When the investigation officers of the Money Laundering Investigation Department asked about the annual turnover, Infinity Holdings Chairman Deepak Bhatt said, ‘I cannot say for sure, but the annual income is around 300 million.’

Moments earlier, he was asked about the source of the 752.632 million rupees he had paid to Jagdamba Steels. In response, he had said, ‘I cannot reveal the source now, I can tell you later after looking at the transactions.’

Four cases have been filed against Bhatt and his ‘business partners’ for alleged involvement in unnatural financial transactions exceeding legitimate income. The Central Investigation Bureau of the Police and the Money Laundering Investigation Department registered the cases in the Special Court, Patan High Court and Kathmandu District Court on Thursday after conducting a joint and sequential investigation based on the investigation report of the Securities and Exchange Board of Nepal and the Supervision Department of the National Bank.

A case has been filed against Bhatt, his business partners Shankar Group Chairman Shankarlal Agrawal and Vice Presidents Shulav and Sahil Agrawal, Golchha Group Chairman and Managing Director Shekhar Golchha, Jawalakhel Group of Industries Managing Director Raj Bahadur Shah, Lucky Group Managing Director Amit Mor and 86 others. Of these, the highest amount of about 27 billion has been fixed in the case of Bhatt and then more than 25.5 billion in the case of Shulav Agrawal.

When examining the four charge sheets filed, the main characters in this case, Bhatt, Agrawal, Golchha, Mor, Shah and others, have claimed that they are innocent and have put all the blame on others. In these charge sheets prepared by the government prosecutor, it is seen that they have formed a network and evaded the law by committing ‘financial crimes’ ranging from ‘paper land transfer’ to ‘family share distribution’.

Bhatta's statement to the investigation officers of the Money Laundering Investigation Department that he did not know the source of his transactions is included in the same chargesheet.

As mentioned in the chargesheets, this entire case began in Bhadra-Asoj 2079 with the transfer of Rs 545 million from the Mega Investment Bank account of Jagadamba Steels under the Shankar Group to Bhatta's account in Siddhartha Bank. According to Bhatta, he had taken the amount as collateral to sell 54 aanas of land in Sanepa, Lalitpur to Jagadamba.

An investigation officer of the Money Laundering Investigation Department involved in the investigation told Kantipur that Bhatta had laundered the amount in the name of purchasing land to build a megacity in Lubhu, Lalitpur. However, the project was not taken forward.

It was alleged that the then Finance Minister Janardan Sharma had manipulated tax rates to benefit Jagdamba Steels while bringing the supplementary budget of 2078 BS and the budget of 2079 BS. Bhatta was accused of playing a role in that and Jagdamba Steels had given him the amount for that. After such allegations were made public, the National Bank had written to the Money Laundering Investigation Department to investigate the suspicious transaction. That point was the preliminary investigation of today's prosecution.

According to the prosecutors, the amount initially reached Bhatta's personal account from Jagdamba Steels, from where he sent it to his sole proprietorship Infinity Holdings account and then invested it in Himalayan Reinsurance.

The charge sheet states that Jagdamba used the 'working capital loan' taken from the then Nepal Investment Bank to purchase land illegally and gave it to Bhatta.

Shortly after that, Bhatta sent 752.632 million rupees to Jagadamba. He has stated in his statement that he returned the amount of the bond with interest after Jagadamba was unable to purchase the land citing financial reasons.

‘I returned the principal with interest after Jagadamba Steels expressed its inability to purchase the land due to financial reasons,’ he said in his statement. But in the same statement, he also says, ‘I have no professional or personal relationship with Jagadamba Steels.’

Why did a company with no personal relationship send him such a large amount without any documents? The prosecutor has raised exactly this question. The document called the bond has not even been certified by the local level, no loan has been sought from any bank to buy the land, and registration has not been passed for three to four years. Jagdamba showed the amount as ‘advance for land’ in his financial statements for three years, but there is no mention of it from the financial year 2080/81.

Bhatta returned the same amount from his Siddhartha Bank account with a credit limit of Rs 50 lakh, the source of which he had told the investigating officers ‘not knowing’. He returned the amount to Jagdamba through a check in 24 installments at the exact time when the National Bank was investigating the misuse of loans.

Where did that money come from?

