The elected government led by Sushila Karki, formed after the sacrifice of 76 people in the Gen-G uprising demanding good governance, has taken the initiative to grant immunity to those accused of serious financial crimes such as money laundering, further tarnishing the prevailing laws and the country's international image.

The Financial Action Task Force (FATF), an international forum that monitors financial transactions, has placed Nepal on the 'grey list' of countries that launder money. A year has passed since the FATF gave Nepal two years to take effective steps against money laundering and exit the 'grey list' by establishing good governance. If it fails to act as promised within the next year, the organization will place Nepal on the 'black list'. 

At the same time, the decision by the Attorney General's Office to amend the charge sheets of 50 people, including those in prison, released on bail, on the fugitive list, and those on the 'Interpol Red Notice', has hit the government's commitments made in international forums to maintain good financial governance.

When Sushila Karki was a Supreme Court judge, a bench including her had on 9 Falgun 2068 sentenced the then Communications Minister Jayaprakash Gupta to pay the same amount of money and a fine and to be imprisoned for one and a half years in a corruption case of Rs 8.4 million. The bench of then Justices Karki and Tarkaraj Bhatta had made the decision saying that Gupta had failed to disclose the source of the Rs 8.4 million he earned while holding public office. After being sent to jail on the same day of the verdict, Gupta's political career ended, while Karki's anti-corruption image was brightened. However, after becoming the Prime Minister, Karki's government has been violating the law and the status quo. 

A case of cooperative fraud, money laundering and organized crime is pending in half a dozen district courts against Gorkha Media's operator Gitendra Babu (GB) Rai, the then Managing Director and Rashtriya Swayamsevak Sangh (RSS) President Ravi Lamichhane and former DIG of Nepal Police Chhabilal Joshi, for embezzling billions of rupees from the cooperative through Gorkha Media and the network spread under its umbrella.

In this case, some defendants, including RSS President Lamichhane and former DIG Joshi, have been released on bail. GB Rai is absconding in all cases. The International Police Organization (Interpol) has put Rai on a 'red notice' in the third week of Falgun 2080 in this case.

Attorney General Savita Bhandari, on the instructions of Prime Minister Karki, has decided to withdraw the case of organized crime and money laundering filed against GB, Ravi, Chhabi and other defendants. Attorney General Bhandari, who initially decided to withdraw the money laundering and organized crime case against Rashtriya Swayamsevak Sangh (RSS) President Lamichhane, on Friday decided to withdraw the cases of 50 people involved in this crime, including GB and Chhabi. The Nepal Bar Association has also objected to the Attorney General's decision and has asked for the decision to be withdrawn, and three writ petitions have been filed in the Supreme Court against it.

'The decision to withdraw the case is against the prevailing legal system and the principles propounded by the Supreme Court on withdrawal of cases earlier. Such a selective decision will also affect the jurisdiction of the court and affect the concept of an independent judiciary,' the bar said. 'We oppose the decision to ensure the rule of law as the politicization of crime and the criminalization of politics encourage impunity and kill the spirit of criminal justice.' The Attorney General is the Prime Minister's legal advisor. However, the government of former Chief Justice Karki, who has been vocal in his views on good governance, is taking one decision after another that will tarnish the country's law and international image.

Such government decisions will prevent Nepal from getting out of the 'grey list' within the specified period and there is a risk that that period will be extended, says Phanindra Gautam, former legal secretary and former coordinator of the National Coordination Committee for the Prevention of Money Laundering. 'Nepal is also participating in the FATF meeting to be held in Mexico in February 2026. There, the Nepali team will have to brief on the work done to get out of the grey list in 2 years,' he said. 'Such decisions of the government will report on what progress has been made in preventing money laundering? The question will arise that Nepal is not on the right track.' Nepal should brief on its progress at the FATF meeting (plenary) at least three times a year.

It is not yet clear what exactly will happen as the cases that the government has said will be amended are still under consideration in the courts, says Pushkar Sapkota, coordinator of the National Coordination Committee for the Prevention of Money Laundering and Secretary to the Prime Minister's Office. 'It has been said that the prosecution of some cases will be amended,' he said. 'If the cases are withdrawn that are against the constitution and law, the FATF will also take it seriously.'

