Over Rs 4 billion loss incurred in purchase of wide-body aircraft : Report

Kathmandu, Jan 2 : The Sub-Committee formed under the Public Account Committee of the House of Representatives has submitted its report today, stating embezzlement of four billion 355 million rupees in the purchase of two Airbus A330-200 aircrafts that first arrived on June 28 and the second one on July 26 last year.

The Nepal Airlines Corporation has purchased the aircrafts from the USA-based AAR Corporation for around Rs 24 billion.

Sub-Committee’s Coordinator Rajendra KC in today’s meeting of Public Accounts Committee said the report concludes so after a probe into the same. The conclusion on embezzlement was made as per the current exchange rate.

FULL TEXT of the Report:

A seven-member Sub-Committee was formed on December 12, 2018 to probe into the purchase of two wide-body aircrafts.

Recommendation to take action against Minister Adhikari

The Sub-Committee has recommended the Public Account Committee to take action against Minister for Culture, Tourism and Civil Aviation Rabindra Adhikari as per the existing laws citing his involvement in the embezzlement surrounding the purchase of wide-body aircrafts.

The report states that Minister Adhikari has intentionally instructed to pay the last tranche of money for the purchase of the aircrafts despite knowing that the 55th report of the Auditor General had mentioned that the procurement process was not abiding by legal provisions.

Furthermore, then line Minister Jeevan Bahadur Shahi, according to the report, should take moral responsibility for the loss incurred during the procurement process.

The report states that then Minister Shahi failed to observe precaution and issue instruction not to procure the aircrafts against the Public Procurement Act.

According to the report, the Minister had also made decision for exchange of money for the payment of the advance amount.

The Sub-Committee has also recommended action against Former Minister for Culture, Tourism and Civil Aviation Jitendra Narayan Dev stating that he too should take moral responsibility as he had made a decision to give currency exchange facility for payment of the first installment for the purchase of the wide-body aircraft neglecting the agreement with the company to purchase the aircraft was illegal.

The sub-committee report states- “It is seen that the aircraft has been purchased from the manufacturing company using the middlemen in the purchase process with the intention of misusing the amount including the discount amount to NAC, by purchasing aircraft which has flown 1,000 hours whereas a new aircraft could be purchased by the cost amount the NAC purchased the aircraft.

“The aircraft purchase process itself which has been undertaken with the objective of financial embezzlement is of mala fide intention and not in consonance with the law; and it appears the authority has been abused in this,” coordinator KC stated in the meeting.

The sub-committee has, on the basis of the details and evidence related to the aircraft purchase that it received from the Ministry, NAC and other bodies, recommended to the committee to forward the legal process to hand down maximum punishment on the then secretary at the Ministry and chairman of NAC, Prem Kumar Rai, Shankar Prasad Adhikari, the sitting secretary at the Ministry Krishna Prasad Devkota and on NAC general manager Sugat Ratna Kansakar who played the major role in the irregularities concerning the aircraft purchase by suspending them from their posts.

The sub-committee has also recommended to the committee to issue directives to the government and the Commission for the Investigation of Abuse of Authority (CIAA) for forwarding legal action against them by immediately suspending these officials as it is seen that corruption has been committed by abusing authority in the aircraft purchase scam through ill intention.

Stating that aircraft with the weight in consonance with the conditions mentioned in the proposal presented for the purchase of the aircraft were not brought, the sub-committee report concluded that the NAC has been dealt a massive economic loss and much damage in the wide-body aircraft purchase.

According to the report, the Nepal Airlines Corporation had incurred loss worth USD 4,250,000 in each purchase of the aircrafts. Proposal was made to procure aircraft having 242-metric tonnes capacity but when the aircraft arrived Nepal, they were of 233-metric tonnes capacity.

The Sub-Committee has also suggested bringing to book the members of the NAC’s Board members, members in various sub-committees and those involved in the procurement process.

President Bharat Kumar Shah shared that the further studies would be done on the recommendations furnished in the next meeting of the Committee on coming Friday and decision would be made accordingly.

Today’s meeting made the decision to form various 8 sub-committees to indentify the issues in the jurisdiction of the Committee aimed at facilitating the Committee’s works. RSS