Allegations of misappropriation of Rs 3.73 billion 8.5 million 24 thousand 226 belonging to the general public in listed companies including Himalayan Reinsurance, Himalayan Securities Banker, HLI Large Cap Fund, Nepal Micro Insurance
We use Google Cloud Translation Services. Google requires we provide the following disclaimer relating to use of this service:
This service may contain translations powered by Google. Google disclaims all warranties related to the translations, expressed or implied, including any warranties of accuracy, reliability, and any implied warranties of merchantability, fitness for a particular purpose, and noninfringement.
The Money Laundering Investigation Department has recommended filing a case against 29 people, including controversial businessmen Deepak Bhatt and Sulabh Agrawal, for money laundering. The department has recommended the District Government Attorney's Office, Kathmandu, to file a case worth around Rs 20 billion.
The Money Laundering Investigation Department submitted the investigation report to the Public Prosecutor's Office in the second week of Baisakh According to an official from the Government Attorney's Office, a case has been recommended against Infinity Holdings Chairman Deepak Bhatt, Jagdamba Holding Chairman Sulabh Agrawal and his wife Subhi Agrawal, Shankar Group Chairman Shankarlal Agrawal, Jagdamba Group Chairman Shahil Agrawal, and former President of the Federation of Nepalese Chambers of Commerce and Industry Shekhar Golchha. Similarly, the department has also recommended filing a case against Jawalakhel Group Managing Director Raj Bahadur Shah, Himalayan Reinsurance CEO Upasana Poudel, Ramesh Corp Vice President Rohit Gupta, businessmen Rishiraj Mor, Sandeep Chachan, and others.
According to officials from the department, police and Public Prosecutor's Office, the department submitted the investigation report in the second week of Baisakh. The officials said that the report is in the process of being studied. 'The study is almost over. A case will probably be filed next week,' said an official involved in the study. 'We are preparing to file a case against the accused for committing crimes against the laws related to insurance, securities and share trading, demanding imprisonment for 2 to 10 years, fine according to the amount, and confiscation of undisclosed assets.'
The department arrested Sulabh on 21 Chaitra and Bhatta two days earlier on 19 Chaitra. Shankar, the chairman of Shankar Group, who is also Sulabh's father, was arrested on 20 Chaitra. The department released Shankar on bail after keeping him in custody for two days. Bhatta and Sulabh are in custody. Golchha was also arrested and an investigation was launched. But he has been released by the Supreme Court. The other accused are absconding.
According to the department, this group has been found to have illegally transferred about Rs 3.73 billion from five companies, including Himalayan Re-Insurance, and purchased shares in competing companies.
Somakanta Bhandari, Chief and Associate Attorney of the District Government Attorney's Office, Kathmandu, said that the investigation report has been received from the department and the report is under study. He did not want to say who the department has recommended for prosecution.
The department had investigated the charges of ‘investing the assets acquired through criminal acts, including the offense of Section 140 of the Insurance Act, 2079, in the stock market and other sectors, and committing the crime of money laundering by causing them to commit the prohibited acts under Section 3 (1) (a), (b) and (c) of the Money Laundering Prevention Act, 2064’.
Kantipur has already spoken to about 10 people with direct knowledge of this case and made the details public. According to relevant sources, with purely commercial motives, in the last Sawant (the beginning of the current financial year), Golchha Group Chairman and Managing Director Shekhar Golchha, Ramesh Corp Vice Chairman Gupta, Jawalakhel Group of Industries Managing Director Shah, Infinity Holdings Chairman Bhatt and Lucky Group Managing Director More had agreed to conduct a collective share transaction. As per the agreement, everyone had also raised money. Everyone also collected money in a single account through the banking system. Some shares were also purchased from the same fund.
The department had initially started an investigation alleging that Bhatt had illegally embezzled Rs 3.73 billion 8.5 million 24 thousand 226 of the general public in listed companies including Himalayan Re-Insurance, Himalayan Securities Banker, HLI Large Cap Fund and Nepal Micro Insurance.
Regulatory bodies had started an investigation after the formation of the new government after the Gen-G movement. The bank accounts of both Bhatt and Sulabh Agrawal were frozen immediately after the Gen-G movement and are still frozen.
