Prosecutors have launched a sweeping legal offensive against executives of the Shanker Group, Infinity Holdings and Himalayan Reinsurance, filing cases simultaneously in three separate courts over allegations of financial misconduct spanning the securities, insurance, banking and anti-money laundering.

The cases have been filed against Shanker Group chair Shankerlal Agrawal, vice-chairs Sulav Agrawal and Sahil Agrawal, Infinity Holdings chair Deepak Bhatta, and former Himalayan Reinsurance chairman and former president of the Federation of Nepalese Chambers of Commerce and Industry Shekhar Golchha, among others.

The District Government Attorney’s Office in Kathmandu filed insurance and securities-related cases at the Kathmandu District Court, while the Special Government Attorney’s Office filed a money laundering case at the Special Court. A separate banking offence case has been registered at the Patan High Court.

Prosecutors have named 42 defendants in the insurance case, 81 in the securities case, 39 in the money laundering case and five in the banking offence case.

Combined, the cases seek recovery of Rs27.80 billion in alleged losses and illicit gains.

The breakdown of the claims includes Rs3.74 billion in the insurance case, Rs1.15 billion under securities laws, approximately Rs22.5 billion in the money laundering case, and Rs421.49 million in the banking offence case.

Two charge sheets have been filed at the Kathmandu District Court, while one case each has been registered at the Patan High Court and the Special Court.

The Special Government Attorney’s Office filed the money laundering case against 39 individuals, including the Agrawal father and sons, and Bhatta, seeking recovery of approximately Rs22.5 billion.

In the banking offence case, prosecutors have charged the Agrawal trio and Bhatta, demanding recovery of Rs421.49 million and seeking fines and prison sentences.

Legal officials say it is likely the first time that cases of this scale involving alleged financial misconduct have been filed simultaneously in Nepal’s district, high and special courts on the same day.

Investigators allege the defendants used political influence and regulatory manipulation to dominate sectors including insurance, securities trading and banking, while also laundering proceeds generated through those activities.

The cases stem from months of parallel investigations conducted by multiple state agencies, including the Nepal Rastra Bank, the Nepal Insurance Authority and the Securities Board of Nepal. Their findings were subsequently pursued by the Nepal Police and the Department of Money Laundering Investigation.

The prosecutions follow a broader anti-corruption drive launched after the formation of a government led by Balendra Shah on March 27.

As part of the investigations, authorities arrested Sulav on April 4 and Bhatta on April 2. Shankerlal was arrested on April 3 but was released on personal recognisance after two days in custody. Golchha was arrested on April 23 and later released following a Supreme Court order.

Only Bhatta and Sulav remain in custody.

According to the charge sheets, Bhatta and Agrawal trio are identified as the main accused. Prosecutors allege they manipulated the securities market, laundered illegally acquired assets, and used reinsurance and microinsurance companies to distort market conditions in a coordinated manner. The charge sheets further allege that proceeds generated through those activities were subsequently laundered.

Loan diversion allegations

According to the banking offence charge sheet filed at the Patan High Court, the case originated after the central bank flagged suspicious transactions involving loans extended to Jagdamba Steels by a consortium led by Nepal Investment Mega Bank.

Investigators found that funds drawn from Jagdamba Steels’ account were allegedly diverted for land purchase advance payments rather than the purposes for which the loans had been approved.

The case centres on alleged violations of Nepal’s Banking Offences and Punishment Act, which prohibits borrowers from using credit facilities for purposes other than those stated in loan agreements.

Investigators found that between October 3 and October 6, 2022, Jagdamba Steels transferred Rs450 million to accounts linked to Deepak Bhatta under what prosecutors describe as unusual.

“Defendants Deepak Bhatta, Sulav Agrawal and Sahil Agrawal committed offences prohibited under the Banking Offences and Punishment Act by misusing credit facilities. Accordingly, recovery of Rs421.49 million has been sought, along with fines and imprisonment,” the chargesheet states.

The charge sheet further alleges that Shankerlal Agrawal indirectly assisted the misuse of the loans and should therefore be punished as an accomplice.

Relationship under scrutiny

The relationship between Bhatta and the Agrawal family reportedly grew closer during the Covid pandemic following a controversy involving alleged profiteering in thermal gun imports.

According to investigators, Bhatta became closely associated with the Shanker Group after Sulav Agrawal’s arrest in that case, using his political connections to strengthen ties with the business conglomerate.

Prosecutors also point to alleged links between the two sides and the controversial alteration of tax rates during the 2022-23 budget process. The allegations involve claims that tax provisions were changed late at night inside Singha Durbar in a manner that benefited Jagdamba Steels. Although those allegations surfaced publicly at the time, investigators say no independent inquiry was carried out into the matter.