NEPAL: ONE EX-MINISTER AND TWO SECRETARIES

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 002006

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STATE FOR SA/INS, LONDON FOR POL/GURNEY, NSC FOR MILLARD

E.O. 12958: DECL: 10/15/2013
TAGS: PGOV KCOR NP
SUBJECT: NEPAL: ONE EX-MINISTER AND TWO SECRETARIES
ARRESTED ON CORRUPTION CHARGES

REF: KATHMANDU 975

Classified By: DCM Robert K. Boggs for Reasons 1.5 (b,d).

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SUMMARY
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1. (C) On October 13, Nepal's anti-corruption agency, the
CIAA, arrested three former senior government officials,
including former minister and Deputy General Secretary of the
Nepali Congress Party Govinda Raj Joshi, as well as two
former government secretaries. Joshi's arrest represents the
second time that the CIAA has filed formal charges against a
high-level political figure and former minister. CIAA Chief
Commissioner Upadhyay asserted that the cases against Joshi
and the two ex-secretaries are very strong and anticipates
successful convictions. Another CIAA official, however,
feared that the cases would drag out for a long period due to
political pressure on the Special Court judges to avoid
prosecutions. End Summary.

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FORMER HIGH-LEVEL OFFICIALS ARRESTED
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2. (U) On October 13, the Commission to Investigate Abuses of
Authority (CIAA) arrested former minister and Deputy General
Secretary of the Nepali Congress (NC) party, Govinda Raj

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Joshi, and two former government secretaries, Chakra Bandhu
Aryal and Padam Prasad Pokharel. Life-long bureaucrats,
Aryal was formerly Secretary of the Defense Ministry, while
Pokharel was formerly Secretary of the Home Ministry. Joshi,
a close associate of NC President G.P. Koirala, was most
recently Minister of Local Development (2001),prior to which
he was Minister of Home (2000),Water Resources (1999),and
Education (1995-1997). Joshi is the second former minister
and high-level political leader to be prosecuted by the CIAA.
The first was Khum Bahadur Khadka, former Home Minister and
General Secretary of the Nepali Congress (Democratic),who
resigned his party position in May 2003 after his indictment
(reftel).

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SUSPECTS ALLEGE THE CIAA IS POLITICALLY MOTIVATED
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3. (C) After receiving the first CIAA summons in May 2003
along with Khadka and others, Joshi and Pokharel filed
similar cases with the Supreme Court contesting the legality
of the CIAA's actions, claiming that the CIAA was politically
motivated and lacked legal legitimacy. These cases are still
pending within the Supreme Court. In a meeting with PolOff
on October 15, CIAA Head Commissioner Surya Nath Upadhyay
dismissed these allegations, asserting that the CIAA is
constitutionally mandated with conducting investigations,
arrests and prosecutions of any public official who has
misused his position for personal benefit. Additionally, he
said, the Commission's actions show that it is not
politically biased; the CIAA has filed cases against members
of all the major political parties, Upadhyay explained.
However, Upadhyay admitted that the majority of CIAA cases
are filed against NC members because that party held power
for most of Nepal's 12 years of democracy. Consequently,
most corruption at the political level will be found in the
NC and NC (Democratic) parties, he said. Upadhyay also
pointed out that, on October 13, the CIAA issued an arrest
warrant for Rabindra Nath Sharma, a key leader of the
royalist Rastra Prajatantra Party (RPP). Sharma was not
arrested, however, as he is reportedly abroad on official
travel.

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CIAA ANTICIPATES SUCCESSFUL CONVICTIONS, BUT DELAYS COULD
OCCUR
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4. (C) Upadhyay further noted that the arrests were made
after nearly four months of investigation into the suspects'
property holdings, as well as the property of their close
relatives, across all 75 districts of Nepal and in India.
Although he was unable to give approximate amounts of the
suspects' illicitly- accumulated wealth, Upadhyay suggested
that Joshi had acquired wealth in the "range of tens of
millions of rupees" while former secretaries Aryal and
Pokharel had acquired even more. Upadhyay was able to
provide examples of the type of evidence the CIAA was
investigating. For example, the CIAA discovered that Joshi's
octogenarian, widowed mother-in-law holds the title to a
property worth more than NRs 10 million (USD 134,000),but
has been unable to show investigators how she legitimately
acquired the property. In another instance, Upadhyay said,
Joshi's brother-in-law, a low-level government clerk,
possesses a "palatial estate" but also is unable to show how
it was acquired. The Commissioner noted that with access to
Joshi's property documents and bank statements, as well as
those of his relatives, the CIAA "has developed a very strong
case against Joshi."


5. (C) On October 14, the CIAA presented to the Special
Anti-Corruption Court a motion seeking to hold the suspects
in detention for one month in order to complete the
investigation. According to CIAA Joint Secretary Surya
Koirala, the CIAA will likely seek a six-month extension of
the detention period to ensure that the defendants do not
destroy evidence or attempt to flee the country. The court,
however, will likely decide to release the suspects on bail
as they did in the case of former minister Khadka in May, he
said. Koirala also confided that the cases likely would take
over a year to prosecute because of political party pressure
on judges not to convict political leaders.


6. (SBU) Koirala pointed out that the CIAA's success rate in
convictions is high, although most cases have involved false
certificates of academic or professional qualifications that
are easily adjudicated. In June, the CIAA was successful in
convicting its first property case when the former Executive
Director of Royal Nepal Airline Corporation, Mr. Hong Kong
Rana Magar, was sentenced to three years in jail and a fine
of USD 700,000, after he failed to procure an aircraft
despite entering into a contractual lease and paying USD
700,000 to U.S. company Chase Air, Inc. Koirala echoed the
Commissioner's sentiment that the current cases are solid and
will result in successful convictions.

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COMMENT
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7. (C) The arrest of former minister Joshi and former
secretaries Aryal and Pokharel are landmark achievements for

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Nepal's anti-corruption agency, which remains under
significant pressure from political parties, private business
and the media to relent in its effort to root out corruption
by public officials. Despite Commissioner Upadhyay's strong
stewardship, political pressure may make it difficult for the
Commission to convict high-profile cases successfully.
Former ministers Khadka and Joshi will be litmus tests for
the CIAA's future legitimacy and success. End Comment.
MALINOWSKI