Not only in money laundering, Nepal is also on the list of countries with high corruption. Transparency International has ranked Nepal 107th out of 180 countries and included it in the list of countries with high corruption. Transparency has placed Nepal on the list of countries with high corruption, citing extreme corruption in the courts, parliament, authorities, other government bodies, and import-export. The US also placed Nepal on the 'Tier Two Watch List' last year, citing its failure to take effective steps against human trafficking.

Former President of Transparency Nepal Padmini Pradhananga has said that this elected government has further tarnished the country by taking a decision that even previous governments had hesitated to make. ‘The government formed on the foundation of the sacrifices of Gen-G youth also sided with the accused, did things that were detrimental to the country and were determined to tarnish Nepal’s image on the international stage,’ she told Kantipur. ‘No government in the past had dared to make such a decision, which the current interim government has done.’ 

Pradhananga has said that the decisions made by Attorney General Bhandari, who is also the former Vice President of Transparency Nepal, have dented Transparency’s credibility. After Bhandari decided to exempt a health institution in which she has invested, Transparency International has already suspended her from being an ordinary member. 

Attorney General Bhandari has decided to drop the organized crime and money laundering cases against Ravi and Chhabi, Gorkha Media and various organizations opened under its umbrella, including Leela Pachai, former chairman of the cooperative Gitendra Babu (GB) Rai, his brother Bhupendra Rai, current chairman Than Bahadur Budha, vice-chairman of the board of directors Kailash Kumar Darlami, secretary Dhiraj Kumar Das, treasurer Kumar Ramtel, members Hemanta Adhikari, Kabita Tamang and Pramod Bhattarai. Bhandari made the decision to drop the organized crime and money laundering cases against former secretaries of the cooperative Anuj Nakarmi and Suraj Shrestha, board members Shiva Bahadur Gurung, Bhavishwar Aryal and Aisma Gurung, coordinator of the accounts committee Sagar KC, members Dinesh Roka and Lalita Tamang, accounts officer Shristi Manandhar, and loan officer Buddhi Gurung by amending the charge sheet last Wednesday and Friday.

His decision will also amend the charge sheet of 39 people registered in the case of the Swarnalakshmi Cooperative fraud in Kathmandu. A case was filed against 22 people, including Lamichhane, in the Rupandehi District Court for embezzlement of funds from the Supreme Savings and Loan Cooperative. They were accused of fraud and organized crime. The District Government Attorney's Office had claimed an additional Rs 550 million from 28 people, including GB Rai and Rabi Lamichhane, and an additional Rs 109.9 million from Rabi, Chhabilal Joshi and Laxmi Prasad Poudel, and an additional Rs 20 million from Rabi personally.

A case has been registered against 29 people, including Lamichhane, in the case of the Sano Paila Cooperative in Parsa for organized crime and cooperative fraud. The charge sheet of the Sano Paila Cooperative case in Parsa, which was last registered on 29 Jestha, is also on the list of amendments. The Sano Paila Cooperative is accused of embezzling a total of Rs 2.3 billion 14 million 29 thousand 800 and 11 paisa. In Lamichhane's case, the amount owed to the cooperative is Rs 57.43 million 333.33 paisa.

The FATF, World Bank, International Monetary Fund, and related bodies under the United Nations have repeatedly warned Nepal to work effectively against money laundering crimes. In 2012, after the FATF warned that Nepal would be included in the 'black list', Nepal reformed its laws. Under pressure from the FATF, the government amended 19 laws in Chaitra 2080.

The amended law also gives the authority to investigate and prosecute complaints related to money laundering to bodies including the Authority and Nepal Police. However, the Attorney General has become an obstacle in the investigations by those same bodies and in the cases brought to court by the Government Attorney's Office.

The government has not been able to regulate cooperatives that are outside the regulation of the Nepal Rastra Bank. Instead of being ruthless against the money laundering that has occurred, the government has become committed to clearing the accused. There is investment worth trillions of rupees in cooperatives. However, the source of this has not been investigated. According to the Economic Survey 2080, 31,450 cooperatives and 7,385,528 savers across the country have deposited Rs. 405.3 billion.