Former minister and Nepali Congress leader Deepak Khadka, who has been drawn into a money laundering investigation, is now facing separate probes into alleged tax evasion and corruption.

The Department of Money Laundering Investigation has written to the Commission for Investigation of Abuse of Authority (CIAA) seeking action on corruption-related allegations, while also referring the case to the Department of Revenue Investigation for examination of suspected tax evasion.

In a parallel move, the Department of Money Laundering Investigation forwarded the case file to the Department of Revenue Investigation, which subsequently took Khadka into custody. The Lalitpur District Court on Monday granted a three-day detention order to allow further investigation.

An official at the money laundering investigation department said that once a preliminary inquiry is completed, the agency is required to refer matters to the relevant authorities depending on the nature of the offence. “Where an initial inquiry under money laundering allegations indicates misuse of public office, it is referred to the CIAA, and where suspicious financial transactions or tax evasion are identified, it is referred to the Department of Revenue Investigation. We have forwarded the collected evidence to the concerned agencies for further investigation,” the official said.

Following amendments to the law two years ago, the Department of Money Laundering Investigation’s direct jurisdiction over money laundering offences was curtailed. Since then, cases involving unexplained wealth have been routinely referred to either the CIAA or the Department of Revenue Investigation.

Officials said that in cases where proceeds of corruption are invested in businesses or assets, the predicate offence must first be established. Only after that can money laundering charges be pursued.

The law further states that for complaints filed before April 12, 2024, the department may carry out investigations on its own. However, for cases registered after that date, the primary offence must first be investigated by the relevant authority before money laundering proceedings can proceed based on facts and evidence.

Section 14 (1) of the Money Laundering Prevention Act 2008 empowers the department either to forward cases to concerned authorities or to constitute its own investigative team. It also requires that, where preliminary findings indicate irregularities, the matter must be referred to the concerned body for further action.

Relying on this legal framework, the former minister has been brought under scrutiny by two separate investigative agencies.

Acting on the department’s request, the Central Investigation Bureau (CIB) of Nepal Police took Khadka into custody on March 29 from Budhanilkantha. He was later remanded by the Kathmandu District Court for preliminary investigation.

Following that initial custody, the department reviewed financial transactions involving Khadka, his family members, and companies linked to him. It also examined discrepancies between declared assets during his tenure in public office and his current holdings, describing them as “unusual”, which prompted referrals to the CIAA and the Department of Revenue Investigation.

The Department of Revenue Investigation has since taken custody of Khadka, and all further detention and legal proceedings will now be handled by the Lalitpur District Court instead of the Kathmandu District Court.

According to sources, an earlier complaint was already under investigation at the CIAA before the Gen Z movement. After the latest communication from the money laundering investigation department, both matters are now being consolidated for a more detailed and coordinated investigation.

During last year’s Gen Z protests, Khadka was serving as energy, water resources and irrigation minister in the then KP Sharma Oli-led government. He had previously also served as state minister for water supply and sanitation in a coalition government led by Pushpa Kamal Dahal involving the Nepali Congress and then CPN (Maoist Centre).

Khadka is active in both politics and business. However, investigators have flagged discrepancies between his asset declarations filed during his tenure as a two-time member of parliament and two-time minister, his bank accounts used for both personal and business transactions, tax payment records, and shareholding in multiple companies. Officials said the mismatch between declared and actual assets has raised questions over the lawful origin of his wealth, triggering parallel probes into both tax evasion and corruption.

Khadka owns land and houses in Budhanilkantha, Chandragiri, and Sankhuwasabha, among other locations. His residence in Budhanilkantha was set on fire during the Gen Z protests on September 9. Videos and images showing burnt cash reportedly recovered from the damaged house also circulated publicly.

Investigators said they have also visited the damaged property and carried out a site inspection as part of the ongoing inquiry.

Khadka is linked to Khadka Land Development Pvt Ltd and other business ventures, and remains under scrutiny over suspected financial irregularities. He has also been accused of illegally occupying seven ropani (0.36 hectares) of Nepal Scouts land in Lainchaur and operating a party palace there for years.

Separately, he is under investigation over allegations connected to the Jagdulla Hydropower Project, where procurement irregularities were alleged in a Rs16 billion contract. Complaints claim that after the tender process was cancelled, intermediaries facilitated a deal benefiting selected companies, with alleged commissions of around two percent for the minister and payments shared among other bidding contractors.

The CIAA has already been investigating these allegations, and the latest letter from the money laundering investigation department has brought Khadka further under formal and expanded scrutiny.