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Nepal: The sulfurous Chinese connections of Prime Minister KP Sharma Oli

12 July 2020 Expertises   67692  

Roland Jacquard

The modus operandi often adopted by China to make inroads into economically weaker nations, whether in Asia, Africa or Latin America, has been to strike deals with corrupt Heads of State. This enables Chinese companies to not only further their business interests in that country but the Chinese State to surreptitiously penetrate the nation’s polity, with the objective to ensure its long-term influence. The Himalayan nation of Nepal is emerging as a classic example of this Chinese machination where the ruling Nepal Communist Party, led by Prime Minister KP Sharma Oli has been seen to blatantly advance Chinese interests, to the extent that it has made many senior members of his party uncomfortable.

Corruption charges and links to China are not something new for Nepal’s Prime Minister. During his first stint as PM from 2015-16, there were reports to suggest that with the assistance of the then Chinese Ambassador to Nepal Wu Chuntai, he had initiated the process to invest in the telecommunication sector in Cambodia. The deal was finalized by the now deceased Nepalese businessman Ang Shering Sherpa, a close confidante of Oli, and with the intervention of Cambodian Prime Minister Hun Sen  and facilitation by  top Chinese diplomat in Phnom Penh Bo Jiangeo.

In his second term as Prime Minister since 2018, Oli’s tendency to circumvent government regulations in order to award projects to Chinese companies or to Nepalese businesses known for their links with the Prime Minister’s office, has caught public attention. Investigations in many of these cases have pointed at kickbacks leading either to Prime Minister Oli or his close coterie. For instance, in December 2018, China Communication Service, an agent of Chinese telecom company Huawei, received a contract for setting up an ‘Digital Action Room’ with video conferencing facilities in the Prime Minister’s office. The contract was awarded to the Chinese company without a competitive bid, even though the government-owned Nepal Telecommunication had the expertise to create this facility. Later investigations indicated that Prime Minister’s Political Adviser Bishnu Rimal’s son had pushed for this deal in return for financial gains.

In May 2019, Nepal Telecommunication signed an agreement with Hong Kong-based China Communication Service for developing radio access network and another with China’s telecom equipment manufacturer ZTE for installing the core 4G network for Nepal Telecommunication. The project is worth around Nepalese Rupees (NR) 19 billion or around Euro 130 million. Prime Minister Oli also overturned the decision of his predecessor Sher Bahadur Deuba to not award the US Dollar 2.42 billion contract for the 1200 MW Budhigandaki Hydropower project, the largest in the country, to the Chinese State-owned China Gezhouba Group Company. In this case too, KP Sharma Oli awarded the contract without a competitive bid. It is widely known in Nepal that the decision was overturned after a Nepali businessman close to the Prime Minister received a large kickback from the Chinese company.

The KP Sharma Oli-led government’s brazen disregard for procedure and transparent functioning, rampant corruption resulting in the gradual collapse of an innately weak government social welfare infrastructure and a visible Chinese influence in decision-making, has not gone unnoticed in Nepal. It was, therefore, not surprising, when following the government’s mishandling of the Covid-19 pandemic, spontaneous apolitical students protests   began in Nepal from mid-June onwards. In the last one month, the slogan  ‘Enough is Enough’ has resounded at protests in Kathmandu and other towns across Nepal. Protestors have been angered by the government’s lack of apathy in  handling of the pandemic, coupled with charges of corruption linked to pay-offs received for the purchase of Chinese –made personnel protective gear, testing equipment etc., many of which were later found to be defective and over-priced. The protestors have demanded that the government come clear on the reported Nepalese Rupees 10 billion, equivalent to approximately Euro 73 million, spent in the fight against the pandemic.

Two investigations are already underway into accusations of Nepal’s Health Minister and several other senior advisers in Prime Minister KP Sharma Oli’s inner coterie taking bribes in the purchase of medical equipment. One of the cases involves the Nepal-based OMNI Group that was awarded a contract worth nearly Euro 7 million to supply medical equipment and logistics required to control corona virus. The first consignment of medical supplies, purchased by the OMNI group from China and delivered to the Nepalese government, was found to be not only of sub-standard quality but also highly overpriced. Interestingly, this is not the first time that OMNI Group has been accused of supplying overpriced faulty equipment. In 2017, ahead of Nepal’s last general elections it supplied defective printing machines to Nepal’s Election Commission. Close links have been found between the owners of OMNI and Prime Minister KP Sharma Oli’s office, which would explain why despite its poor business record, the government still awarded it the contract for medical equipment.

Prime Minister Oli’s personal wealth is reported to have increased manifold over the last few years. According to our sources, he has an account at a Swiss bank branch. This account that he holds jointly with his wife Radhika Sakya, has around US Dollar 5.5 million that has been invested in long-term deposits and share options, and believed to yield a healthy return of half a million dollars annually. However, in a press release sent to our editorial staff, the bank in question stated that “the persons you mention have no account in our establishment”.

While China steadily makes inroads into Nepal, this rampant corruption offers a “win-win” situation for KP Sharma Oli and his Chinese benefactors.

Writer and consultant, Chairman of  Roland Jacquard Global Security Consulting (RJGSC)