investigation has almost completed, we took Shah and his groups into custody,” said Thapa, adding that police had found no evidence of Nepali nationals being duped by this group.

The alleged defrauding by Shah and his associates also drew US agencies as the US nationals also became victims.

The Financial Crimes Enforcement Network (FinCEN), a US government agency under the Department of Treasury, which collects and analyses information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes, had asked the Financial Intelligence Unit of Nepal Rastra Bank to freeze the amount illegally brought from the US and to return it to the country.

However, Shah, a resident of Bannigadhi Rural Municipality-6 in Achham district, sought political intervention through Sharma. The then finance minister allegedly asked the central bank to release the money in the name of Shah which the governor refused.

But Sharma took a proposal to the Cabinet to suspend Adhikari for his refusal to unfreeze Shah’s money despite his instruction. After the Cabinet on April 8 last year formed the probe committee, Adhikari was automatically suspended.

But the Supreme Court, responding to a petition by Adhikari, ordered the government not to implement the decision.

Adhikari accused Sharma of pressuring him to release the suspicious money, according to the petition he filed at the Supreme Court. On the other hand, Shah had long been making efforts to unfreeze the money.

Besides approaching the finance minister, Shah had filed a petition at the Supreme Court on July 27, 2021 demanding that the court issue an interim order to release the money.

He had filed the petition on behalf of the World Export and Import Private Limited, in whose names the money was received, and other companies which Shah claims to own and operate.

As many as six petitions were registered at the Supreme Court demanding a halt to the ongoing investigation into 15 bank accounts opened in the name of Shah, his kin, employees and different companies.

But the Supreme Court did not entertain the requests for an interim order to the central bank to release the money. The court on April 18, 2021 had decided to send the sixth petition for a final hearing after refusing to issue an interim order demanded by Shah.

Although the issue was sub judice in the Supreme Court, the Department of Money Laundering on January 25 last year decided to unfreeze his bank accounts arguing that the evidence immediately available did not establish Shah’s involvement in a crime related to money laundering and wrote to the banks concerned to unfreeze the money.

On January 31, the department had written to the central bank to facilitate the unfreezing process.

A senior official at the department, however, told the Post in April last year, on condition of anonymity, that it was a mistake to decide to unfreeze Shah’s bank accounts when the investigation was underway. “Political influence is apparent in this decision,” said the official.

Money owned by Shah and his associates has continued to remain frozen, according to a senior official at Nepal Rastra Bank. “The money has not been returned to the US as requested by the US agency as well,” the official said.