The collusion of not only traders but also bank employees was clearly seen in the letter of credit (LC) scam. An investigation into 6,000 LCs out of 16,000 opened from Shrawan 2051 to Kartik 2052 concluded that 36,156,797 were misused.

The government had formed an inquiry commission under the chairmanship of former deputy governor of Nepal Rastra Bank, Lav Prasad Sharma. Based on the report given by the commission, the Ministry of Finance issued a statement on 2053, promising to take action against the culprits.

In the case, businessmen had embezzled US dollars by opening LCs in various banks in the names of poor people. The collusion of bank employees was seen in it. There was talk of political forces trying to manipulate the incident. The work of arresting, recording statements and registering cases in court of the businessmen named by the commission was ongoing. Some businessmen were remanded in custody while some were absconding.

The Commission for the Investigation of Abuse of Authority was also looking into the incident. The involvement of employees of various banks was seen in the incident. The authority had given a written order to the police to arrest 9 people, including the then chairman and general manager of Rastriya Banijya Bank, Guru Prasad Neupane, who was found guilty in the incident. The CIAA's Chief Commissioner Radharan Upadhyay had said that he had ordered the police but no arrests were made.

This raised suspicions that the government was trying to protect the bank employees. The Commission had filed a case in the Lalitpur Appellate Court alleging that nine LCs had been opened by the Vishalnagar branch of the National Commercial Bank from 2051 Magh 17 to 2052 Asar 4, causing losses to the bank. The CIAA had filed nine cases in the court.

The CIAA had named six defendants including the then Chairman and General Manager of the National Commercial Bank, Neupane, the then manager of the Vishalnagar branch, Balkrishna Adhikari, accountants Sudarshan Krishna Shrestha and Surendralal Rajbhandari, and LC in-charge Rambhakta Devkota. Although the court recorded statements from two of them, the police had not arrested eight people, including General Manager Neupane. The then manager of the Bishalnagar branch, Neupane, had said in his statement that he helped open the LC as per the instructions given by the then chairman and general manager of the bank, Neupane. According to the commission, Ram Kumar Agrawal (Bhadrapuria) was the guarantor in all the LCs opened by six firms. Agrawal was absconding. The case filed by the CIAA mentioned that he had embezzled 16,56,555 US dollars. The then chairman and general manager, Neupane, was working at the Nepal Rastra Bank Banking Traders Center when the CIAA issued the arrest warrant.

Neupane was not appointed as the chairman and general manager of the bank during the nine-month UML rule. Even though a case was being filed against him, Neupane had gone to Switzerland. Neupane had been absent without any information during his tenure. In the meeting of the House of Representatives on 27th July 2053, Congress MPs Krishna Prasad Upadhyay Gautam and Gangadhar Lamsal criticized the government for giving Neupane a chance to abscond. They demanded that the real status of Chairman Neupane be made known to the House.

Chairman Neupane was absent even though the Authority had set a date. Since he did not appear even when called, a case was registered against him in the Lalitpur Court of Appeal, and the authority said that the remaining legal process would be carried out from there. The Loveraj Commission formed by the government had not looked at the LC scam file that the Authority had started investigating. The Authority had also decided to study the employees of the Nepal Rastra Bank and the file related to the LC scam there. For that, the Revenue Investigation had also retrieved the file given to the Nepal Rastra Bank.

The Authority had especially tried to see the documentary evidence that the employees of the Nepal Rastra Bank were also involved or not at the time of opening the LC. At that time, the Loveraj Commission had found that Himalaya Bank 3, Bangladesh Bank 16, Nepal Bank 1, Nepal Arab Bank 6, ISB Bank 12, Indoswegs Bank 6, and commercial banks Bhotahiti Branch 19, Head Office Bishal Bazaar 15, and Baneshwor Branch 15 had helped in the embezzlement.

Based on the report made public by the Ministry of Finance, the Kantipur Daily had continuously published a list of the accused involved in the scam, along with their firms, banks, bank employees, and the amount of money embezzled since the last week of Jestha 2053.

The Public Accounts Committee of Parliament had also shown interest in the LC scam. In this context, the CIAA had filed a case against the bank employees and ordered the police to arrest the accused, and Kantipur Daily published it on 28 Shrawan 2053 under the title ‘Letter of Credit Scam Case: Letter of Credit Opened on the Chairman’s Instructions’.