Chaudhary Group’s investment in tax haven countries: Legal or illegal?

KATHMANDU, Oct 4: The International Consortium of Investigative Journalists (ICIJ) has released an investigation report called the ‘Pandora Papers’, which consists of 2.9 terabyte of information which consists of as many as 11.9 million files. The investigation also reports on how US trust providers have taken advantage of some states’ laws that promote secrecy and help wealthy overseas clients hide wealth to avoid taxes in their home countries.

The files also bear the name of famous Nepali business tycoon, Binod Chaudhary and members of his family who have used loopholes in the law to make investments, buy properties and avoid taxes. According to the report presented by the ICIJ to the Center for Investigative Journalism Nepal, the Chaudhary family owns as many as three companies in the British Virgin Island and one each in Singapore and Panama. The three companies belonging to the Chaudhary family in British Virgin Island include Sinovision Importers, CG Hotels and Resort Limited, and Sensei Capital Partners Inc. Likewise, the name of the company in Singapore is CG Hospitality Holdings Global Pvt Ltd.

Earlier in his autobiography and interviews, Binod Chaudhary had claimed that he has made foreign investments by following the law and that there is no room for questioning his investments. But the ‘Pandora Papers’ tell a different story.

Meanwhile, the investigation also shows that Chaudhary’s foreign partner and foreign investor in Nepal, Abdul Awal Mintu was investigated for his involvement in money laundering cases in Bangladesh.

According to experts, Chaudhary has invested abroad by misinterpreting the provisions of the Income Tax Act-2058 BS. The Income Tax Act stipulates that a person who has been in Nepal for 183 days or more in a period of 365 consecutive days should be considered a ‘resident’.

“He has made wrong use of the legal provision,” former finance secretary Rameshwor Khanal said. “This act has not made any provision for any kind of discount in foreign investment with the money generated in Nepal. Only those citizens who stay abroad for 183 days with an income can invest in foreign countries,” he said. “The dividend amount of Nabil Bank which should go to foreign investors has been invested in foreign countries. But as it turns out, Binod Chaudhary himself is the sole owner of the company. The same dividend amount received from the bank could be the source of investment he has made in foreign countries. He has claimed that the money taken from the country to make foreign investments were the earnings of his sons who live abroad, which is completely wrong,” Khanal said. This has raised questions over the legitimacy of foreign investments made by the Chaudhary family.

Also, despite the country’s laws that do not allow any Nepali citizen to make investments in foreign countries, the pandora paper leaks show that Binod Chaudhary’s wife Sarikadevi Chaudhary and his eldest son Nirvana Chaudhary, who are both Nepali citizens, have also made investments in the British Virgin Islands. As many as five members of the Chaudhary family including Binod Chaudhary have made investments in Sinovation Imports, while his three sons and his wife have made investments in Singapore’s CG Hospitality Holdings Global Pvt Ltd.

According to sources, Binod, Sarikadevi, and Nirvana Chaudhary have not sought any permission from Nepal Rastra Bank to make investments in any company listed in the ‘Pandora Papers’. Earlier, Binod Chaudhary had made a request to NRB to list his name after foreigners gifted 50,000 shares of Sinovation company to him. Apart from this, Binod, Nirvana, and Sarikadevi have not made any requests to invest in foreign countries.

In addition, the Pandora Papers show that members of the Chaudhary family have invested in gifted shares of Sinovation company as well and have also set up a few umbrella companies to expand their international business network. Moreover, the NRB had stopped the dividend from Nabil bank to be received by Binod Chaudhary after seeking the proof of final investors of the Sinovation Importers from 2019/2020.

“The Board of Directors of NRB had decided to stop the distribution of the dividends after doubting the Chaudary family to be the final investors of the Sinovation company,” sources at NRB said. “They have not presented the names of the final investors of Sinovation company. The dividends will not be distributed until the final investors of the company are presented.

According to Narayan Prasad Pokhrel, focal person of NRB, Binod Chaudhary has not been given any approval to make any kind of investments outside the country. “The NRB has not allowed any citizen to invest Nepal’s capital in a foreign country. Nobody is allowed to do that,” he said.

The Chaudhary family has invested in over 122 companies across 50 countries and 76 brands till 3rd February of 2020. Although questions have been raised by the media regarding Chaudhary’s mobilization of capital in foreign countries, the government bodies are silent on the matter.

Chaudhry who was considered close to the Panchayat and the Royal Palace in the past has also become a member of parliament from the CPN-UML as well as Nepali Congress (NC).

Responding to the allegation shown in the Pandora Papers, Chaudhary Group said that no national and foreign law has been violated. “According to my father and President of CG, the investments made by Sinovation and partner companies have followed every rule and regulation of Nepal’s law. We have no further comments and ideas regarding your research,” Rahul Chaudhary said in an e-mail when asked by Peter Harriski of the Washington Post regarding the leaks of ‘Pandora Papers’.

Furthermore, the Chaudhary’s are not the only ones listed in the ‘Pandora Papers’, who have invested in tax haven countries. Along with the Chaudhrys, big names like Golchha Organisation and their family members, Ajay Raj Sumargi, Arjun Prasad Sharma, Radhe Shyam Saraf and his family members (Yak and Yeti Hotel and Taragaun Hotel Regency Limited), Kishor Rana (Karna Investment Limited Company), Suhardraj Ghimire, Purushottam Paudel (Continental Trading Enterprises), Sudhir Mittal (Shree Airlines) and Rajendra Shakya (Guna Group) are among others listed in the ‘Pandora Papers’ presented by the ICIJ.


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