When smart-talking Ram Sharan Mahat finally quit on 31 July, with some opposition prodding, he became Nepal´s first-ever Finance Minister to resign over allegations of “financial irregularity”. Mr Mahat had failed to notify Nepal´s central bank of a New York bank account which contained his earnings (USD 46,846) from a stint with the United Nations.
While this “irregularity” bore no resemblance to the ill-gotten amassing of wealth of many a Nepali “power centre”, it was the appearance of impropriety—a finance minister flouting the very regulations he is supposed to uphold—which proved the ambitious Mr Mahat´s undoing. It did not matter, in this instance, that the Foreign Currency Regulations Act 1962 is an anachronistic law from a different era, meant to keep hard currency within the country back when no one believed that Nepalis were capable of earning money abroad.
Somewhat more than USD 46,846 was involved in the “LC Scam” which the Mahat episode served to sideline. Indeed, Mr Mahat´s was a minor possible misdemeanor (for he pleads innocence) compared to what has been collectively wrought by those involved in the thirty-million-dollar scandal, in which hard currency was sent out of the country on the basis of letters of credit (LC) opened to import goods that never actually arrived. What has been most surprising is the silence from all quarters on the matter.
Even the usually combative Communist Party of Nepal (United Marxist-Leninist), one of whose MPs intercepted Mr Mahat´s bank statement in the postal system, has chosen to look the other way. And the unwillingness of anyone to speak up in Parliament, which is in session, leads to speculation that there is a gentleman´s agreement to bury the investigation. A sincere probe would splatter mud on every party.
Back in June, when the government commission investigating the affair had pulled up 175 business houses and commercial banks, it was apparent that the scam had the blessing of the highest party officials. Soon after two of the accused were arrested from a Delhi hotel with the help of Indian police and brought to Kathmandu, the phone at police headquarters began jangling off its hook. Those who called made up a Who´s Who of Nepal´s party bosses.
One of the two arrested threatened to spill the beans, but no political party rose to the challenge to demand that his testimony be heard. Both have now been released on bail.
It was Mr Mahat who, as an opposition MP last year, was most vocal about the need to thoroughly probe the LC Scam. Financial misappropriation of such proportions could take place only with the knowledge of the then ruling Communist party bosses, he had claimed. Yet, once he became somewhat wiser as Finance Minister, he surprised pressmen by stating baldly that the government commission had no mandate to implicate politicians!
The scam is yet another proof of the growing contempt that Nepali politicians of all hues are showing for public opinion. It also points at something much more insidious, which is the inroads made into the decision-making inner conclaves of political parties by un-kosher financiers. Today, big money is required to run the party organisation and to prepare for elections, and the only way to receive large amounts is under the table. The last few years has also seen individual leaders amassing personal war chests, to the exclusion of party coffers.
It used to be that one reason to cling on to government was to ensure that yours was the party in power during election-time. Now, increasingly, the reason to remain in power, by hook or by crook, is for the money that is to be made. Thus, six years of democracy has seen the bond between the unabashed politicians and the cash-rich business world become ever stronger. The politician needs the money to stay in power, and the longer he stays in power, the richer his financiers get.
The public is out of the reckoning in all this.