Police bureau recommends prosecution of Prithvi Bahadur Shah and associatesCalls grow to make former finance minister Sharma accountable for trying to offer political protection to Shah.
The Central Investigation Bureau of Nepal Police has recommended prosecuting Prithvi Bahadur Shah and 19 other members of his group in four crimes—fraud, document forgery, cooperatives fraud, and organised crime.
Shah, the central character in a row between former finance minister Janardan Sharma and Nepal Rastra Bank Governor Maha Prasad Adhikari early last year, as well as six other associates, are currently in police custody on charges of defrauding a number of foreigners. Thirteen other accused are at large, according to the police.
According to the CIB, they received $4.54 million, 22,000 pound sterling, and 340,000 Canadian dollars which converted into a total of Rs639.5 million, through online hacking and got the money transferred to the accounts of their companies and individuals.
The CIB said on Wednesday that it submitted its investigation report to the Office of District Attorney, Kathmandu for prosecution.
Besides committing fraud, they were also found to have used fake thumb prints to register a company and submitted fake documents to receive money from abroad. In order to hide the money brought illegally, Shah transferred the ownership of a company to others while still taking hold of its bank account, according to the CIB.
“A separate investigation against them is also underway on charges of money laundering,” said AIG Uttam Raj Subedi, chief of the CIB. “It may take a month to a month and a half to complete the investigation on money laundering too.”
They established relationships with foreign nationals, particularly US citizens, by sending emails in the name of anti-virus updates, and bill payments to Amazon, Geek Squad and Quick books. The fraudsters also established access to their victims’ bank accounts remotely and got the amount transferred to Nepal through various banks by composing email from the victims’ addresses.
According to the police, Shah’s group sent fake bank statements of money being deposited in the accounts of victims and told them to return the amount.
“In fact, Shah’s group showed a fake bank statement of a huge amount being deposited in the victims’ accounts even though there was no such deposit,” said Subedi, the CIB chief. “The group then persuaded the victims to return the extra amount, telling them that getting the amount from the undisclosed sources could invite punishment under the US laws.”
Of the total amount transferred to Nepal, $1.50 million (Rs206.88 million) has been held by various banks including Kumari, NCC, and Global IME without depositing them in the accounts of Shah and his associates, and an additional Rs12.89 million in their accounts has been frozen.
Shah, however, was able to use Rs388.66 million of the total transferred amount to invest in real estate, shares, gold, company registration, and insurance. “While purchasing land, he evaded taxes by showing low prices of the plots,” the CIB said.
Police received 24 complaints from 56 victims, all US citizens, through the help of the US Federal Investigation Bureau (FBI). “They have claims for $2.89 million,” said Subedi. “As more amounts have been transferred from the US, this group might have more victims there.”
Subedi said that the group had established contact with the victims from Kolkata, India too. “When the racket contacted the victims from Kolkata, the victims saw a phone number originating in the US. But during our investigation we found that the calls were made from Kolkata,” said Subedi.
According to him, the picture of people in the US involved in these frauds is as yet unclear. “We have requested the FBI for details about this racket’s possible connections with the people based in the US,” he said.
The US Embassy in Kathmandu also confirmed cooperation with Nepal’s law enforcement agencies.
In a statement, the US Embassy said that in 2021 and throughout 2022, the Financial Crimes Enforcement Network under the US Department of Treasury advised Nepal’s Financial Intelligence Unit (FIU) of the potential scheme which conned US citizens into unwittingly transferring money to bank accounts controlled by Shah.
“The Federal Bureau of Investigation [FBI] and the US Embassy helped gather additional evidence against Shah showing that he and his associates were engaging in organised crime. The CIB of Nepal Police arrested Prithvi Shah and six associates in January 2023,” the embassy said in the statement. With the confirmation from the US Embassy, the cases against Shah have become stronger.
On Wednesday, the Nepal Police submitted additional evidence of criminal violations against Shah and his associates to prosecutors for allegedly stealing over $4 million in a large-scale fraud scheme targeting US citizens and private enterprises, the embassy said.
The alleged fraud by Shah surfaced after the Financial Intelligence Unit at the central bank received a request around two years ago from the Financial Crimes Enforcement Network (FinCEN), a US government agency under the Department of Treasury, to freeze the amount illegally brought from the US and to return it to the country. The FIU then asked the CIB to look into the matter.
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 his name, a request the governor refused.
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 putting pressure on him to release the suspicious money, according to the petition he filed at the Supreme Court.
Even though criminals in Nepal have long enjoyed political protection, little effort is being made to make such politicians accountable for their actions.
“Following the prosecution of Shah and his associates, the activities of former finance minister Sharma also look suspicious,” said Surya Nath Upadhyay, former chief of the Commission for Investigation of Abuse of Authority. “It is thus vital to also investigate his property and determine if he derived any benefit by protecting Shah.”