C O N F I D E N T I A L KATHMANDU 001748

SIPDIS

STATE FOR SA/INS
LONDON FOR POL - RIEDEL

E.O. 12958: DECL: 09/09/2012
TAGS: PGOV NP GON
SUBJECT: NEPAL: INFLUENTIAL MINISTER ACCUSED OF CORRUPTION
RESIGNS

REF: A. (A) KATHMANDU 1618


B. (B) KATHMANDU 1007

C. (C) KATHMANDU 0485

Classified By: POL PMAHONEY. REASON: 1.5 (B,D).


1. (U) Minister for Physical Planning Chiranjibi Wagle, a
close confidante of Prime Minister Sher Bahadur Deuba and
perhaps the most influential member of his Cabinet, submitted
his resignation from the Cabinet to the PM September 9. The
resignation follows in-depth press coverage of Wagle's
failure to disclose his own and his family's personal assets
to a judicial commission specially appointed by the PM last
March to review the finances of public officials (Ref C).
Wagle, whose ministry controls the awarding of sought-after
contracts for road construction and other infrastructure
projects, had told the commission his personal savings
amounted to less than USD 8,000. Journalists for the
Kathmandu Post, Nepal's largest-circulation English daily,
however, reported that his son, owner of a long-defunct
travel agency, had failed to report hundreds of thousands of
dollars in Nepali bank accounts--as well as a pricey piece of
property in the heart of Kathmandu's tourist district--to the
authorities. The story broke while the PM was on an official
visit to EU headquarters in Brussels, leaving Wagle, the
seniormost member of his Cabinet, as acting PM.


2. (SBU) Upon his return to Kathmandu Sept. 2, Deuba
reportedly summoned his long-time friend and political ally
to explain the controversy. Within a week, newspapers were
reporting that the minister had submitted his resignation to
the PM.


3. (C) One NGO activist told us Wagle followed up his
resignation with a fence-mending visit to the PM's political
rival, former Prime Minister Girija Koirala. A highly placed
source within the PM's Nepali Congress Party told the
Ambassador to expect more resignations to follow Wagle's.
The Prime Minister will accept the resignations under the
face-saving pretext that the former Ministers need time off
to prepare for November 13 national elections. The PM will
then form a more streamlined, leaner Cabinet. The source was
unable to advise if the new Cabinet will be composed
primarily of technocrats--as we and the British have advised
(Ref B)--or members of the party faithful.


4. (C) Comment: Rumors about Wagle's personal corruption
have long been circulating. The recent moves by the
Commission to Investigate the Abuse of Authority (Ref A) to
bring corrupt officials to book have resulted in an
outpouring of positive public support--always desirable
during an election season--for the initiative. Accepting
Wagle's resignation--and encouraging similar moves by other
members of his bloated Cabinet--could be a fairly painless
way for the PM to capitalize on this groundswell. We hope
the PM will use this opportunity to make some long-needed
changes in the composition of his Cabinet, replacing some of
his political cronies with qualified, non-partisan
technocrats who can oversee the administration of his
government during this crucial period.
MALINOWSKI