By IANS
Kathmandu : The chief of Nepal's central bank has been charged with fraud in collusion with an American and a Sri Lankan company that cost the nation millions of rupees.
In a move that shocked Nepal's banking sector, Bijay Nath Bhattarai, governor of Nepal Rastra Bank, was suspended Friday and now faces a two-year prison sentence as well as a stiff fine running into nearly Nepali Rs.50 million.
Along with the governor, the executive director of the bank, Surendra Man Pradhan, has also been slapped with graft charges by a special court.
The commission for investigation of abuse of authority, probing graft charges against Nepal's 'who's who' – including Prime Minister Girija Prasad Koirala and a clutch of former ministers – says the two top bank officials okayed a deal during the fag end of King Gyanendra's regime that led to a loss of Nepali Rs.24.5 million for the state.
According to the commission, in February 2006, just two months before King Gyanendra's ouster, the central bank hired two foreign consultants to suggest reforms to strengthen the supervision department of the bank.
The two consultant agencies were IEF Inc of US and KPMG of Sri Lanka.
The two agencies were paid part of the money though they did not do any work, the commission said in its charge sheet.
Later, the bank terminated the contract but did not recover the money paid to the two foreign companies.
The commission also claimed that the documents presented on behalf of the Sri Lankan firm were forged.
It is now asking a special court to recover the money from the apex bank governor and his aide and slap both with a fine amounting to the same sum, in addition to a two-year jail term.
While Pradhan was taken into custody Friday, Bhattarai has been declared an absconder by the commission. Both the accused have been suspended.
However, on Friday, the governor attended a long meeting with the finance minister followed by an official dinner in a five-star hotel.
The governor had been questioned earlier by the same commission for allegedly abetting King Gyanendra's regime by authorising financial transactions.
Recently, he was prevented from flying out of Nepal to attend an official programme abroad.
However, Bhattarai told the media he had done nothing unlawful and would defend himself.
Nepal's banking sector remains mired in corruption with bad debts and unprecedented impunity enjoyed by bank loan defaulters.
Defaulters include members of the royal family, top businessmen and politicians.
There was a furore earlier this year when a businessman, wanted for defrauding his bank of millions, threw a lavish reception for his son's wedding that was attended by many of Nepal's leading lights, including the number two in the government.
Though the World Bank and International Monetary Fund have been pressuring the government to initiate reforms, corruption flourishes, with a succession of governments and security authorities continuing to turn a blind eye to white-collar crime.