After the biggest ever leak of secret financial documents, the Centre for Investigative Journalism (CIJ) Nepal began investigating whether Nepal is also receiving suspicious FDI from tax haven countries. Our investigation has revealed how suspicious FDI is being channeled into Nepal’s cement, betel nut and tobacco industries and hospitality sector from tax haven countries.
Our investigation shows two of the 12 companies where Saurabh Group has brought suspicious FDI from tax haven countries like the British Virgin Islands, the UAE and Hong Kong.
A tale of empty tower
Saurabh Group, chaired by Bishnu Prasad Neupane, had brought FDI from the British Virgin Islands to build a hotel in Bhaktapur, but his project has been in limbo due to a prohibitory order issued by Madhyapur Thimi Municipality.
A 17-storey building left unfinished in Bhaktapur.
A high-rise, incomplete and crumbling building that has now become a landmark of the Radhe Radhe neighborhood near Bhaktapur Durbar Square was built by Neupane to open a luxury hotel.
Saurabh Group was granted permission to build a five-storey building in Radhe Radhe, but it ended up constructing a 17-storey structure in violation of the building design approved by Madhyapur Thimi Municipality. So, its construction was halted by the municipality administration.
As per the documents obtained from the Department of Industry (DoI), Saurabh Group had a plan to build this hotel with investments from Global Technology and Trademark Company based in the British Virgin Islands. The DoI had approved the Group’s proposal for Rs 1.94 billion in FDI from the Company, which received permission on 14 April 2013 to build GT&T hotel in Katunje of Bhaktapur.
But the Group began constructing the hotel building in Radhe Radhe, not in Katunje. According to the Industrial Enterprises Act of 2016, an industrial plant must be built exactly where it is allowed, and if the proposed plant needs to be shifted elsewhere, a new permission must be sought. Neupane, Chair of Saurabh Group, has been publicly slamming the municipality for not co-operating with him. Interestingly, he had started constructing the hotel construction two years before he was granted permission.
Madan Sundar Shrestha, the Mayor of Madhyapur Thimi, said, “A 17-storey structure was added to the originally-approved five-storey building, but they do not have permission for its construction. They have not followed building standards. They have not left the required open space around the building.”
Mayor Shrestha says the Municipality was mulling over resolving the issue by asking Saurabh Group to follow the standards. But when Shrestha was on a visit to China in September 2015, Neupane secured permission of planning in the area occupied by the 17-storey building from the Kathmandu Valley Development Authority (KVDA). Shrestha says: “A planning permission is given for the areas where there is no structure. How can he get such permission in the area where there is already a building?”
According to the Local Government Operation Act 2017, a fine of Rs 100,000 to Rs 500,000 can be slapped for building a structure in violation of the building design. Mayor Shrestha is now under tremendous pressure from leaders of the ruling Nepal Communist Party to pass the building design of the 17-storey building. But he says: “Come what may, I will not give in to pressure.”
We contacted Neupane several times for his comment on the investment he brought in and the hotel he tried to open. Since the second instance, the person who answered the phone said he was not Bishnu Prasad but his brother. We were told that Bishnu Prasad had gone to Bhairahawa after leaving his mobile phone. Since the second day, our number was ‘blocked’ in his mobile. He did not respond to our text messages, either.