By IANS
Kathmandu : A concerned World Bank has begun its own probe into an allegation of graft against the governor of the central bank that has shaken Nepal's banking industry.
"We take these allegations very seriously and hope that the investigations are carried out in a professional manner and on the basis of credible evidence," Susan Goldmark, World Bank country director for Nepal, said in a statement released here late Sunday.
"We are also carrying out our own internal review of the allegations and the circumstances around them," Goldmark said.
Nepal's banking sector was stunned Friday when Bijay Nath Bhattarai, governor of Nepal Rastra Bank, the apex bank, was suspended after being charged with fraud in collusion with an American and a Sri Lankan company that cost the nation millions of rupees.
Along with the governor, the executive director of the bank, Surendra Man Pradhan, was also slapped with graft charges by a special court.
The Commission for Investigation of Abuse of Authority says the two top bank officials okayed a deal struck during the fag end of King Gyanendra's regime that cost the state a loss of Nepali Rs.24.5 million.
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 chargesheet.
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 lost 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.
On Sunday, a special court began hearing the case even as Nepal's Finance Minister Ram Sharan Mahat expressed shock at the turn of events and said it would undermine the reforms being initiated in the banking sector.
The World Bank is watching the case keenly as, apart from pressing the government to implement reforms in the finance sector, the alleged fraud involves a World Bank financed contract.
"At this point we can confirm that the World Bank provided its no objection to both the award and termination of Nepal Rastra Bank's contract with IEF Inc under routine World Bank procedures," Goldmark said.
"Furthermore, we have received a copy of the consultant's inception report, which was the basis for Nepal Rastra Bank's release of payment to IEF Inc."
The case is reminiscent of an earlier allegation of corruption levelled by King Gyanendra's government against the prime minister he deposed through a coup in 2005.
Ousted prime minister Sher Bahadur Deuba and a senior minister were accused of graft in a multimillion dollar drinking water project mainly funded by the Asian Development Bank (ADB) and sent to prison though the ADB conducted its own investigation and said there were no irregularities.
The commission has become mired in controversy this year after several former ministers it charged with graft were cleared by a special court.