The Special Court verdict on the Lalita Niwas land grab scam acquitting former ministers on the grounds that they were part of the government’s undefined ‘policy decisions’ has once again brought to light how the loophole has been used to save politicians from conviction in corruption cases.

The Special Court on Thursday convicted more than 100 individuals, including former government secretaries, in the illegal conversion of government land at Baluwatar as personal assets of private individuals while acquitting the political leaders involved in making the decisions. It also ordered the confiscation of land from 65 individuals.

Former deputy prime minister and minister for physical infrastructure and transport Bijay Kumar Gachhadar, and two former land reform ministers Dambar Shrestha and Chandra Deo Joshi were given clean chits in the infamous scam even though the decisions for land transfer were taken when they headed the land reform ministry that oversees the land ownership issue.

The Commission for Investigation of Abuse of Authority (CIAA) prosecuted former ministers but not former prime ministers—Madhav Kumar Nepal and Baburam Bhattarai—citing that it has no jurisdiction to investigate policy decisions of the Cabinet as per Section 4(B) of the CIAA Act-1991.

The provision states that the commission shall not take any action in matters relating to any business or decisions taken at meetings of any house of Parliament or any committee or for anything said or done by any member at such meetings. It also bars action against any policy decisions taken by the Council of Ministers or any committee thereof or judicial actions of a court of law.

Pointing out the CIAA decision not to prosecute the former prime ministers, the Special Court said that the ministers who were part of the collective decision of the Cabinet cannot be prosecuted alone either.

“It would be unfair to implicate some while sparing other signatories of the same Cabinet decision,” reads a point of the verdict, adding that the ministers were collectively responsible for ‘policy decisions’.

As the politicians have long been spared from prosecution because decisions made in the Cabinet are termed policy decisions, the anti-graft body has long been urging the government and Parliament to define what constitutes ‘policy decision’. Anti-corruption activists have also been seeking a definition of policy decisions for the same reason.

“As per the Land Act-1964, only the land reform office can decide on tenants. When the land reform office refused to provide government-owned lands in the name of fake tenants, the Cabinet ordered the land revenue office to do so. It was thus implemented without legal authority,” said former Special Court chairperson Gauri Bahadur Karki.

“Even though the Cabinets headed by Nepal and Bhattarai made decisions in violation of the law, those involved in the Cabinet decisions were not prosecuted, citing the limitation of jurisdiction in the CIAA Act-1991.”

The Special Court itself has also pointed out that the government-owned land of Baluwatar was provided to some individuals in the name of tenants’ rights based on the ‘policy decision’ of the Cabinet even though their beneficiary status was not established.

“Even as the court suggested that the Cabinet decision was illegal, it acquitted the former ministers not on the ground that they were not involved in illegal acts but to ensure equal treatment for all Cabinet members,” said Karki.

However, Senior Advocate Bal Krishna Neupane questioned the Special Court’s verdict, arguing that it adopted discriminatory policy between former ministers and bureaucrats as politicians were acquitted in the name of ‘policy decision’ while bureaucrats were convicted for implementing the same decision.

Neupane asked: How can a Cabinet decision to transfer government-owned land to the ownership of a private individual be a policy decision?

A Supreme Court order in early August last year had opened the door for the CIAA to investigate former prime ministers Nepal, now the chairperson of the ruling Communist Party of Nepal (Unified Socialist), and Bhattarai, who now heads the Nepal Samajbadi Party, in the scam.

After hearing a habeas corpus petition filed on behalf of Yograj Paudel, a former civil servant arrested in connection with the scam, a division bench of justices Anil Kumar Sinha and Kumar Chudal said no one involved in making decisions relating to the transfer of land should be spared investigation.

“Here’s a direction to investigate those directly involved in the Cabinet decisions of April 11, 2010 and May 14, 2010 as well as of August 13, 2010 and October 4, 2013, and those implementing the decisions, in addition to those making minister-level decisions and executing them," said the court, arguing that top officials involved in decision-making need to be investigated.

On the dates, the Cabinet led by then-prime ministers Nepal and Bhattarai had decided to order the land revenue offices to transfer some land of Lalita Niwas in the name of individuals.

Even though the CIAA Act-1991 is silent on what constitutes the policy decision, the Supreme Court in 1996 had sought to define the policy decision.

As per the 1996 verdict issued by then-chief justice Surendra Prasad Singh and justices Keshav Prasad Upadhyaya, Laxman Prasad Aryal, Kedar Nath Upadhyay and Udayaraj Upadhyaya, decisions taken ‘collectively’ by the Cabinet to fulfil promises made in the election manifesto constitute ‘policy decisions’.

Bal Krishna Neupane, a senior lawyer, based on whose petition the Supreme Court had passed the verdict more than two decades ago, questioned whether the decision to transfer government-owned land in the name of private individuals was part of the election manifestos of the former prime ministers.

Instead of clearly defining the policy decision, a bill registered in Parliament to amend the CIAA-Act 1991 also fails to define the Cabinet’s ‘policy decision’. Furthermore, the bill proposes barring the CIAA from looking into the policy decisions of provincial Cabinets and those of their subordinate committees.

The government says the proposal was to readjust the law as per the country’s newly adopted federal system.

Padmini Pradhananga, president of Transparency International-Nepal, said the bill registered in Parliament was more regressive than the existing one when it comes to controlling corruption involving top political leaders. The bill first registered in the National Assembly was endorsed by the upper house on April 10, 2023.

“The acquittal of former ministers in the Lalita Niwas grab scam showed there should be a clear definition of ‘policy decisions’,” she said. “But the bill is not only mum on defining the policy decision, it opened the door for politicians to commit corruption though the provincial cabinet too.”

The Lalita Niwas area covers around 300 ropanis [around 15 hectares] of land adjoining the prime minister's residence, Nepal Rastra Bank’s central office and some VIP residences.