The NAC Wide-Body Aircraft Corruption Scam will be investigated again

Politicians and bureaucrats are working together in significant corruption cases in Nepal, as evidenced by the recent revelation that a US company was fined more than $55 million for paying Nepali authorities to get a wide-body aircraft deal with the state-owned Nepal Airlines Corporation (NAC). In settlements with the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ), the US-based aviation services provider AAR Corp. agreed to pay more than $55 million to address any violations of the FCPA. In an attempt to gain contracts with state-owned airlines, the corporation was linked to bribery schemes involving South African and Nepalese government officials.

Between 2015 and 2020, the AAR acknowledged conspiring to pay bribes, which led to the illicit earnings of about $24 million from the state-owned airlines in South Africa and Nepal. After self-reporting the infractions to the DOJ and SEC in 2019 and assisting both agencies in a multi-year investigation, the corporation accepted the Offer of Settlement and issued a cease-and-desist order. The relevant government agencies in Nepal should request information from the US government agencies, start a new investigation into the case, and bring charges against all those directly involved in the multi-million dollar corruption case, including the politicians, as the DOJ and SEC reports indicate that AAR Corp’s Nepal agent engaged in bribing bureaucrats and politicians to secure the deal.

According to the DOJ and SEC findings, the mastermind behind bribing Nepali politicians and officials to get the aircraft sale for the AAR Corp. was Deepak Sharma, a UK citizen of Nepali descent who lived in the UK. Sharma was the principal executive in charge of the NAC deal before he left the company in September 2019. By indicating to the AAR Corp that he could help win the opportunity, Sharma was instrumental in getting the NAC contract during that time. Sharma pleaded guilty in August 2024 to a one-count criminal information filed in the US regarding the Nepal Airlines scheme. The information charged Sharma with conspiracy to violate the FCPA’s anti-bribery provisions, which prohibit US companies from bribing foreign government officials to obtain any form of business advantage. He may have contacted politicians in addition to bureaucrats to close the contract, based on his internal correspondence with the AAR Corp. It’s also noteworthy that the contentious purchase agreement for two wide-body aircraft involves all three of the main political parties: the Nepali Congress, the CPN-UML, and the CPN (Maoist Center).

On November 2, 2015, the NAC Board of Directors decided to buy two wide-body aircraft during the K.P. Oli administration. Under the direction of Sugat Ratna Kansakar, who was previously imprisoned on corruption allegations related to the purchase of two narrow-body aircraft from Airbus, this decision was made. The Oli-led administration was overturned on August 3, 2016, and Pushpa Kamal Dahal, the chairman of the Maoist Center, spearheaded the formation of a new government made up of NC. The NAC Board of Directors’ decision to buy wide-body aircraft two years ago was upheld by the Dahal-led administration.

NC Minister Jeevan Bahadur Shahi, who served as the cabinet’s tourism and civil aviation minister under Dahal, has been charged by the Commission for the Investigation of Abuse of Authority (CIAA) with being involved in decisions to change the aircraft’s specifications, including lowering the weight capacity, which reduced the aircraft’s range and long-haul flight potential. In order to enable the planes to finally land in Kathmandu in July 2018, when the Oli-led government was once again in power, the Dahal-led government decided at a cabinet meeting on April 20, 2017, to borrow Rs 24 billion from the Employees Provident Fund and the Citizens Investment Fund.

In April, the CIAA filed a corruption lawsuit in the Special Court against two companies and thirty people related to the 2017 acquisition of two wide-body aircraft. Former managing director of Nepal Airlines Corporation Sugat Ratna Kansakar, former aviation secretaries Sishir Kumar Dhungana and Shankar Prasad Adhikari, and former minister Shahi have all been charged by the anti-graft body with embezzling approximately Rs 1.478 billion during the purchase of two Airbus A330s. Through his internal communications with AAR staff, Sharma disclosed that the NAC’s request for proposals (“RFP”) would be written in AAR’s favor, according to the SEC’s dossier.

In a nation like ours, it is hard to believe that a significant procurement deal for hundreds of millions of rupees that involves corruption is made without the participation of powerful politicians. When the AAR Corps accepted the Offer of Settlement with the DOJ and SEC in the US, it disclosed every detail of its unethical business practices. These specifics might offer crucial hints for identifying the corruption scandal’s source. The top politicians implicated in the wrongdoing must also be held accountable, and the case needs to be further probed in light of the information that suggests the CIAA did not conduct a comprehensive investigation. The state has lost money in the multimillion-dollar corruption case, but the nation’s reputation abroad has also suffered.