China has expressed its serious concerns over Chinese entities being implicated in the $215.96 million China-funded Pokhara international airport project amid a corruption investigation.

Chinese Ambassador to Nepal Chen Song, who is soon completing his three-year term in Kathmandu, paid a farewell call on Prime Minister Sushila Karki on Wednesday and voiced reservations over Chinese entities facing allegations in the Pokhara regional airport corruption case.

Chen arrived in Kathmandu in early January 2023 to take up his diplomatic assignment, and is now returning to Beijing after getting a promotion.

According to two officials familiar with Chen’s meetings with ministers and officials, the ambassador was recalled prematurely. His departure comes at a time when Nepal is holding crucial elections on March 5 and ambassadors from key countries are expected to remain in the host country due to the importance of political transition.

“We have heard that he got promoted to the post of director general and will return to Beijing by the end of this month,” a senior foreign ministry official told the Post. Beijing is yet to name his successor.

Chen told the prime minister that he received the recall notice from Beijing just two days ago and is leaving Nepal around December 28.

“Today [Wednesday], the Chinese ambassador paid a farewell call on Prime Minister Karki at Singha Durbar, as the ambassador is set to return home upon completing his tenure,” said a notice issued by the prime minister’s private secretariat.

During the farewell meeting at Singha Durbar, Ambassador Chen requested that China and Chinese entities not be implicated in the Pokhara airport case, according to officials present at the meeting. He urged the prime minister to help in the matter. This is the first time that China has officially lodged a complaint on the issue at the highest political level.

Ambassador Chen stated that China CAMC Engineering Company, the airport contractor, is a state-owned entity and cannot be involved in corruption under Chinese law.

Before meeting with PM Karki, ambassador Chen had held meetings with some Cabinet ministers, government officials and Chinese interlocutors and voiced concerns over implicating Chinese entities in the airport corruption case, which the Chinese side thinks very unfair and escalated by foreign forces.

“The Chinese officials were quite angry about the recent corruption case implicating the company,” a minister told the Post. “They have expressed concerns to several political leaders and government officials after the case was filed against the Chinese company.”

The Chinese ambassador also suggested that external factors may have played a role in raising the Pokhara airport case and implicating Chinese entities. Chen even named some countries and their agencies as being behind the flaring of the corruption case and the involvement of the Chinese company, according to leaders.

The Commission for Investigation of Abuse of Authority (CIAA) filed a corruption case at the Special Court on December 7 against 55 individuals including five former ministers and 10 former secretaries, as well as China CAMC Engineering Company, the contractor, over irregularities in the construction of Pokhara airport.

According to the court, this is the biggest corruption case filed at the Special Court in terms of the cash involved under a state procurement process.

The anti-corruption body has determined Rs8.36 billion should be recovered from each of the 56 defendants, the largest financial penalty to date. The final sentencing, however, will be determined by the court.

The project was bankrolled by China, and from the outset, China CAMC, which has secured multiple projects in Nepal including the Pokhara airport, acted with malafide intent to secure and influence the project, the chargesheet reads.

The project’s MoU stated that “the government of Nepal shall provide CAMC solid and substantial support in a tender” in order for the Civil Aviation Authority of Nepal to issue an engineering, procurement, and construction (EPC) contract for the regional international airport.

Under the agreement, Nepal received a loan from China EXIM Bank, of which 25 percent is interest-free. Interest on the remaining amount was set at 2 percent annually. The repayment period has been set at 20 years, including a seven-year grace period.

The ambassador told the prime minister not to implicate China and Chinese entities in the Pokhara airport case, claiming that there was no corruption in the project.

“The project was dragged into controversy due to the internal differences in Nepal, so China and Chinese entities have nothing to do with the corruption,” Chen told the prime minister, according to officials familiar with the meeting.

He also asked the prime minister to play a role so that Chinese entities would not be implicated, but the prime minister replied that the CIAA, the anti-graft body, is independent and autonomous and she cannot intervene in its investigation.

“These officials [55 those implicated] colluded in evaluating a technically baseless and financially overpriced bid from China CAMC Engineering Co Ltd. They illegally negotiated, formed advisory groups twice [on September 12, 2013, and September 9, 2014] despite no provision for such bodies in the Public Procurement Act,” the chargesheet by the CIAA states.

China has listed the Pokhara airport as a flagship project under its Belt and Road Initiative (BRI).

During the meeting, the Chinese envoy also asked the prime minister to check anti-China activity in Nepal, as well as activities of Tibetan refugees against China, as well as any other anti-China activities that may take place in Nepal’s northern districts.

In response, the prime minister stated that Nepal is committed to one-China policy and will not allow its soil to be used against any of its neighbours. Ambassador Chen also communicated that China is ready to support and expand cooperation under the BRI in Nepal and sought reciprocity.

Nepal and China first signed the BRI framework agreement in 2017 which was later updated in 2024 December during the visit of Prime Minister KP Oli to China. At the Nepali request, 10 different projects were agreed upon during Oli’s visit, but not a single one of them has moved forward.

During the meeting, there were discussions on various dimensions of Nepal-China relations and matters of bilateral interest, said the notice issued by the prime minister’s private secretariat.

Prime Minister Karki congratulated the Chinese ambassador on the successful completion of his tenure and wished him a safe and successful journey home, according to the notice.