Businessman Shekhar Golchha, former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), was arrested on Thursday in connection with alleged offences related to the securities and insurance sectors.

His arrest comes even as the Department of Money Laundering Investigation continues a parallel inquiry into the same case.

Acting on a complaint lodged by the Securities Board of Nepal (Sebon), the Central Investigation Bureau (CIB) arrested Golchha from the office of Golchha Organisation at Narayanchaur, Naxal, on Thursday afternoon. CIB spokesperson Senior Superintendent of Police Shiva Kumar Shrestha said the bureau had obtained an arrest warrant from the Kathmandu District Court before taking him into custody.

Police said Golchha is being investigated under the Securities Act, 2007, for alleged false trading, price manipulation and influencing the securities market—acts prohibited under the law. Golchha is the immediate past chair of Himalayan Reinsurance Company.

The department said it is separately probing Golchha on suspicion of laundering assets through questionable transactions in the share market via insurance companies.

According to department officials, others under investigation in the case include Sulav Agrawal, vice-chairperson of Shankar Group and chairperson of Jagdamba Holdings; Deepak Bhatta, chairperson of Infinity Holdings; directors of Himalayan Reinsurance; business associates linked to them; and former officials and employees of the Nepal Insurance Authority and Sebon.

According to sources familiar with the matter, at the beginning of the current fiscal year, a group comprising Golchha, Rohit Gupta, Raj Bahadur Shah, Deepak Bhatta and Amit More agreed to jointly trade shares for commercial purposes. As per the understanding, all partners contributed money, which was collected into a single account through the banking system. Some shares were later purchased from that pooled fund.

“Friends coming together to raise money, create a fund and invest it in the capital market with the aim of earning quick profits is not, in itself, wrong or illegal,” one of the partners said. “But when one of the partners is found to have cheated the others, the relationship quickly turns hostile.”

In conversation with Kantipur, one of the five partners alleged that funds worth Rs3.73 billion had been misappropriated in Himalayan Reinsurance Limited, Himalayan Securities Banker, HLI Large Cap Fund and Nepal Micro Insurance, among other listed companies, in the name of Bhatta. However, Bhatta has reportedly maintained that Sulav Agrawal carried out the transactions without his knowledge.

When Golchha, Shah, Gupta, and More learned that irregularities had occurred and that their money had been misused to buy shares, they called an emergency meeting. Bhatta was also present. According to sources, heated exchanges took place during the meeting, and there were discussions on recovering the money involved in the alleged irregularities committed by Bhatta and Sulav.

However, it was not possible as the Department of Money Laundering Investigation and other regulatory bodies had already begun probing the transactions involving Bhatta and Agrawal. Their bank accounts had been frozen during the investigation and remain blocked.

According to two sources present at the meeting, Bhatta expressed anger towards Sulav, while Sulav became emotional and repeatedly apologised. “Sulav admitted his mistake, broke down in tears, and even touched Golchha’s feet seeking forgiveness. But apologies could not bring the money back,” a source told Kantipur.

Golchha had earlier told Kantipur that he resigned as chairman of Himalayan Reinsurance after learning of the irregularities. “It turned out that transactions involving such a huge amount had taken place, and funds of various public limited companies had been embezzled to purchase shares,” Golchha told Kantipur in the second week of April. “This proposal never even came to the board meeting of Himalayan Reinsurance. The very day I learned of these activities, I resigned as chairman.”

He also claimed that he was not the ultimate beneficial owner in any part of the transactions.

According to the CIB, it started further investigation against several individuals and entities who were found to be involved in irregularities. Investigating officials say that directors of Himalayan Reinsurance, the brokerage firm Himalayan Securities, Himalayan Capserve, the HLI Large Cap Fund, and associated traders and executives have also come under scrutiny.

The CIB said it is pursuing the case under Sections 94, 95, 96 and 98 of the Securities Act, based on a formal complaint filed by Sebon under Section 103(3).

Section 94 of the Act prohibits false or artificial trading in securities, while section 95 bars artificial price fluctuations, including transactions intended to fix, inflate, depress or stabilise the price of securities through fake or manipulated trades. Likewise, section 96 prohibits acts intended to improperly influence the securities market, including artificially raising, lowering or stabilising the market price of a company’s securities in order to induce or discourage others from buying or selling.

Section 98 prohibits fraudulent transactions, including the use of deceptive schemes, plans or devices to mislead others into buying, selling or exchanging securities.

A CIB official said Golchha was arrested after investigators found evidence linking him to suspicious transactions involving Himalayan Reinsurance and related businesses. Investigations are also continuing against other accused individuals connected to the case.

Sebon had separately referred the matter, along with its preliminary investigation report, to both the Department of Money Laundering Investigation and the CIB. The board’s report named Sulav Agrawal, Deepak Bhatta, Shubhi Agrawal, Raj Bahadur Shah, businessman Rishiraj Mor and Sandeep Chachan in suspicious roles.

The report also linked former FNCCI chief Golchha, Rohit Gupta of Ramesh Corp, and institutions including Himalayan Reinsurance, Himalayan Capserve, Himalayan Securities, HLI Large Cap Fund and Nepal Micro Insurance. It identified Golchha as a person who allegedly facilitated the offences. He had resigned from Himalayan Reinsurance after being drawn into the money laundering investigation.

Meanwhile, the Department of Money Laundering Investigation said it is preparing to conclude its probe. Bhatta and Sulav Agrawal remain in its custody.

Officials said the investigation covers their alleged suspicious financial transactions, including the investment of unlawfully acquired assets in the capital market and other sectors. An official said evidence gathered during the inquiry, along with statements from the accused, is being incorporated into the final report.

Sources said statements have so far been recorded from more than 25 individuals, including Golchha, Bhatta and Agrawal. Investigators have also questioned Santosh Narayan Shrestha, chairperson of Sebon, who resigned last Friday. He had been appointed to the post on December 25, 2024, and came under investigation after allegations that Sebon had taken decisions granting undue benefits to insurance companies linked to Bhatta and Agrawal.

Golchha had resigned as chairperson of Himalayan Reinsurance on March 9 after the company’s directors came under investigation.

The department has also recorded the statement of former chair of Nepal Insurance Authority Surya Prasad Silwal.

As part of the same probe, Bhatta was arrested on April 1 and Sulav Agrawal on April 4. On April 14, investigators raided their homes and offices, as well as the office of Himalayan Reinsurance, seizing documents, equipment and vehicles.

Officials said three vehicles seized from Bhatta’s residence in Sanepa were later found to belong to Agrawal, chairperson of Jagdamba Holdings.