According to the special on-site inspection report of Siddhartha Bank, out of Rs 75 crore, Rs 679 crore belongs to the Jagdamba group. The amount that went to Bhatt from the Agrawal family accounts was Rs 143.2 million from Krishiv Agrawal (Shulav Agrawal's son), Rs 131.8 million from Shubh Agrawal (Shulav Agrawal's wife), Rs 103.0 million from Shulav Agrawal, Rs 90.0 million from Shahil Agrawal, Rs 83.0 million from Jana Agrawal (Shulav Agrawal's daughter), Rs 83.0 million from Lalita Agrawal (Shulav Agrawal's mother), and Rs 45.0 million from Shankarlal Agrawal. Of the rest, Rs 101.7 million went to Deepak Bhatt's wife Ayushma Nepal Bhatt and Rs 294.1 thousand from Infinity Holdings, a company in which Bhatt is the sole shareholder.

Investigators have said that the amount borrowed from the bank by Jagdamba Steels was 'round tripped' and transferred to Bhatt's account. Bhatt calls the amount simply 'loan'. But what is the loan for? Bhatt's answer is - 'I can't say for sure what the collateral was used for.' His answer is also about the source of the money that came into his account from Infinity Holdings - 'I can't say for sure whether it was an advance or a dividend.'

Bhatt has said that 'the transactions between Jagadamba and Mega Investment Bank are not something that he knows about.' In his own words, 'I am not the one who took the loan from the bank, Jagadamba Steels should be responsible for the loan.'

The process of doing business together but accusing each other or not knowing each other is not limited to the Bhatt-Agarwal partnership. Shridhar Khanal, who has been a banking assistant in the corporate office of Jagadamba Steels for 7 years, had worked to deliver four checks of Rs 545 million given to Bhatt to the bank on behalf of the company. But Khanal himself has claimed in his statement that he does not know Bhatt. He said, ‘I do not know the defendant Deepak Bhatt.’ While the back of the check was his signature, the mobile number on it was his. However, he says, ‘Since it was a long time ago, I do not remember who gave me the checks or who put them in my drawer.’

If the story had ended here, it would have been just a case of loan misuse. However, the same Himalayan Reinsurance has been dragged into an even bigger controversy four years later. This time the game was not about bank loan misuse but in the stock market. And, a new player had been added to it, Bhrikuti Stock Broking (broker number 55).

According to the securities indictment filed with the Kathmandu District Court, from 5th July 2082 to 1st Chaitra, Bhatta bought securities worth 3.80 billion 5.3 million through the same broker. That too without paying a single rupee in advance. While according to the law, the brokerage company must receive at least 25 percent of the amount in advance from the buyer. During the same period, Bhatta had sold shares worth 935 million through the same brokerage company. Even after reducing the amount, Bhatta still has to pay 2.89 billion 20 million rupees.

Due to the artificial demand created by this lending transaction, the share price of Nepal Reinsurance rose from 1,461 on the afternoon of 5th July 2082 to 1,686 rupees by 10th Bhadra. That is, there was an increase of 15.5 percent in 5 weeks. The charge sheet states, ‘This shows that Deepak Bhatta, Bhrikuti Stock Broking, Himalayan Reinsurance Company, Himalayan Capsorb (100 percent owned by Himalayan Reinsurance), Nepal Micro Insurance Company (15 percent owned by Deepak Bhatta) conspired to increase the share price of Nepal Reinsurance Company.’ According to the charge sheet, ‘Shubhi Agarwal, Himalayan Life Insurance, Rishiraj Mor and Raj Bahadur Shah were also involved in increasing the share price of Nepal Reinsurance.’

Now the question arises, where did the broker get the money to trade billions of rupees?

The answer is found in the charge sheet. Where it is mentioned that the money of these companies, along with Rohit Gupta and Shekhar Golchha, was also used for that purpose. Golchha, the then chairman of Himalayan Reinsurance and former chairman of the Federation of Nepalese Chambers of Commerce and Industry, has admitted to the investigating officers that he gave Rs 525 million to Bhrikuti Broking on various dates. In his statement, he said, ‘I do not know Sandeep Chachan Agrawal (chairman of Bhrikuti Broking) personally... I do not even have a demat account with that broking company.’

When asked why he gave Rs 525 million to a broker who did not have a demat account and did not even know the chairman, Golchha replied, ‘I gave it to him to buy shares in the secondary market in consultation with friends including Rohit Gupta, Raj Bahadur Shah, Shulav Agrawal and Amit Mor. I do not know whether the company used the balance in the account for anyone’s payment settlement. I did not allow the money to be used to purchase shares in the name of Deepak Bhatt or to facilitate any criminal activity. I have no financial or business dealings with Deepak Bhatt.' In a recent conversation with Kantipur, Golchha had also said that he was not involved in the transaction, but rather that the money was trapped.

