Purna Bahadur Balampaki of Belgachhi, Mahottari, was accused of embezzling 473,200 US dollars in transactions conducted through four letters of credit (LCs).

The incident of Balampaki buying slippers from a businessman who had been a guarantor when he went to give a statement in court on charges of embezzling crores of foreign currency by opening an LC was very popular at that time. Because Balampaki's status did not allow him to buy slippers and wear them. When he went to give a statement in court, it was revealed that the businessmen had misused his citizenship and opened LCs in his name as guarantors.

It is said that 'the rich man who had become a guarantor after Balampaki came to court to give a statement with bare feet had bought slippers.' Not only Balampaki, but also Ramjatan Mochi, Kuji Musahar of Dhanusha, Kanchharam Thing of Sindhuli, Abire Tamang, Tika Nepali of Bhojpur, Lal Bahadur Sundas of Jhapa and countless others were seen embezzling foreign currency through LCs.

They were from poor families who had to struggle to make ends meet. Therefore, it was not difficult to guess how a well-planned plan to embezzle foreign currency was hatched by wealthy businessmen through LCs nearly 29 years ago. Banks were also equally responsible for the scandal, which was considered an event that would bankrupt the country economically.

These facts came to light after the government launched an investigation into the suspicion that foreign currency was being exported by wealthy businessmen without importing goods by opening LCs. When the goods did not arrive but foreign currency reserves were decreasing, the government formed an inquiry commission on Magh 5, 2052 under the chairmanship of former Deputy Governor of the Nepal Rastra Bank. The report submitted by the commission revealed the fact that foreign currency was being embezzled through LCs.

The investigation was started especially after it was found that more goods were being imported than required by Nepal. The media made news after the foreign currency reserves unexpectedly decreased in the data of the Nepal Rastra Bank. The government then formed an inquiry commission. Based on the report submitted by the inquiry commission on 2053 Jestha 32,

Although the LC was opened in the name of the judge on paper in the scam case, the guarantors were from the business family. They had used the citizenship of their company employees, porters and domestic workers. The banks had opened LCs in their guarantors and provided foreign currency. After the facts came out, the fate of the businessmen who opened firms in the name of the poor and needy and became guarantors themselves was decided.

Prakash Tibadewala and Hari Agarwal, among the nine main accused in the case, were arrested in New Delhi on 2053 Asad 15. They fled to Delhi after being threatened with action. The police received information after Sitaram Nepal, Sagar Wagle, Islamuddin, and others close to the scam accused were taken into custody at a house in Kupandol.

The police found that Sitaram and others were staying at the house and sending details of the news published in newspapers related to the scam to Tibetewala and Agrawal to New Delhi. Based on the information they gave, they were arrested through the joint efforts of the New Delhi Police, Interpol and Nepal Police. They were brought to Kathmandu by plane from New Delhi. The police had repeatedly questioned them about the six people involved in the scandal, including Anand Agrawal. But Tibetewala and Agrawal had laughed and replied that they did not know.

After the commission made the report public, there were voices that the government did not want to take action against the accused, the government sent a four-member police team to New Delhi to search for them. The police released Tibetewala and Anand, who were arrested on 2053 Jestha 32 on the same day. Although they were released on bail, they absconded. As a result, the government was accused of fleeing the accused. The Commission for the Investigation of Abuse of Authority was dissatisfied with the government's formation of the inquiry commission.

The then Chief Commissioner of the Authority, Radharaman Upadhyay, had called the government's move to form the commission unconstitutional. Before the commission was formed, the Authority had started an investigation into foreign exchange embezzlement through the LC. He said, 'Since the authority is a constitutional body, the commission should not have been formed when it was conducting tax collection.' The Authority's statement was that the government was not coordinating against normal courtesy.

Ministers' clarification at the Congress meeting
During the LC investigation, Sher Bahadur Deuba was the prime minister. The Home and Finance Ministers were Khum Bahadur Khadka and Dr. Ram Sharan Mahat respectively. After allegations of fleeing the accused, the two ministers gave an explanation at the Nepali Congress's central committee meeting on Asad 14, 2053.

Why were the accused in the LC case not arrested in the meeting? When the central members raised questions about why the arrested were also released, Minister Khadka and Mahat responded. Kantipur Daily published a news report focusing on the arrest of the accused involved in the LC case on 16 Asad 2053 under the title ‘Promissory note scam case: Two main accused arrested in New Delhi’.