Nepal’s anti-graft watchdog has charged 55 people, including five former government ministers with corruption, accusing them and a Chinese state-owned company of inflating the construction costs of an international airport in Pokhara, the country’s second-biggest city.
After a monthslong probe, the Nepali authorities said on Sunday that executives of China CAMC Engineering Company, the construction arm of the state-owned conglomerate Sinomach, colluded with Nepali politicians and bureaucrats to pad construction costs by $75 million.
The corruption charges are the latest controversy surrounding the Chinese-built airport, which was opened in 2023 and has become a cautionary tale about the costs of relying heavily on China for expensive infrastructure projects. The airport was considered a “flagship project” of China’s Belt and Road Initiative, the infrastructure campaign that has doled out an estimated $1 trillion in loans and grants to other countries.
Many of the findings by Nepal’s Commission for the Investigation of Abuse of Authority corroborated a 2023 report by The New York Times that found China CAMC Engineering had inflated the project’s costs and undermined oversight of quality control, prioritizing its business interests. Shortly after the article was published, a parliamentary committee started investigating the airport’s construction. A report by the committee in April found “irregularities and corruption.”
The charges by the anti-graft commission represent one of the largest corruption cases it has ever brought, both in terms of monetary value and the number of individuals and entities involved.
The case is expected to go before a special court for a hearing. The defendants, including officials from the Chinese construction company, will be summoned to make statements, according to a court information officer. If the officials with China CAMC Engineering do not work in Nepal, the court said it would issue a public notice requesting their appearance. The process is expected to take several months.
While some of China’s Belt and Road projects have come under criticism abroad for shoddy construction and inflated costs, it is unusual for the country that commissioned the infrastructure work to take legal action against a state-owned Chinese firm.
The airport cost Nepal close to $250 million and was financed by a 20-year loan from the Export-Import Bank of China, a state-owned lender that finances Beijing’s overseas development work. Under the terms of the loan, Nepal is expected to repay what it owes using profits generated by the airport.
However, the projections for international flights landing in Pokhara, a tourist destination at the foothills of the Himalayas, that justified the loan are nowhere near reality. Currently, there are no regularly scheduled international flights in or out of the airport, meaning the facility is not generating the revenue necessary to repay the loan. There is growing concern that the airport is becoming an additional financial burden on the impoverished nation.
The anti-graft commission said in a 33-page document outlining the charges against officials that the cost of the contract with China CAMC Engineering was more than 40 percent higher than the initial estimate from Nepal’s Civil Aviation Authority.
The commission said Wang Bo, chairman of China CAMC Engineering, and its regional manager, Liu Shengcheng, acted with malicious intent and without reasonable cause to increase the project’s estimated cost. The executives also worked with the other defendants during the bidding process to obtain illegal benefits, the commission added.
“It has been found that they had already set an unnatural price even before entering into further procurement-related procedures, in violation of the existing law,” according to the charging document.
It remains to be seen how this case might affect Nepal’s relationship with China. Nepal’s previous government, which collapsed during anti-corruption protests in September, had asked China to convert the airport loan into a grant. At the time, Nepal’s ruling party had close ties to Beijing, fueling optimism that China would grant that request.
Akhilesh Upadhyay, the policy lead for the Center for Geostrategic Affairs at the Institute for Integrated Development Studies, a Kathmandu-based think tank, said the case could have repercussions for the country’s relationship with China and that it might encourage both countries to push for greater transparency in their dealings.
“It is no longer the old Kathmandu where you do a closed-door deal with some leaders flying to Beijing and others flying to Kathmandu,” he said.
China CAMC Engineering and China’s Ministry of Foreign Affairs did not immediately respond to requests for comment.
The commission filed charges against five ministers and 10 government secretaries. The ministers come from every major political party: Nepali Congress, the Communist Party of Nepal (Unified Marxist-Leninist) and the CPN (Maoist Centre).
The commission said it is still investigating three other cases pertaining to the Pokhara airport, including an illegal tax exemption for China CAMC Engineering. In addition, the body is looking into whether Nepal’s Civil Aviation Authority made additional payments for construction work and a consultancy fee that should have been the financial responsibility of the Chinese firm.
Joy Dong and Siyi Zhao contributed research.
Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region.
The post Nepal Charges Chinese Construction Firm for Corruption Over Airport appeared first on New York Times.
