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Supreme Court’s Ruling and World Bank’s Reaction
BY KTM Metro Reporter in Kathmandu
On March 18, 2008, a single bench of Justice Tahir Ali Ansari of the Supreme Court of Nepal ruled that Governor of Nepal Rastra Bank (Central Bank of Nepal) Bijaya Nath Bhattarai, and Executive Director Surendra Man Pradhan abused their authority causing the loss of $ 51,538 to the bank signing a contract on the Banking Sector Reform Project funded by the World Bank with the IEF Inc Lloyd Hill Oakton, USA in association with KPMG, SriLanka and later terminating it. The ruling says, “The release of $51,538 violated Condition 6 (4) of the contract. The money was disbursed without the consent of the World Bank.
On June 29, 2007, the Commission on Investigation into Abuse of Authority (CIAA) filed a case at the Special Court against Governor Bhattarai and Executive Director Pradhan accusing them of embezzling US$ 51,538 as they had not taken immediate actions against KPMG for not taking up the job following the agreement and not claiming compensation from KPMG after terminating the agreement, as a result causing a loss to the project.
On February 17, 2008, the Special Court sent this case to the Supreme Court for the ruling after the three judges came out with three different conclusions. According to the Clause 6 (5) of the Special Court Act of 2002, the current ruling is considered as the Special Court’s ruling; so, the defendants have the right to appeal to the Supreme Court within 35 days.
On March 20, 2008, in a statement released in Kathmandu, the World Bank said, "World Bank procedures do not require prior clearance by us for payments made against contract conditions agreed between the implementing agency in this case Nepal Rastra Bank and the firm it hired for consulting services. The World Bank made this payment from a grant window. Our technical experts found that the work done by the consulting firm was satisfactorily carried out against the terms of their contract."
According to the charges filed by the CIAA against the governor and the executive director of the Nepal Rastra Bank at the Special Court, the bank made payment to the consultants that never showed up in Nepal.
In view of the World Bank’s stance on appointing a contractor reported in the Nepalese press in the past, some media analysts questioned whether the World Bank’s public statement favoring the convicted governor and executive director of the Nepal Rastra Bank is to protect them from the corruption case or not.
