Chhabi Lal Joshi, a retired deputy inspector general (DIG) of Nepal Police, was arrested on Sunday from Kathmandu on the charge of misappropriating funds of Suryadarshan Saving and Credit Cooperative Limited in Pokhara. Joshi was one of the founders of Gorkha Media Network.
“Based on a letter from the District Police Office, Kaski, the crime division of Nepal Police arrested Joshi from Kathmandu on Sunday,” Karki told the Post. “He has been taken to Pokhara by air.”
Karki, however, did not specify the law under which Joshi will be prosecuted.
The parliamentary special panel, formed to investigate crisis-ridden cooperatives, has recommended in its report that the government initiate legal action against Joshi, one of the founders of the Gorkha Media Network, along with the company’s chair, Gitendra Babu (GB) Rai, then managing director Rabi Lamichhane, and board member Kumar Ramtel.
The committee’s report was submitted to Speaker of the House of Representatives Devraj Ghimire on September 16 and subsequently forwarded to the government. A Cabinet meeting on September 19 decided to own the report and directed the ministries and agencies concerned to implement it.
On Saturday, as recommended by the parliamentary probe panel, Minister of Home Affairs Ramesh Lekhak directed the Nepal Police to take necessary action on the cooperatives scam. A member of the home minister’s secretariat confirmed this directive while talking to the Post.
The probe panel has recommended prosecuting the four, and the International Criminal Police Organisation (INTERPOL) has issued a diffusion notice for Rai, who is on the run.
Ramtel is already in judicial custody in Kaski for misusing cooperative funds and now Joshi has been arrested. The police are now considering prosecuting Lamichhane.
“If everything stays on track, the police will soon arrest Lamichhane,” a source close to Home Minister Lekhak told the Post. “There is also a strong possibility of Nepali Congress Vice President Dhan Raj Gurung being arrested.”
Gurung and his former wife Jyoti Gurung are accused of misusing more than Rs120 million of Lalitpur-based Miteri Cooperative. The probe panel report also called for the government to investigate the Gurung duo.
Lamichhane is the chair of the Rastriya Swatantra Party (RSP), and he was twice deputy prime minister and home minister in the CPN (Maoist Centre) chair Pushpa Kamal Dahal’s government formed in coalition with the CPN-UML.
All four persons recommended for prosecution by the probe panel are accused of diverting funds from multiple cooperatives to finance the media company that operated the Galaxy 4K television channel, which shut down last year.
Chairman GB Rai and managing director Lamichhane co-founded and jointly ran the media company before Lamichhane joined politics in June 2022.
“During the investigation, the probe panel found that investments in the Gorkha Media Network had been made with the money diverted from various cooperatives,” reads the probe panel report. Although Lamichhane has been found guilty of using funds from cooperatives in the Gorkha Media Network, the report said that it could not unearth evidence of Lamichhane himself bringing in cooperatives’ money into the network.
Soon after the probe panel submitted its 1,124-page report to the House, the RSP started claiming that party chair Lamichhane had gotten a clean chit on the cooperative scam. Claiming that Lamichhane was not involved in rerouting the cooperative fund into the Gorkha Media Network, the party leaders argued that Lamichhane was innocent.
Although the parliamentary probe panel was unable to directly link Lamichhane to the routing of cooperative funds into the media house, corporate lawyers argue that, as one of the company's responsible persons, he could be held accountable under the fiduciary duties outlined in the Company Act 2006’s Articles 160 and 161.
If the chair or the managing director of a company acts in his/her personal interest to the detriment of the company’s shareholders, the chair or the managing director can be booked under the law.
Lamichhane and his party leaders have been claiming that he was just an employee of the Gorkha Media Network and did not know all the details of its investments. They argue that Lamichhane cannot be held accountable for the investments and loans involving the now dysfunctional company and its chair, Rai.
The Company Act 2006 Section 2(j) defines the position (managing director) held by Lamichhane as an ‘Officer’ of the company’s corporate body.
According to the Act, the definition of ‘officer’ of a company encompasses director, chief executive, manager, company secretary, liquidator, and any employee undertaking departmental responsibility of the company as the officer of the company.
While the Company Act 2006 mentions the managing director as an officer of a company, the National Penal Act 2017 states that the managing director is a responsible person who should be held accountable should the company commit any crime falling within the scope of his/her authority.
Likewise, the National Penal (Code) Act 2017 Section 30 states that criminal liability for an offence committed by a body corporate [legal entity with separate legal existence from a company’s members or shareholders] is vested in the one who commits or causes the commission of the act.
“Where any firm, company, or body corporate commits, or causes the commission of, an act considered to be an offence under this Act or law, the person who committed, or caused the commission of, such offence shall be responsible for such act,” the Act reads.
“Where such a person cannot be identified... in the case of a firm, the director, managing director, general manager who did or caused the doing of such an act… and where even such a person cannot be identified, the chief executive of such a body shall bear the criminal liability,” it says.
Meanwhile, a 14-member RSP delegation which was on a 10-day visit to China since Saturday, is returning home soon. After the police arrested Joshi and the looming possibility of party chief Lamichhane’s arrest, the party leaders abruptly decided to cut short the visit.
“The party leaders who are currently in China are coming back soon,’’ the party's acting spokesperson Ganesh Karki told the Post.
Upon the invitation of the Chinese Communist Party, the RSP delegates led by the party’s vice-president, Swarnim Wagle.
Meanwhile Lamichhane has requested his party members and supporters to stay alert and on standby saying that the government may do anything to him and his party.
Lamichhane made the request while addressing his supporters gathered at the party’s headquarters at Balaju, Kathmandu on Sunday evening after unsubstantiated reports stated that the government was preparing to arrest him.
He urged his supporters to be ready to fight for the protection of their newly emerged political force and claimed that all these attempts were aimed at ‘finishing off Rabi Lamichhane and the Rastriya Swatantra Party'.
He argued that he did nothing wrong and wondered why the authorities are afraid of him and his party.
"I don't trust this government. It can do anything. So I earnestly request you all to stay alert and on standby," he said addressing the supporters.
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