The department says that Bhatt and his group committed illegal activities related to money laundering by embezzling money from listed companies. The above-mentioned matter is also confirmed by the letter sent by the department to the Insurance Authority, Securities Board, NEPSE, CDSC and other bodies seeking details of Bhatt's share transactions. Kantipur has obtained some of the letters sent by the department to these bodies. In the course of the investigation, the department had collected information from the Rastra Bank, Securities Board, Insurance Authority, NEPSE, CDSC and other bodies. The report was prepared after analyzing and verifying the information and data received, taking statements from stakeholders, etc.
A large number of shares of Nepal Reinsurance Company were purchased in collusion with Bhatta and Shankar Group Vice Chairman Sulabh Agarwal by taking money from five companies. Deepak Bhatta had purchased shares through Bhrikuti Stock Broking Company Pvt. Ltd. with Securities Broker License No. 55. The Department of Money Laundering had started an investigation after a complaint was filed alleging that money was taken from various companies for the purchase of shares but they were not paid.
According to the officer involved in the investigation, all the transactions were done from Sulabh Agarwal's office. 'It has been found that Bhatta and his group have been buying shares of Nepal Reinsurance Company in the secondary market for the past few months,' the officer said. According to him, there were two hidden interests in this. First, since Nepal Reinsurance Company was preparing to issue right shares, they would gain dominance by buying the shares of the company and weaken the competing company. Second, after weakening Nepal Reinsurance, they would merge with Himalaya Reinsurance or gain strong dominance in the market.
Bhrikuti Stock Broking had also sold a large number of shares of other companies in the name of Himalayan Re-Insurance Company. But the broker did not give the amount for the sale of shares to Himalayan Re-Insurance. Instead, sources have said that shares were purchased in the name of Nepal Re-Insurance Company in the name of Deepak Bhatta with the same amount. Himalayan Re-Insurance has already filed a case against Bhrikuti Stock Broking Company in the Kathmandu District Court last week after it did not receive the money. The writ has demanded that Bhrikuti Stock Broking Company be given the amount it is due.
Bhatta, however, has been saying that Sulabh did this without his knowledge. Bhatta, in his statement to the Money Laundering Investigation Department, has claimed that he was not aware that the broker had purchased shares in his name. He states that the broker gave Sulabh the login and password for online share trading and that Sulabh misused it. Bhatta has stated in his statement that the agreement between him and Bhrikuti Stock for margin trading is safe.
Bhatta states that in this transaction, Rs 2.73 billion 33 million, which came from selling shares of various companies in the name of Himalayan Re-Insurance, was also given to broker number 55 and Sulabh purchased shares with that money. Bhatta said that although there was an agreement with the broker for margin trading, at that time (as of Ashad 2082), no broker had started the service of margin trading (providing loans to buy shares) after obtaining permission from the regulatory body. Therefore, as Bhatta claims, the transaction said to have taken margin facility from the broker is also illegal in itself.
The report submitted by the Nepal Securities Board to the investigative body shows that Bhatta, along with Subhi Agrawal, Raj Bahadur Shah and Rishiraj Mor, were engaged in borrowed share trading. According to the letter from the Money Laundering Investigation Department, the investigation report prepared by the board mentions the details of the share transactions in the business partnership of Bhatta and Shankar Group. The report has revealed that along with Bhatta, Subhi, wife of Shankar Group Vice President Sulabh, Shah, Managing Director of Jawalakhel Group of Industries, and another businessman Mor also purchased shares on credit from Broker No. 55 Bhrikuti against the law and were being liquidated.
'It is seen that Subhi, Raj Bahadur and Rishiraj, like Bhatta, traded shares without paying the advance amount, did not pay all the amount of the share transaction and received the shares in their accounts without paying the amount,' the report says. 'This action seems to have helped in increasing the price of the shares purchased by them.' It also appears that they have been deceiving investors and the stock market. The board has concluded that they planned and acted in collaboration with the stock broker Bhrikuti Stock Broking Company to defraud investors and artificially increase the price of shares, which may have been an offense under the Securities Act.
Although the department has investigated money laundering, the Central Bureau of Investigation (CIB) is conducting another separate investigation. A separate investigation is being conducted into the offense of false trading in the stock market, price fluctuations, and affecting the stock market, which are prohibited by the Securities Act, 2063. ‘A case will also be filed for that soon,’ said an official of the department. ‘The department has also started an investigation into their money laundering in other areas. A case will be filed against them after investigating them in many areas.’
