The government has expanded the mandate of a high-level probe commission to investigate not only the domestic assets of senior politicians and bureaucrats who have been in office since 2006-07, but also the wealth they may have stashed abroad, bringing into focus those accused of siphoning off illicit gains through abuse of public office.

However, even as the move signals a tougher anti-corruption stance, tracing offshore assets and bringing those involved under scrutiny remain complex legal and diplomatic challenges.

Over the years, several individuals who have fled Nepal to different places after committing crimes. Although efforts have been made in the past to issue Interpol red notices and trace such individuals, a lack of “adequate cooperation” from the countries concerned has allowed many to continue living abroad. Diplomatic efforts and seeking support from Interpol—of which Nepal Police is a member—have continued, but repatriating suspects and accused individuals remains complicated.

Against this backdrop, the government has authorised the commission led by former Supreme Court justice Rajendra Kumar Bhandari to investigate assets hidden abroad and to coordinate directly with Interpol and Nepali diplomatic missions overseas. Former attorney general Badri Bahadur Karki says that although the commission has been entrusted with investigating assets abroad, the task is neither easy nor straightforward. He notes that whether individuals and their assets abroad can be brought under investigation will depend on how the commission functions.

“We need to see which laws are invoked to investigate assets. Even in 1990, there were claims that ‘Pampha Devi’ had hidden wealth in Switzerland and that it would be repatriated—but that remained mere talk,” said Karki, also a senior advocate. “During my tenure as attorney general, a probe commission was formed under Bhairav Prasad Lamsal. What was the outcome? Where is the evidence it collected?”

A former Supreme Court justice said recovering assets held or hidden abroad is very complex. “If proper diplomatic initiatives are undertaken through state mechanisms, it may be possible to locate how much money is in Switzerland or elsewhere. Even in India, Prime Minister Narendra Modi had pledged to bring back [illicit] money from Swiss banks, but could not do so. Whether Nepal can succeed will be seen later, but for now, it doesn’t appear easy.”

The Balendra Shah government has authorised the commission to investigate political office holders ranging from local government chiefs and deputies to the prime minister. Among civil servants, the mandate covers officials from the joint secretary to the chief secretary levels, as well as first-class officers and above in the army and police. If under-secretaries have served as office chiefs, they also fall under the ambit of investigation. Officials of government, public, and autonomous institutions are also within the scope of investigation.

The mandate states that while investigating suspicious assets hidden abroad, the commission may, in accordance with prevailing laws, coordinate directly with Nepali diplomatic missions, Interpol, and other investigative agencies. It also allows the commission to examine the financial status of concerned individuals abroad.

The priority for the investigation will be given to individuals against whom complaints have been filed, those subjected to departmental action, those displaying unusually high financial status, intermediaries, and officials who have worked for long periods or repeatedly in institutions dealing directly with the public, such as tax and revenue administration, land administration, and transport management—sectors considered prone to corruption.

Hemanta Malla, a former chief of the Central Investigation Bureau, said investigating assets hidden abroad is not easy. However, he added that it is not impossible if diplomatic efforts, Nepal Police’s international networks, and coordination with counterpart agencies are effectively mobilised.

“It’s not that such investigations cannot be done. The key is the effectiveness of our efforts. " How much diplomatic capacity can we demonstrate in investigation and inquiry?” Malla said. “At a time when even bringing back fugitives is difficult, investigating assets already transferred abroad is even more challenging. Still, the government’s attempt should be taken as a positive initiative.”

Illicit wealth is often generated through policy manipulation, collusion in public procurement and trade, bribery in public services, and payments for postings in “lucrative offices.” Much of this money is then transferred abroad, laundered, and brought back into Nepal, yet detailed investigations into these practices remain lacking.

Not just the probe of accumulation of assets abroad, it is equally difficult to extradite individuals accused of crimes in Nepal who are living overseas. Many defendants in cases ranging from banking fraud to cooperative scams and corruption continue to stay abroad, and effective efforts to bring them back have yet to materialise.

For instance, Pawan Kumar Karki, the then managing director of Capital Merchant and Finance Limited, who was convicted by a court in Nepal, currently resides in the United States. Karki had transferred money earned through banking offences in Nepal to the US through various means and later obtained citizenship there. Despite multiple attempts by Nepal, the US government refused to extradite its citizen.

On January 7, 2016, the Nepal Police issued an Interpol red notice against Karki. Prior to that, he had already been placed on a diffusion notice on January 18, 2012. Despite at least two dozen correspondences with the National Central Bureau, Interpol’s liaison office, in the US, there was no progress to get him back. After the US authorities informed Nepal that deportation was not possible, prospects of bringing him under Nepal’s legal framework have “almost” ended.

Similarly, British national Michael Ryder was convicted in Nepal in the Sudan scam involving the procurement of armoured personnel carriers for Nepal Police’s UN peacekeeping mission in Darfur. Several attempts to bring him to Nepal over the past decade have failed.

In another glaring example, Gitenra Babu (GB) Rai, chairman of Gorkha Media Network, who faces multiple charges including cooperative fraud, money laundering, and organised crime, has also absconded abroad. Despite Interpol notices, the government has not been able to bring him back. Although he was reportedly in Malaysia, authorities say his current whereabouts are unknown. There are claims that funds siphoned from cooperatives may have been transferred abroad, but no detailed investigation has been conducted.

In the Nepal Airlines wide-body aircraft procurement scam, several foreign nationals were convicted along with Nepali officials. Despite court verdicts, Nepal has made little progress in taking legal or diplomatic action against those abroad. Investigations have revealed bribery deals conducted overseas and funds parked in countries such as Singapore, Dubai, and Hong Kong, but follow-up action has been weak.

Jyoti Gurung, the ex-wife of Congress leader and former minister Dhanraj Gurung, accused in a cooperative fraud case involving Rs 177.2 million, is also believed to be in the United States. Despite Interpol's listing, she has not been extradited.

A Nepali Additional Inspector General says weak mutual legal assistance mechanisms, ineffective diplomatic efforts, and reluctance from foreign countries are key obstacles. “Even in criminal investigations, obtaining cooperation is difficult. Asset investigation is even more complex. Effective engagement with the country concerned is essential, but experience shows this is not easy,” he said.

A representative case illustrating how illicit wealth is transferred abroad is that of Biklal Paudel, former executive director of the Security Printing Centre.

Paudel, currently in Dillibazar Prison after being convicted of corruption, is facing multiple ongoing cases. Investigations have revealed that he received bribes in countries such as Singapore, opened bank accounts there, transferred funds to the United States, and purchased property in New York in his wife Elina Basnet's name.

The illicit funds were channelled through insurance, shares, real estate, and complex technology-related investments. Investigations show transactions through banks in Singapore and Nepal, including United Overseas Bank, Nabil Bank, and Nepal Investment Bank.

Authorities have traced multiple transactions, including the transfer of millions of dollars, investments in shares, insurance premiums, and coordinated fund movements through associates. It has also been established that funds labelled as “gifts” were in fact bribes originating from corruption in Nepal, routed through Singapore, and ultimately reaching the US.

Despite extensive findings, the illicit wealth managed abroad has not been recovered. It remains unclear what specific procedures the new commission will adopt in such cases.