A different picture emerges when we look at whose account the money is being transferred from the broker's account. According to this, Jawalakhel Group of Industries Managing Director Raj Bahadur Shah has purchased shares of Nepal Reinsurance Company for Rs 1.418 billion, but has paid only Rs 525 million to the broker company. About Rs 90 million is left.

Another group linked to this is the Mor family. The statements given to the investigating officers by Amit Mor and Rajiv Mor, who are also directors of Himalaya Reinsurance, are almost identical. Both say that while the 79th meeting of the board of directors unanimously approved ‘all decisions from the date of formation to the present’, they did ‘even sign policy decisions’, there was never a detailed discussion about the investment and the responsibility for the company’s financial transactions lies with the CEO and the manager.

Both had resigned from the board of directors of Himalayan Reinsurance three days before making this statement. Before that, Golchha had resigned from the chairmanship on 25 Falgun 2082. Some directors of Himalayan Reinsurance Company had also admitted that there was a huge amount of irregularities in the share purchase. Golchha, who resigned after learning about the irregularities, had said this in an informal conversation with Kantipur last Chaitra.

The resignation of Golchha and Mordway seems to be reducing the size of the board of Himalayan Reinsurance as the investigation into this case intensifies.

According to Rishiraj of the Mor family, he invested in shares by ‘taking loans from a broker company on different dates’. He still has to pay Rs 23 crore to the broker.

Can a broker company give loans like a bank?

In response, Mor says, ‘I don’t know.’

He also says, ‘I don’t know Shulav Agarwal, Shahil Agarwal, Deepak Bhatt and Shubh (Shulav’s wife) Agarwal.’

However, he has sent money to Shubh Agarwal’s account.

Regarding that, he says, ‘I don’t want to reveal here why I gave money to him. This is my personal matter.’

Shulav Agarwal’s wife Shubh is also among the ‘borrowers’ from the broker company. उनले बयानमा आफूले हिमालयन रिइन्स्योरेन्सको रकम प्रयोग गरेर नभई ५५ नम्बर ब्रोकर र आफूबीचको सम्झौताबमोजिम सेयर कारोबार गरेको बताएकी छन् । ‘मैले अहिले पनि उक्त कम्पनीलाई फिर्ता गर्नुपर्ने रकम ६२ करोड रहेको छ । ५५ नम्बर ब्रोकर कम्पनीले के कुन स्रोतबाट प्राप्त गरेको रकम मलाई दिएको हो भन्नेबारेमा मलाई थाहा छैन ।’

शुलभको तर्क पनि त्यही छ, श्रीमतीले ब्रोकरबाट लिएको रकमको स्रोत कुन हो भन्ने उनीहरू दुवै जनाको सरोकारको कुरा होइन । उनीहरूमाथि कसुरजन्य सम्पत्तिको व्यवस्थापनका लागि (सम्पत्ति शुद्धीकरणका लागि) विभिन्न कम्पनीहरू खडा गर्ने, तेस्रो पक्षको प्रयोग गर्ने, भृकुटी स्टक ब्रोकिङलाई अपराध गर्ने योजनासहित ‘स्पेसल पर्पोज भेइकल’ का रूपमा प्रयोग गर्ने गरेको लगायतका अभियोग लागेको छ । उनीहरूले ती सबै अभियोग अस्वीकार गरेका छन् ।

भट्टले भृकुटी स्टक ब्रोकिङमार्फत किनिएको सेयरमा आफूले हिमालयन रिइन्स्योरेन्सको रकम प्रयोग नगरेको, कतिपय सेयर आफूले उक्त ब्रोकर कम्पनीसँगको सम्झौताबमोजिम किनेको र त्यसको रकम तिर्न बाँकी रहेको बताएका छन् । त्यसबाहेक अन्य कतिपय कारोबारहरू आफ्नो आईडी र पासवर्ड प्रयोग गरी आफ्नो जानकारीबेगर शुलभले गरेको आरोप लगाएका छन् । त्यसका लागि ती कारोबारका ‘आईपी एड्रेस’ हेर्न पनि उनले भनेका छन् ।